SATC Satcon Technology Corp. (MM)

Satcon Technology Corporation® (NASDAQ CM:SATC), a leading provider of utility scale power conversion solutions for the renewable energy market, today announced its results for the second quarter ended June 30, 2011.

            Three Months Ended   (in millions except margin data)

June 30, 2011

 

June 30,2010

% Change   Revenue $45.5 $27.6 64.7% Gross Margin 8.0% 21.0% (37%) Operating Income (Loss) ($20.1) ($5.3) (283%)

Revenue for the second quarter of 2011 was $45.5 million, in line with its previously revised guidance of $45-$47 million, and an increase of approximately 64.7% over the same period last year.

“The market environment in the second quarter was challenging. Despite the strength of North America, the market conditions in Europe and Asia had negative effects on our overall performance,” said Steve Rhoades, President and Chief Executive Officer of Satcon. “In addition, we incurred one-time charges associated with inventory, restructuring, and the strategic decision to accelerate product development. Although these measures have resulted in a higher than expected operating loss, they have effectively strengthened our ability to achieve our revenue and cost targets by the end of 2011.”

During the second quarter, the company shipped 195 MWs of its industry-leading PowerGate® Plus, Prism® Platform, and Equinox® solutions. North America continued to be the company’s strongest performing region, representing 80% of total revenue, with 12% coming from Asia and 8% from Europe. Satcon's utility scale solutions of 250kW and above continued to be the company’s strongest performing offering, shipping over 167 MW, and representing 86% of total units shipped in the quarter.

At June 30, 2011, the company's backlog, which consists of purchase orders from its customers, was $55.2 million. Backlog from North America represented 74% of orders to be delivered. Asia contributed 15%, while Europe contributed 11%.

For the third quarter of 2011 the company expects revenue to be in the range of $45 million to $52 million, and gross margin percentage to be in the mid-teens. “Going forward, we see a strong North American market with upside coming from Asia and Europe,” continued Rhoades. “We believe that the measures we have taken in the quarter give us the flexibility to adapt to the current market volatility, position us to achieve our guidance, and put us on a path to a sustainable business.”

Conference Call Reminder

The company will hold a conference call to review its financial results and business highlights today, August 9, 2011 at 5:00 p.m. ET. During the conference call, the company may answer questions concerning business and financial developments and trends, and other business and financial matters. The company’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.

The conference call will be webcast live over the Internet and can be accessed on the Investor Relations section of the company’s website at http://investor.satcon.com. The conference call also can be accessed by dialing (877) 407-8289 (U.S. and Canada) or (201) 689-8341 (International). Interested parties that are unable to listen to the live call may access an archived version of the webcast on Satcon’s website.

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.

SATCON TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

    June 30, December 31, ASSETS   2011     2010   Current assets: Cash and cash equivalents $ 28,430,711 $ 30,094,162

Accounts receivable, net of allowance of $1,803,810 and $974,887at June 30, 2011 and December 31, 2010, respectively

77,698,142 73,713,308 Unbilled contract costs and fees 174,342 174,342 Inventory 96,213,389 40,542,893 Note receivable 4,382,546 — Prepaid expenses and other current assets   5,147,850     4,254,246     Total current assets 212,046,980 148,778,951 Property and equipment, net 12,039,485 7,284,285 Other long-term assets   517,744     —     Total assets $ 224,604,209   $ 156,063,236    

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Line of credit

$ 35,000,000 $ 15,000,000

Note payable, current portion, net of discount of $407,930 and $434,247at June 30, 2011 and December 31, 2010, respectively

3,568,496 2,107,473 Accounts payable 86,778,392 45,060,537 Accrued payroll and payroll related expenses 3,063,736 4,476,685 Other accrued expenses 6,465,841 6,824,388 Accrued contract loss 2,268,346 — Accrued restructuring costs 1,032,316 49,203 Current portion of subordinated convertible notes 6,095,238 — Deferred revenue   10,136,374     8,099,852   Total current liabilities 154,408,739 81,618,138   Warrant liabilities 1,170,652 5,454,109

Note payable, net of current portion and discount of $259,411 and $399,589at June 30, 2011 and December 31, 2010, respectively

7,148,472

9,058,691

Long-term subordinated convertible notes, net of current portion 10,254,762 — Deferred revenue, net of current portion 17,751,905 11,622,918 Other long-term liabilities   621,942     318,151   Total liabilities 191,356,472 108,072,007 Commitments and contingencies   Stockholders' equity:

Preferred stock; $0.01 par value 1,000,000 shares authorized, 0 shares issued and outstandingat June 30, 2011 and December 31, 2010, respectively

—

—

Common stock; $0.01 par value, 200,000,000 shares authorized; 119,327,864 and 117,911,278 shares issued and outstandingat June 30, 2011 and December 31, 2010, respectively

1,193,279

1,179,113

Additional paid-in capital 300,326,034 291,717,323 Accumulated deficit (266,842,008 ) (243,475,639 ) Accumulated other comprehensive loss   (1,429,568 )   (1,429,568 ) Total stockholders' equity   33,247,737     47,991,229   Total liabilities and stockholders' equity $ 224,604,209   $ 156,063,236  

SATCON TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

    Three Months Ended Six Months Ended June 30,

2011

  June 30,

2010

June 30,

2011

  June 30,

2010

    Product revenue $ 45,497,036 $ 27,627,473 $ 107,501,973 $ 42,359,952   Cost of product revenue 41,866,139 21,890,030 88,998,664 34,589,139             Gross margin   3,630,897       5,737,443     18,503,309       7,770,813     Operating expenses: Research and development 9,718,388 2,711,070 15,854,721 5,442,855 Selling, general and administrative 12,898,591 8,282,484 23,121,904 13,862,366 Restructuring charge   1,134,254       —     1,134,254       783,701     Total operating expenses from continuing operations 23,751,233 10,993,554 40,110,879 20,088,922             Operating loss from continuing operations   (20,120,336 )     (5,256,111 )   (21,607,570 )     (12,318,109 )   Change in fair value of subordinated convertible notes and warrant liabilities 1,023,622

(857,965

)

1,147,183 231,013 Other (loss) income, net (277,757 ) (251,043 ) (477,613 ) (319,458 ) Interest income 183,125 10 183,276 185 Interest expense   (2,036,396 )     (226,169 )   (2,611,645 )     (289,396 )

Loss from continuing operations before discontinued operations

 

(21,227,742

)

   

(6,591,278

)

 

(23,366,369

)

   

(12,695,765

)

  Gain on sale of discontinued operations, net — — — 500,217 Income from discontinued operations, net   —       —     —       31,390   Net loss   (21,227,742 )     (6,591,278 )   (23,366,369 )     (12,164,158 )   Deemed dividend and accretion on Series C preferred stock

—

(1,538,934

)

—

(2,808,125

)

Dividend on Series C preferred stock   —       (368,697 )   —       (723,757 ) Net loss attributable to common stockholders $ (21,227,742 )   $ (8,498,909 ) $ (23,366,369 )   $ (15,696,040 )   Net loss per weighted average share, basic and diluted: From loss from continuing operations before discontinued operations attributable to common stockholders

$

(0.18

)

$

(0.12

)

$

(0.20

)

$

(0.22

)

From income from discontinued operations — — — — From gain on sale of discontinued operations   —       —     —       —   Net loss attributable to common stockholders per weighted average share, basic and diluted

$

(0.18

)

 

$

(0.12

)

$

(0.20

)

 

$

(0.22

)

  Weighted average number of common shares, basic and diluted   119,137,006       71,512,306     118,931,664       71,216,831