Evergreen Solar, Inc. (Nasdaq: ESLR) made four major announcements today: a major polysilicon supply agreement, the construction of a new facility, an alliance with a utility partner to expand its solar reach, and its financial results for the first quarter of 2007.
ESLR has signed a polysilicon supply agreement with DC Chemical Co., Ltd. that guarantees Evergreen enough silicon for 1 GW of PV modules through 2014. Shipments will begin in late 2008 and continue through 2014.
DC Chemical agreed to purchase 3 million shares of Evergreen Solar common stock for $12.07 per share. Evergreen agreed to issue 4.5 million shares of restricted common stock and 625 shares of restricted preferred stock to DC Chemical. The transaction is expected to close within a week.
“The investment of both our polysilicon manufacturing capacity and our financial resources indicates that we believe in Evergreen Solar’s technology, industry vision and management team,” said Hyunwoo Shin, Executive Vice Chairman of DC Chemical. “We hope that with our ongoing support as both a key supplier and a major shareholder that Evergreen Solar will be able to realize the significant market penetration and financial potential of its wafer technology.”
Evergreen also announced it will significantly expand manufacturing operations with a new facility to be located on the campus of the Massachusetts Technology Collaborative.
The Company’s Board of Directors approved the construction of a $150 million facility which would increase capacity in Massachusetts by 70 MW and double its employee base in the state to more than 600 employees. “Over the last three years, we have shown that our string ribbon technology is scalable as we have increased annual sales fourfold to approximately $100 million in 2006 through our joint venture in Europe,” said Richard M. Feldt, Chairman, President and CEO. “Our new plant in Massachusetts is a natural evolution of this market penetration as we focus on the significant opportunities in the United States.”
The Commonwealth of Massachusetts support program is expected to include up to $23 million in grants, up to $17.5 million in low-interest loans and a low-cost, 30-year lease of MTC land. Construction is planned to begin in early fall 2007 with completion expected in late 2008.
In a third announcement, Evergreen and NSTAR (NYSE: NST), a Boston-based electric and gas utility, have created an alliance to increase the role of solar power in Eastern Massachusetts.
“This relationship with a utility can dramatically improve solar market delivery and significantly accelerate closing the gap between solar and conventional energy costs,” said Richard Feldt, Evergreen Solar CEO. “NSTAR has ideal infrastructure to reduce the non-hardware portion of solar system costs.”
“This program with Evergreen Solar will expand renewable energy choices for our customers by making solar installations more accessible and affordable,” said Thomas J. May, NSTAR Chairman, President and CEO.
NSTAR can positively influence the cost of solar installations and service by promoting standardized systems installed by pre-approved solar contractors. NSTAR will also bring significant value to related efforts such as market research, marketing and promotion, lead development, sales support, and standardized system development. Customer follow-up, evaluation, and service will also be provided by NSTAR and its contractors.
The alliance will benefit from today’s announcement by Massachusetts Governor Deval Patrick of an innovative and expanded solar incentive program for the state – a goal of advancing solar power generating capacity – from roughly 2 MW today to 250 MW by the end of 2017 – by strategic use of renewable energy funds and additional regulatory incentives for solar power adoption by residential, commercial, and industrial customers.
Evergreen also reported financial results for the quarter ended March 31, 2007
Total sales were $40.2 million with a 20% gross margin. Net loss was $6.2 million, or $0.09 per share compared to $8.1 million, or $0.13 per share, in Q106.
Said Richard Feldt, CEO, “At the end of the quarter, we finalized a $300 million contract extension with one of our major customers, bringing total long-term contracts and backlog to more than $1 billion.”
“The EverQ-2 factory is on track for beginning production in the second quarter,” said Feldt. “In addition, we continue to make substantial progress with our developmental Quad Ribbon furnace. During the quarter, yield on our Quad test furnaces consistently equaled our dual ribbon production standard. With advanced software and laser cut on the fly techniques, we see substantial opportunity to significantly increase yield, and hope to make Quad the manufacturing standard for new factory locations opening in 2008 and beyond.”
Guidance for Second Quarter 2007
Product revenue from Evergreen Solar’s Marlboro facility for the second quarter of 2007 is expected to be approximately $12.5 million to $13.5 million, compared to the $12.6 million in the first quarter of 2007. Other revenue is expected to be approximately $1.5 million to $1.75 million, consisting of fees from EverQ for the marketing and sale of EverQ modules by Evergreen Solar and royalty payments for Evergreen Solar’s technology contribution to EverQ.
Gross margin is expected to be in the range of 22.0% to 24.0%. Operating expenses are expected to be in the range of $10.25 million to $10.75 million, including research and development costs of $5.25 million to $5.5 million and factory start-up costs of approximately $500,000 relating to Evergreen Solar’s announced expansion initiative.
Operating loss is expected to be in the range of $7.0 million to $7.25 million, and net loss is expected to be in the range of $8.0 million to $8.25 million, or $0.10 per share, including approximately $1.25 million for Evergreen Solar’s share of EverQ’s expected quarterly loss as it continues to incur start-up costs associated with the EverQ-2 factory. The Company anticipates that the EverQ-2 factory will commence product shipments during the second quarter of 2007 and reach full manufacturing capacity by the end of 2007.
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