Day4 Energy Reports First Quarter 2012 Results
BURNABY, British Columbia, May 15, 2012 /PRNewswire/ --
Day4 Energy Inc. (TSX: DFE), a leading global provider of solar photovoltaic (PV) products and solutions, today reported operating results for the first quarter of 2012.
"We are operating in an extremely challenging market plagued with oversupply, falling prices and tremendous uncertainty of what the future holds in respect of government subsidies and with that overall demand in some of our core markets. Unfortunately this market pain is unavoidable as our industry transitions from the subsidy supported supply dominated market to a real business of supplying cost competitive energy solutions based on PV technology to customers around the world. While the transition can take some time, I do believe that our products and technology could play a significant role in the revival of the PV market at some point in the future," noted George Rubin, President and CEO of Day4 Energy. "Today our focus is on making sure that we can manage through these extremely challenging times while preserving as much value for all of our company's stakeholders as possible under the circumstances," added Mr. Rubin.
Q1 2012 FINANCIAL RESULTS FROM CONTINUING OPERATIONS
Worldwide Product Revenues
First quarter revenues of $6.5 million declined from $16.0 million or 59% from the same period in 2011 and by $1.8 million or 22% from the prior quarter. As the global market migrated to higher overall supply in 2011, prices fell, thus reducing sales revenues in combination with lower availability of Day4 product. These market conditions continued into early 2012 resulting in consistent downward pressure on our selling prices and revenues.
Gross Loss
Gross loss was $0.7 million (10.5%) for the first quarter of 2012 as compared to a gross loss of $2.7 million (17%) in the same quarter of 2011 and a gross loss of $1.4 million (17%) in the fourth quarter of 2011. The continuing negative margins were due to several factors including decreasing sales prices and downward inventory adjustments to market.
Expenses
For the first quarter of 2012, general and administrative (G&A) expenses were $2.3 million, a decrease of $0.7 million and an increase of $0.3 million from expenses of $3.0 million for the prior quarter and $2.0 million for the same period in 2011, respectively. G&A expenses in the first quarter of 2012 include higher overhead costs being charged to G&A for professional fees and travel.
Research and development (R&D) expenses in the first quarter were $0.7 million compared to $0.3 million for the prior quarter and $1.2 million for same period in 2011. The decrease in R&D expenses in 2012 was a result of the overall cost-cutting measures across the Company.
Sales and marketing expenses were $0.7 million for the first quarter of 2012 compared to $0.6 million in the same period in 2011 and $1.2 million in the fourth quarter of 2011. The increase is mainly related to the addition of $0.2 million provision for PV module warranties in the first quarter of 2012.
Loss per Share
The net loss from continuing operations for the first quarter of 2012 was $4.1 million ($0.07 per share) compared to $11.2 million ($0.21 per share) in the prior quarter and a net loss of $6.3 million ($0.14 per share) for the same period in 2011. The continuing net losses are a direct result of the deteriorated PV market conditions.
Cash and Short-Term Liquidity
Working capital was negative $7.0 million at the end of the first quarter of 2012, a decrease of $3.0 million compared to the previous quarter. Cash, cash equivalents and restricted cash totaled $2.0 million at March 31, 2012, a decrease of $5.2 million from $7.2 million at December 31, 2011. Cash and cash equivalents have decreased since December 31, 2011 primarily due to the utilization of funds to finance operations.
Detailed financial results and management's discussion and analysis can be found on our website at http://www.day4energy.com or on SEDAR at http://www.sedar.com.
About Day4 Energy
Day4 Energy Inc. is a Canadian company dedicated to providing high performance photovoltaic (PV) solutions for residential, commercial and utility scale installations. By fundamentally improving on the design and assembly of solar cells and modules, the Company produces unique PV panels of high power density, increased lifetime and uncompromised aesthetic appearance. Day4 Energy partners with international technology leaders to develop and deliver IEC- and UL-certified solar products to customers around the world. Day4 Energy is listed on the Toronto Stock Exchange under the symbol "DFE". For more information, please visit http://www.day4energy.com.
Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements include, among other things, statements relating to our expectations regarding our revenues, expenses, cash flows, operating performance and future profitability. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target", and similar words suggesting future events or future performance.
The forward-looking statements contained in this news release are based on assumptions, which include, but are not limited to the minimum base of licensed manufacturing capabilities required for revenues to become sufficient to cover the costs of the Company's operations; the interest of third parties in manufacturing Day4's products under license; our ability to meet and manage demand for our products; achieving increased PV cell and PV module efficiencies; expanding our existing product line; developing new markets for our products and securing necessary certifications in such markets; building the Day4 brand, attracting customers, and developing and maintaining customer and supplier relationships; continuing our strong relationships with our suppliers; effectively managing foreign exchange risks; effectively managing credit risks of customers and other counterparties; protecting our intellectual property rights and not infringing on the intellectual property rights of third parties; timely processing by certification agencies for new products; the continued existence of government incentives for the generation of electricity using solar power; and complying with applicable governmental regulations and standards.
Such forward-looking statements are subject to risks, uncertainties and other factors, including those listed in our Annual Information Form filed with Canadian securities regulatory authorities, many of which are beyond our control and each of which contributes to the possibility that our forward-looking statements will not occur or that actual results, performance or achievements may differ materially from those expressed or implied by such statements. These risks, uncertainties and other factors include, but are not limited to dilution risk; risks related to our ability to reduce costs by way of divesting of certain assets and certain unprofitable parts of our operations; government subsidies and economic incentives for PV power could be reduced or eliminated; the financial strength of our competitors; risks related to third parties infringing on our intellectual property; our financial strength and our ability to effectively manage our cash flow; there may be a lower than expected interest from third parties in licensing Day4's proprietary technology; the absence of confirmed PV cell suppliers could impact our ability to secure third party licensees of our technology with PV cells incorporating Day4's technology; the non-production of Day4 PV modules until licensed manufacturers are established may damage our sales channels, our brand and our reputation; the possibility that we may be subject to litigation by our suppliers or customers; warranty claims; risks relating to the protection of our intellectual property and intellectual property infringement claims by third parties; our reliance on a limited number of suppliers; competition from other forms of renewable energy; our ability to manage growth effectively; our ability to open up new markets for our products; demand for PV modules may reduce; risks relating to negotiating and closing contracts with Ever Energy Co. Ltd; technological advances from competitors that may render our products uneconomic or obsolete; the impact of general economic, market or business conditions; currency market fluctuations; and other factors, many of which are beyond our control.
The forward-looking statements made in this news release relate only to events or information as of the date indicated above. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Day4 Energy Inc.
Interim Consolidated Statements of Financial Position (unaudited)
(Expressed in Canadian Dollars)
March 31, December 31,
2012 2011
$ $
Assets
Current assets
Cash and cash equivalents 1,829,441 7,059,862
Restricted cash (note 6) 185,100 185,000
Trade receivables 4,084,029 4,463,586
Warranty claim receivable 1,544,369 1,529,415
Other receivables (note 8) 1,671,626 1,879,907
Current portion of debenture receivable (note 5) 347,460 -
Inventory (note 9) 4,217,184 8,375,914
Prepaid expenses 460,218 607,433
14,339,427 24,637,031
Non-current assets
Property, plant and equipment (note 10) 9,233,921 13,368,766
Debenture receivable (note 5) 1,385,517 -
24,958,865 38,005,797
Liabilities
Current liabilities
Trade payables and accrued liabilities 16,413,198 21,307,307
Provisions (note 11) 3,033,036 3,115,026
Deferred revenue 1,198,855 430,456
Current portion of long-term debt 726,811 3,512,805
Current portion of finance lease obligations - 308,355
21,371,900 28,673,949
Non-current liabilities
Long-term debt (note 12) 91,203 1,062,345
Deferred revenue 162,084 -
Finance lease obligation (note 13) - 123,435
21,625,187 29,859,729
Shareholders' Equity
Share capital (note 15) 137,244,624 137,244,624
Contributed surplus 3,356,027 3,346,341
Deficit (131,403,380) (126,426,944)
Accumulated other comprehensive loss (5,863,593) (6,017,953)
3,333,678 8,146,068
24,958,865 38,005,797
Day4 Energy Inc.
Interim Consolidated Statements of Loss and Comprehensive Loss (unaudited)
(Expressed in Canadian Dollars)
Three months ended
March 31
2012 2011
$ $
Revenues 6,506,037 15,999,162
Cost of revenues 7,191,407 18,733,774
Gross margin (loss) (685,370) (2,734,612)
Expenses
General and administrative 2,302,192 2,035,208
Research and development 687,905 1,189,651
Less: Government assistance (note 17) (62,794) (73,569)
Selling and marketing 669,099 643,750
3,596,402 3,795,040
Loss from operating activities 4,281,772 6,529,652
Foreign exchange gain 139,177 414,144
Interest and other income 103,628 (7,686)
Interest expense (20,826) 17,376
Gain on disposal of property, plant and equipment 17,019 -
238,998 423,834
Loss before income taxes 4,042,774 6,105,818
Income taxes 25,621 219,056
Loss from continuing operations 4,068,395 6,324,874
Net loss from discontinued operations (note 5) (908,041) (663,384)
Net loss for the period 4,976,436 6,988,258
Other comprehensive gain (loss)
Unrealized foreign exchange gain on translation
of consolidated financial statements
to the presentation currency 154,360 1,188,926
Total comprehensive loss (4,822,076) (5,799,332)
Net loss per share from continuing
operations - basic and diluted (0.07) (0.14)
Net loss per share from discontinued
operations - basic and diluted (0.02) (0.02)
(0.09) (0.16)
Day4 Energy Inc.
Interim Consolidated Statements of Changes in Equity (unaudited)
(Expressed in Canadian Dollars)
Equity
component of
consideration Accumulated
issuable for other
Share business Contributed comprehensive Total
capital acquisition surplus Deficit income equity
Balance,
January 1,
2012 137,244,624 - 3,346,341 (126,426,944) (6,017,953) 8,146,068
Net loss for
the
period (4,976,436) (4,976,436)
Foreign
currency
translation 154,360 154,360
Comprehensive
loss
for the
period (4,976,436) 154,360 (4,822,076)
Stock based
compensation 9,686 9,686
Balance,
March 31,
2012 137,244,624 - 3,356,027 (131,403,380) (5,863,593) 3,333,678
Equity
component of
consideration Accumulated
issuable for other
Share business Contributed comprehensive Total
capital acquisition surplus Deficit loss equity
Balance,
January 1,
2011 134,391,619 1,128,870 2,946,444 (6,662,172) (85,746,363) 46,058,398
Net loss for
the
period - - - (6,988,258) (6,988,258)
Foreign
currency
translation - - - 1,188,926 1,188,926
Comprehensive
gain loss
for the
period (6,988,258) 1,188,926 (5,799,332)
Stock based
compensation 46,450 46,450
Balance,
March 31,
2011 134,391,619 1,128,870 2,992,894 (13,650,430) (84,557,437) 40,305,516
Day4 Energy Inc.
Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in Canadian Dollars)
Three Months ended March 31
2012 2011
$ $
Cash flows from operating activities
Loss for the period (4,976,436) (6,988,258)
Items not affecting cash
Stock-based
compensation 9,686 46,450
Depreciation and
amortization 749,085 719,207
Gain on sale of
property, plant
and equipment (19,982) (173,670)
Impairment of
property, plant
and equipment - 189,865
Impairment of
inventory 184,617 1,285,073
Unrealized
foreign exchange
(gain) loss (154,360) (414,143)
Warranty expense 192,201 36,646
Gain on disposal
of subsidiary (856,131) -
(4,871,320) (5,298,830)
Changes in non-cash
working capital items
Trade receivables (64,028) 7,623,182
Other receivables (122,657) (159,562)
Inventory 1,877,162 (15,144,092)
Prepaid expenses (163,052) 103,209
Trade payables and accrued
liabilities (2,611,659) 6,038,642
Deferred revenue 1,186,775 1,314,038
Provisions (234,468) -
(5,003,247) (5,523,413)
Cash flows from investing activities
Change in restricted cash 100 599,354
Purchase of property, plant and equipment (138,856) (104,315)
Proceeds from sale of property,
plant and equipment 17,023 488,936
Proceeds from disposition of
subsidiary, net of cash surrendered (930) -
Investment in product development - (663,399)
(122,663) 320,576
Cash flows from financing activities
Repayment of IRAP loan (73,431) (174,440)
Proceeds from (repayment of) bank loan (60,329) 133,048
Repayment of finance lease obligation (123,468) (345,377)
(257,228) (386,769)
Impact of foreign exchange
on cash and cash equivalents 152,717 369,291
Decrease in cash and cash equivalents (5,230,421) (5,220,315)
Cash and cash equivalents
- Beginning of period 7,059,862 10,486,264
Cash and cash equivalents
- End of period 1,829,441 5,265,949
Supplemental cash flow information
Cash paid for interest 10,433 11,878
Cash received for interest 98 137
For further information:
George Rubin
President and CEO
Day4 Energy Inc.
+1-604-297-0444
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