Evergreen Solar (ESLR)
Q1 2010 Earnings Call
May 05, 2010 8:30 am ET
Michael McCarthy - Director of Investor Relations
Michael El-Hillow - Chief Operations Officer, Chief Financial Officer, Principal Accounting Officer and Secretary
Richard Feldt - Executive Chairman, Chief Executive Officer and President
Sanjay Shrestha - Lazard Capital Markets LLC
Stephen Chin - UBS Investment Bank
Kelly Dougherty - Macquarie Research
Paul Clegg - Jefferies & Company, Inc.
Robert Stone - Cowen and Company, LLC
Adam Krop - Ardour Capital
Smittipon Srethapramote - Morgan Stanley
Christopher Blansett - JP Morgan Chase & Co
Burt Chao - Simmons
Previous Statements by ESLR
» Evergreen Solar, Inc. Q4 2009 Earnings Call Transcript
» Evergreen Solar Q3 2009 Earnings Call Transcript
» Evergreen Solar Inc. Q2 2009 Earnings Call Transcript
Good day, everyone, and welcome to Evergreen Solar's First Quarter 2010 Conference Call. [Operator Instructions] At this time, for opening remarks, I'd like to turn the conference over to Mr. Michael McCarthy, Director of Investor Relations and Government Affairs. Please go ahead, sir.
Thank you, and good morning. I'm joined today by Rick Feldt, Chairman, President and CEO; and Mike El-Hillow, Chief Operating Officer and Chief Financial Officer, both of whom will share some prepared remarks prior to taking questions.
Before we begin today's call, we'd like to remind everyone that statements made in this conference call will include forward looking statements, made pursuant to the Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934.
Management will be discussing expectations, beliefs, strategies, goals, outlook and other non-historical matters. In particular, statements will be made to address the company's ability to cost-effectively manufacture products, to improve operations in Devens, Massachusetts; to develop its role on China factory; to transition panel assembly operations to China and otherwise expand production rapidly; as well as expectations regarding product demand and pricing. These and other forward-looking statements are neither promises nor guarantees and are subject to a number of risks and uncertainties that will cause our actual results to differ. Such risks and uncertainties include those described in filings that the company makes from time to time with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they're made. I'll now turn the call over to Rick for his review of the first quarter. Rick?
Thanks, Mike, and good morning, everyone. I will focus on four areas of my prepared remarks this morning. First, the strong performance we continue to see from our operations in Devens. Second, our progress in China. Next, our progress we are making with our key technology programs. Then finally, I will share some brief comments with respect to our view of near-term market outlook.
Mike will provide you with a comprehensive financial update, which will include the impact of the recently completed convertible securities transactions and the completed sale of Sovello. During the first quarter, we shipped a record 35.4 megawatts from Devens, up from 31.9 megawatts shipped in the fourth quarter of 2009. Our wafer costs were $0.65 per watt, down from $0.69 in the fourth quarter.
Silicon consumption was further trimmed to an industry-leading 3.8 grams per watt. Devens is producing wafers that are cost competitive with many of our larger China-based competitors today. And there is more to come. Our R&D team is developing ways to improve performance of our Quad technology at a time when we are simultaneously reducing silicon costs and scaling on low-cost manufacturing capacity in China. All of which will result in further reductions of wafer costs allowing us to reach our 2012 goal of $0.30 per watt.
Devens has shown consistent improvements in start up, and we are pleased with its performance. Given these operational improvements, we now believe we can achieve a Devens cost of about $1.20 per watt in late 2011 to additional operational efficiencies, reducing material costs, including silicon, and transitioning our Devens panel assembly to China, which we mentioned previously.
On our last call, I said we expect the Devens panel transition process would likely take between 12 to 18 months. This transition will be done in conjunction with the construction of our 100-megawatt facility in China. During the second quarter, we expect to begin shipping a limited amount of cells produced in Devens that will be processed into panels in China and we're rapidly increasing the amount throughout the year. By early 2011, we expect to have 20 megawatts of panel capacity in China to accommodate the cells made in Devens and will complete the transition by mid-2011.
Now onto our expansion in China. Today, the wafer Quad building is complete. And we have installed 10 trainee Quad furnaces that have produced our first wafers in China. John has made similar progress on the selling panel facilities. We are on schedule to begin production of panels in early July. This facility reaches about 20 megawatts of capacity per quarter expected in early 2011, we expect to initially produce a wafer for about $0.40 per watt and have a total cost at the panel level of about $1.25 per watt.
The on-math will rapidly decrease our cost as we improve factory operational efficiency and raise 5 megawatts per quarter by mid-2011. As our performance at Devens has demonstrated, yield to the cell and panel fabs using String Ribbon wafers are similar to yields in factories that utilize caps and [ph] wafers. Therefore, working with Jiawei, we believe that we can achieve selling panel conversion costs that are competitive with industry-leading performance and have total panel cost of about $0.90 per watt by the end of 2012, including a wafer cost of about $0.30 per watt. As a result of our recent financing, our strength and financial position affords us the flexibility to assess both the timing and expense of our expansion in China.