Satcon Technology Corporation. (
Q1 2011 Earnings Call
April 26, 2011 5:00 pm ET
Leah Gibson – Investor Relations
Steve Rhoades – President and Chief Executive Officer
Donald R. Peck – Chief Financial Officer and Treasurer
Colin Rusch – Thinkequity LLC
Ahmar Zaman – Piper Jaffray
John Hardy – Gleacher & Company
Dale Pfau – Cantor Fitzgerald
Carter Driscoll – Capstone Investments
Joe Maxa – Dougherty & Company LLC
Adam Krop – Ardour Capital Investments
Pavel Molchanov – Raymond James
Jeff Osborne – Stifel Nicolaus & Company, Inc.
Previous Statements by SATC
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» SatCon Technologies Corp. Q1 2010 Earnings Call Transcript
Good afternoon and welcome everyone to Satcon’s first quarter 2011 conference call. Today’s call is being recorded. You may listen to the webcast on Satcon’s website located at
. In addition, today’s news release is posted on the site for those of you who did not receive it by email.
With us today, are Satcon’s President and Chief Executive Officer, Mr. Steve Rhoades; Chief Financial Officer, Mr. Don Peck; and Investor Relations Manager, Ms. Leah Gibson.
At this time for opening remarks, I’d like to turn the call over to Ms. Gibson. Please go ahead.
Thank you, Manley and welcome to the call everyone. Before we begin, please note that the comments made on this conference call today may include forward-looking statements that involve a number of risks and uncertainties. For this purpose, any statements contained herein, that are not statements of historical facts, may be deemed to be forward-looking statements and may include the words, believes, anticipates, plans, expects, intend and similar expressions, which are intended to identify forward-looking statements.
Important factors that could cause actual results to differ materially from those inferred by such forward-looking statements are set forth under the caption Risk Factors in Satcon’s Annual Report and Quarterly Report on Form 10-Q for the quarter ended December 31st, 2011. These factors are included there for reference. Once filed with the SEC, copies of the 10-Q will be available from Satcon upon request and will be posted to the company’s Investor Relations website at satcon.com.
In addition, today’s call is being recorded and a webcast replay will be available on the Investor Relations website. This conference call and associated recordings belong to Satcon and are prepared for the benefit of our investors.
I will now turn the call over to our President and Chief Executive Officer, Steve Rhoades. Steve?
Thanks, Leah and good afternoon everyone. Satcon recognized another strong quarter with revenue of $62 million, our largest first quarter in the company's history and an increase of over 320% from the first quarter of 2010. While, we are pleased with our first quarter growth over Q1 of last year as we announced on April 7, our revenue for the quarter was below our initial projections of $65 million to $70 million. These lower than expected revenues with a result of the much weaker market in Europe than anticipated as well as some shipments postponed to later in the year by our customers.
Our gross margin for the quarter 24%, below our initial projected range of 25% to 27% as the result of the lower than expected shipments we experienced in Q1. We ended the first quarter with the backlog of approximately $72.2 million, up 28% over our backlog of $56 million at March 31, 2010.
Bookings for the quarter were $35.5 million and equaled the 132 megawatt of our Inverter Solutions. Our bookings performance in North America and Asia this quarter was consistent with our expectations. But Europe under performed due to the combination of seasonality and the current uncertainty related to the feed interrupts in the key markets of Germany and Italy.
Although the market situation in Europe remains unclear, our diversified market approach positions us to expand our leadership positions in both North America and Asia. While we continue to be very competitive through a combination of our technology leadership and our ongoing focus to deliver the industry’s highest performing solutions with the lowest levelized cost of energy.
We expect our Q2 revenues to be between $50 million and $60 million, which will be roughly double the revenues in Q2 2010. We believe the negative effects of the European markets will reduce our revenue and gross margin through Q2, both due to the impact of lower revenues and the impact of a mix shift as a higher percentage of volume of sales are generated from Asia relative to Europe.
In addition we expect to incur higher material costs for our new products Solstice, Equinox, and Prism platform, which are being launched at our Boston Design Center. As we implement cost reductions on these products throughout the quarter, we expect to write down existing on hand inventories to their new lower cost.
These four factors will have a short-term effect on our gross margins resulting in a guidance of 17% to 20% of sales. We are still targeting to be at 30% in gross margin by the end of 2011 with aggressive cost reduction initiatives already underway and anticipated higher volumes in the second half of the year.
As we look to the second half of the year, we expect that the market conditions we experienced in Q1 will be offset by strong demand from utility scale solutions. As many of these historically strong market pose to define their next phases of incentive structures and regulation, we are seeing market driven factors contributing to the growth of the utility scale sector in North America and Asia.