Day4 Energy Reports Third-Quarter 2009 Results

BURNABY, BC, Nov. 9 /CNW/ - Day4 Energy Inc. (TSX: DFE), a solar electric technology developer and manufacturer of superior performance solar modules, today reported operating results for the third quarter of 2009.

"The trend we started to see at the end of the last quarter continued and strengthened through Q3 resulting in one of the most significant periods of revenue growth in the company's history," said George Rubin, president of Day4 Energy. "We are very encouraged by our 133% sales growth reaching $13.3 million for the third quarter. In the face of the past very volatile 12 months we have taken clear steps to manage our working capital and preserve our cash position, implement strategies to support our sales efforts including trade insurance for customers and focus on managing our supply chain to utilize inventory and manage production. We are pleased to see these efforts paying dividends in the form of improved financial results, positive gross margin, a stable cash position and improved sales."

    
    Key events of the quarter and in the past month included:

    -   Advances in the solar project division with the announcement of the
        initiation of a 2.4MW project with Gunther Heiss Solar GmbH & Co. KG
        in Germany

    -   $0.5 million in funding from the National Research Council to support
        Day4's activities

    -   The introduction of the Day4 60MC-I featuring the Guardian
        Technology(TM) that dramatically improves the performance of the PV
        modules when exposed to partial shading, snow, debris and other
        external factors that, under normal circumstances, cause a
        substantial reduction in power and energy yield.

    -   Approval from the Australian Patent Office on our patent for our core
        Day4 Electrode(R) solar technology.
    

Q3 2009 FINANCIAL RESULTS

Worldwide Product Revenues

Third quarter revenues of $13.3 million increased by $7.6 million or 133% from the prior quarter revenues and decreased by $ 18.4 million for the same period in 2008. The increase in revenues compared to the prior quarter is due to a relatively solid recovery in demand in our primary markets. The decrease in revenue versus the same period in 2008 was primarily due to the impact of the global economic recession and financial crisis that started in the fourth quarter 2008 The annual period comparison is skewed because Q3 2008 was the strongest in the history of the company and while the trend has been increased demand over the past couple of quarters it has not reached the levels seen prior to the start of the recession.

Gross Margins

The gross margin of $0.1 million for the third quarter compared to a loss of $10.8 million in the second quarter 2009 and a gross loss of $0.5 million in the same period in 2008. The higher gross loss in the prior quarter was primarily the result of an inventory write-down and period costs relating to low capacity utilization. There were no inventory write-downs in the third quarter, however we did incur period costs of $0.9 million relating to fixed overhead costs due to low capacity utilization at Jabil Circuits Inc. that unfavorably impacted our gross margin.

Expenses

For the third quarter of 2009, general and administrative expenses were $1.9 million, relatively consistent compared to the prior quarter expenses of $2.0 million and the expenses in the third quarter of 2008 of $2.0 milion.

Sales and marketing expenses of $0.9 million for the third quarter 2009 compared to $1.0 million and $0.9 million in the previous quarter and the same period in 2008 respectively.

R&D expenses in the third quarter increased to $1.0 million from $0.5 million in the prior quarter and $0.7 million for the same period in 2008. The increase primarily related to the costs associated with our Burnaby facility that is now used almost exclusively for R&D purposes, following the transfer of production to Jabil. All production equipment, personnel and facility costs, with the exception of the Day4 Electrode wire production, have been reallocated from production to R&D as we focus on the development of the Day4 Electrode and new products. Staff assigned to R&D was forty-one at the end of the third quarter compared to nine for the same quarter ended in 2008.

Loss Per Share

The net loss for the third quarter 2009 was $4.2million ($0.12) per share compared with $14.1 million ($0.38) per share for the prior quarter and $1.7 million ($0.05) per share for the same period in 2008. The net loss for the nine months ended September 30, 2009 was $21 million ($0.57) per share compared to $4.9 million ($0.13) per share for the same period in 2008. Higher net loss in the nine months ended September 30, 2009 compared to the same period in 2008 was mainly attributed to the inventory write-down, activities relating to the start up of Jabil and fixed overhead period cost due to low capacity utilization.

Cash and Short-Term Investments

At September 30, 2009, we had $21 million in cash and short term investments, including restricted cash of $0.4 million, even with total cash and short term investments of $21 million at June 30, 2009 and $26 million at December 31, 2008.Cash used by operations was $0.4 million for the third quarter 2009, compared to $0.7 million for the second quarter of 2009 and $8.4 million for the same period in 2008. Cash used in operating activities significantly decreased from the comparable periods in 2008 through cost reduction programs to manage working capital and preserve cash.

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.day4energy.com.

Conference Call Information

Day4 Energy's management will conduct a conference call at 8:30am (ET) November 9, 2009 to review the company's third-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. 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, 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 September 30, 2009 and December 31, 2008
    -------------------------------------------------------------------------

                                                   September 30, December 31,
                                                           2009         2008
                                                              $            $
                                                     (unaudited)

    Assets

    Current assets
    Cash and cash equivalents                        11,396,053   14,730,294
    Restricted cash                                     413,430   11,085,230
    Short-term investments                            9,040,679            -
    Accounts receivable                               3,315,759    3,320,849
    Investment tax credits receivable                   600,000      600,000
    Other receivables                                 2,135,163    1,511,301
    Inventory                                        21,787,572   35,018,558
    Prepaid expenses                                    416,313      379,429
    Equipment held for sale                                   -    2,704,913
                                                    ------------ ------------
                                                     49,104,969   69,350,574

    Property, plant and equipment                    23,461,289   28,254,320
                                                    ------------ ------------
                                                     72,566,258   97,604,894
                                                    ------------ ------------
                                                    ------------ ------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities         10,183,655   12,504,078
    Taxes payable                                       830,000      830,000
    Short-term debt                                     177,978      142,940
    Deferred revenue                                    144,589      168,012
    Derivative instruments                                    -    2,157,218
                                                    ------------ ------------
                                                     11,336,222   15,802,248

    Long-term debt                                    1,143,521    1,143,521
                                                    ------------ ------------
                                                     12,479,743   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                               2,484,375    2,091,952

    Warrants                                          2,279,890    2,279,890

    Deficit                                         (75,630,007) (54,691,384)
                                                    ------------ ------------
                                                     60,086,515   80,632,715
                                                    ------------ ------------
                                                     72,566,258   97,604,894
                                                    ------------ ------------
                                                    ------------ ------------



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

                                Three-months ended         Nine-months ended
                                      September 30,             September 30,
                          ------------------------- -------------------------
                                 2009         2008         2009         2008
                                    $            $            $            $
    Revenue
    Sales                  13,342,802   31,692,152   23,417,251   60,224,616
    Cost of goods sold     13,234,391   32,148,373   34,549,494   60,032,368
                          ------------------------- -------------------------
    Gross (loss) margin       108,411     (456,221) (11,132,243)     192,248
                          ------------------------- -------------------------

    Expenses
    General and
     administrative         1,922,304    1,955,797    6,907,498    4,501,041
    Research and
     development            1,068,064      695,626    2,106,455    1,769,665
    Less: Investment tax
     credits and Government
     assistance               (34,020)           -      (34,020)    (245,302)
    Selling and marketing     887,009      856,122    2,508,558    2,798,162
    Depreciation              562,236      131,409      775,061      360,789
    Amortization                    -       71,054            -      213,164
                          ------------------------- -------------------------
                            4,405,593    3,710,008   12,263,552    9,397,519
                          ------------------------- -------------------------
    Loss before undernoted  4,297,182    4,166,229   23,395,795    9,205,271
                          ------------------------- -------------------------

    Foreign exchange gain
     (loss)                    53,280     (466,277)   2,331,709      710,032
    Unrealized gain (loss)
     on derivative
     instruments                    -    2,996,598            -    2,359,398
    Interest and other
     income                    52,581      465,917      167,085    1,882,665
    Interest expense          (27,266)     (61,177)     (82,915)     (61,177)
    Royalty premium expense         -     (419,180)           -     (419,180)
    Gain (loss) on disposal
     of property, plant and
     equipment                 (1,452)         (88)      25,278          (88)
    Write-off of plant
     design costs                   -            -            -      (18,980)
    Gain on disposition
     of subsidiary                  -            -       24,677            -
    Accretion expense          (6,995)     (41,664)     (19,985)    (138,436)
                          ------------------------- -------------------------
                               70,148    2,474,129    2,445,849    4,314,234
                          ------------------------- -------------------------
    Loss before
     non-controlling
     interest               4,227,034    1,692,100   20,949,946    4,891,037

    Non-controlling
     interest                       -            -      (11,323)           -
                          ------------------------- -------------------------
    Loss and comprehensive
     loss for the year      4,227,034    1,692,100   20,938,623    4,891,037

    Deficit - Beginning
     of period             71,402,973   24,016,970   54,691,384   20,818,033
                          ------------------------- -------------------------
    Deficit - End of
     period                75,630,007   25,709,070   75,630,007   25,709,070
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    Net loss per share
     - basic and diluted         0.12         0.05         0.57         0.13
                          ------------------------- -------------------------
                          ------------------------- -------------------------
    Weighted average
     number of shares
     outstanding - basic
     and diluted           36,679,366   36,679,366   36,679,366   36,641,734
                          ------------------------- -------------------------
                          ------------------------- -------------------------



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

                                Three-months ended         Nine-months ended
                                      September 30,             September 30,
                                 2009         2008         2009         2008
                                    $            $            $            $

    Cash flows from
     operating activities
    Loss and comprehensive
     loss for the period   (4,227,034)  (1,692,100) (20,938,623)  (4,891,037)
      Items not affecting
       cash
        Stock-based
         compensation         123,877      172,831      392,423      594,429
        Accretion and
         royalty premium
         on IRAP-TPC loan           -      465,282            -      550,901
        Depreciation and
         amortization         862,484      611,594    1,956,218    1,377,988
        Gain on disposition
         of pre-acquisition
         assets                     -        3,610            -        3,610
        Loss (gain) on sale
         of property, plant
         and equipment          1,452           88      (25,278)          88
        Write-off of plant
         design costs               -            -            -       18,980
        Gain on disposal
         of subsidiary              -            -      (24,677)           -
        Unrealized foreign
         exchange (gain)
         loss                  10,205   (1,289,210)    (379,611)     453,054
        Change in value
         of derivative
         instruments                -   (2,996,598)  (2,157,218)  (2,359,398)
        Deferred lease
         inducement                 -            -            -      (11,245)
        Non-controlling
         interest                   -            -      (11,323)           -
    Changes in non-cash
     working capital items
      Accounts receivable  (1,856,793)  (8,649,945)   1,468,191  (20,678,665)
      Investment tax
       credits receivable           -            -            -      159,006
      Other receivables     1,935,873      599,537     (664,541)     821,926
      Inventory             9,140,832    4,643,977   13,230,986   (8,988,571)
      Prepaid expenses        (26,710)     125,762      (36,884)     145,511
      Accounts payable
       and accrued
       liabilities         (6,342,324)    (460,689)  (4,320,260)   5,176,061
      Deferred revenue        (31,790)      59,086      (23,423)     (19,702)
                          ------------------------- -------------------------
                             (409,928)  (8,406,775) (11,534,020) (27,647,064)
                          ------------------------- -------------------------

    Cash flows from
     investing activities
    Purchase of short-term
     investments                    -            -   (9,000,000)  (8,000,000)
    Proceeds from sale of
     short-term investments         -   13,900,000            -   29,900,000
    Change in restricted
     cash                       3,055      987,450   10,671,800   (9,890,709)
    Purchase of property,
     plant and equipment     (138,702)  (6,124,582)  (2,646,634) (23,790,657)
    Proceeds from sale of
     property, plant and
     equipment                      -        8,975    8,213,638        8,975
    Proceeds from sale of
     subsidiary - net of
     cash included in sale
     of 29,098                      -            -        9,590            -
                          ------------------------- -------------------------
                             (135,647)   8,771,843    7,248,394  (11,772,391)
                          ------------------------- -------------------------

    Cash flows from
     financing activities
    Proceeds from exercise
     of warrants                    -            -            -      492,498
    Proceeds from exercise
     of stock options               -            -            -       80,000
                          ------------------------- -------------------------
                                    -            -            -      572,498
                          ------------------------- -------------------------

    Impact of foreign
     exchange on cash and
     cash equivalents         576,364      400,596      951,385     (545,172)
                          ------------------------- -------------------------
    Increase (decrease)
     in cash and cash
     equivalents               30,789      765,664   (3,334,241) (39,392,129)

    Cash and cash
     equivalents -
     Beginning of period   11,365,264   12,935,343   14,730,294   53,093,136
                          ------------------------- -------------------------
    Cash and cash
     equivalents -
     End of period         11,396,053   13,701,007   11,396,053   13,701,007
                          ------------------------- -------------------------
                          ------------------------- -------------------------

    Supplemental cash
     flow information
    Cash paid for
     interest                   1,249        8,127        4,217        8,249
    Cash received for
     interest                   1,315      317,146       19,778    1,693,204
    

SOURCE Day4 Energy Inc.

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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