Evergreen Solar Announces Second-Quarter 2006 Results
Evergreen Solar, Inc. announced financial results for the quarter ended July 1, 2006. Product revenues increased 106% to $22.0 million from $10.7 million in the second quarter of 2005, with EverQ production output contributing approximately $10.7 million of the total revenue. In addition to the positive results for the second quarter, Evergreen Solar signed the largest sales agreement in its history in early July. The five-year, approximately $200 million deal with SunEdison, LLC is Evergreen Solar's fifth major contract secured since November 2005.
"Evergreen Solar continues to move forward on its vision - to rapidly advance photovoltaic technology and ultimately achieve economic parity with retail electricity," said Richard M. Feldt, President and Chief Executive Officer. "Our polysilicon supply chain is stronger than ever before and the production ramp at EverQ is on track. In addition, Evergreen Solar's R&D initiatives are progressing well. Our Marlboro factory is running 100% on thin wafer, setting the stage to begin conversion of EverQ's factory to thin wafer during the third quarter. Our Quad Ribbon platform - Evergreen Solar's next-generation technology - has successfully grown thousands of String Ribbon wafers in pilot production. Solar product demand continues to strengthen, and our deal with SunEdison, LLC raised the total value of Evergreen Solar's current sales contracts to more than $600 million over the next five years."
Net loss attributable to common stockholders for the second quarter of 2006 was $7.5 million, or $0.11 per share. This figure includes approximately $1.7 million of Evergreen Solar's share of net losses associated with the production ramp-up at EverQ and compares with a net loss of $4.5 million, or $0.07 per share, for the second quarter of 2005 and a net loss of $8.1 million, or $0.13 per share, for the first quarter of 2006. Evergreen Solar recorded equity-based compensation expenses of approximately $1.8 million during the second quarter of 2006.
Second-quarter 2006 product gross margin was positive 4.1%, compared with positive 6.2% for the second quarter a year ago and negative 12.5% for the first quarter of 2006. The expected year-over-year decrease in product gross margin primarily resulted from negative gross margin recorded by EverQ associated with incremental manufacturing start-up costs; incremental costs associated with completing the conversion to thin-wafer production in Marlboro; and increased stock-based compensation expense related to Evergreen Solar's equity compensation plans incurred as a result of the adoption of new financial reporting standards. The 16.6 percentage point improvement in gross margin from the first quarter of 2006 was largely the result of the incremental $10.7 million of revenue generated from product manufactured by EverQ.
In conjunction with the binding memorandum of understanding for EverQ, enabling EverQ to expand its capacity from 30MW in 2006 to approximately 300mW in late 2009 or early 2010, Q-Cells and REC will become equal partners with Evergreen Solar in EverQ. As a result, all three partners will share equally in the net income generated by the joint venture. In addition, Evergreen Solar anticipates receiving royalty payments from the company's thin ribbon technology, which it expects to license to EverQ. Evergreen Solar expects to account for its share of EverQ's financial results under the equity method of accounting subsequent to the execution of the definitive agreements for the EverQ expansion, expected during the third quarter.