SatCon’s ( SATC) Q3 2011 Earnings Call November 8, 2011 9:00 am ET Executives Leah Gibson – Director of Investor Relations Charles S. Rhoades – President, Chief Executive Officer & Director Aaron M. Gomolak – Chief Financial Officer, Executive Vice President & Treasurer Analysts Colin Rush – Sync Equity Dale Pfau – Cantor Fitzgerald Jessie Pichel – Jefferies & Company Carter Driscoll – CapStone Investments Joseph A. Maxa – Dougherty & Company Adam Krop – Ardour Capital Investments Al Shams – MidSouth Capital Presentation Operator
Previous Statements by SATC
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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 quarterly report on Form 10Q for the quarter ended September 30, 2011. These factors are included there for reference. Once filed with the SEC copies of the 10Q will be available from SatCon upon request and will be posted to the company’s investor relations website at www.SatCon.com.In addition, today’s call is being recorded and a webcast/webplay will be available on the investor relations website. This conference call and associated records belong to SatCon and are prepared for the benefit of our investors. With that, I’ll turn the call over to our President and CEO Steve Rhoades. Charles S. Rhoades Let me begin by providing an overview of our performance this quarter and then Aaron will take you through the financials before we turn the call over to the operator for your questions. Briefly recapping our top line results, revenue for the third quarter was $45 million in line with our reported guidance and relatively flat over sales during Q2 of this year. Despite the compounding effects of reduced panel prices delaying many projects and the continued slowdown of the European solar market, demand for our large scale inverter solutions has remained strong resulting mostly from the robust growth in North America. Revenues in North America in the first nine months of the year grew 131% over the same period in 2010. Shipments into North America in the 2011 period increased 168% compared with last year, while global megawatts grew 68%. To date, we have shipped over 653 megawatts of our solutions, putting us in a strong position to surpass the 688 megawatt mark we achieved for the full year in 2010. This growth has also been fueled by business with our four large EPC customers where we have grown revenues 87% year-over-year and megawatts shipped to these partners by 119% in the same period.
Looking at the quarter, we continue to see our strongest performing solutions within the large scale commercial and utility segments greater than 250 kilowatts where we shipped 151 megawatts out of a third quarter total of 181. Gross margin for the quarter was 12% compared with 8% in Q2. As we discussed on our Q2 call, we’ve initiated a number of actions to improve our margin performance. We are resizing the company to align our cost structure with projected revenues implementing material cost reduction programs across all our product lines and continue to execute on product innovations that allow us to capture a greater portion of balance system revenue by delivering complete systems that deliver competitively differentiated system wide value.We are progressing on all these fronts as evidenced through our incremental improvement in margin as well as through the continued growth of our product portfolio through successful solution launches in the quarter. An example of this is the expansion of our Prism Platform solution. In the quarter, we grew our integrated platform portfolio to include the 1.25 megawatt Equinox Prism Platform. To date, we have sold over 150 megawatts of the prism integrated solutions. The 1.25 megawatt Equinox Prism Platform’s industry meeting 98% weighted CEC efficiency is combined with turnkey solution value removing costly system integration traditionally done in the field by delivering a complete and test medium voltage power conversion system straight from our SatCon Boston facility. This allows for a significant reduction in time and expensive system construction while ensuring the highest levels of system performance through a highly optimized design. The strength of the North American market in the quarter is also evident by the successful development of many of the projects that were initiated last year. In 2010 Southern California Edison selected SatCon’s PowerGate Plus 500 Kilowatt as the primary building block for its 250 megawatt solar voltaic program. Since its launched we have delivered approximately 50 megawatts for our solutions for this project. In addition, these volumes when combined with multiple projects we have been awarded with additional California utilities, brings SatCon’s sales for utility owned solar power generation to over 100 megawatts in California alone. Read the rest of this transcript for free on seekingalpha.com