Day4 Energy Reports First Quarter 2012 Results

BURNABY, BC, May 15, 2012 /CNW/ - Day4 Energy Inc. (TSX: DFE), a leading global provider of solar photovoltaic (PV) products and solutions, today reported operating results for the first quarter of 2012.

"We are operating in an extremely challenging market plagued with oversupply, falling prices and tremendous uncertainty of what the future holds in respect of government subsidies and with that overall demand in some of our core markets. Unfortunately this market pain is unavoidable as our industry transitions from the subsidy supported supply dominated market to a real business of supplying cost competitive energy solutions based on PV technology to customers around the world. While the transition can take some time, I do believe that our products and technology could play a significant role in the revival of the PV market at some point in the future." noted George Rubin, President and CEO of Day4 Energy. "Today our focus is on making sure that we can manage through these extremely challenging times while preserving as much value for all of our company's stakeholders as possible under the circumstances." added Mr. Rubin

Q1 2012 FINANCIAL RESULTS FROM CONTINUING OPERATIONS

Worldwide Product Revenues
First quarter revenues of $6.5 million declined from $16.0 million or 59% from the same period in 2011 and by $1.8 million or 22% from the prior quarter. As the global market migrated to higher overall supply in 2011, prices fell, thus reducing sales revenues in combination with lower availability of Day4 product. These market conditions continued into early 2012 resulting in consistent downward pressure on our selling prices and revenues.

Gross Loss
Gross loss was $0.7 million (10.5%) for the first quarter of 2012 as compared to a gross loss of $2.7 million (17%) in the same quarter of 2011 and a gross loss of $1.4 million (17%) in the fourth quarter of 2011. The continuing negative margins were due to several factors including decreasing sales prices and downward inventory adjustments to market.

Expenses
For the first quarter of 2012, general and administrative (G&A) expenses were $2.3 million, a decrease of $0.7 million and an increase of $0.3 million from expenses of $3.0 million for the prior quarter and $2.0 million for the same period in 2011, respectively. G&A expenses in the first quarter of 2012 include higher overhead costs being charged to G&A for professional fees and travel.

Research and development (R&D) expenses in the first quarter were $0.7 million compared to $0.3 million for the prior quarter and $1.2 million for same period in 2011. The decrease in R&D expenses in 2012 was a result of the overall cost-cutting measures across the Company.

Sales and marketing expenses were $0.7 million for the first quarter of 2012 compared to $0.6 million in the same period in 2011 and $1.2 million in the fourth quarter of 2011. The increase is mainly related to the addition of $0.2 million provision for PV module warranties in the first quarter of 2012.

Loss per Share
The net loss from continuing operations for the first quarter of 2012 was $4.1 million ($0.07 per share) compared to $11.2 million ($0.21 per share) in the prior quarter and a net loss of $6.3 million ($0.14 per share) for the same period in 2011. The continuing net losses are a direct result of the deteriorated PV market conditions.

Cash and Short-Term Liquidity
Working capital was negative $7.0 million at the end of the first quarter of 2012, a decrease of $3.0 million compared to the previous quarter. Cash, cash equivalents and restricted cash totaled $2.0 million at March 31, 2012, a decrease of $5.2 million from $7.2 million at December 31, 2011. Cash and cash equivalents have decreased since December 31, 2011 primarily due to the utilization of funds to finance operations.

Detailed financial results and management's discussion and analysis can be found on our website at www.day4energy.com or on SEDAR at www.sedar.com.

About Day4 Energy
Day4 Energy Inc. is a Canadian company dedicated to providing high performance photovoltaic (PV) solutions for residential, commercial and utility scale installations. By fundamentally improving on the design and assembly of solar cells and modules, the Company produces unique PV panels of high power density, increased lifetime and uncompromised aesthetic appearance. Day4 Energy partners with international technology leaders to develop and deliver IEC- and UL-certified solar products to customers around the world. Day4 Energy is listed on the Toronto Stock Exchange under the symbol "DFE". For more information, please visit www.day4energy.com.

Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements include, among other things, statements relating to our expectations regarding our revenues, expenses, cash flows, operating performance and future profitability. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target", and similar words suggesting future events or future performance.

The forward-looking statements contained in this news release are based on assumptions, which include, but are not limited to the minimum base of licensed manufacturing capabilities required for revenues to become sufficient to cover the costs of the Company's operations; the interest of third parties in manufacturing Day4's products under license; our ability to meet and manage demand for our products; achieving increased PV cell and PV module efficiencies; expanding our existing product line; developing new markets for our products and securing necessary certifications in such markets; building the Day4 brand, attracting customers, and developing and maintaining customer and supplier relationships; continuing our strong relationships with our suppliers; effectively managing foreign exchange risks; effectively managing credit risks of customers and other counterparties; protecting our intellectual property rights and not infringing on the intellectual property rights of third parties; timely processing by certification agencies for new products; the continued existence of government incentives for the generation of electricity using solar power; and complying with applicable governmental regulations and standards.

Such forward-looking statements are subject to risks, uncertainties and other factors, including those listed in our Annual Information Form filed with Canadian securities regulatory authorities, many of which are beyond our control and each of which contributes to the possibility that our forward-looking statements will not occur or that actual results, performance or achievements may differ materially from those expressed or implied by such statements. These risks, uncertainties and other factors include, but are not limited to dilution risk; risks related to our ability to reduce costs by way of divesting of certain assets and certain unprofitable parts of our operations; government subsidies and economic incentives for PV power could be reduced or eliminated; the financial strength of our competitors; risks related to third parties infringing on our intellectual property; our financial strength and our ability to effectively manage our cash flow; there may be a lower than expected interest from third parties in licensing Day4's proprietary technology; the absence of confirmed PV cell suppliers could impact our ability to secure third party licensees of our technology with PV cells incorporating Day4's technology; the non-production of Day4 PV modules until licensed manufacturers are established may damage our sales channels, our brand and our reputation; the possibility that we may be subject to litigation by our suppliers or customers; warranty claims; risks relating to the protection of our intellectual property and intellectual property infringement claims by third parties; our reliance on a limited number of suppliers; competition from other forms of renewable energy; our ability to manage growth effectively; our ability to open up new markets for our products; demand for PV modules may reduce; risks relating to negotiating and closing contracts with Ever Energy Co. Ltd; technological advances from competitors that may render our products uneconomic or obsolete; the impact of general economic, market or business conditions; currency market fluctuations; and other factors, many of which are beyond our control.

The forward-looking statements made in this news release relate only to events or information as of the date indicated above. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Day4 Energy Inc.
Interim Consolidated Statements of Financial Position (unaudited)
(Expressed in Canadian Dollars) 

		March 31, 2012 $		December 31, 2011 $
Assets
Current assets
Cash and cash equivalents		1,829,441		7,059,862
Restricted cash (note 6)		185,100		185,000
Trade receivables		4,084,029		4,463,586
Unbilled receivables (note 7)		-		535,914
Warranty claim receivable		1,544,369		1,529,415
Other receivables (note 8)		1,671,626		1,879,907
Current portion of debenture receivable (note 5)		347,460		-
Inventory (note 9)		4,217,184		8,375,914
Prepaid expenses		460,218		607,433
		14,339,427		24,637,031
Non-current assets
Property, plant and equipment (note 10)		9,233,921		13,368,766
Debenture receivable (note 5)		1,385,517		-
		24,958,865		38,005,797
Liabilities
Current liabilities
Trade payables and accrued liabilities		16,413,198		21,307,307
Provisions (note 11)		3,033,036		3,115,026
Deferred revenue		1,198,855		430,456
Current portion of long-term debt		726,811		3,512,805
Current portion of finance lease obligations		-		308,355
		21,371,900		28,673,949
Non-current liabilities
Long-term debt (note 12)		91,203		1,062,345
Deferred revenue		162,084		-
Finance lease obligation (note 13)		-		123,435
		21,625,187		29,859,729
Shareholders' Equity
Share capital (note 15)		137,244,624		137,244,624
Contributed surplus		3,356,027		3,346,341
Deficit		(131,403,380)		(126,426,944)
Accumulated other comprehensive loss		(5,863,593)		(6,017,953)
		3,333,678		8,146,068
		24,958,865		38,005,797

Day4 Energy Inc.
Interim Consolidated Statements of Loss and Comprehensive Loss (unaudited)
(Expressed in Canadian Dollars)

			Three months ended March 31
			2012 $	2011 $
Revenues			6,506,037	15,999,162
Cost of revenues			7,191,407	18,733,774
Gross margin (loss)			(685,370)	(2,734,612)
Expenses
General and administrative			2,302,192	2,035,208
Research and development			687,905	1,189,651
	Less: Government assistance (note 17)		(62,794)	(73,569)
Selling and marketing			669,099	643,750
			3,596,402	3,795,040
Loss from operating activities			4,281,772	6,529,652
Foreign exchange gain			139,177	414,144
Interest and other income			103,628	(7,686)
Interest expense			(20,826)	17,376
Gain on disposal of property, plant and equipment			17,019	-
			238,998	423,834
Loss before income taxes			4,042,774	6,105,818
Income taxes			25,621	219,056
Loss from continuing operations			4,068,395	6,324,874
Net loss from discontinued operations (note 5)			(908,041)	(663,384)
Net loss for the period			4,976,436	6,988,258
Other comprehensive gain (loss)
Unrealized foreign exchange gain on translation of consolidated financial statements to the presentation currency			154,360	1,188,926
Total comprehensive loss			(4,822,076)	(5,799,332)
Net loss per share from continuing operations - basic and diluted			(0.07)	(0.14)
Net loss per share from discontinued operations - basic and diluted			(0.02)	(0.02)
			(0.09)	(0.16)

 

Day4 Energy Inc.
Interim Consolidated Statements of Changes in Equity (unaudited)
(Expressed in Canadian Dollars)

		Share capital	Equity component of consideration issuable for business acquisition	Contributed surplus	Deficit	Accumulated other comprehensive income	Total equity
Balance, January 1, 2012		137,244,624	-	3,346,341	(126,426,944)	(6,017,953)	8,146,068
Net loss for the period					(4,976,436)		(4,976,436)
Foreign currency translation						154,360	154,360
Comprehensive loss for the period					(4,976,436)	154,360	( 4,822,076)
Stock based compensation				9,686			9,686
Balance, March 31, 2012		137,244,624	-	3,356,027	(131,403,380)	(5,863,593)	3,333,678

		Share capital	Equity component of consideration issuable for business acquisition	Contributed surplus	Deficit	Accumulated other comprehensive loss	Total equity
Balance, January 1, 2011		134,391,619	1,128,870	2,946,444	(6,662,172)	(85,746,363)	46,058,398
Net loss for the period		-	-	-	(6,988,258)		(6,988,258)
Foreign currency translation		-	-	-		1,188,926	1,188,926
Comprehensive gain loss for the period					(6,988,258)	1,188,926	(5,799,332)
Stock based compensation				46,450			46,450
Balance, March 31, 2011		134,391,619	1,128,870	2,992,894	(13,650,430)	(84,557,437)	40,305,516

 

Day4 Energy Inc.
Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in Canadian Dollars)

					Three Months ended March 31
					2012 $		2011 $
Cash flows from operating activities
Loss for the period					(4,976,436)		(6,988,258)
	Items not affecting cash
		Stock-based compensation			9,686		46,450
		Depreciation and amortization			749,085		719,207
		Gain on sale of property, plant and equipment			(19,982)		(173,670)
		Impairment of  property, plant and equipment			-		189,865
		Impairment of inventory			184,617		1,285,073
		Unrealized foreign exchange (gain) loss			(154,360)		(414,143)
		Warranty expense			192,201		36,646
		Gain on disposal of subsidiary			(856,131)		-
					(4,871,320)		(5,298,830)
Changes in non-cash working capital items
	Trade receivables				(64,028)		7,623,182
	Other receivables				(122,657)		(159,562)
	Inventory				1,877,162		(15,144,092)
	Prepaid expenses				(163,052)		103,209
	Trade payables and accrued liabilities				(2,611,659)		6,038,642
	Deferred revenue				1,186,775		1,314,038
	Provisions				(234,468)		-
					(5,003,247)		(5,523,413)
Cash flows from investing activities
Change in restricted cash					100		599,354
Purchase of property, plant and equipment					(138,856)		(104,315)
Proceeds from sale of property, plant and equipment					17,023		488,936
Proceeds from disposition of subsidiary, net of cash surrendered					(930)		-
Investment in product development					-		(663,399)
					(122,663)		320,576
Cash flows from financing activities
Repayment of IRAP loan					(73,431)		(174,440)
Proceeds from (repayment of) bank loan					(60,329)		133,048
Repayment of finance lease obligation					(123,468)		(345,377)
					(257,228)		(386,769)
Impact of foreign exchange on cash and cash equivalents					152,717		369,291
Decrease in cash and cash equivalents					(5,230,421)		(5,220,315)
Cash and cash equivalents - Beginning of period					7,059,862		10,486,264
Cash and cash equivalents - End of period					1,829,441		5,265,949
Supplemental cash flow information
Cash paid for interest					10,433		11,878
Cash received for interest					98		137

 

 

 

George Rubin
President and CEO
Day4 Energy Inc.
[phone]