ENERGY CONVERSION DEVICES REPORTS NET INCOME OF $0.17 PER SHARE
ON REVENUES OF $70 MILLION FOR THIRD QUARTER FISCAL 2008
|
▪ |
Company Reaches Profitability |
|
▪ |
Solar Gross Margin Exceeds 30 Percent |
|
▪ |
Internal Funding for Next 120MW Expansion |
Rochester Hills, Mich., May 8, 2008 – Energy Conversion Devices, Inc. (ECD) (NASDAQ: ENER), the leading global manufacturer of thin-film flexible solar laminate products for the building integrated and commercial rooftop markets, today announced financial results for the third quarter and nine-month period ended March 31, 2008.
Total consolidated revenues for the quarter were $70 million, up 24 percent from second quarter revenues of $56.4 million, and 155 percent higher than third quarter fiscal 2007 revenues of $27.4 million. Solar product sales were $64.9 million, a 31 percent sequential increase and a 193 percent increase over the prior-year quarter.
Net income for the third quarter was $7.0 million, or $0.17 per share, compared to a net loss of $5.4 million, or $0.14 per share, in the second quarter of fiscal 2008, and a net loss of $6.9 million, or $0.17 per share, in the year-ago period. Third quarter results include preproduction costs of approximately $751,000 and restructuring charges of $2.4 million, representing $0.08 per share in the aggregate.
Gross margin on product sales in the solar business was 30.7 percent in the third quarter, compared with 19.2 percent in the second quarter. The gross margin improvement was driven by better factory utilization and yield, and favorable customer/product mix.
Mark Morelli, ECD’s president and chief executive officer, commented, “I’m pleased to report that we’ve reached profitability, and we’ve done so through sustainable changes to our business. This is a key milestone in our company’s history, and a testament to the commitment and hard work of our colleagues.”
United Solar Ovonic produced 21.6 MWs in the third quarter and 47.4 MWs for the first nine months of the fiscal year. The company confirmed its plans to expand and add 120MWs of additional nameplate capacity to its existing Greenville facilities. ECD will be able to internally fund this expansion through available funds and cash flow from operations. This previously announced expansion will increase the company’s nameplate capacity to approximately 300MWs by the end of fiscal year 2010.
“Our focused efforts are achieving tangible results. These include profitability driven by operational improvements, a substantial increase in sustainable gross margin, and $6 million in positive operating cash flow for the fiscal third quarter. Demand for our products continues to exceed available supply, and we are emphasizing take-or-pay agreements which give us better forward visibility, while ensuring supply to our strategic channel partners. These changes have
– 2 –
strengthened our current financial position, positioned us for future profitable growth and give us the flexibility to internally fund our new 120MW expansion,” added Mr. Morelli.
Nine Months Results
For the first nine months of fiscal 2008, total consolidated revenues were $173.5 million compared with $77.6 million for the first nine months of fiscal 2007, an increase of 124 percent. Solar product sales totaled $154.5 million in the first nine months of fiscal 2008, a 150 percent increase compared with $61.7 million last year.
For the nine-month period, the company reported a net loss of $6 million, or $0.15 per share, compared with the previous nine month’s net loss of $12.1 million, or $0.31 per share. Restructuring costs for the first nine months of fiscal 2008 were $7.5 million. Preproduction costs for the year-to-date period were $5.6 million.
Fourth Quarter/Fiscal Year 2008 Updated Guidance
Total consolidated revenues are expected to be between $73 and $78 million for the fiscal fourth quarter ending June 30, 2008 and between $246 and $251 million for fiscal 2008. Solar product sales for the fourth quarter are expected to be $68 to $73 million, and $222 to $227 million for fiscal 2008. For the fourth quarter, ECD expects it will maintain the 30 to 31 percent gross margin it achieved in the third quarter. Restructuring costs are expected to be between $2 to $3 million for the fourth quarter and $10 to $11 million for fiscal 2008. Preproduction costs are expected to be approximately $1.5 to $2 million for the fourth quarter and between $7 and $8 million for fiscal 2008.
Conference Call / Webcast Details
Management of Energy Conversion Devices will review these financial results on a conference call on Thursday, May 8, 2008 at 10:00 a.m. ET. The dial-in number for the live audio call is 877-858-2512 or 706-634-6076 (international) with conference ID number 44703161. The conference call will be webcast live over the Internet and can be accessed in the Investor Relations – Conference Calls – section of the company’s website at www.ovonic.com.
An audio replay of the call will be available approximately two hours after the conclusion of the call. The audio replay will remain available until 11:59 p.m., May 10, 2008, and can be accessed by dialing (800) 642-1687 or (706) 645-9291 (international), with conference ID number 44703161. The webcast will also be archived on the company’s website.
About Energy Conversion Devices
Energy Conversion Devices, Inc. (ECD) (NASDAQ: ENER) is the leader in building integrated and commercial rooftop photovoltaics, one of the fastest growing segments of the solar power industry. The company manufactures and sells thin-film solar laminates that convert sunlight to energy using proprietary technology. ECD’s UNI-SOLAR® brand products are unique because of their flexibility, light weight, ease of installation, durability, and real-world efficiency. ECD also pioneers other alternative technologies, including a new type of nonvolatile digital memory technology that is
– 3 –
significantly faster, less expensive, and ideal for use in a variety of applications including cell phones, digital cameras and personal computers. For more information, please visit www.ovonic.com.
This release contains forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future net sales or performance, capital expenditures, financing needs, plans or intentions relating to expansions, business trends and other information that is not historical information. All forward-looking statements are based upon information available to us on the date of this release and are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Risks that could cause such results to differ include: our ability to achieve sustainable profitability; our ability to maintain our customer relationships; our ability to expand our manufacturing capacity in a timely and cost-effective manner; the worldwide demand for electricity and the market for solar energy; the supply and price of components and raw materials for our products; and the resolution of pending legal disputes. The risk factors identified in the ECD filings with the Securities and Exchange Commission, including the company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q, could impact any forward-looking statements contained in this release.
Contact:
Mark Trinske, Vice President
Investor Relations & Corporate Communications
(248) 299-6063
– 4 –
ENERGY CONVERSION DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Sales |
$ |
65,366 |
|
$ |
23,206 |
|
$ |
159,391 |
|
$ |
64,731 |
|
|
Royalties |
|
1,537 |
|
|
769 |
|
|
4,044 |
|
|
2,397 |
|
|
Revenue from Product Development |
|
2,691 |
|
|
2,887 |
|
|
8,490 |
|
|
8,750 |
|
|
Revenue from License Agreements |
|
264 |
|
|
238 |
|
|
1,015 |
|
|
734 |
|
|
Other |
|
124 |
|
|
329 |
|
|
533 |
|
|
947 |
|
|
Total Revenues |
|
69,982 |
|
|
27,429 |
|
|
173,473 |
|
|
77,559 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Product Sales |
|
45,296 |
|
|
19,787 |
|
|
122,109 |
|
|
54,122 |
|
|
Cost of Revenues from Product Development Agreements |
|
1,863 |
|
|
2,012 |
|
|
5,391 |
|
|
5,726 |
|
|
Product Development and Research |
|
1,653 |
|
|
5,671 |
|
|
7,698 |
|
|
15,338 |
|
|
Preproduction Costs |
|
751 |
|
|
491 |
|
|
5,575 |
|
|
1,595 |
|
|
Operating, Selling, General and Administrative (Net) (Including Patents) |
|
12,461 |
|
|
10,448 |
|
|
37,082 |
|
|
26,977 |
|
|
Restructuring Charges |
|
2,386 |
|
|
— |
|
|
7,457 |
|
|
— |
|
|
Total Expenses |
|
64,410 |
|
|
38,409 |
|
|
185,312 |
|
|
103,758 |
|
|
Income (Loss) from Operations |
|
5,572 |
|
|
(10,980 |
) |
|
(11,839 |
) |
|
(26,199 |
) |
|
Total Other Income |
|
1,439 |
|
|
4,109 |
|
|
5,914 |
|
|
14,113 |
|
|
Net Income (Loss) before Income Taxes |
|
7,011 |
|
|
(6,871 |
) |
|
(5,925 |
) |
|
(12,086 |
) |
|
Income Taxes |
|
37 |
|
|
— |
|
|
94 |
|
|
— |
|
|
Net Income (Loss) |
$ |
6,974 |
|
$ |
(6,871 |
) |
$ |
(6,019 |
) |
$ |
(12,086 |
) |
|
Basic Net Income (Loss) Per Share |
$ |
.17 |
|
$ |
(.17 |
) |
$ |
(.15 |
) |
$ |
(.31 |
) |
|
Diluted Net Income (Loss) Per Share |
$ |
.17 |
|
$ |
(.17 |
) |
$ |
(.15 |
) |
$ |
(.31 |
) |
|
Shares Used In Calculation of Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
40,317 |
|
|
39,517 |
|
|
40,100 |
|
|
39,295 |
|
|
Diluted |
|
40,719 |
|
|
39,517 |
|
|
40,100 |
|
|
39,295 |
|
– 5 –
Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP) ECD uses the following measures (unaudited) as defined by the Securities and Exchange Commission as non-GAAP measures:
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||
|
|
(In Thousands Except Per Share Data) | |||||||||||
|
Net Income (Loss) |
$ |
6,974 |
|
$ |
(6,871 |
) |
$ |
(6,019 |
) |
$ |
(12,086 |
) |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
– Preproduction Costs |
|
751 |
|
|
491 |
|
|
5,575 |
|
|
1,595 |
|
|
– Restructuring Charges |
|
2,386 |
|
|
— |
|
|
7,457 |
|
|
— |
|
|
Net Income (Loss) as Adjusted (Non-GAAP) |
$ |
10,111 |
|
$ |
(6,380 |
) |
$ |
7,013 |
|
$ |
(10,491 |
) |
|
Net Income (Loss) (Basic and Fully Diluted) |
$ |
.17 |
|
$ |
(.17 |
) |
$ |
(.15 |
) |
$ |
(.31 |
) |
|
Net Income (Loss) (Basic and Fully Diluted) |
$ |
.25 |
|
$ |
(.16 |
) |
$ |
.17 |
|
$ |
(.27 |
) |
ENERGY CONVERSION DEVICES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
|
|
March 31, 2008 |
|
June 30, 2007 |
| ||||||
|
|
(Unaudited) |
|
|
| ||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents |
|
$ |
80,690 |
|
|
|
$ |
80,770 |
|
|
|
Restricted Investments |
|
|
5,659 |
|
|
|
|
— |
|
|
|
Short-Term Investments |
|
|
14,963 |
|
|
|
|
125,004 |
|
|
|
Accounts Receivable (Net) |
|
|
44,204 |
|
|
|
|
36,498 |
|
|
|
Inventories |
|
|
32,232 |
|
|
|
|
38,692 |
|
|
|
Assets Held for Sale |
|
|
1,539 |
|
|
|
|
1,524 |
|
|
|
Property, Plant and Equipment (Net) |
|
|
384,583 |
|
|
|
|
311,369 |
|
|
|
Other |
|
|
41,274 |
|
|
|
|
6,822 |
|
|
|
TOTAL ASSETS |
|
$ |
605,144 |
|
|
|
$ |
600,679 |
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable and Other Liabilities |
|
$ |
47,166 |
|
|
|
$ |
42,940 |
|
|
|
Long-Term Liabilities |
|
|
31,499 |
|
|
|
|
32,232 |
|
|
|
TOTAL LIABILITIES |
|
|
78,665 |
|
|
|
|
75,172 |
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
526,479 |
|
|
|
|
525,507 |
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
605,144 |
|
|
|
$ |
600,679 |
|
|
– 6 –
ENERGY CONVERSION DEVICES INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
|
|
Nine Months Ended | |||||
|
|
2008 |
|
2007 |
| ||
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net Loss |
$ |
(6,019 |
) |
$ |
(12,086 |
) |
|
Adjustments to Reconcile Net Loss to Net Cash |
|
|
|
|
|
|
|
Depreciation and Amortization |
|
15,059 |
|
|
8,258 |
|
|
Bad Debt and Other Expenses |
|
734 |
|
|
(55 |
) |
|
Amortization of Premium (Discount) on Investments |
|
— |
|
|
(146 |
) |
|
Allowance for Slow-Moving Inventory |
|
1,793 |
|
|
1,421 |
|
|
Restructuring Charge |
|
1,019 |
|
|
— |
|
|
Stock and Stock Options Issued for Services Rendered |
|
1,506 |
|
|
1,455 |
|
|
Other |
|
(359 |
) |
|
(1,478 |
) |
|
Changes in Working Capital |
|
(1,064 |
) |
|
1,299 |
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
|
12,669 |
|
|
(1,332 |
) |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Increase in Restricted Investment |
|
(5,659 |
) |
|
— |
|
|
Purchases of Property, Plant and Equipment (Including |
|
(88,375 |
) |
|
(139,420 |
) |
|
Proceeds from Sale of Investments |
|
75,379 |
|
|
21,504 |
|
|
Payment to Ovonyx |
|
— |
|
|
(200 |
) |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(18,655 |
) |
|
(118,116 |
) |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
5,971 |
|
|
8,308 |
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
|
(65 |
) |
|
(18 |
) |
|
NET CASH FLOW |
|
(80 |
) |
|
(111,158 |
) |
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
80,770 |
|
|
164,962 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
80,690 |
|
$ |
53,804 |
|
– 7 –
ENERGY CONVERSION DEVICES INC. AND SUBSIDIARIES
SEGMENT REVENUE AND OPERATING INCOME/(LOSS)
(In Thousands)
(Unaudited)
|
|
Three Months Ended | |||||||||||||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||||||||||
|
|
Revenues |
|
Income (Loss) from Operations | |||||||||||||||||
|
United Solar Ovonic |
|
$ |
66,736 |
|
|
|
$ |
23,841 |
|
|
|
$ |
13,735 |
|
|
|
$ |
518 |
|
|
|
Ovonic Materials |
|
|
3,178 |
|
|
|
|
3,442 |
|
|
|
|
940 |
|
|
|
|
(4,185 |
) |
|
|
Corporate Activities |
|
|
253 |
|
|
|
|
291 |
|
|
|
|
(9,175 |
) |
|
|
|
(6,796 |
) |
|
|
Consolidating Entries |
|
|
(185 |
) |
|
|
|
(145 |
) |
|
|
|
72 |
|
|
|
|
(517 |
) |
|
|
Consolidated |
|
$ |
69,982 |
|
|
|
$ |
27,429 |
|
|
|
$ |
5,572 |
|
|
|
$ |
(10,980 |
) |
|
|
|
Nine Months Ended | |||||||||||||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||||||||||
|
|
Revenues |
|
Income (Loss) from Operations | |||||||||||||||||
|
United Solar Ovonic |
|
$ |
160,343 |
|
|
|
$ |
66,895 |
|
|
|
$ |
15,352 |
|
|
|
$ |
2,870 |
|
|
|
Ovonic Materials |
|
|
12,840 |
|
|
|
|
10,263 |
|
|
|
|
639 |
|
|
|
|
(10,957 |
) |
|
|
Corporate Activities |
|
|
797 |
|
|
|
|
890 |
|
|
|
|
(27,983 |
) |
|
|
|
(16,527 |
) |
|
|
Consolidating Entries |
|
|
(507 |
) |
|
|
|
(489 |
) |
|
|
|
154 |
|
|
|
|
(1,585 |
) |
|
|
Consolidated |
|
$ |
173,473 |
|
|
|
$ |
77,559 |
|
|
|
$ |
(11,838 |
) |
|
|
$ |
(26,199 |
) |
|
– 8 –
|
Segment Operations – United Solar Ovonic (In Thousands) (Unaudited) | ||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||
|
PV Product Sales |
$ |
64,941 |
|
$ |
22,143 |
|
$ |
154,538 |
|
$ |
61,715 |
|
|
Megawatts Produced |
|
21.6 |
|
|
8.8 |
|
|
47.4 |
|
|
21.8 |
|
|
Megawatts Shipped |
|
21.5 |
|
|
7.4 |
|
|
51.4 |
|
|
19.2 |
|
|
Cost of Product Sales |
$ |
45,021 |
|
$ |
18,303 |
|
$ |
117,846 |
|
$ |
50,298 |
|
|
Gross Margin |
$ |
19,920 |
|
$ |
3,840 |
|
$ |
36,692 |
|
$ |
11,417 |
|
|
Gross Margin % |
|
30.7% |
|
|
17.3% |
|
|
23.7% |
|
|
18.5% |
|
|
Other Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development |
$ |
1,795 |
|
$ |
1,696 |
|
$ |
5,805 |
|
$ |
5,174 |
|
|
Other Operating Revenues |
|
— |
|
|
2 |
|
|
— |
|
|
6 |
|
|
Other Revenues Total |
|
1,795 |
|
|
1,698 |
|
|
5,805 |
|
|
5,180 |
|
|
Total Revenues |
|
66,736 |
|
|
23,841 |
|
|
160,343 |
|
|
66,895 |
|
|
Other Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development |
|
1,943 |
|
|
1,945 |
|
|
6,314 |
|
|
4,793 |
|
|
Preproduction |
|
751 |
|
|
491 |
|
|
5,574 |
|
|
1,595 |
|
|
Operating, Selling, General and Administrative |
|
5,286 |
|
|
2,584 |
|
|
15,257 |
|
|
7,339 |
|
|
Total Other Expenses |
|
7,980 |
|
|
5,020 |
|
|
27,145 |
|
|
13,727 |
|
|
Income from Operations |
$ |
13,735 |
|
$ |
518 |
|
$ |
15,352 |
|
$ |
2,870 |
|
– 9 –
|
Segment Operations – Ovonic Materials (In Thousands) (Unaudited) | ||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||
|
Product Sales |
$ |
425 |
|
$ |
1,063 |
|
$ |
4,872 |
|
$ |
3,016 |
|
|
Cost of Product Sales |
|
356 |
|
|
1,098 |
|
|
4,519 |
|
|
2,674 |
|
|
Other Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties |
|
1,537 |
|
|
769 |
|
|
4,044 |
|
|
2,397 |
|
|
Research and Development |
|
896 |
|
|
1,194 |
|
|
2,684 |
|
|
3,596 |
|
|
Licenses |
|
264 |
|
|
238 |
|
|
1,015 |
|
|
734 |
|
|
Other Operating Revenues |
|
56 |
|
|
178 |
|
|
225 |
|
|
520 |
|
|
Other Revenues Total |
|
2,753 |
|
|
2,379 |
|
|
7,968 |
|
|
7,247 |
|
|
Total Revenues |
|
3,178 |
|
|
3,442 |
|
|
12,840 |
|
|
10,263 |
|
|
Other Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development |
|
1,573 |
|
|
5,740 |
|
|
6,776 |
|
|
16,289 |
|
|
Operating, General and Administrative Expenses |
|
309 |
|
|
789 |
|
|
906 |
|
|
2,257 |
|
|
Total Other Expenses |
|
1,882 |
|
|
6,529 |
|
|
7,682 |
|
|
18,546 |
|
|
Income (Loss) from Operations |
$ |
940 |
|
$ |
(4,185 |
) |
$ |
639 |
|
$ |
(10,957 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Segment Operations – Corporate Activities (In Thousands) (Unaudited) | ||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| ||||
|
Other Operating Revenues |
$ |
253 |
|
$ |
291 |
|
$ |
797 |
|
$ |
890 |
|
|
Other Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
2,386 |
|
|
— |
|
|
7,457 |
|
|
— |
|
|
Operating, General and Administrative |
|
7,042 |
|
|
7,087 |
|
|
21,323 |
|
|
17,417 |
|
|
Total Expenses |
|
9,428 |
|
|
7,087 |
|
|
28,780 |
|
|
17,417 |
|
|
Loss from Operations |
$ |
(9,175 |
) |
$ |
(6,796 |
) |
$ |
(27,983 |
) |
$ |
(16,527 |
) |