Evergreen Solar (ESLR)
Q3 2010 Earnings Call
November 02, 2010 8:30 am ET
Mark Fidler -
Scott Gish - Vice President of Sales & Marketing
Michael McCarthy - Director Investor Relations & Governmental Affairs
Michael El-Hillow - Chief Executive Officer, President, Chief Operations Officer and Director
Smittipon Srethapramote - Morgan Stanley
Hari Chandra - Deutsche Bank
Josh Baribeau - Canaccord Adams
Stephen Chin - UBS Investment Bank
Kelly Dougherty - Macquarie Research
Benedict Pang - Caris & Company
Christopher Blansett - JP Morgan Chase & Co
Previous Statements by ESLR
» Evergreen Solar Q2 2010 Earnings Call Transcript
» Evergreen Solar Q1 2010 Earnings Call Transcript
» Evergreen Solar, Inc. Q4 2009 Earnings Call Transcript
Good day, everyone, and welcome to the Evergreen Solar's Third Quarter 2010 Conference Call. [Operator Instructions] At this time, for opening remarks, I would like to turn the call over to Mr. Michael McCarthy, Director of Investor Relations. Please go ahead, sir.
Thank you, and good morning. I'm joined today by Mike El-Hillow, our President and CEO; and Mark Fidler, our Vice President of Finance. Both of them will share some prepared remarks. Scott Gish, Vice President of Global Sales and Marketing will be joining them for the Q&A portion of our call this morning. In addition to the press release that was issued last night, we have prepared several slides that may be referenced during this morning's call. If you have not already accessed them, you can do so by going to our website at www.evergreensolar.com, and clicking on the Invest tab at the top right part of the landing page.
Before we begin today's call, we'd like to remind everyone that statements maybe made during the call, which 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 items. In particular, statements will be made to address the performance of the company's wafer manufacturing furnaces; the company's ability to cost-effectively manufacture products; to improve operations in Devens, Massachusetts; ramp its Wuhan, China factory; to transition panel assembly operations to China and otherwise, expand production rapidly; expected manufacturing costs as well as expectations regarding product demand and pricing and the company's cash requirements.
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, including inherent difficulties in predicting the benefits of new technologies that often [ph] involve a market for solar grade silicon and the difficulty in forecasting customer demand in volatile and uncertain market for the company's products.
Such risks and uncertainties also 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 are made. The company undertakes no obligation to update any forward-looking statements made on this call or otherwise.
I'll now turn the call over to Mike for his review of the third quarter. Mike?
Thanks, Mike, and good morning, everyone. Evergreen took some very important steps during the third quarter. During our prepared remarks and through our Q&A this morning, we expect to provide you with a better understanding of what these milestones mean for the long-term growth of our company. I will begin this morning's call with a discussion of the continued outstanding performance in Devens, and the commencement of commercial operations in Wuhan. Then I will give [ph] you some finer detail about the technology, which differents Evergreen from every other solar companies today, our String Ribbon wafers. Mark will then provide you with a comprehensive financial update.
During the quarter, we shipped a record 42.6 megawatts to customers, while all of which was produced in Devens, up from 39.8 megawatts just in the second quarter. While we did produce 3.4 megawatts of Evergreen Solar branded panels in Wuhan, which we had purchase orders, the product was still en route to our distribution warehouse in Europe and therefore, not included in revenue.
Mark will explain our revenue recognition policy of product manufacture in Wuhan shortly. If we had recognized revenue at the time of shipment from Wuhan, would've sold a total of 46 megawatts worldwide for the quarter.
Our average selling price for the third quarter was $2.02 per watt, which was a very modest $0.02 decrease from the second quarter. As many of you know, the demand for solar panels during the period was robust, softening the downward pricing trend that industry has been seeing for the past 18 months now.
Also, the stronger euro has a positive impact on selling prices. I also want to reinforce that Evergreen Solar panels continue to generate premium pricing due to several factors. The feedback we received consistently from installers working with Evergreen product pertains to panel quality and power performance. Stated more simply, in any given environmental condition, Evergreen panels outperformed.
Our costs at the panel level are improving steadily. Manufacturing costs at Devens were down about 3% to $1.88 per watt, compared to $1.94 per watt in the second quarter. From the start of 2010, our total panel costs at Devens have decreased from $2.05 per watt. Our silicon consumption continues to be an industry-leading at 3.7 grams per watt.
Though we have made steady progress so far, our future success unequivocally requires us to further reduce costs. One of the ways we will continue to lower cost is if we gradually increase the number of Devens-made cells shipped to China to be assembled into panels. Combined with other cost reduction initiatives, we will reduce panel costs to about $1.15 per watt, with a cash cost of $1 per watt by the end of 2010.
Today, we are shipping limited quantities of cells to China while we focus on ramping that factory. Another way for us to reduce overall module cost is to build new capacity in China as we are now doing with our facility in Wuhan. We will be able to take advantage of being in a low-cost manufacturing region, but we will benefit from lower labor and overhead costs, and we'll also be able to more quickly realize lower material costs by sourcing lower-cost materials locally.