Evergreen Solar, Inc. (NasdaqGM: ESLR), a manufacturer of String Ribbon® solar power products with its proprietary, low-cost silicon wafer technology, today announced financial results for the third quarter ended October 2, 2010.
Key accomplishments during the quarter were:
- Record shipments of 42.6 MW compared with 39.8 MW in the second quarter 2010, up 7.2% sequentially
- Total manufacturing cost at Devens decreased 3.1% to $1.88 per watt from $1.94 per watt in the second quarter of 2010
- Wuhan expansion on track with 3.4 MW of Evergreen Solar branded solar panels produced
Michael El-Hillow, President and Chief Executive Officer commented, “The Evergreen team has performed exceptionally well in both Devens and Wuhan. The Devens facility is now exceeding our original operational target of 40 megawatts of production per quarter, further validating the performance of our proprietary furnace technology. In mid-September, we held official grand opening ceremonies in Wuhan and began producing Evergreen Solar branded solar panels. We are making good progress with our production ramp in China and produced 3.4 MW of product in Wuhan during the quarter.”
“Demand for the high quality and performance of Evergreen Solar panels continues to be strong. As such, we expect shipments in the fourth quarter to be in the range of about 48 megawatts,” concluded Mr. El-Hillow.
Third Quarter 2010 Financial Results
Revenues for the third quarter of 2010 were $86.5 million, up 2.4% sequentially compared to 2010 second quarter revenues of $84.5 million. Average selling price for the third quarter of 2010 was $2.02 per watt, down slightly from $2.04 per watt recorded in the second quarter of 2010.
Gross margin for the third quarter of 2010 was 7.5%, compared to 8.6% in the second quarter of 2010. The decrease in gross margin resulted primarily from the decrease in royalties associated with the licensing of the Company’s proprietary wafer technology. During the second quarter of 2010, the Company recorded royalty revenue of $3.4 million which included a one-time payment of $2.4 million associated with the sale of Sovello. In the future, the Company expects that royalty payments recorded each quarter will be in line with those levels recorded in the third quarter of 2010.
Operating loss for the third quarter was $22.7 million, compared to $15.5 million for the second quarter of 2010. Operating loss in the third quarter of 2010 increased from the second quarter of 2010 due mainly to a $6.4 million charge relating to the write-off of a receivable associated with a Korean customer and a decrease in royalty revenue, offset by a decrease in manufacturing costs.
Net loss for the third quarter of 2010 was $27.2 million compared to $3.3 million in the second quarter of 2010. Net loss for the third quarter of 2010 includes the aforementioned charge to accounts receivable of $6.4 million and foreign exchange gains of $6.3 million. Net loss in the second quarter of 2010 includes approximately $24.8 million of net gains on the early extinguishment of outstanding debt, $6.9 million of foreign exchange losses caused by the weakening Euro and a $3.2 million recovery of impairment charges associated with the sale of Sovello AG.
Conference Call Information
Management will conduct a conference call at 8:30 a.m. (ET) tomorrow (November 2, 2010) 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 (888)204-4368 or (913)312-0638 (International) prior to the start of the call and refer to confirmation code 1106064. For those unable to join the live conference call, a webcast replay will be available from 11:00 a.m. (ET) on November 2, 2010 through 8:00 p.m. (ET) on November 19, 2010. To access the webcast 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® 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® and String Ribbon® are trademarks of Evergreen Solar, Inc.
Safe Harbor Statement
This press release includes statements regarding expectations, beliefs, strategies, goals, outlook and other non-historical matters. Any such statements are forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include but are not limited to statements about ongoing production levels at the Company’s Devens, Massachusetts facility, the ramp of the Company’s new facility in China and continued levels of demand for Evergreen Solar’s panels. These forward-looking statements are neither promises nor guarantees and are subject to a number of risks and uncertainties that could cause the Company’s future production levels to differ, including unexpected materials shortages or price increases, the difficulty of accurately forecasting the production benefits from new technologies, new operational strategies and operational scaling, the difficulty in forecasting customer demand in a volatile and uncertain market for the Company’s products, and other risks and uncertainties described in filings that the Company makes from time-to-time with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to update any forward looking statements.
Evergreen Solar, Inc. (Nasdaq: ESLR) | ||||||||
| Condensed Consolidated Balance Sheets (a) | ||||||||
| (in thousands, except share data) | ||||||||
| (Unaudited) | ||||||||
December 31, | October 2, | |||||||
| (Adjusted) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 112,368 | $ | 93,275 | ||||
| Accounts receivable, net of allowances for doubtful accounts | 53,295 | 59,390 | ||||||
| Inventory | 34,890 | 47,140 | ||||||
| Prepaid cost of inventory | 25,634 | 34,524 | ||||||
| Other current assets | 11,451 | 25,001 | ||||||
| Total current assets | 237,638 | 259,330 | ||||||
| Restricted cash | 3,134 | 6,710 | ||||||
| Deferred financing costs | 8,312 | 10,249 | ||||||
| Loan receivable from Jiawei and related interest | - | 13,311 | ||||||
| Prepaid cost of inventory | 147,573 | 121,213 | ||||||
| Fixed assets, net | 430,681 | 423,936 | ||||||
| Other assets | 295 | 302 | ||||||
| Total assets | $ | 827,633 | $ | 835,051 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 31,420 | $ | 37,712 | ||||
| Due to Sovello AG and related guarantees | 17,544 | - | ||||||
| Accrued employee compensation | 7,287 | 4,533 | ||||||
| Accrued interest | 7,004 | 11,372 | ||||||
| Accrued warranty | 2,368 | 3,515 | ||||||
| Total current liabilities | 65,623 | 57,132 | ||||||
| Convertible notes, net of discount | 323,276 | 386,899 | ||||||
| Loan and related interest payable | 34,152 | 36,786 | ||||||
| Deferred income taxes | 5,396 | 5,396 | ||||||
| Total liabilities | 428,447 | 486,213 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
Common stock, $0.01 par value, 450,000,000 shares authorized, 207,809,919 and 208,908,066 shares issued and outstanding at December 31, 2009 and October 2, 2010, respectively | 2,078 | 2,089 | ||||||
| Additional paid-in capital | 1,028,233 | 1,032,108 | ||||||
| Accumulated deficit | (631,119 | ) | (685,603 | ) | ||||
| Accumulated other comprehensive income (loss) | (6 | ) | 244 | |||||
| Total stockholders' equity | 399,186 | 348,838 | ||||||
| Total liabilities and stockholders' equity | $ | 827,633 | $ | 835,051 | ||||
| (a) On January 1, 2010, the Company adopted the FASB's update to the Debt topic of the FASB codification which requires an entity that enters into an equity-classified share lending agreement, utilizing its own shares, in contemplation of a convertible debt issuance or other financing to initially measure the share lending arrangement at fair value and treat it as a cost of the financing. In addition, if it becomes probable that the counterparty to the arrangement will default, the issuer shall recognize an expense for the fair value of the unreturned shares, net of probable recoveries. These rules require revision of prior periods to conform to current accounting. | ||||||||
| 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 | |||||||||||||||
October 3, | October 2, | October 3, | October 2, | |||||||||||||
| (Adjusted) | (Adjusted) | |||||||||||||||
| Product revenues | $ | 75,450 | $ | 86,026 | $ | 192,586 | $ | 245,616 | ||||||||
| Royalty and fee revenues | 2,208 | 497 | 4,716 | 3,908 | ||||||||||||
| Total revenues | 77,658 | 86,523 | 197,302 | 249,524 | ||||||||||||
| Cost of revenues | 70,092 | 80,009 | 187,842 | 229,725 | ||||||||||||
| Gross profit | 7,566 | 6,514 | 9,460 | 19,799 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 4,417 | 5,101 | 13,307 | 15,078 | ||||||||||||
| Selling, general and administrative | 5,872 | 13,672 | 18,990 | 28,713 | ||||||||||||
| Write-off of loan receivable from silicon supplier | - | - | 43,882 | - | ||||||||||||
| Facility start-up | 2,493 | 5,509 | 6,639 | 14,481 | ||||||||||||
| Restructuring charges | 777 | 4,925 | 3,394 | 13,780 | ||||||||||||
| Total operating expenses | 13,559 | 29,207 | 86,212 | 72,052 | ||||||||||||
| Operating loss | (5,993 | ) | (22,693 | ) | (76,752 | ) | (52,253 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Foreign exchange gains (losses), net | 2,478 | 6,334 | 3,460 | (2,845 | ) | |||||||||||
| Interest income | 118 | 380 | 3,672 | 1,612 | ||||||||||||
| Interest expense | (7,683 | ) | (11,229 | ) | (20,101 | ) | (29,002 | ) | ||||||||
| Gain on early extinguishment of debt | - | - | - | 24,777 | ||||||||||||
| Other income (expense), net | (5,087 | ) | (4,515 | ) | (12,969 | ) | (5,458 | ) | ||||||||
Loss before equity loss from interest in Sovello AG, (impairment) recovery of equity investment, and income tax benefit | (11,080 | ) | (27,208 | ) | (89,721 | ) | (57,711 | ) | ||||||||
| Equity loss from interest in Sovello AG | (9,710 | ) | - | (16,202 | ) | - | ||||||||||
Impairment and other charges associated with equity investment in Sovello AG | (69,713 | ) | - | (69,713 | ) | - | ||||||||||
| Recovery of impairment charges associated with Sovello AG | - | - | - | 3,227 | ||||||||||||
| Income tax benefit | (7,805 | ) | - | (7,805 | ) | - | ||||||||||
| Net loss | $ | (82,698 | ) | $ | (27,208 | ) | $ | (167,831 | ) | $ | (54,484 | ) | ||||
| Net loss per share (basic and diluted) | $ | (0.40 | ) | $ | (0.13 | ) | $ | (0.92 | ) | $ | (0.27 | ) | ||||
Weighted average shares used in computing basic and diluted net loss per share | 204,790 | 205,501 | 182,250 | 205,361 | ||||||||||||
| (a) On January 1, 2010, the Company adopted the FASB's update to the Debt topic of the FASB codification which requires an entity that enters into an equity-classified share lending agreement, utilizing its own shares, in contemplation of a convertible debt issuance or other financing to initially measure the share lending arrangement at fair value and treat it as a cost of the financing. In addition, if it becomes probable that the counterparty to the arrangement will default, the issuer shall recognize an expense for the fair value of the unreturned shares, net of probable recoveries. These rules require revision of prior periods to conform to current accounting. | ||||||||||||||||
| Evergreen Solar, Inc. (Nasdaq: ESLR) | ||||||||
| Condensed Consolidated Statements of Cash Flows (a) | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| Year-to-Date Period Ended | ||||||||
October 3, | October 2, | |||||||
| (Adjusted) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (167,831 | ) | $ | (54,484 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 29,067 | 46,237 | ||||||
| Gain on early extinguishment of debt | - | (24,777 | ) | |||||
| Imputed interest and accretion of bond premiums | (478 | ) | - | |||||
| Bad debt expense | - | 6,389 | ||||||
| Amortization of prepaid cost of inventory | 7,479 | 9,424 | ||||||
| Equity loss from Sovello AG and impairment of investment | 85,915 | - | ||||||
| Amortization of deferred debt financing costs | 1,796 | 1,973 | ||||||
| Loss on loan receivable from silicon supplier | 43,882 | - | ||||||
| Loss on disposal of fixed assets | - | 494 | ||||||
| Provision for warranty | 962 | 1,229 | ||||||
| Amortization of debt discount | 8,731 | 7,629 | ||||||
| Compensation expense associated with employee equity awards | 5,253 | 3,476 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (29,707 | ) | (12,484 | ) | ||||
| Inventory and related prepaid cost of inventory | (7,670 | ) | (3,245 | ) | ||||
| Other current assets | (2,208 | ) | (13,550 | ) | ||||
| Accounts payable and accrued expenses | (26,159 | ) | 1,971 | |||||
| Interest payable | 2,045 | 5,817 | ||||||
| Deferred income taxes | (7,805 | ) | - | |||||
| Other | 2,685 | (200 | ) | |||||
| Net cash used in operating activities | (54,043 | ) | (24,101 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of fixed assets and deposits on fixed assets under construction | (101,331 | ) | (40,042 | ) | ||||
| Proceeds from the disposal of fixed assets | - | 62 | ||||||
| (Increase) decrease in restricted cash | (2,914 | ) | (3,561 | ) | ||||
| Increase in Sovello AG loan | (11,750 | ) | - | |||||
| Capital contribution to Sovello AG | (2,917 | ) | - | |||||
| Payments associated with sale of Sovello AG and associated guarantee | - | (14,804 | ) | |||||
| Increase in other loans | - | (12,800 | ) | |||||
| Proceeds from sale and maturity of marketable securities | 76,716 | - | ||||||
| Net cash used in investing activities | (42,196 | ) | (71,145 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the issuance of convertible secured debt, net of offering costs | - | 158,557 | ||||||
| Early redemption of senior convertible debt, net of redemption costs | - | (82,354 | ) | |||||
| Payment associated with share increase | - | (144 | ) | |||||
| Proceeds from the issuance of common stock, net of offering costs | 72,387 | - | ||||||
| Proceeds from China government loan | 13,592 | - | ||||||
Proceeds from exercise of stock options and shares purchased under Employee Stock Purchase Plan | 332 | 94 | ||||||
| Net cash provided by financing activities | 86,311 | 76,153 | ||||||
| Net increase (decrease) in cash and cash equivalents | (9,928 | ) | (19,093 | ) | ||||
| Cash and cash equivalents at beginning of period | 100,888 | 112,368 | ||||||
| Cash and cash equivalents at end of period | $ | 90,960 | $ | 93,275 | ||||
| (a) On January 1, 2010, the Company adopted the FASB's update to the Debt topic of the FASB codification which requires an entity that enters into an equity-classified share lending agreement, utilizing its own shares, in contemplation of a convertible debt issuance or other financing to initially measure the share lending arrangement at fair value and treat it as a cost of the financing. In addition, if it becomes probable that the counterparty to the arrangement will default, the issuer shall recognize an expense for the fair value of the unreturned shares, net of probable recoveries. These rules require revision of prior periods to conform to current accounting. | ||||||||
Contacts:
Michael McCarthy, 508-251-3261
Director
– Investor Relations
mmccarthy@evergreensolar.com
