Satcon Technology has released preliminary unaudited results for revenue and gross margin for the second quarter of 2011, which show that the company has revised its gross margin for the quarter downwards from 17–20% to within the 7–11% range. Revenue for the quarter, previously forecasted at between US$50 and US$60 million, now looks set to come in at between US$45 and US$47 million.
The company has also performed a global restructuring of the company’s workforce, resulting in a 15% staff cut. This step will give the company an estimated compensation-related cash saving of US$5.0 million per year as of Q3 2011.
In another cash-saving move, Satcon has initiated a securities purchase agreement with an institutional investor that will garner in the region of US$16 million in gross proceeds through the issuance of subordinated convertible notes, set to mature on July 1, 2013. Net proceeds of US$15 million were yielded from the financing round, for which Lazard Capital Markets LLC acted as sole placement agent.
The downward revision of revenue and margins is a result of continuing changes in government incentives in Europe, which contains several of the company’s higher margin markets, as well as some delayed projects that will now be reflected in Satcon’s third-quarter figures.
Furthermore, Satcon experienced additional one-off costs brought about by a revaluation of material due to lower component costs, an excess inventory provision, and a non-recurring expense associated with an unnamed project in North America.
“We anticipated Q2 to be a transitional quarter and have taken on the appropriate measures to ensure that we achieve profitability,” said Steve Rhoades, Satcon’s president and CEO. “Despite the challenges in the quarter, Satcon attained important milestones on our path to long term margin expansion and profitability. We successfully introduced several new products, further strengthening our continued leadership position in the global utility scale inverter markets. In addition, our achievements in both the supply chain and product engineering continue to lower our cost structure and position us to expand margins in the third and fourth quarters of this year.”