BURNABY,BC, Aug. 10 /PRNewswire-FirstCall/ -- Day4 Energy Inc. (TSX: DFE), a solar electric technology developer and manufacturer of superior performance solar modules, today reported operating results for the second quarter of 2009.
"I would characterize the second quarter of 2009 as mixed market conditions," said George Rubin, president of Day4 Energy. "Our quarterly results reflect the continued impacts of consumer confidence issues, tight market conditions and overall weak demand leading to further write-downs and continued negative gross margins. Over the course of the quarter we implemented a number of strategic actions to address the challenges of our new market realities including adopting more aggressive pricing strategies and obtaining trade credit insurance for transactions with our channel partners. In addition to working persistently on stimulating activity in our traditional sales channels, we have also spent some time exploring and developing opportunities to expand into new vertical markets. These steps resulted in an over 30% improvement in sequential quarterly sales. While it is too early to make definitive statements on the sustainability of the trend, we are encouraged by our monthly sales revenue on a rolling three months average basis that has improved from an overall decline of 4% from the period of January through May to an increase of 10% from May to June. Sales have continued to improve through July."
"We continue to focus our efforts on managing working capital and preserving cash and have worked cooperatively with our material suppliers to delay purchase commitments, reduce pricing to reflect current market conditions, extend payment terms and rescheduling shipments to match our demand requirements. Finally, in anticipation of completing our outsource strategy we have cut back further on production at our Burnaby facility and utilized the Federal Government work-share program to reduce our costs," he concluded.
Q2 2009 FINANCIAL RESULTS Worldwide Product Revenues
Second quarter revenues of $5.7 million increased by $1.4 million or 33% from the prior quarter revenues and decreased by $9.3 million for the same period in 2008. The increase in revenues compared to the prior quarter appears to be the result of slight recovery in demand in our primary markets. The decrease in revenue was primarily due to the impact of the global economic recession and financial crisis starting in the fourth quarter of 2008.
Gross Margins
The gross loss of $10.8 million for the second quarter compared to a loss of $0.5 million in the first quarter 2009 and a gross margin of $0.4 million in the same period in 2008. The higher gross loss during the quarter is mainly resulting from inventory write-down of $9.5 million and period costs relating to low capacity utilization of $2.4 million. Continued decreases in average selling price (ASP) during the quarter resulted from general weakness in the demand for PV and additional economic pressures to liquidate inventories.
Expenses
For the second quarter of 2009, general and administrative expenses were $2.0 million, a decrease of $1.0 million over the prior quarter expenses of $3.0 million and an increase $0.6 million for the same period in 2008. The decrease primarily related to a one-time start-up cost of Jabil in the first quarter 2009. Another contributor to the reduction in expense included management's continued efforts in cost reduction initiatives in response to the global economic slowdown.
Sales and marketing expenses of $1.0 million for the second quarter 2009 compared to $0.7 million and $1.3 million in the previous quarter and the same period in 2008 respectively. The increase in expenses when compared to the previous quarter primarily reflects seasonal tradeshow activity during the period.
R D expenses of $0.5 million were relatively consistent with the prior quarter and same period in 2008 reflecting our continued efforts to develop our PV technologies and opportunities provided by the Day4 Electrode.
Loss Per Share
The net loss for the second quarter 2009 was $14.1 million ($0.38) per share compared with $2.6 million ($0.07) per share for the prior quarter and $2.5 million ($0.07) per share for the same period in 2008. Higher net loss in the second quarter compared to the same period in 2008 was mainly attributed to the inventory write-down, and fixed overhead period cost due to low capacity utilization.
Cash and Short-Term Investments
At June 30, 2009, we had $21 million in cash and short term investments, including restricted cash of $0.4 million, down from total cash and short term investments of $22 million at March 31, 2009 and $26 million at December 31, 2008. Cash used by operations was $0.7 million for the second quarter 2009, compared to $ 10.5 million for the first quarter of 2009 and $7.6 million for the same period in 2008. The lower use of the cash in operating activities during the second quarter relative to the prior quarter and same period in 2008 was primarily due to decreases in non-cash working capital, particularly a decrease in accounts receivable due to the lower sales level and decrease in inventory as we reduce production and draw down inventory.
Detailed financial results and management's discussion and analysis can be found on our website at http://www.day4energy.com/ or on SEDAR at http://www.sedar.com/.
About Day4 Energy
Day4 Energy Inc. is Canada's largest manufacturer of high performance photovoltaic (PV) modules for residential, commercial and utility scale installations around the world. By fundamentally improving on the design and assembly of solar modules, Day4 Energy produces unique PV panels of high power density, increased lifetime and uncompromised aesthetic appearance. Day4 Energy partners with international technology leaders to develop and deliver IEC- and UL-certified solar products to customers throughout Europe and North America. Day4 Energy is listed on the Toronto Stock Exchange under the symbol "DFE". For more information, please visit http://www.day4energyenergy.com/.
Conference Call Information
Day4 Energy's management will conduct a conference call at 8:30am (ET) August 10, 2009 to review the company's first-quarter financial results. The call can be accessed by dialing 1-800-319-4610 (Canada and US) or 1-604-638-5340 (International) prior to the start of the call. Following the call a recording of the conference call will be archived on Day4 Energy's website, http://www.day4energy.com/
Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements include, among other things, statements relating to our expectations regarding our revenues, expenses, cash flows, operating performance and future profitability.
The forward-looking statements contained in this news release are based on assumptions, which include, but are not limited to, our successful implementation of outsource manufacturing with Jabil; our ability to obtain an adequate spread between our module average selling price and cost of raw materials, including PV cells; achieving increased PV cell and PV module efficiencies; expanding our existing product line; building the Day4 brand, attracting customers and developing and maintaining customer and supplier relationships; continuing our strong relationships with our suppliers; effectively managing foreign exchange risks; protecting our intellectual property rights and not infringing on the intellectual property rights of third parties; timely processing by certification agencies of new products; and complying with applicable governmental regulations and standards.
Such forward-looking statements are subject to risks, uncertainties and other factors, including those listed in our Annual Information Form filed with Canadian securities regulatory authorities, many of which are beyond our control and each of which contributes to the possibility that our forward-looking statements will not occur or that actual results, performance or achievements may differ materially from those expressed or implied by such statements. These risks, uncertainties and other factors include, but are not limited to, the impact of general economic, market or business conditions; risks related to the implementation of outsource manufacturing with Jabil; our limited operating history; risks relating to the protection of our intellectual property and intellectual property infringement claims by third parties; our dependence on a limited number of PV cell suppliers; government subsidies and economic incentives for PV power could be reduced or eliminated; our ability to achieve higher PV module efficiencies; our dependence on a limited number of customers and our lack of long-term purchase contracts; demand for PV modules; technological changes in the PV power industry could render our products uncompetitive or obsolete; unexpected warranty expenses; fluctuations in exchange rates; product liability claims; compliance with environmental regulations; and other factors, many of which are beyond our control.
The forward-looking statements made in this news release relate only to events or information as of the date indicated above. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Day4 Energy Inc. Consolidated Balance Sheets As at June 30, 2009 and December 31, 2008 ------------------------------------------------------------------------- June 30, December 31, 2009 2008 $ $ (unaudited) Assets Current assets Cash and cash equivalents 11,365,264 14,730,294 Restricted cash 416,485 11,085,230 Short-term investments 9,013,962 - Accounts receivable 725,333 3,320,849 Investment tax credits receivable 600,000 600,000 Other receivables 4,097,753 1,511,301 Inventory 30,928,404 35,018,558 Prepaid expenses 389,603 379,429 Equipment held for sale - 2,704,913 ------------ ------------ 57,536,804 69,350,574 Property, plant and equipment 24,186,523 28,254,320 ------------ ------------ 81,723,327 97,604,894 ------------ ------------ ------------ ------------ Liabilities Current liabilities Accounts payable and accrued liabilities 15,217,241 12,504,078 Taxes payable 830,000 830,000 Short-term debt 166,514 142,940 Deferred revenue - current 176,379 168,012 Derivative instruments - 2,157,218 ------------ ------------ 16,390,134 15,802,248 Long-term debt 1,143,521 1,143,521 ------------ ------------ 17,533,655 16,945,769 Non-controlling interest - 26,410 Shareholders' Equity Share capital Authorized Unlimited number of common shares Unlimited number of preferred shares Issued and outstanding 36,679,366 (2008 - 36,679,366) common shares 130,952,257 130,952,257 Contributed surplus 2,360,498 2,091,952 Warrants 2,279,890 2,279,890 Deficit (71,402,973) (54,691,384) ------------ ------------ 64,189,672 80,632,715 ------------ ------------ 81,723,327 97,604,894 ------------ ------------ ------------ ------------ Day4 Energy Inc. Consolidated Statements of Operations, Comprehensive Loss and Deficit For the three and six months ended June 30, 2009 and 2008 (unaudited) ------------------------------------------------------------------------- Three-months ended Six-months ended June 30, June 30, ------------------------- ------------------------- 2009 2008 2009 2008 $ $ $ $ Revenue Sales 5,729,904 15,038,078 10,074,449 28,532,464 Cost of goods sold 16,506,946 14,659,998 21,315,103 27,883,995 ------------------------- ------------------------- Gross (loss) margin (10,777,042) 378,080 (11,240,654) 648,469 ------------------------- ------------------------- Expenses General and administrative 1,980,493 1,386,540 4,985,194 2,545,244 Research and development 522,684 593,556 1,038,391 1,074,039 Less: Investment tax credits and Government assistance - (245,302) - (245,302) Selling and marketing 970,691 1,276,723 1,621,549 1,942,040 Depreciation 209,408 134,856 212,825 229,380 Amortization - 71,055 - 142,110 ------------------------- ------------------------- 3,683,276 3,217,428 7,857,959 5,687,511 ------------------------- ------------------------- Loss before undernoted 14,460,318 2,839,348 19,098,613 5,039,042 ------------------------- ------------------------- Foreign exchange gain (loss) 355,396 (263,687) 2,278,429 1,176,309 Unrealized gain (loss) on derivative instruments - 120,550 - (637,200) Interest and other income 48,783 584,881 114,504 1,416,748 Interest expense (24,517) - (55,649) - Gain on sale of property, plant and equipment - - 26,730 - Write-off of plant design costs - (18,980) - (18,980) Gain on disposition of subsidiary - - 24,677 - Accretion expense (6,656) (50,231) (12,990) (96,772) ------------------------- ------------------------- 373,006 372,533 2,375,701 1,840,105 ------------------------- ------------------------- Loss before non-controlling interest 14,087,312 2,466,815 16,722,911 3,198,937 Non-controlling interest - - (11,323) - ------------------------- ------------------------- Loss and comprehensive loss for the year 14,087,312 2,466,815 16,711,588 3,198,937 Deficit - Beginning of period 57,315,661 21,550,155 54,691,384 20,818,033 ------------------------- ------------------------- Deficit - End of period 71,402,973 24,016,970 71,402,973 24,016,970 ------------------------- ------------------------- ------------------------- ------------------------- Net loss per share - basic and diluted 0.38 0.07 0.46 0.09 ------------------------- ------------------------- ------------------------- ------------------------- Weighted average number of shares outstanding - basic and diluted 36,679,366 36,639,586 36,679,366 36,622,711 ------------------------- ------------------------- ------------------------- ------------------------- Day4 Energy Inc. Consolidated Statements of Cash Flows For the three and six months ended June 30, 2009 and 2008 (unaudited) ------------------------------------------------------------------------- Three-months ended Six-months ended June 30, June 30, 2009 2008 2009 2008 $ $ $ $ Cash flows from operating activities Loss and comprehensive loss for the year (14,087,312) (2,466,815) (16,711,589) (3,198,937) Items not affecting cash Stock-based compensation 118,913 202,547 268,546 421,598 Accretion and royalty premium on IRAP-TPC loan - 43,871 - 85,619 Depreciation and amortization 676,801 428,326 1,093,734 766,395 Gain on sale of property, plant and equipment - - (26,730) - Write-off of plant design costs - 18,980 - 18,980 Gain on disposal of subsidiary - - (24,677) - Unrealized foreign exchange (gain) loss 139,212 (184,990) 38,622 1,017,836 Change in value of derivative instruments - (120,550) (2,157,218) 637,200 Deferred lease inducement - (5,623) - (11,246) Non-controlling interest - - (11,323) - Changes in non-cash working capital items Accounts receivable 2,419,496 1,589,802 3,149,510 (9,895,076) Investment tax credits receivable - 159,006 - 159,006 Other receivables 846,165 (756,853) (2,600,414) 222,389 Inventory 11,504,374 (13,747,198) 4,090,154 (13,632,548) Prepaid expenses (4,638) (55,310) (10,174) 19,749 Accounts payable and accrued liabilities (2,309,702) 7,749,966 1,779,910 2,997,076 Deferred revenue 25,810 (494,294) 8,367 (78,788) ------------------------- ------------------------- (670,881) (7,639,135) (11,113,282) (20,470,747) ------------------------- ------------------------- Cash flows from investing activities Purchase of short-term investments (5,000,000) (8,000,000) (9,000,000) (8,000,000) Proceeds from sale of short-term investments - 6,000,000 - 16,000,000 Change in restricted cash 4,667,065 319,959 10,668,745 (10,878,159) Purchase of property, plant and equipment (920,745) (9,089,253) (2,507,932) (17,666,075) Proceeds from sale of property, plant and equipment - - 8,213,638 - Proceeds from sale of subsidiary - net of cash included in sale of 29,098 - - 9,590 - ------------------------- ------------------------- (1,253,680) (10,769,294) 7,384,041 (20,544,234) ------------------------- ------------------------- Cash flows from financing activities Proceeds from exercise of warrants - - - 492,498 Proceeds from exercise of stock options - 80,000 - 80,000 ------------------------- ------------------------- - 80,000 - 572,498 ------------------------- ------------------------- Impact of foreign exchange on cash and cash equivalents 334,884 (54,978) 364,211 284,690 ------------------------- ------------------------- Decrease in cash and cash equivalents (1,589,677) (18,383,407) (3,365,030) (40,157,793) Cash and cash equivalents - Beginning of period 12,954,941 31,318,750 14,730,294 53,093,136 ------------------------- ------------------------- Cash and cash equivalents - End of period 11,365,264 12,935,343 11,365,264 12,935,343 ------------------------- ------------------------- ------------------------- ------------------------- Supplemental cash flow information Cash paid for interest 1,185 121 2,968 121 Cash received for interest 3,105 565,537 18,463 1,376,058
Day4 Energy Inc.
CONTACT: Therese Hayes, Head, Corporate Development, Day4 Energy Inc.,
(604) 296-0434, thayes@day4energy.com; Agnieszka Pozniak, Media Contact, Day4
Energy Inc., (604) 297-0444, media@day4energy.com
