Satcon® Provides Preliminary Second Quarter 2011 Financial Results
July 05 2011 - 8:00AM
Business Wire
Satcon Technology Corporation® (NASDAQ CM:SATC), a leading
provider of utility scale power conversion solutions for the
renewable energy market, today announced preliminary unaudited
results for revenue and gross margin for its second quarter ended
June 30, 2011.
Based on preliminary financial data and subject to the final
closing of the company’s financial statements, Satcon expects
second-quarter 2011 revenue will be between $45 million and $47
million, compared with its previously announced guidance of $50
million to $60 million. The narrowed revenue range reflects the
continued impact of changes in government incentives in the
company’s higher margin markets in Europe as well as delays on a
few projects that have been pushed into the third quarter.
The company also revised its gross margin estimate for the
quarter, which is now expected to be between 7% and 11%, below the
company’s previously announced guidance of 17% to 20%. Q2 gross
margin was affected by the lower revenue range, and the effects of
the slowdown in the European market. Additionally, the company
incurred one-time expenses relating to the revaluation of material
due to lower component costs, an excess inventory provision, and a
non-recurring expense associated with a major project in North
America. This project, along with an increase in accounts
receivable reserves, will also impact the company’s Q2 operating
expenses.
“We anticipated Q2 to be a transitional quarter and have taken
on the appropriate measures to ensure that we achieve
profitability,” said Steve Rhoades, Satcon’s President and Chief
Executive Officer. “Despite the challenges in the quarter, Satcon
attained important milestones on our path to long term margin
expansion and profitability. We successfully introduced several new
products, further strengthening our continued leadership position
in the global utility scale inverter markets. In addition, our
achievements in both the supply chain and product engineering
continue to lower our cost structure and position us to expand
margins in the third and fourth quarters of this year.”
Global Restructuring Initiative
To further support its margin expansion efforts, the company
announced today that it conducted a global restructuring of its
workforce that resulted in a 15% reduction in staff. This is
expected to provide the company with compensation-related cash
savings of approximately $5.0 million per year, beginning in Q3 of
2011. The company expects to record a pre-tax charge of
approximately $1.0 million in Q2 related to this initiative.
Debt Financing
The company also announced that it entered into a securities
purchase agreement with an institutional investor whereby it raised
$16 million in gross proceeds through the issuance of subordinated
convertible notes (“the notes”) maturing July 1, 2013.
The company received net proceeds of approximately $15 million
from the financing, to be used for general corporate purposes.
Lazard Capital Markets LLC acted as sole placement agent.
The material terms of the notes are described in more detail in
the company’s current report on Form 8-K which will be filed today
with the Securities and Exchange Commission.
The securities were issued in a private placement under
Regulation D of the Securities Act of 1933, as amended (the “Act”),
and have not been registered under the Act, or state securities
laws, and may not be offered or sold in the United States absent
registration with the Securities and Exchange Commission or an
applicable exemption from registration requirements. This press
release is not an offer to sell or the solicitation of an offer to
buy any securities, nor shall it constitute an offer, solicitation,
or sale in any jurisdiction in which such offer, solicitation or
sale is unlawful.
“The commitment to reaching our growth and margin targets this
year led us to adjust our cost structure as an organization while
carefully ensuring no negative impact to our customers or critical
product development programs,” said Aaron Gomolak, Satcon’s Chief
Financial Officer. “We, along with many of the industry’s leading
analysts, see the market positioned for a strong second half
recovery. Following the restructuring, and factoring in the
anticipated revenue recovery, we expect that gross margin will
improve to first quarter levels during the third quarter. The
measures we announced today strengthen our ability to lead the
utility-scale solar market profitably as we as a company, and as an
industry, achieve our next phase of growth.”
Second-Quarter Financial Results Conference Call
Satcon will release its second-quarter 2011 financial results
after the close of market on Tuesday, August 9, 2011. In
conjunction with the announcement, management will host a
conference call that day at 5:00 p.m. ET. To participate in
the conference call, please dial (877) 407-8289 (U.S. and Canada)
or (201) 689-8341 (International). The call will also be
available as a live and archived audio webcast on the “Investor
Relations” section of Satcon’s website at
http://investor.satcon.com.
About Satcon
Satcon Technology Corporation is a leading provider of
utility-grade power conversion solutions for the renewable energy
market, enabling the industry's most advanced, reliable and proven
clean energy alternatives. For more than ten years, Satcon has
designed and delivered advanced power conversion products that
enable large-scale producers of renewable energy to convert the
clean energy they produce into grid-connected efficient and
reliable power. To learn more about Satcon, please visit
http://www.Satcon.com.
Safe Harbor
Statements made in this document that are not historical facts
or which apply prospectively, including those relating to
preliminary Q2 2011 financial results, expected cost savings from
our workforce reduction, and the use of proceeds from the offering,
are forward-looking statements that involve risks and
uncertainties. These forward-looking statements are identified by
the use of terms and phrases such as "will," "intends," "believes,"
"expects," "plans," "anticipates" and similar expressions.
Investors should not rely on forward looking statements because
they are subject to a variety of risks and uncertainties and other
factors that could cause actual results to differ materially from
the company's expectation. Additional information concerning risk
factors is contained from time to time in the company's SEC
filings, including its Annual Report on Form 10-K and other
periodic reports filed with the SEC. Forward-looking statements
contained in this press release speak only as of the date of this
release. Subsequent events or circumstances occurring after such
date may render these statements incomplete or out of date. The
company expressly disclaims any obligation to update the
information contained in this release.
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