Evergreen Solar's Sequential Shipments Increase 35% to 31 MW for the Third Quarter
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Transition of Devens Panel Assembly to China Planned for 2010
Wafer and Cell Production to Remain in Devens
MARLBORO, Mass.--(BUSINESS WIRE)-- Evergreen Solar, Inc. (NasdaqGM: ESLR), a manufacturer of String Ribbon(TM) solar power products with its proprietary, low-cost silicon wafer technology, today announced financial results for the third quarter ended October 3, 2009.
Key accomplishments during the quarter were:
-- Shipped 31.3 MW from our Devens facility, an increase of 35% over second
quarter shipments of 23.2 MW;
-- Reduced total manufacturing cost to $2.24 per watt, down 17% from $2.70
per watt for the second quarter. Wafer manufacturing cost was
approximately $0.75 per watt, down from $0.85 per watt in the second
quarter;
-- Generated EBITDA of $6.3 million, compared to $1.4 million in the second
quarter;
-- Finalized agreements with Jiawei Solar and the Wuhan, China Government's
Hubei Science & Technology Investment Co., Ltd. ("HSTIC"), under which:
o Evergreen Solar will manufacture String Ribbon wafers using our
state-of-the-art Quad furnaces at a leased facility currently being
built by Jiawei in Wuhan, China on Jiawei's campus;
o Jiawei will convert the String Ribbon wafers into Evergreen
Solar-branded panels on a contract manufacturing basis beginning in
the spring 2010; and
o HSTIC provided $33 million of 7.5% financing, which Evergreen Solar
must repay no later than July 2014, all of which has been received.
-- Hired our Chinese executive team, including Henry Ng, former General
Manager of Suntech Power Company Ltd.'s factory in Wuxi, China;
-- Began pilot production at our Michigan high-temperature filament plant.
"Due to strong demand from our customers, we were able to increase our sequential production substantially and sell everything we produced," stated Richard M. Feldt, Chairman, CEO and President. "While demand continues to be solid early in the fourth quarter, we expect to experience some of the typical seasonal moderation in December which we expect will extend into the first quarter.
"Our Devens facility has continuously met its key operational goals of rapid sequential production increases and significantly reduced manufacturing costs since opening in mid-2008. In particular, we are especially pleased with the success of our Quad wafer production performance, which has met or exceeded our expectations to date. However, panel prices have fallen over 30% since mid-2008 making it very difficult for manufacturers located in high-cost regions to remain price competitive. Therefore, we are accelerating our strategic initiative of increasing the focus on our unique wafer manufacturing technology; and we will begin to transition our Devens-based panel assembly to China in mid-2010," continued Feldt.
"Until we begin this transition, we expect to produce approximately 30 to 35 megawatts each quarter at our Devens facility. After the transition is complete, we will continue to produce wafers and cells at our Devens facility and may increase capacity if market demand warrants. If long-term demand for panels manufactured in the United States significantly increases, we will be well-positioned to quickly reintroduce panel assembly again at Devens," Feldt concluded.
Third Quarter 2009 Financial Results
Revenues for the third quarter of 2009 were $77.7 million, including $2.2 million of fees from our Sovello joint venture, compared to $63.8 million for the second quarter of 2009, including $1.1 million of fees and $22.1 million for the third quarter of 2008, including $4.3 million of fees.
Gross margin for the third quarter of 2009 was 9.7%, compared to 1.9% for the second quarter of 2009 and 5.7% for the third quarter of 2008.
Operating loss for the third quarter was $6.0 million, compared to $11.5 million for the second quarter of 2009 and $22.1 million for the third quarter of 2008. Net loss for the third quarter of 2009 was $82.4 million compared to $20.3 million in the second quarter of 2009 and $24.6 million for the third quarter 2008. Net loss for the third quarter 2009 includes a charge of approximately $70 million reflecting the write-down of our investment in Sovello to its estimated fair value. In making the assessment, we considered Sovello's cash position, projected cash flow, comparable market data, the current investing environment, management changes and competition. If Sovello is not able to restructure the terms of its loan agreements or its operations continue to deteriorate, the carrying value of this investment could be further impaired in the future.
This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release.
Conference Call Information
Management will conduct a conference call at 8:30 a.m. (ET) tomorrow (November 5, 2009) to review the Company's third quarter financial results and highlights. The call will be webcast live over the Internet and can be accessed by logging on to the "Investors" section of Evergreen Solar's website, www.evergreensolar.com prior to the event.
The call also can be accessed by dialing (877) 704-5378 or (913) 312-1294 (International) prior to the start of the call and refer to confirmation code 3659743.
For those unable to join the live conference call, a webcast replay will be available from 11:00 a.m. (ET) on November 5 through 8:00 p.m. (ET) on November 13. To access the replay, logon to the "Investors" section of Evergreen Solar's website, www.evergreensolar.com.
About Evergreen Solar, Inc.
Evergreen Solar, Inc. develops, manufactures and markets String Ribbon(TM) solar power products using its proprietary, low-cost silicon wafer technology. The Company's patented wafer manufacturing technology uses significantly less polysilicon than conventional processes. Evergreen Solar's products provide reliable and environmentally clean electric power for residential and commercial applications globally. For more information about the Company, please visit www.evergreensolar.com. Evergreen Solar(R) and String Ribbon(TM) are trademarks of Evergreen Solar, Inc.
Safe Harbor Statement
This press release contains forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These statements are based on management's current expectations or beliefs. Such forward-looking statements include, but are not limited to, those related to expectations regarding our ability to continue to significantly reduce our manufacturing costs; potential cost savings from the transition of our panel operation to China; potential increases in the wafer and cell production capacity at our Devens facility; our ability generally to manufacture and sell our products and the possible changes in pricing and demand for our products. These statements are neither promises nor guarantees, and involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements, including risks associated with the company's ability to lower manufacturing costs and otherwise successfully manufacture and sell its products; uncertainties related to government regulations, subsidies and incentives; risks from various economic factors such as credit market conditions, fluctuations in currency exchange rates and other risks and uncertainties identified in the company's filings with the Securities and Exchange Commission. Evergreen Solar disclaims any obligation to update or revise such statements to reflect any change in company expectations, or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements for any reasons.
Evergreen Solar, Inc. (Nasdaq: ESLR) Condensed Consolidated Statements of Operations (a) (in thousands, except per share data) (Unaudited) Quarter Ended Year-to-Date Period Ended September 27, October 3, September 27, October 3, 2008 2009 2008 2009 (Adjusted) (Adjusted) Product revenues $ 17,803 $ 75,450 $ 54,180 $ 192,586 Royalty and fee 4,264 2,208 13,590 4,716 revenues Total revenues 22,067 77,658 67,770 197,302 Cost of revenues 20,820 70,092 50,914 187,842 Gross profit 1,247 7,566 16,856 9,460 Operating expenses: Research and 5,541 4,417 16,371 13,307 development Selling, general and 6,174 5,872 17,060 18,990 administrative Write-off of loan receivable from silicon - - - 43,882 supplier Facility start-up 8,956 2,493 20,948 6,639 Restructuring charges 2,709 777 7,279 3,394 Total operating 23,380 13,559 61,658 86,212 expenses Operating loss (22,133 ) (5,993 ) (44,802 ) (76,752 ) Other income (expense): Foreign exchange gains (5,017 ) 2,478 (1,361 ) 3,460 (losses), net Interest income 4,242 118 10,004 3,672 Interest expense (3,295 ) (7,430 ) (3,657 ) (19,342 ) Other income (expense), (4,070 ) (4,834 ) 4,986 (12,210 ) net Loss before equity income (loss) from interest in Sovello AG, (26,203 ) (10,827 ) (39,816 ) (88,962 ) impairment of equity investment and income tax benefit Equity income (loss) from interest in Sovello AG and 1,558 (79,423 ) 6,224 (85,915 ) impairment of investment Income tax benefit - (7,805 ) - (7,805 ) Net loss $ (24,645 ) $ (82,445 ) $ (33,592 ) $ (167,072 ) Net loss per share: Basic $ (0.19 ) $ (0.40 ) $ (0.28 ) $ (0.92 ) Diluted $ (0.19 ) $ (0.40 ) $ (0.28 ) $ (0.92 ) Weighted average shares used in computing basic and diluted net loss per share: Basic 132,034 204,790 119,807 182,250 Diluted 132,034 204,790 119,807 182,250 (a) On January 1, 2009, the Company adopted FSP No. APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)" concerning convertible debt accounting, which has been incorporated into Accounting Standards Codification ("ASC") 470, and FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" concerning the calculation of earnings per share, which has been incorporated into ASC 260. These rules require restatement of prior periods to conform to current accounting.
Evergreen Solar, Inc. (Nasdaq: ESLR) Condensed Consolidated Balance Sheets (a) (in thousands, except share data) (Unaudited) December 31, October 3, 2008 2009 (Adjusted) Assets Current assets: Cash and cash equivalents $ 100,888 $ 90,960 Marketable securities 76,621 - Accounts receivable, net of allowances for doubtful 35,458 63,796 accounts Due from Sovello AG 1,949 3,318 Inventory 23,500 30,743 Prepaid cost of inventory 11,696 19,302 VAT receivable, net 1,474 1,601 Other current assets 7,684 7,980 Total current assets 259,270 217,700 Investment in and advances to Sovello AG 115,553 50,000 Restricted cash 212 3,138 Deferred financing costs 6,152 5,115 Loan receivable from silicon supplier 41,757 - Prepaid cost of inventory 172,193 155,996 Fixed assets, net 406,191 440,348 Other assets 3,579 330 Total assets $ 1,004,907 $ 872,627 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $ 62,652 $ 25,951 Due to Sovello AG 22,840 1,620 Accrued employee compensation 6,451 5,646 Accrued interest 7,392 3,277 Accrued warranty 1,182 2,091 Total current liabilities 100,517 38,585 Senior convertible notes, net of discount 311,531 320,262 Loan Payable - 14,115 Deferred income taxes 9,776 2,400 Total liabilities 421,824 375,362 Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value, 250,000,000 shares authorized, 164,874,850 and 207,845,548 shares issued 1,649 2,078 and outstanding at December 31, 2008 and October 3, 2009, respectively Additional paid-in capital 803,491 881,192 Accumulated deficit (223,687) (390,759) Accumulated other comprehensive income 1,630 4,754 Total stockholders' equity 583,083 497,265 Total liabilities and stockholders' equity $ 1,004,907 $ 872,627 (a) On January 1, 2009, the Company adopted FSP No. APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)" which has been incorporated into Accounting Standards Codification 470. The rule requires restatement of prior periods to conform to current accounting.
Non-GAAP Financial Measures
This press release includes a discussion of EBITDA, which is a non-GAAP financial measure and is provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "EBITDA" refers to a financial measure that we define as operating loss plus depreciation and amortization of prepaid cost of inventory. This Non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, our definition of EBITDA may not be comparable to the definitions as reported by other companies. We believe adjusted EBITDA is relevant and useful information because it provides us and investors with an additional measurement to compare the Company's operating performance. This measure is part of our internal management reporting and planning process and is a primary measure used by management to evaluate the operating performance of our business. The components of EBITDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance. EBITDA is also used for planning purposes and in presentations to financial institutions and our board of directors. Furthermore, we intend to provide this non-GAAP financial measure as part of our future earnings discussions and, therefore, the inclusion of this non-GAAP financial measure will provide consistency in our financial reporting.
Adjusted EBITDA was determined as follows:
Quarter Ended
July 4, October 3,
2009 2009
Operating loss per statement of operations (11,488) (5,993)
Depreciation 10,017 10,583
Amortization of prepaid cost of inventory 2,918 1,709
Adjusted EBITDA 1,447 6,299
Source: Evergreen Solar, Inc.
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