Satcon Technology Corporation (SATC)
Q2 2010 Earnings Conference Call
August 5, 2010 5:00 PM ET
Leah Gibson – IR Manager
Steve Rhoades – President and CEO
Donald Peck – CFO
Dale Pfue – Cantor Fitzgerald
Joseph Maxa – Dougherty & Company
Michael Kumatsky -American Capital
Pavel Molchanov – Raymond James
Jeff Osborne – Stifel Nicolaus & Co.
Adam Krop – Adour Capital Investment
Chris (ph) – Treaty Oak Capital
Joe Eisenberg – Renewable Analytics
Dragos Georgescu – Cambria Capital
Previous Statements by SATC
» SatCon Technologies Corp. Q1 2010 Earnings Call Transcript
» SatCon Technology Corporation Q4 2009 Earnings Call Transcript
» SatCon Technology Corporation Q3 2009 Earnings Call Transcript
Good afternoon and welcome everyone to SatCon’s second quarter 2010 conference call. Today’s call is being recorded. You may listen to the webcast on SatCon’s website located at www.satcon.com. In addition today’s news release is posted on the site for those of you who have received it by email.
With us today are SatCon’s President and Chief Executive Officer, Steve Rhoades, and Chief Financial Officer, Don Peck and Investor Relations Manager, Leah Gibson. At this time for opening remarks, I would like to turn the call over to Ms. Gibson. Please go ahead.
Thank you Devon 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 statement contained herein that are not statements of historical fact, may be deemed to be forward-looking statements and may include the words believe, anticipate, plan, expect, 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 on Form 10-K for the year ended December 31, 2009, and the company’s quarterly report on Form 10-Q ended June 30, 2010. 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 website at stacon.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 recorded belong to SatCon and are prepared for the benefit of our investors.
Finally I would like to mention that Satcon is presenting at the Needham Clean Technology Conference in New York on Monday August 9, at 1:20 PM. A live webcast of management’s presentation will be available on our investor website at satcon.com and an archive recording will be available for 90 days.
With that I’ll turn the call over to our President and Chief Executive Officer, Steve Rhoades, Steve?
Thanks Leah, good afternoon everyone. I’m pleased to report to you in the largest revenue quarter in SatCon’s history. We are very pleased to have posted revenues near the high end of our guidance of $28 million with Q2 2010 ending at $27.6 million.
This represents an increase of almost 2.5 times our reported renewable energy solutions revenue from the same quarter a year ago. Gross margin also came in above our goal at 21%. A significant improvement over the last quarter’s recorded 14%. And we expect this trend in gross margin to continue throughout the second half of the year and into 2011.
Our gross margin improvement has been fuelled in part by the now completed transfer of our primary supply chain and manufacturing to our lower cost facility in Shenzhen, China which delivered over 85% of our products that were shipped in the second quarter. We have also completed efforts to streamline our manufacturing operations in Burlington, Ontario which now provides Satcon additional capacity to meet global demand and better serve the rapidly expanding Ontario’s solar market.
We’ve seen this market grow in the last six months, fuelled by the introduction of the problem since first Feed-In Tariff which requires a significant portion of the equipment to be installed to be manufactured locally.
During the quarter, we shipped a 105 megawatts of SatCon’s industry leading solutions. SatCon’s 500 kilowatt PowerGate Plus solution continued to be our strongest performing product. Shipping 66 megawatts and representing 300% growth over the number of 500 kilowatt units shipped in the second quarter of 2009. Our 500 kilowatt PowerGate Plus is the most widely deployed utility ready solar PV inverter of its size with over 600 megawatts sold worldwide since its introduction in 2005.
As of August 3, 2010 the company’s backlog which consists of firmed fixed purchase orders with customers totaled over $110 million. This is a significant increase over the $80 million in backlog announced last quarter and it shows the growing market for utility projects as well as the demand for SatCon’s industry leading technology for this sector. The current backlog consists of 390 megawatts of our large scale inverter solutions at 250 kilowatts and above and reflects our growing global footprint and success securing large portions of market share in Europe and Asia while maintaining our dominant position in the evolving large North American inverter market.
Given our first half shipments, along with our second half backlog in pipeline, we firmly believe that we will acquire well over 20% of the 2010 global market for PV inverters in 250 kilowatts and above. This global demand has driven our recent move to raise our global manufacturing capacity to over 1 Gigawatts and move towards the 2011 global capacity of 1.75 Gigawatts.