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Evergreen Solar to double workforce thanks to new manufacturing facility
By Ann Steffora Mutschler, Senior Editor -- Electronic News, 4/20/2007
Marlboro, Mass.-based solar wafer provider Evergreen Solar Inc. said this week it intends to expand its manufacturing operations with a new facility expected to be located on the campus of the Massachusetts Technology Collaborative (MTC) in Westborough, Mass., bringing its employee base in the state to more than 600.
The company said its board of directors has approved the construction of a $150 million facility that will increase the company’s production capacity in Massachusetts by 70-megawatts.
Evergreen Solar currently operates its prototype production and manufacturing facility in Marlboro, Mass.
Richard M. Feldt, chairman, president and CEO of Evergreen Solar said in a statement, “Over the last three years, we have shown that our string ribbon technology is scalable as we have increased annual sales fourfold to approximately $100 million in 2006 through our joint venture in Europe.”
“Our new plant in Massachusetts is a natural evolution of this market penetration as we focus on the significant opportunities in the United States. Several states aggressively pursued our planned new facility,” he explained.
Mass. Governor Deval Patrick’s vision for broad scale solar power adoption through a solar incentive program as well as the financial incentive programs that the governor, the legislature and the town of Westborough are expected to provide were key factors in the company’s decision to expand in the state, Feldt also noted.
The Commonwealth of Massachusetts support program is expected to include up to $23 million in grants, up to $17.5 million in low-interest loans and a low-cost, 30-year lease of MTC land. Construction of Evergreen Solar’s new facility is planned to begin in early fall with completion expected in late 2008.
Helping Evergreen Solar meet demand in its new facility will be DC Chemical Co. Ltd., which will supply polysilicon under a newly-inked, multi-year agreement. Shipments are to begin in late 2008 and continue through 2014.
Under the agreement, Evergreen Solar will receive enough polysilicon to manufacture a total of approximately 1-gigawatt of photovoltaic solar modules through 2014.
Along with the supply agreement, DC Chemical has agreed to purchase 3 million shares of Evergreen Solar common stock for $12.07 per share, representing the closing price of Evergreen Solar’s common stock on the Nasdaq Global Market on April 16. Evergreen Solar agreed to issue 4.5 million shares of restricted common stock and 625 shares of restricted preferred stock to DC Chemical.
The preferred stock will automatically convert into 6.25 million shares of restricted common stock upon the termination of the applicable waiting period under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, which is expected to occur within 30 days of the closing.
Finally, the solar product supplier announced sales for its Q1 ended March 31 of $12.6 million compared to $11.6 million in Q1 2006.
Total worldwide sales of String Ribbon product were $40.2 million in Q1, including $27.6 million of sales from EverQ - Evergreen Solar’s joint venture with Q-Cells A.G. and Renewable Energy Corporation ASA.
Evergreen Solar provides worldwide sales of product manufactured with its String Ribbon technology as the company believes it is a useful indication of the full market penetration and growth of its technology.
Gross margin was $2.8 million, or 20 percent, including income of $1.5 million related to the marketing and sale of EverQ modules by Evergreen Solar and royalty payments for Evergreen Solar’s technology contribution to EverQ. Comparatively, Q1 2006 gross margin was a negative $1.5 million or 12.5 percent.
Q1 net loss was $6.2 million, or 9 cents per share, compared to $8.1 million, or 13 cents per share, in Q1 2006.
Looking ahead to Q2, product revenue from Evergreen Solar’s Marlboro facility for is expected to be approximately $12.5 to $13.5 million.
Other revenue is expected to be approximately $1.5 to $1.75 million, consisting of fees from EverQ for the marketing and sale of EverQ modules by Evergreen Solar and royalty payments for Evergreen Solar’s technology contribution to EverQ.
Gross margin is expected to be in the range of 22 to 24 percent, with operating expenses expected to be in the range of $10.25 to $10.75 million, including R&D costs of $5.25 to $5.5 million and factory start-up costs of approximately $500,000 relating to Evergreen Solar’s announced expansion initiative.
The EverQ-2 factory is expected to commence product shipments during Q2 and reach full manufacturing capacity by the end of the year, the company concluded.
