ECD posts loss of US$57.5 million: cell efficiency improvements pushed out again

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Having stopped all production at various plants to preserve cash and help draw down inventory, Energy Conversion Devices (ECD) posted a net loss from continuing operations of US$57.5 million, which includes a non-cash impairment charge of US$34.3 million for its financial Q1 results. Revenue was reported at US$22.0 million, which compares to US$65.3 million in the first quarter of fiscal year 2011, and US$70.5 million in the fourth quarter of fiscal year 2011. ECD previously cancelled its conference call and refrained from providing information on whether a call would be organised.

In a statement issuing first-quarter results, management said that it had adjusted its technology roadmap to speed up the introduction of higher conversion efficiencies via its patented ‘Nano-Crystalline’ technology, claimed to boost efficiencies by 50%.

ECD noted that equipment modifications were underway at its Greenville, Michigan plant that would see pre-production and optimization begin in mid-2012, though did not say when actual production would begin.

However, ECD management had previously told PV-Tech on several occasions in 2010 that its first major upgrade to conversion figures, including a larger cell area within the laminate, would be in production by the end of 2011.

Though the efficiency gains are inline with a cited 9-10% figure, claims of the speeding-up of this implementation have been brought into question.

With production currently halted, ECD did not provide guidance on when it expected to restart any of its plants, instead providing a mid-2012 timeline for the upgraded line in Greenville.

ECD said it sold 11.4MW of ‘UNI-SOLAR’ a-Si thin-film laminates in the quarter. However, ECD did not provide any details on inventory levels but held a total inventory value of just over US$68 million, equivalent to three-quarters of the worth of net sales based on the last quarter’s sales. In SEC filings, ECD had US$43 million in finished goods and US$14.59 million of work in progress. Raw materials made up the balance of inventory. 

Bringing higher efficiency products to market would impact the value of inventory held. Consequently, a meaningful write-down of inventory would be required if sell-through from stock does not improve significantly in coming quarters, taking into account the fact that production plants are being idled.

As of September 30 2011, ECD held US$130.2 million in cash, cash equivalents, restricted cash and short-term investments. This represents a decrease of US$10.5 million from June 30, 2011.

However, the company noted that it would be continuing seek new investment funds and a broad range of business strategies (though not specified) as well as the start of talks with holders of an outstanding Convertible Senior Notes (US$316.3 million) due in June 2013, in an effort to restructure payment terms. 

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