ECD sees gains in solar PV revenues, shipments, but posts losses for quarter and fiscal year

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Despite significant increases in quarterly revenues and shipments, an improved cash position, and growth in its project pipeline, thin-film solar manufacturer Energy Conversion Devices posted net losses for the fourth quarter and fiscal year ended June 30. The company’s guidance for the first quarter of FY2011 sees production continuing to ramp amid a backdrop of lower sequential revenues, although annual revenues and shipments are expected to exceed FY2010’s results.  

Total consolidated revenues for the quarter were $86.2 million, compared to $51.4 million in the fourth quarter of fiscal 2009, a 68% increase, and $72.4 million in the third quarter of fiscal 2010, a 19% increase. The largest sales segment, solar product and systems, saw its numbers grow to $81.3 million, compared to $46.0 million in the same quarter last year, a 77% increase, and $65.1 million in the third quarter of fiscal 2010, a 25% increase.

Total consolidated revenues for FY2010 were $254.4 million, compared to $316.3 million in the prior year. Solar product and system sales were $230.2 million for fiscal 2010 compared to solar product sales of $295.0 million in the prior year.

For the fourth quarter, the company reported a loss of $20.4 million compared to a net loss of $17.6 million in the year-ago period and a net loss of $26.8 million in the Q3 2010.

ECD’s net loss for the year was $456 million, compared to net income of $8.5 million in FY2009. The large loss was the result of $359.2 million in various noncash impairment charges and miscellaneous other costs and charges.

The company reported an increase in cash, cash-equivalents and short-term investments of $7.4 million during the quarter, compared to a decrease of $38.3 million in the Q4 2009 and a decrease of $19.6 million in the Q3 2010.

Inventory levels were cut to $61 million during the quarter, well down from $94 million in Q3 and $121 million in Q2.

The company shipped 33.8MW of its Uni-Solar products during the quarter on production of 21.3MW, compared to 25.3MW and 10.4MW, respectively, in the previous period. For the year, total shipments reached 95.4MW on production of 84.3MW.

ECD’s combined backlog and pipeline grew to approximately 650MW in the quarter, up from 500MW in the previous period. The pipeline breaks out to about two-thirds for the European market and one-third for North America.

The company’s guidance for FY2011 forecasts shipments in the 28-33MW range for the first quarter and 120-140MW for the year, with production at about 33MW for the quarter and 120-140MW for the year.

ECD expects to see consolidated revenues drop to between $63 million and $68 million for the opening quarter, with results improving over the course of the year, reaching the $280 million to $330 million range.

The company, which posted $2.04/W in manufacturing costs for Q4, believes it will cut that number to about $1.60 in the first quarter of fiscal 2011. It also plans to spend $30 million to $35 million on capital improvements and equipment during FY2011 and reach 10% conversion efficiencies on its amorphous-silicon laminates during the calendar year.

Mark Morelli, ECD’s president/CEO, made the following statements about the company’s financial results.

“Our fourth-quarter results demonstrate solid progress. We have expanded shipments, reduced inventory, improved cash flow and increased revenue on a sequential basis. We remain aggressively focused on improving sales and margins and bringing our overall costs down. Our demand creation activities continue to gain traction as we have added 150MW to our project pipeline.”

“We expect to grow our business substantially in fiscal 2011, although our quarterly results may show unevenness due to project timing uncertainties and the relative growth in our systems business, for which revenue recognition can be delayed by several quarters following initial product shipments,” he continued.

“For example, we expect to nearly double shipments year over year in the first quarter, but will not recognize the revenue for many of these shipments until later in the fiscal year. As a greater proportion of our business is generated from projects, we will see continued revenue growth, enhanced system-derived margin, and increased visibility moving forward.

“Building on our improvement in fiscal 2010, I am confident that we are achieving operating cash flow breakeven, as we begin realizing the benefits of our recent cost reduction activities, which in concert with increased production, will lead to a dramatic improvement in our cost per watt as the year progresses.

“We are also establishing the foundation to achieve sustainable profitability by running our factories at or above nameplate capacity, taking additional cost out of our business, launching new and innovative products, growing our systems business, and following our technology roadmap,” concluded Morelli.      

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