Day4 Energy Reports Second-Quarter 2009 Results



    BURNABY,BC, Aug. 10 /CNW/ - Day4 Energy Inc. (TSX: DFE), a solar electric
technology developer and manufacturer of superior performance solar modules,
today reported operating results for the second quarter of 2009.
    "I would characterize the second quarter of 2009 as mixed market
conditions," said George Rubin, president of Day4 Energy. "Our quarterly
results reflect the continued impacts of consumer confidence issues, tight
market conditions and overall weak demand leading to further write-downs and
continued negative gross margins. Over the course of the quarter we
implemented a number of strategic actions to address the challenges of our new
market realities including adopting more aggressive pricing strategies and
obtaining trade credit insurance for transactions with our channel partners.
In addition to working persistently on stimulating activity in our traditional
sales channels, we have also spent some time exploring and developing
opportunities to expand into new vertical markets. These steps resulted in an
over 30% improvement in sequential quarterly sales. While it is too early to
make definitive statements on the sustainability of the trend, we are
encouraged by our monthly sales revenue on a rolling three months average
basis that has improved from an overall decline of 4% from the period of
January through May to an increase of 10% from May to June. Sales have
continued to improve through July."
    "We continue to focus our efforts on managing working capital and
preserving cash and have worked cooperatively with our material suppliers to
delay purchase commitments, reduce pricing to reflect current market
conditions, extend payment terms and rescheduling shipments to match our
demand requirements. Finally, in anticipation of completing our outsource
strategy we have cut back further on production at our Burnaby facility and
utilized the Federal Government work-share program to reduce our costs," he
concluded.

    
    Q2 2009 FINANCIAL RESULTS

    Worldwide Product Revenues
    

    Second quarter revenues of $5.7 million increased by $1.4 million or 33%
from the prior quarter revenues and decreased by $9.3 million for the same
period in 2008. The increase in revenues compared to the prior quarter appears
to be the result of slight recovery in demand in our primary markets. The
decrease in revenue was primarily due to the impact of the global economic
recession and financial crisis starting in the fourth quarter of 2008.

    Gross Margins

    The gross loss of $10.8 million for the second quarter compared to a loss
of $0.5 million in the first quarter 2009 and a gross margin of $0.4 million
in the same period in 2008. The higher gross loss during the quarter is mainly
resulting from inventory write-down of $9.5 million and period costs relating
to low capacity utilization of $2.4 million. Continued decreases in average
selling price (ASP) during the quarter resulted from general weakness in the
demand for PV and additional economic pressures to liquidate inventories.

    Expenses

    For the second quarter of 2009, general and administrative expenses were
$2.0 million, a decrease of $1.0 million over the prior quarter expenses of
$3.0 million and an increase $0.6 million for the same period in 2008. The
decrease primarily related to a one-time start-up cost of Jabil in the first
quarter 2009. Another contributor to the reduction in expense included
management's continued efforts in cost reduction initiatives in response to
the global economic slowdown.
    Sales and marketing expenses of $1.0 million for the second quarter 2009
compared to $0.7 million and $1.3 million in the previous quarter and the same
period in 2008 respectively. The increase in expenses when compared to the
previous quarter primarily reflects seasonal tradeshow activity during the
period.
    R&D expenses of $0.5 million were relatively consistent with the prior
quarter and same period in 2008 reflecting our continued efforts to develop
our PV technologies and opportunities provided by the Day4 Electrode.

    Loss Per Share

    The net loss for the second quarter 2009 was $14.1 million ($0.38) per
share compared with $2.6 million ($0.07) per share for the prior quarter and
$2.5 million ($0.07) per share for the same period in 2008. Higher net loss in
the second quarter compared to the same period in 2008 was mainly attributed
to the inventory write-down, and fixed overhead period cost due to low
capacity utilization.

    Cash and Short-Term Investments

    At June 30, 2009, we had $21 million in cash and short term investments,
including restricted cash of $0.4 million, down from total cash and short term
investments of $22 million at March 31, 2009 and $26 million at December 31,
2008. Cash used by operations was $0.7 million for the second quarter 2009,
compared to $ 10.5 million for the first quarter of 2009 and $7.6 million for
the same period in 2008. The lower use of the cash in operating activities
during the second quarter relative to the prior quarter and same period in
2008 was primarily due to decreases in non-cash working capital, particularly
a decrease in accounts receivable due to the lower sales level and decrease in
inventory as we reduce production and draw down inventory.
    Detailed financial results and management's discussion and analysis can
be found on our website at www.day4energy.com or on SEDAR at www.sedar.com.

    About Day4 Energy

    Day4 Energy Inc. is Canada's largest manufacturer of high performance
photovoltaic (PV) modules for residential, commercial and utility scale
installations around the world. By fundamentally improving on the design and
assembly of solar modules, Day4 Energy 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 throughout Europe and North
America. Day4 Energy is listed on the Toronto Stock Exchange under the symbol
"DFE". For more information, please visit www.day4energyenergy.com.

    Conference Call Information

    Day4 Energy's management will conduct a conference call at 8:30am (ET)
August 10, 2009 to review the company's first-quarter financial results. The
call can be accessed by dialing 1-800-319-4610 (Canada and US) or
1-604-638-5340 (International) prior to the start of the call. Following the
call a recording of the conference call will be archived on Day4 Energy's
website, 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.
    The forward-looking statements contained in this news release are based
on assumptions, which include, but are not limited to, our successful
implementation of outsource manufacturing with Jabil; our ability to obtain an
adequate spread between our module average selling price and cost of raw
materials, including PV cells; achieving increased PV cell and PV module
efficiencies; expanding our existing product line; 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; protecting our intellectual
property rights and not infringing on the intellectual property rights of
third parties; timely processing by certification agencies of new products;
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, the impact of general economic, market or business conditions;
risks related to the implementation of outsource manufacturing with Jabil; our
limited operating history; risks relating to the protection of our
intellectual property and intellectual property infringement claims by third
parties; our dependence on a limited number of PV cell suppliers; government
subsidies and economic incentives for PV power could be reduced or eliminated;
our ability to achieve higher PV module efficiencies; our dependence on a
limited number of customers and our lack of long-term purchase contracts;
demand for PV modules; technological changes in the PV power industry could
render our products uncompetitive or obsolete; unexpected warranty expenses;
fluctuations in exchange rates; product liability claims; compliance with
environmental regulations; 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.
    Consolidated Balance Sheets
    As at June 30, 2009 and December 31, 2008
    -------------------------------------------------------------------------

                                                        June 30, December 31,
                                                           2009         2008
                                                              $            $
                                                     (unaudited)
    Assets

    Current assets
    Cash and cash equivalents                        11,365,264   14,730,294
    Restricted cash                                     416,485   11,085,230
    Short-term investments                            9,013,962            -
    Accounts receivable                                 725,333    3,320,849
    Investment tax credits receivable                   600,000      600,000
    Other receivables                                 4,097,753    1,511,301
    Inventory                                        30,928,404   35,018,558
    Prepaid expenses                                    389,603      379,429
    Equipment held for sale                                   -    2,704,913
                                                    ------------ ------------
                                                     57,536,804   69,350,574

    Property, plant and equipment                    24,186,523   28,254,320
                                                    ------------ ------------
                                                     81,723,327   97,604,894
                                                    ------------ ------------
                                                    ------------ ------------
    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities         15,217,241   12,504,078
    Taxes payable                                       830,000      830,000
    Short-term debt                                     166,514      142,940
    Deferred revenue - current                          176,379      168,012
    Derivative instruments                                    -    2,157,218
                                                    ------------ ------------
                                                     16,390,134   15,802,248

    Long-term debt                                    1,143,521    1,143,521
                                                    ------------ ------------
                                                     17,533,655   16,945,769
    Non-controlling interest                                  -       26,410

    Shareholders' Equity

    Share capital
    Authorized
      Unlimited number of common shares
      Unlimited number of preferred shares

    Issued and outstanding
      36,679,366 (2008 - 36,679,366)
       common shares                                130,952,257  130,952,257

    Contributed surplus                               2,360,498    2,091,952

    Warrants                                          2,279,890    2,279,890

    Deficit                                         (71,402,973) (54,691,384)
                                                    ------------ ------------
                                                     64,189,672   80,632,715
                                                    ------------ ------------
                                                     81,723,327   97,604,894
                                                    ------------ ------------
                                                    ------------ ------------



    Day4 Energy Inc.
    Consolidated Statements of Operations, Comprehensive Loss and Deficit
    For the three and six months ended June 30, 2009 and 2008 (unaudited)
    -------------------------------------------------------------------------

                                Three-months ended          Six-months ended
                                           June 30,                  June 30,
                          ------------------------- -------------------------
                                 2009         2008         2009         2008
                                    $            $            $            $

    Revenue
    Sales                   5,729,904   15,038,078   10,074,449   28,532,464
    Cost of goods sold     16,506,946   14,659,998   21,315,103   27,883,995
                          ------------------------- -------------------------
    Gross (loss) margin   (10,777,042)     378,080  (11,240,654)     648,469
                          ------------------------- -------------------------
    Expenses
    General and
     administrative         1,980,493    1,386,540    4,985,194    2,545,244
    Research and
     development              522,684      593,556    1,038,391    1,074,039
    Less: Investment tax
     credits and Government
     assistance                     -     (245,302)           -     (245,302)
    Selling and marketing     970,691    1,276,723    1,621,549    1,942,040
    Depreciation              209,408      134,856      212,825      229,380
    Amortization                    -       71,055            -      142,110
                          ------------------------- -------------------------
                            3,683,276    3,217,428    7,857,959    5,687,511
                          ------------------------- -------------------------
    Loss before undernoted 14,460,318    2,839,348   19,098,613    5,039,042
                          ------------------------- -------------------------

    Foreign exchange gain
     (loss)                   355,396     (263,687)   2,278,429    1,176,309
    Unrealized gain (loss)
     on derivative
     instruments                    -      120,550            -     (637,200)
    Interest and other
     income                    48,783      584,881      114,504    1,416,748
    Interest expense          (24,517)           -      (55,649)           -
    Gain on sale of
     property, plant and
     equipment                      -            -       26,730            -
    Write-off of plant
     design costs                   -      (18,980)           -      (18,980)
    Gain on disposition
     of subsidiary                  -            -       24,677            -
    Accretion expense          (6,656)     (50,231)     (12,990)     (96,772)
                          ------------------------- -------------------------
                              373,006      372,533    2,375,701    1,840,105
                          ------------------------- -------------------------
    Loss before
     non-controlling
     interest              14,087,312    2,466,815   16,722,911    3,198,937

    Non-controlling
     interest                       -            -      (11,323)           -
                          ------------------------- -------------------------
    Loss and comprehensive
     loss for the year     14,087,312    2,466,815   16,711,588    3,198,937

    Deficit - Beginning
     of period             57,315,661   21,550,155   54,691,384   20,818,033
                          ------------------------- -------------------------
    Deficit - End of
     period                71,402,973   24,016,970   71,402,973   24,016,970
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    Net loss per share
     - basic and diluted         0.38         0.07         0.46         0.09
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    Weighted average
     number of shares
     outstanding - basic
     and diluted           36,679,366   36,639,586   36,679,366   36,622,711
                          ------------------------- -------------------------
                          ------------------------- -------------------------



    Day4 Energy Inc.
    Consolidated Statements of Cash Flows
    For the three and six months ended June 30, 2009 and 2008 (unaudited)
    -------------------------------------------------------------------------

                                Three-months ended          Six-months ended
                                           June 30,                  June 30,
                                 2009         2008         2009         2008
                                    $            $            $            $
    Cash flows from
     operating activities
    Loss and comprehensive
     loss for the year    (14,087,312)  (2,466,815) (16,711,589)  (3,198,937)
      Items not affecting
       cash
        Stock-based
         compensation         118,913      202,547      268,546      421,598
        Accretion and
         royalty premium
         on IRAP-TPC loan           -       43,871            -       85,619
        Depreciation and
         amortization         676,801      428,326    1,093,734      766,395
        Gain on sale of
         property, plant
         and equipment              -            -      (26,730)           -
        Write-off of plant
         design costs               -       18,980            -       18,980
        Gain on disposal
         of subsidiary              -            -      (24,677)           -
        Unrealized foreign
         exchange (gain)
         loss                 139,212     (184,990)      38,622    1,017,836
        Change in value of
         derivative
         instruments                -     (120,550)  (2,157,218)     637,200
        Deferred lease
         inducement                 -       (5,623)           -      (11,246)
        Non-controlling
         interest                   -            -      (11,323)           -
    Changes in non-cash
     working capital items
      Accounts receivable   2,419,496    1,589,802    3,149,510   (9,895,076)
      Investment tax
       credits receivable           -      159,006            -      159,006
      Other receivables       846,165     (756,853)  (2,600,414)     222,389
      Inventory            11,504,374  (13,747,198)   4,090,154  (13,632,548)
      Prepaid expenses         (4,638)     (55,310)     (10,174)      19,749
      Accounts payable and
       accrued liabilities (2,309,702)   7,749,966    1,779,910    2,997,076
      Deferred revenue         25,810     (494,294)       8,367      (78,788)
                          ------------------------- -------------------------
                             (670,881)  (7,639,135) (11,113,282) (20,470,747)
                          ------------------------- -------------------------
    Cash flows from
     investing activities
    Purchase of short-term
     investments           (5,000,000)  (8,000,000)  (9,000,000)  (8,000,000)
    Proceeds from sale of
     short-term investments         -    6,000,000            -   16,000,000
    Change in restricted
     cash                   4,667,065      319,959   10,668,745  (10,878,159)
    Purchase of property,
     plant and equipment     (920,745)  (9,089,253)  (2,507,932) (17,666,075)
    Proceeds from sale of
     property, plant and
     equipment                      -            -    8,213,638            -
    Proceeds from sale of
     subsidiary - net of
     cash included in sale
     of 29,098                      -            -        9,590            -
                          ------------------------- -------------------------
                           (1,253,680) (10,769,294)   7,384,041  (20,544,234)
                          ------------------------- -------------------------
    Cash flows from
     financing activities
    Proceeds from exercise
     of warrants                    -            -            -      492,498
    Proceeds from exercise
     of stock options               -       80,000            -       80,000
                          ------------------------- -------------------------
                                    -       80,000            -      572,498
                          ------------------------- -------------------------
    Impact of foreign
     exchange on cash and
     cash equivalents         334,884      (54,978)     364,211      284,690
                          ------------------------- -------------------------

    Decrease in cash and
     cash equivalents      (1,589,677) (18,383,407)  (3,365,030) (40,157,793)

    Cash and cash
     equivalents -
     Beginning of period   12,954,941   31,318,750   14,730,294   53,093,136
                          ------------------------- -------------------------

    Cash and cash
     equivalents - End
     of period             11,365,264   12,935,343   11,365,264   12,935,343
                          ------------------------- -------------------------
                          ------------------------- -------------------------

    Supplemental cash
     flow information
    Cash paid for
     interest                   1,185          121        2,968          121
    Cash received for
     interest                   3,105      565,537       18,463    1,376,058
    

    %SEDAR: 00026066E




For further information:

For further information: Therese Hayes, Head, Corporate Development,
Day4 Energy Inc., (604) 296-0434, thayes@day4energy.com; Agnieszka Pozniak,
Media Contact, Day4 Energy Inc., (604) 297-0444, media@day4energy.com

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