News Article
Slow Down Hits ARISE
Citing current financial influences, PV manufacturer ARISE announces reduced expectations
ARISE Technologies Corporation has commented on its 2008 financial results and the outlook for 2009. It also announced that it plans to release its year-end and fourth-quarter 2009 financial results after the close of the Toronto Stock Exchange on Monday, March 9. The company will hold its usual quarterly conference call and webcast the following morning at 8:30 a.m. (Eastern). ARISE will issue a release approximately one week earlier confirming details of the announcement and the call and webcast.
“It has become increasingly apparent that the global economic downturn is now affecting the solar industry as well. The turn has been fairly sudden and significant. We began to experience the effects in December when our customers started to defer purchasing of PV (photovoltaic) cells in view of the drop in their requirements,” said Vern Heinrichs, the company's recently appointed interim President and Chief Executive Officer.
“Reflecting this, while we could have delivered more PV cells and met our projections, our actual fourth-quarter shipments were approximately 6.2MW, a 24% increase from the 5MW shipped in the 2008 third quarter, following the start-up of our new plant in Germany. This brought our total shipments in the second half of 2008 to 11.2MW, compared with our most recent public projection of 12-13MW.
“As a result, we currently expect to report 2008 fourth-quarter revenue of about $18.5-19.5 million, which is below the $21 million to $24 million range that we had projected in our 2008 third-quarter result news release of November 11, 2008,” he said.
“We were successful in the fourth quarter in reducing the scrap rate by about 20% from the amount in the third quarter and achieved a further reduction in January. This is good progress and we expect to make further improvement as our manufacturing operations mature and we gain more experience.”
“ARISE expects to take an inventory valuation write-down in the 2008 fourth quarter of approximately $2.8 million,” said the company's Chief Financial Officer, Dave Chornaby. “This write-down is necessitated, in part, by the deferral of purchases by our customers and the global decline in pricing for PV cells and silicon that has taken place. To reflect this, we must write-down the value of both PV cells and silicon in our inventory.”
“When ARISE announced our third-quarter results,” Mr. Heinrichs said, “we also stated that we might incur a four-to-eight week delay in the planned start-up of Line 2 for PV cell manufacturing because the manufacturer of a key piece of equipment was behind schedule. We are pleased to report that we have been successful in our efforts to get the start-up of Line 2 back on track for early in the second quarter of this year.”
“Given the unstable nature of the economies in which we are operating and the uncertainties with which we and our customers are dealing, it would be imprudent for us to offer any guidance as to our expectations for 2009. It is our intention to try to scale our manufacturing over the course of 2009 to our best estimates of the demand levels. We currently are in discussions with both our customers and suppliers to determine whether adjustments in our agreements with them may be needed to reflect the changed economic circumstances. It is possible that these discussions may result in changes to our sales and purchasing volumes in 2009 as well as in pricing,” said Mr. Chornaby.
“These are extraordinarily tumultuous times and they require extraordinary measures and swift action by companies to deal with the rapidly changing conditions,” Mr. Heinrichs said. “Given that the solar industry, including our customers, now is being profoundly affected by the capital markets turmoil and recessionary environment, we are re-examining all of our spending plans and operating budgets. We are acting to tightly manage all of our costs and capital investments to deploy our funds where they will be most productive. This may mean delaying some projects at least until conditions improve and financing becomes more available at reasonable terms or even terminating them for now.
“Our broad strategies remain the same. We are focusing on the silicon and PV cell businesses as the areas that should enable us to grow impressively and profitably in the future to create long-term, sustainable value for our shareholders,” Mr. Heinrichs concluded.
“It has become increasingly apparent that the global economic downturn is now affecting the solar industry as well. The turn has been fairly sudden and significant. We began to experience the effects in December when our customers started to defer purchasing of PV (photovoltaic) cells in view of the drop in their requirements,” said Vern Heinrichs, the company's recently appointed interim President and Chief Executive Officer.
“Reflecting this, while we could have delivered more PV cells and met our projections, our actual fourth-quarter shipments were approximately 6.2MW, a 24% increase from the 5MW shipped in the 2008 third quarter, following the start-up of our new plant in Germany. This brought our total shipments in the second half of 2008 to 11.2MW, compared with our most recent public projection of 12-13MW.
“As a result, we currently expect to report 2008 fourth-quarter revenue of about $18.5-19.5 million, which is below the $21 million to $24 million range that we had projected in our 2008 third-quarter result news release of November 11, 2008,” he said.
“We were successful in the fourth quarter in reducing the scrap rate by about 20% from the amount in the third quarter and achieved a further reduction in January. This is good progress and we expect to make further improvement as our manufacturing operations mature and we gain more experience.”
“ARISE expects to take an inventory valuation write-down in the 2008 fourth quarter of approximately $2.8 million,” said the company's Chief Financial Officer, Dave Chornaby. “This write-down is necessitated, in part, by the deferral of purchases by our customers and the global decline in pricing for PV cells and silicon that has taken place. To reflect this, we must write-down the value of both PV cells and silicon in our inventory.”
“When ARISE announced our third-quarter results,” Mr. Heinrichs said, “we also stated that we might incur a four-to-eight week delay in the planned start-up of Line 2 for PV cell manufacturing because the manufacturer of a key piece of equipment was behind schedule. We are pleased to report that we have been successful in our efforts to get the start-up of Line 2 back on track for early in the second quarter of this year.”
“Given the unstable nature of the economies in which we are operating and the uncertainties with which we and our customers are dealing, it would be imprudent for us to offer any guidance as to our expectations for 2009. It is our intention to try to scale our manufacturing over the course of 2009 to our best estimates of the demand levels. We currently are in discussions with both our customers and suppliers to determine whether adjustments in our agreements with them may be needed to reflect the changed economic circumstances. It is possible that these discussions may result in changes to our sales and purchasing volumes in 2009 as well as in pricing,” said Mr. Chornaby.
“These are extraordinarily tumultuous times and they require extraordinary measures and swift action by companies to deal with the rapidly changing conditions,” Mr. Heinrichs said. “Given that the solar industry, including our customers, now is being profoundly affected by the capital markets turmoil and recessionary environment, we are re-examining all of our spending plans and operating budgets. We are acting to tightly manage all of our costs and capital investments to deploy our funds where they will be most productive. This may mean delaying some projects at least until conditions improve and financing becomes more available at reasonable terms or even terminating them for now.
“Our broad strategies remain the same. We are focusing on the silicon and PV cell businesses as the areas that should enable us to grow impressively and profitably in the future to create long-term, sustainable value for our shareholders,” Mr. Heinrichs concluded.
