Continued Strong Execution at Devens and China Expansion Remains on Track
MARLBORO, Mass., Feb 08, 2010 (BUSINESS WIRE) -- Evergreen Solar, Inc. (NasdaqGM: ESLR), a manufacturer of String Ribbon(TM) solar power products with its proprietary, low-cost silicon wafer technology, today announced financial results for the fourth quarter ended December 31, 2009.
Key accomplishments during the quarter were:
* Shipped 31.9 MW from our Devens facility at an average selling price of $2.32 per watt;
* Improved product gross margins to 11.9% from 7.1% for the third quarter of 2009;
* Reduced total manufacturing cost to $2.05 per watt, down 8.5% from $2.24 per watt for the third quarter of 2009;
* Reduced wafer manufacturing cost to approximately $0.69 per watt from $0.75 per watt in the third quarter of 2009;
* Generated $16.9 million of cash from operations, up from $11.2 million in the third quarter.
"Over two years ago, we established a cost target for our Devens facility of about two dollars per watt. We are pleased to have effectively achieved this cost target during the fourth quarter," stated Richard M. Feldt, Chairman, CEO and President. "Our proven track record of manufacturing excellence is even more critical as we will relentlessly pursue additional operational efficiencies, further reduce our silicon and other materials costs and make progress on our technology roadmap to further reduce our costs at Devens to about $1.50 per watt in 2011 as we transition panel assembly to China."
"Our China expansion remains on track," added Mr. Feldt. "We have a strong Chinese management team and we are hiring experienced engineers and other support staff needed for the initial 100 megawatt facility. Equipment has been ordered, and we should be in a good position to ship our first product by this summer."
"Demand for our product was robust throughout the fourth quarter of 2009, a trend which has continued so far in the first quarter of 2010. While incentive program modifications in Europe have resulted in some near-term uncertainty with respect to demand and selling prices, we remain focused on what we can directly control, namely continued operational improvements at Devens and our expansion in China, where we believe we will produce wafers at about $0.30 per watt and panels for about $1.00 per watt by 2012 through our relationship with Jiawei Solar," concluded Feldt.
Fourth Quarter 2009 Financial Results
Revenues for the fourth quarter of 2009 were $74.5 million, compared to $77.7 million (inclusive of $2.2 million of fees from Sovello) for the third quarter of 2009.
Gross margin in the fourth quarter of 2009 was 11.9%, up from 9.7% in the third quarter of 2009. Product gross margin, which excludes fees from Sovello, was 11.9% in the fourth quarter of 2009 compared to 7.1% for the third quarter of 2009.
Operating loss for the fourth quarter was $21.1 million, compared to $6.0 million for the third quarter of 2009. The increase in operating loss was due mainly to non-cash charges of approximately $14.6 million associated with the acceleration of depreciation and other equipment write-offs relating to the planned transition of panel assembly at our Devens facility to our China facility, where we expect to recoup these charges through incremental cost savings.
Net loss for the fourth quarter of 2009 was $98.1 million compared to $82.4 million in the third quarter of 2009. Net loss includes $13.5 million of equity loss in the fourth quarter and $9.7 million in the third quarter from our share of Sovello's losses. Net loss also includes approximately $56.1 million and $61.9 million (net of income tax benefits of $7.8 million) of impairment charges associated with our investment in Sovello for the fourth and third quarters of 2009, respectively.
As previously disclosed, Sovello has been in default under its bank loan agreement since the end of 2008. Throughout 2009, Sovello operated under waivers from its bank syndicate of certain loan covenant violations. On January 28, 2010, Sovello's bank syndicate terminated their loan agreement but has not yet demanded repayment of the outstanding loan. Further, in light of a recent European Commission decision, Sovello may be required to return a portion of the grants it received from the German government. If these matters are not satisfactorily resolved, Sovello may need to declare insolvency which could result in further financial obligations for us. As such, we have recorded a non-cash charge of approximately $40.9 million, reflecting the write-off of our remaining investment in Sovello. Additionally, we recorded charges of approximately $8.1 million for payments under our guarantee (that was paid on February 8, 2010) and $7.3 million for estimated payments relating to undertakings with Sovello's bank and for other expected costs.
Conference Call Information
Management will conduct a conference call at 8:30 a.m. (ET) tomorrow (February 9, 2010) to review the Company's fourth quarter financial results and highlights. The call will be webcast live over the Internet and can be accessed by logging on to the "Investors" section of Evergreen Solar's website, www.evergreensolar.com prior to the event.
The call also can be accessed by dialing 877-704-5378 or 913-312-1294 (International) prior to the start of the call and refer to confirmation code 5233604.
For those unable to join the live conference call, a webcast replay will be available from 11:00 a.m. (ET) on February 9 through 8:00 p.m. (ET) on February 19. To access the webcast replay, logon to the "Investors" section of Evergreen Solar's website, www.evergreensolar.com.
About Evergreen Solar, Inc.
Evergreen Solar, Inc. develops, manufactures and markets String Ribbon(TM) solar power products using its proprietary, low-cost silicon wafer technology. The Company's patented wafer manufacturing technology uses significantly less polysilicon than conventional processes. Evergreen Solar's products provide reliable and environmentally clean electric power for residential and commercial applications globally. For more information about the Company, please visit www.evergreensolar.com. Evergreen Solar(R) and String Ribbon(TM) are trademarks of Evergreen Solar, Inc.
Safe Harbor Statement
This press release contains forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These statements are based on management's current expectations or beliefs. Such forward-looking statements include, but are not limited to, those related to expectations regarding: our ability to improve operational efficiencies, further reduce our silicon and other materials costs and make progress on our technology roadmap; our ability to reduce our wafer manufacturing costs; hiring, operations and costs for our China expansion; potential cost savings from the transition of our panel operation to China; our ability generally to manufacture and sell our products; and the potential insolvency of Sovello and the resulting costs to Evergreen Solar. These statements are neither promises nor guarantees, and involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements, including: risks associated with the our ability to lower manufacturing costs and otherwise successfully manufacture and sell our products; uncertainties related to government regulations, subsidies and incentives; risks from various economic factors such as credit market conditions, fluctuations in currency exchange rates; uncertainties related to the German insolvency process and other risks and uncertainties identified in our periodic filings made with the Securities and Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements for any reason.