Energy Conversion Devices (ECD Ovonics) Announces Third Quarter Fiscal 2006 Operating Results
* United Solar Ovonic posts record results for quarter: -- operating profit of $2.6 million, marking five consecutive quarters of increasing gross profit margins -- product sales increased 69% to $21 million compared to last year -- produced above the 25MW annual capacity of its manufacturing plant * ECD Ovonics' Board of Directors approved a plan to expand United Solar Ovonic's annual manufacturing capacity to 300MW in calendar year 2010; the second 25MW plant is on schedule to be launched in the fall of 2006; the next phase of the plan is the construction of a 50MW annual capacity manufacturing facility in Greenville, Michigan, to be operational in calendar year 2007 * ECD Ovonics successfully completed an equity offering with total gross proceeds to ECD Ovonics of approximately $376 million, principally to fund United Solar Ovonic's capacity expansion * Cobasys selected to supply advanced NiMHax 36-volt Ovonic nickel metal hydride battery systems for GM's 2007 Saturn VUE Green Line SUV expected to be available to consumers in the summer of 2006 * Ovonic Hydrogen Systems LLC showcased a high-tech hydrogen-powered hybrid vehicle using its proprietary solid metal hydrogen storage technology at the recent Society of Automotive Engineers World Congress in Detroit, Michigan
ROCHESTER HILLS, Mich., May 9 -- Energy Conversion Devices, Inc. (ECD Ovonics) announced today its operating results for the third quarter ended March 31, 2006. Net loss for the third quarter was $5.6 million on revenues of $27.0 million compared to net loss of $11.2 million on revenues of $17.9 million for the same quarter last year.
"The third quarter was extremely exciting for us and confirmed our strategy to rapidly expand United Solar Ovonic's manufacturing capacity. Successful completion of our equity offering and the strong performance at United Solar Ovonic indicate that we are on the right track to growth and profitability. With the continued success of our Uni-Solar products, we were honored to have President Bush visit United Solar Ovonic to highlight his energy initiative," commented Robert C. Stempel, Chairman and CEO of ECD Ovonics.
"The new reality of higher oil prices continues to bring increased attention and a sense of urgency to the alternative energy sector where ECD Ovonics has been a major international player," said Stanford R. Ovshinsky, President, Chief Scientist and Technologist of ECD Ovonics. "This has translated into record sales at United Solar Ovonic and the award of a contract to Cobasys by General Motors' Saturn VUE for Cobasys' advanced Ovonic NiMH battery solutions."
The table below summarizes the Company's operating results (in thousands):
Three Months Ended Nine Months Ended
March 31, March 31,
2006 2005 2006 2005
(in thousands, except per-share amounts)
Revenues
Product Sales $21,401 $13,450 $62,349 $36,317
Royalties 1,704 670 3,218 3,746
Revenue from Product
Development Agreements 3,267 3,362 7,448 14,690
Revenue from License and
Other Agreements 288 238 784 80,246
Other 297 176 691 662
Total Revenue 26,957 17,896 74,490 135,661
Expenses 34,411 29,182 95,790 85,045
Income (Loss) from Operations (7,454) (11,286) (21,300) 50,616
Other Income (Expense)
Interest Income 1,933 409 3,530 595
Interest Expense - (70) (197) (541)
Equity Loss in Joint Ventures (105) - (150) (100)
Distribution from Joint Venture - - - 8,000
Impairment Loss in Rare Earth
Ovonic - China - - - (1,710)
Other Nonoperating Income
(Expense) - (196) (24) 77
Total Other Income (Expense) 1,828 143 3,159 6,321
Net Income (Loss) from Continuing
Operations Before Income Taxes
and Extraordinary Item (5,626) (11,143) (18,141) 56,937
Income Taxes (Benefit) - (198) - 827
Net Income (Loss) from Continuing
Operations Before Extraordinary
Item (5,626) (10,945) (18,141) 56,110
DISCONTINUED OPERATIONS (including
gain on disposition of
discontinued operations of
$739,602 in the nine months ended
March 31, 2006) - (305) 314 (1,141)
Extraordinary Item (Net of Taxes) - - - 2,266
Net Income (Loss) $(5,626) $(11,250) $(17,827) $57,235
Basic Net Income (Loss) Per Share
Continuing Operations $(.17) $(.38) $(.60) $2.12
Discontinued Operations - (.01) .01 (.04)
Extraordinary Item - - - .08
Basic Net Income (Loss) Per Share $(.17) $(.39) $(.59) $2.16
Diluted Net Income (Loss) Per Share
Continuing Operations $(.17) $(.38) $(.60) $2.04
Discontinued Operations - (.01) .01 (.04)
Extraordinary Item - - - .08
Diluted Net Income (Loss) Per
Share $(.17) $(.39) $(.59) $2.08
The Company's net loss decreased by $5.6 million as revenues grew by $9.1 million in the three months ended March 31, 2006 compared to the three months ended March 31, 2005.
The major change in operating income (loss) resulted from United Solar Ovonic's product sales increasing 69% to $21,075,000 for 2006 compared to $12,495,000 for 2005. United Solar Ovonic's gross profit increased to $4,991,000 (23.7%) for 2006 compared to a gross profit of $1,282,000 (10.3%) for 2005.
The Company had a net loss of $17,827,000 in the nine months ended March 31, 2006, compared to a net loss of $22,297,000 in the nine months ended March 31, 2005 (excluding a one-time non-cash license fee of $79,532,000 in connection with an expanded license granted to its Cobasys joint venture). Excluding this one-time, non-cash license fee, the net loss of $17,827,000 in the nine months ended March 31, 2006 decreased by $4,470,000. The Company reported a net income of $57,235,000 for the nine months ended March 31, 2005, which included this one-time, non-cash license fee of $79,532,000.
In addition to the aforementioned one-time, non-cash license fee of $79,532,000, other major changes in operating income (loss) were as follows:
* United Solar Ovonic's product sales increased 64% to $60,118,000 for 2006 compared to $36,707,000 for 2005. United Solar Ovonic's gross profit increased to $12,983,000 for 2006 compared to a gross profit of $1,670,000 for 2005.
* Overall spending for product development and research decreased by $1,713,000 as a result of our restructuring program; however, funding decreased by $7,242,000 resulting in an increase of $5,530,000 in the net cost of product development.
For the nine months ended March 31, 2006, the Company had a gain from discontinued operations of $314,000, and for the nine months ended March 31, 2005, the loss from discontinued operations was $1,141,000.
Other major factors that impacted the change in net income (loss) compared to the nine months ended March 31, 2005 were:
* Interest income increased by $1,524,000 for the quarter and $2,935,000 year to date due to higher interest rates and a significant increase in cash and short-term investments.
* $2,266,000 extraordinary gain in 2005 due to payment received from Chevron in excess of restructuring costs.
* $8,000,000 income in 2005 resulting from a distribution from our joint venture Cobasys related to a partial reimbursement of legal fees related to the MEI settlement.
* $1,710,000 impairment loss in 2005 for Rare-Earth Ovonic joint ventures in China.
Conference Call Information
Additional information about the Company and its consolidated financial results can be found in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 which will be filed with the Securities and Exchange Commission on May 10, 2006 and will be available on the Company's website.
About ECD Ovonics
ECD Ovonics is the leader in the synthesis of new materials and the development of advanced production technology and innovative products. It has invented, pioneered and developed its proprietary, enabling technologies in the fields of energy and information leading to new products and production processes based on amorphous, disordered and related materials. The Company's portfolio of alternative energy solutions includes Ovonic thin-film amorphous solar cells, modules, panels and systems for generating solar electric power; Ovonic NiMH batteries; Ovonic hydride storage materials capable of storing hydrogen in the solid state for use as a feedstock for fuel cells or internal combustion engines or as an enhancement or replacement for any type of hydrocarbon fuel; and Ovonic fuel cell technology. ECD Ovonics' proprietary advanced information technologies include Ovonic phase-change electrical memory, Ovonic phase-change optical memory and the Ovonic Threshold Switch. ECD Ovonics designs and builds manufacturing machinery that incorporates its proprietary production processes, maintains ongoing research and development programs to continually improve its products and develops new applications for its technologies. ECD Ovonics holds the basic patents in its fields.