SOLAR LEADER SHOWS Q PROFIT

Every report, every statistic, every announcement is being scrutinized for signs.

The big question: Where will this flailing and falling economy take the boom in New Energy?

An unmistakably bright light is shining out from Energy Conversion Devices (ECD), one of the solar industry’s stalwarts. In the first fiscal quarter of 2009, ending September 30 (and therefore including the first fluctuations of the great crash of ‘08), ECD turned last years losses into a big profit.

This is especially important news because ECD’s profit came in spite of a $1 million (2 cents/share)write-down of a note issued by Lehman Brothers, the bank whose failure was catalytic to the crash.

The inescapable conclusion: There is money to be made in solar energy.

The assumption: Despite the credit crunch, solar energy projects will get financing.

Why? How about passage of the 8-year extension of the investment tax credit (ITC), with its enhanced provisions? How about the multiple incentives for solar development in Europe, including guaranteed, long-term feed-in tariffs? How about the urgency of responding to global climate change?

Example: Part of ECD’s success in the recent quarter was a multiyear extension of a supply deal with Italian steel company Marcegaglia that was no doubt worked out because of new, improved Italian feed-in tariffs.

Predictions (investment sellers like to call them forecasts) for ECD: 2Q 2009 revenue between $100 and $108 million. Full-year 2009 revenue between $455 and $485 million.

The founders of ECD: ”We really want to build a better world – now what’s wrong with that?” From electriccar2 via YouTube.

Energy Conversion Devices swings to profit
November 10, 2008 (AP)
and
Alt. energy firm ECD sees higher income, revenue in fiscal 1Q
Sven Gustafson, November 10, 2008 (Oakland Business Review via MLive)

WHO
Energy Conversion Devices (ECD)esident and CEO Mark Morelli); United Solar Ovonic (ECD subsidiary)

WHAT
ECD turned a big profit in the first fiscal quarter of 2009, suggesting big things for the company going forward despite the financial crisis and the credit crunch.

View the full ENER chart at Wikinvest

WHEN
- 1Q FY 2008: Losses of $7.6 million (19 cents/share)
- 1Q FY 2009: Earnings of $12.7 million (29 cents/share)
- 1Q 2008: Revenues were $47 million
- 1Q 2009: Revenues were $95.8

WHERE
- ECD is based in Rochester Hills, Michigan.
- The ECD stock trades on NASDAQ. (Symbol ENER)
There is strong demand for ECD’s thin film, building-integratable photovoltaic laminates in Europe, Asia and the U.S.
- ECD just completed a retrofit of an Auburn Hills plant and is ramping up production at a new Greenville plant and planning a $220 million capacity expansion at a Battle Creek manufacturing plant.

WHY
- ECD is one of the most well-established manufacturers of thin film materials used in generating electricity from solar energy.
- Earnings moved dramatically from the loss to the profit side despite restructuring costs ($0.2 million, less than 1 cent/share) and write down ($1 million, 2 cents/share)
- Revenues doubled from 1Q 2008 to 1Q 2009
- ECD’s roots are in research and development.
- ECD has become a profitable commercial enterprise, with positive profit margins and a growing customer base.
- ECD at the end of 1Q FY2009: $478 million in cash, cash equivalents and short-term investments.
- Gross margin on solar product sales (93% of revenue): 33.4%; Total gross margins: 34.1%.

The original ECD thin film mass production facility. (click to enlarge)

QUOTES
- AP: “Analysts polled by Thomson Reuters forecast a profit of 26 cents per share.”
- Mark Morelli, President/CEO, ECD: "Looking ahead, we believe that our proven value proposition, strong balance sheet, focus on operational excellence and sustained profitable growth will continue to set us apart from the competition…We have the right strategy, which is to target countries with the highest feed-in tariffs for rooftop and building-integrated solar photovoltaic installations."