Sequential Shipments Increase 35% to 31 MW for the Third Quarter
November 4, 2009
Transition of Devens Panel Assembly to China Planned for 2010
Wafer and Cell Production to Remain in Devens
Marlboro, Massachusetts, November 4, 2009 – 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 3, 2009.
Key accomplishments during the quarter were:
Shipped 31.3 MW from our Devens facility, an increase of 35% over second quarter shipments of 23.2 MW;
Reduced total manufacturing cost to $2.24 per watt, down 17% from $2.70 per watt for the second quarter. Wafer manufacturing cost was approximately $0.75 per watt, down from $0.85 per watt in the second quarter;
Generated EBITDA of $6.3 million, compared to $1.4 million in the second quarter;
Finalized agreements with Jiawei Solar and the Wuhan, China Government’s Hubei Science & Technology Investment Co., Ltd. (“HSTIC”), under which:
Evergreen Solar will manufacture String Ribbon wafers using our state-of-the-art Quad furnaces at a leased facility currently being built by Jiawei in Wuhan, China on Jiawei’s campus;
Jiawei will convert the String Ribbon wafers into Evergreen Solar-branded panels on a contract manufacturing basis beginning in the spring 2010; and
HSTIC provided $33 million of 7.5% financing, which Evergreen Solar must repay no later than July 2014, all of which has been received.
Hired our Chinese executive team, including Henry Ng, former General Manager of Suntech Power Company Ltd.’s factory in Wuxi, China
Began pilot production at our Michigan high-temperature filament plant
“Due to strong demand from our customers, we were able to increase our sequential production substantially and sell everything we produced,” stated Richard M. Feldt, Chairman, CEO and President. “While demand continues to be solid early in the fourth quarter, we expect to experience some of the typical seasonal moderation in December which we expect will extend into the first quarter.
“Our Devens facility has continuously met its key operational goals of rapid sequential production increases and significantly reduced manufacturing costs since opening in mid-2008. In particular, we are especially pleased with the success of our Quad wafer production performance, which has met or exceeded our expectations to date. However, panel prices have fallen over 30% since mid-2008 making it very difficult for manufacturers located in high-cost regions to remain price competitive. Therefore, we are accelerating our strategic initiative of increasing the focus on our unique wafer manufacturing technology; and we will begin to transition our Devens-based panel assembly to China in mid-2010,” continued Feldt.
“Until we begin this transition, we expect to produce approximately 30 to 35 megawatts each quarter at our Devens facility. After the transition is complete, we will continue to produce wafers and cells at our Devens facility and may increase capacity if market demand warrants. If long-term demand for panels manufactured in the United States significantly increases, we will be well-positioned to quickly reintroduce panel assembly again at Devens,” Feldt concluded.
Third Quarter 2009 Financial Results
Revenues for the third quarter of 2009 were $77.7 million, including $2.2 million of fees from our Sovello joint venture, compared to $63.8 million for the second quarter of 2009, including $1.1 million of fees and $22.1 million for the third quarter of 2008, including $4.3 million of fees.
Gross margin for the third quarter of 2009 was 9.7%, compared to 1.9% for the second quarter of 2009 and 5.7% for the third quarter of 2008.
Operating loss for the third quarter was $6.0 million, compared to $11.5 million for the second quarter of 2009 and $22.1 million for the third quarter of 2008. Net loss for the third quarter of 2009 was $82.4 million compared to $20.3 million in the second quarter of 2009 and $24.6 million for the third quarter 2008. Net loss for the third quarter 2009 includes a charge of approximately $70 million reflecting the write-down of our investment in Sovello to its estimated fair value. In making the assessment, we considered Sovello’s cash position, projected cash flow, valuation data, the current investing environment, management changes and competition. If Sovello is not able to restructure the terms of its loan agreements or its operations continue to deteriorate, the carrying value of this investment could be further impaired in the future.
This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release.
Non-GAAP Financial Measures
This press release includes a discussion of EBITDA, which is a non-GAAP financial measure and is provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "EBITDA" refers to a financial measure that we define as operating loss plus depreciation and amortization of prepaid cost of inventory. This Non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, our definition of EBITDA may not be comparable to the definitions as reported by other companies. We believe adjusted EBITDA is relevant and useful information because it provides us and investors with an additional measurement to compare the Company’s operating performance. This measure is part of our internal management reporting and planning process and is a primary measure used by management to evaluate the operating performance of our business. The components of EBITDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance. EBITDA is also used for planning purposes and in presentations to financial institutions and our board of directors. Furthermore, we intend to provide this non-GAAP financial measure as part of our future earnings discussions and, therefore, the inclusion of this non-GAAP financial measure will provide consistency in our financial reporting.
Click here to view Q309 Financial Tables
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Companies | November 4, 2009