Solar EnerTech Corp.: Third Quarter Financial Results
Fiscal 3Q09 Module Shipments Increased 39% Compared to 3Q08
3Q09 Gross Margin Turned Positive 5% Compared to Flat in 3Q08
MOUNTAIN VIEW, Calif., Aug. 14 / Solar EnerTech Corp. (the "Company") today announced financial results for the fiscal third quarter ended June 30, 2009.
In the 2009 third quarter, total module shipments increased 39% compared to the third quarter of the prior year period. Revenue decreased 1% to $10.1 million compared to $10.3 million in the third quarter of the prior year period. Revenue for the third quarter was comprised of approximately $6.6 million in solar modules sales, of which more than 95% were sold to Europe and Australia and $3.5 million in solar cell sales.
Third quarter 2009 gross profit increased to $486,000 compared to $37,000 in the third quarter in the prior year period as well as increased sequentially from a gross loss of $1.3 million for the 2009 second quarter. Third quarter 2009 gross margin was 5% of total sales compared to 0% of total sales in the prior year period. The improvement in gross margin was a result of recent cost restructuring and management focus on procurement.
Total operating expense for the fiscal 2009 third quarter was $3.1 million, or 30% of total net sales, which included a $1.5 million non-cash stock compensation charge related to the retention of the management team and a $36,000 non-cash charge for loss on debt extinguishment. Excluding these
non-cash items, the operating expense for the quarter was $1.6 million, or 16% of total net sales. This compares to total operating expense for the fiscal 2008 third quarter of $3.3 million, or 32% of total net sales.
Net loss for the third quarter of fiscal 2009 was $6.8 million, or ($0.08) per basic and diluted share, compared to a net loss of $3.5 million, or ($0.03) per basic and diluted share in the same period in fiscal 2008. In the third quarter of fiscal 2009, the Company recorded a non-cash loss totaling $3.4 million associated with a change in the fair market value of compound embedded derivative liability and a change in the fair market value of warrant liability compared to a total non-cash gain of $0.1 million for these two same items in the third quarter of fiscal 2008. Excluding non-cash items, on a
non-GAAP basis, the third quarter 2009 net loss was $3.4 million compared to a net loss of $3.6 million in the prior year period. Both the compound embedded derivative and warrant liabilities were recorded in conjunction with the convertible notes transaction entered into by the Company in March 2007.
Mr. Leo Young, Chief Executive Officer of Solar EnerTech commented, "Our recently completed third quarter marks a turning point for Solar EnerTech. We are seeing steady demand for our products in the regions in which we operate as evidenced by the 39% module shipment increase compared to the prior year period. We were also quite pleased to see a monthly improvement to our gross margin that turned positive in the third quarter. Further, our overall performance would have improved even more had we not endured a $3.4 million non-cash accounting charge. We believe the third quarter marks an inflection point in our business with improved operational and financial results from steady customer orders, improved sourcing, a reduction in non-essential expenditures, and leaner production schedule, all of which improves our competitive position as order demand for solar modules accelerates. We expect to see continued module volume and gross margin improvement for the remainder of our calendar year.
"While we have experienced volatile market conditions for the last several months, our focus on product quality coupled with our efforts in sales and support services has provided satisfaction among our major customers in Europe and Australia. To meet the increasing demand for higher output modules from existing and new customers, our R&D and technical teams are acutely focused on producing higher-efficiency cells to generate increased product demand.
"Although we are encouraged with our improved results, we still have a lot of room for improvement. For the remainder of the calendar year, our focus will be on improving our productivity, maximizing our financial performance and profitability, and enhancing the conversion rate of our solar cells. Additionally, we continue to support our new Joint Venture company,
Shunda-SolarE Technologies, Inc., in the U.S. with its efforts to develop a strong base of customers and build up its local supply chain and support team. We believe the quality of our products and the strong customized support that we provide to our customers differentiates Solar EnerTech from many of the other key players in the worldwide PV industry. We look forward to further increasing the awareness of our solar products and expanding our presence in the market."
As of June 30, 2009, the Company had $3.3 million in cash, $6.4 million of accounts receivables, $0.9 million of prepayment primarily for purchase of raw materials and $4.6 million of inventories on hand. Additionally, as of June 30, 2009, the Company had $10.4 million of accounts payable, customer advance payment and accrued liabilities, $5.6 million of accrued liability due to related party, $0.6 million of derivative liabilities, $4.8 million of warrant liabilities and $11.6 million in principal of convertible notes due March 2010 outstanding, which are recorded at carrying value at $1.4 million.
About Solar EnerTech Corp.
Solar EnerTech is a photovoltaic solar energy cell manufacturing enterprise incorporated in the United States with its corporate office in Mountain View, California. The Company has established a sophisticated 63,000 square foot manufacturing plant located in China, in Shanghai's Jinqiao Modern Technology Park. Currently, the Company is capable of producing 50MW of solar cells from its existing production lines.
Solar EnerTech has also established a Joint R&D Lab at Shanghai University to develop higher efficiency cells and to put the results of that research to use in its manufacturing processes. Led by one of the industry's top scientists, the Company expects its R&D program to help bring Solar EnerTech to the forefront of advanced solar technology research and production.
SOURCE Solar EnerTech Corp.
/CONTACT: Bill Zima of ICR Inc. at +1-203-682-8200 (Investor Relations), for Solar EnerTech Corp./