ECD Reports 3Q 2011 Results, Launches Strategic Corporate Restructuring

Energy Conversion Devices, Inc. (ECD) reported financial results for its third fiscal quarter of 2011 ended March 31, 2011, and said it will implement a strategic corporate restructuring to better position and focus the company for success in the rapidly evolving solar industry.

Total consolidated revenue for the quarter was $21.5 million, a decrease of 70% over the third fiscal quarter of 2010, and a decrease of 69% over the previous quarter, due primarily to significant industry-wide disruptions in the company’s key European solar markets. The company reported a net loss of $243.2 million, or $4.88 per share, which included non-cash impairment charges of $222.8 million, or $4.47 per share, compared to a net loss of $385.0 million, or $9.10 per share, in the third fiscal quarter of 2010, which included a non-cash impairment charge of $358.0 million, or $8.46 per share.

As of March 31, 2011, the company had $172 million of cash, cash-equivalents, restricted cash and short-term investments.

The company said it is implementing a strategic corporate restructuring that will include a reduction in its workforce of approximately 300 employees, or 20% of the company’s current associates worldwide. In addition, the Board of Directors appointed Jay Knoll as interim president, replacing former president and CEO Mark Morelli, who has resigned. Knoll formerly served as EVP, general counsel and chief administrative officer.

In addition, Ted F. Amyuni, EVP, global sales; William C. “Kriss” Andrews, EVP and CFO; Joseph P. Conroy, EVO, operations; and Dr. Subhendu Guha, EVP, photovoltaic technology and chairman, United Solar Ovonic, will continue in their current roles and work with Knoll as members of the senior leadership team. The Board has also initiated a search for a permanent CEO.

“These actions will enable ECD to better meet the needs of the dynamic global solar market and will strengthen our ability to respond to this changed industry environment,” said Stephen Rabinowitz, chairman of the ECD Board of Directors. “Our Board is confident that Jay Knoll and the other members of the senior management team, who have extensive experience in our business and industry, executive management and corporate restructuring, will provide strong leadership as we search for a permanent chief executive to lead the organization.”

Rabinowitz continued, “We firmly believe that the restructuring, the continuing implementation of our technology roadmap and our strong cash balance position the company for success as a leader in flexible thin-film PV technology and its applications.”

As part of its restructuring, ECD will focus on its growing North American business, concentrate on its two-step distribution model with existing and new channel partners and pursue opportunities in fast-growing emerging markets. At the same time, the company will maintain its commitment to key European markets as they stabilize. The company will continue to focus on the commercialization of its next-generation technologies, including its High Frequency and Nano-Crystalline technologies to improve conversion efficiency and lower costs. ECD’s technology roadmap is designed to enable the company’s flexible solar products to compete more effectively with standard grid electricity, particularly on rooftop applications.

“Industry-wide disruptions in key European markets impacted our business in the quarter as many of our projects and orders were postponed,” said Knoll. “The abrupt shifts in European solar policies are having a profound impact on the outlook for the global solar industry and our business. Our restructuring actions are designed to align our business with these new realities in the solar industry. However, we remain confident in the growing adoption of solar technology.

“Besides our continuing opportunities in Europe, we anticipate future growth in solar demand will occur more rapidly in regions such as North America, where we have already gained meaningful traction with our unique solar products in large projects,” Knoll added. “ We are also expanding our network of channel partners in the Americas through our Business Alliance Program and we are opening a manufacturing facility in Southern Ontario that will allow projects with our products to qualify for that region’s excellent solar incentive program. Our joint venture in Tianjin, China is starting to see shipment growth and we continue to win orders in emerging markets in the Middle East and Asia. Our new Open Solar initiative will seek to find new applications for our unique products and we are optimistic that it can drive future volume for our business.

“The cornerstone of our refocused strategy is the execution of our technology roadmap. Our High Frequency product will be available later this year, and we have already started retrofitting equipment with our next-generation Nano-Crystalline technology at our Greenville campus. We are confident we are taking the right steps toward sustainable growth and profitability,” Knoll concluded.