Close to the edge: ECD suspends manufacturing indefinitely, postpones quarterly earnings call

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

In another sign of trouble in the US domestic PV manufacturing sector, flexible thin-film silicon laminate maker Energy Conversion Devices has taken several restructuring actions, including the suspension of all manufacturing operations in what the company calls “an inventory control measure.”

Other moves taken by the Auburn Hills, MI-based firm include various cost reduction efforts, continued R&D on next-generation technologies, and the expansion of addressable markets. In addition, ECD management has started discussions with representatives of certain holders of the company's outstanding Senior Convertible Notes due 2013. As a result of the actions, it has postponed the quarterly financial conference call until further notice.

The temporary shutdown of production facilities will result in the furloughing of approximately 400 employees across the company’s three factory locations in Michigan, Baja California, Mexico, and Ontario, Canada. The company said it expects to resume manufacturing as soon as possible once the existing inventory has been sold and market conditions warrant, with a return to normal production levels possible within 60 days.

ECD said will continue to serve its customers through its direct sales force and global network of solar integrators and building materials suppliers.

The company did issue preliminary results for Q1 FY2012, stating that it expects to report total revenue of approximately $22 million. This compares to consolidated revenue of $65 million in the Q1 FY2011.

ECD held $130.2 million of cash, cash equivalents, restricted cash, and short-term investments, a reduction of $10.5 million compared to the previous quarter.

During the just-completed quarter, ECD's United Solar subsidiary shipped 11 MW of thin-film laminates in the face of sharp price declines and excess module supply across the industry. In Q1 2011, the company shipped 30.5MW.

The company’s strategic corporate restructuring began in May, with every aspect of its strategy being reassessed in light of the near-term disruptions in the solar industry.

To reduce cost and manage cash, ECD took personnel and other actions in June with an estimated annualized cash savings of $20 million. In addition, the company said it will further reduce its workforce by approximately 500 full-time associates by the end of calendar 2011.

The company is starting to get traction in its efforts to enter new geographic markets, having recently completed shipments to Brazil, South Korea, India, the Caribbean, and China. Solar sales to customers outside of Europe and North America now account for about 40% of total shipments in the quarter, compared to 4% in the prior year's first quarter.

Consistent with the technology roadmap previously announced by the company, ECD said it is committed to enhancing its core thin-film solar technology by commercializing its patented, higher-efficiency Nano-Crystalline technology. Upgrades to existing capital equipment are under way at its Greenville, MI, plant, and the retrofitted line is expected to begin pre-production testing and optimization in mid-2012.

“These operating results highlight the challenges facing us and the solar industry today,” said Jay Knoll, ECD's interim president. “With reductions in incentives in our core European markets and a volatile credit market, solar projects are having tremendous difficulty closing. These factors combined with a flood of cheap modules from foreign manufacturers have created an environment where very few projects are getting completed without self-financing and steep discounts. The economics of this environment require us to rethink our approach to the sales process and rationalize our cost structure, both of which are under way.”

Separately, ECD's Ovonic Battery Company (OBC) subsidiary generated $2.3 million in the quarter in combined royalties and license fees from its proprietary nickel-metal-hydride rechargeable battery technology. ECD announced in July that it intended to divest OBC in a closed-bid auction and is proceeding with this sales process. 

The company believes that a successful repositioning of its United Solar business will require refinancing or restructuring of its outstanding Senior Convertible Notes due 2013. ECD intends to invest the proceeds from the sale of OBC in its United Solar business to support funding of its technology roadmap and Open Solar initiatives. 

ECD said it is considering a range of strategies to attract additional investment that may be required and has retained the financial advisory firm of AlixPartners to help it evaluate such strategies.

In connection with the foregoing, the company has begun discussions with representatives of an informal group of holders of ECD's outstanding Senior Convertible Notes due 2013, regarding its repositioning efforts to explore the group's interest in restructuring the notes.

In light of these restructuring actions and the ongoing strategic discussions referenced above, the company said it has postponed its conference call previously scheduled to take place November 9. 

ECD will not file its quarterly report on Form 10-Q for the fiscal period ended September 30 by the deadline for such filing and intends to file a Form 12b-25 with the SEC, although it does expect to file its quarterly report on Form 10-Q within the grace period prescribed by Rule 12b-25 under the Securities Exchange Act of 1934, as amended.

 

26 January 2022
Join this free webinar for our analysis of the growth of N-Type technology including; new capacity expansions and production output. We'll also be looking at the global manufacturing footprint with forecasts on how much product will be made outside of China this year and which companies are driving technology change across the crystalline silicon value chain.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.

Read Next

January 20, 2022
Mississippi authorities have expanded the state’s net metering programme to improve total compensation rates for solar customers and prioritise the adoption of distributed PV for low- to moderate-income (LMI) households.
January 20, 2022
US residential solar lender Dividend Finance is to be acquired by Ohio-based banking company Fifth Third.
January 20, 2022
Independent power producer (IPP) Cordelio Power has secured a 900MWac pipeline of solar projects in New York and Pennsylvania from project developer SunEast Renewables.
January 20, 2022
Distributed PV installations in China topped 29GW last year, contributing more than half of total solar installations in the country for the first time.
January 20, 2022
President Joe Biden believes he can win support for the energy and environmental initiatives included in his Build Back Better (BBB) Act, saying he is confident of getting “big chunks” of the US$1.75 billion legislation signed into law.
January 20, 2022
Swiss fund manager SUSI Partners has set up a new renewables platform that will build a portfolio of solar PV and wind assets in Poland.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal