Evergreen Solar, Inc. announced that product revenues for the first quarter of 2006 increased 12 percent to $11.6 million from $10.3 million in the first quarter of 2005, and were flat compared to the $11.6 million reported for the fourth quarter of 2005. During the quarter, Evergreen completed the conversion of its manufacturing capacity in Marlboro to thin-wafer production, commenced the start-up production phase for EverQ making initial volume shipments of finished modules to customers this month.
Also during the first quarter, Renewable Energy Corp. (REC) accelerated its silicon deliveries to Evergreen. Under its supply contract, REC has committed to provide EverQ and Evergreen Solar with 190 and 60 metric tons, respectively, of solar grade silicon annually over the next seven years. This volume is sufficient for both the Marlboro factory and the initial 30 megawatts of production at EverQ's Thalheim factory.
"While reliance on chunk silicon, currently supplied by REC, required us to modify our supply chain and some of our manufacturing processes in the near-term, we continue to believe it will not affect our expected results for 2006 or hinder our expansion plans," said Richard M. Feldt, President and Chief Executive Officer.
"We also made great progress in research and development during the first quarter," Feldt continued. "Thanks to further advances in our manufacturing technology, our newest factory equipment in Marlboro is now routinely producing solar cells that achieve conversion efficiencies of 14 percent and higher. Our next-generation technology - the company's prototype Quad Ribbon platform - continues to generate encouraging results. To date we have received five advanced prototype Quad Ribbon furnaces. Two of these furnaces are now installed at our Marlboro factory, and three are in R&D."
Net loss attributable to common stockholders for the first quarter of 2006 was $8.1 million, or $0.13 per share. This figure includes approximately $2.6 million in Evergreen Solar's share of net losses associated with the production ramp-up at EverQ and compares with a net loss of $3.2 million, or $0.06 per share, for the first quarter of 2005 and a net loss of $5.0 million, or $0.08 per share, for the fourth quarter of 2005. Evergreen Solar recorded equity-based compensation expenses of approximately $1.2 million during the first quarter of 2006. First-quarter 2006 product gross margin was negative 12.5 percent, compared with positive 3.4 percent for the first quarter a year ago and positive 13.0 percent for the fourth quarter of 2005.
Evergreen Solar expects that accelerating to full production at EverQ and implementing its R&D initiatives in Marlboro will continue to affect gross margins throughout 2006. Gross margin at its Marlboro facility, including stock compensation expenses associated with the adoption of FAS123R, is expected to be in the 5 percent to 10 percent range in the second quarter, and then to increase to a range of 7 percent to 15 percent in the second half as the Company benefits from its thin-wafer conversion. Evergreen Solar now expects EverQ's gross margin to be in a range of negative 35 percent to approximately break-even in the second quarter, improve to a range of 12 percent to 25 percent in the third quarter and rise to a range of 30 percent to 35 percent by the fourth quarter.
