ENP Newswire -
Release date- 13082014 -
Second Quarter 2014 Summary:
Net sales of
Diluted GAAP loss per share from continuing operations of
Diluted non-GAAP loss per share from continuing operations of
Adjusted EBITDA of
Finished the quarter with
Executed agreement to sell
Net sales for the quarter ended
On a year-over-year basis, volume increased by approximately 85% and ASP declined by approximately 22%. The volume increases were driven by continued growth with a large Chinese customer and improved demand from our European customer base.
Gross loss for the second quarter of 2014 was
The sequential increase in loss was primarily driven by
The increase in material costs was driven by learning curve inefficiencies at FeiYu, our outsourcing manufacturer, as they significantly ramped production for the first time during the second quarter and higher scrap generated at our
Selling, general and administrative expenses for the second quarter of 2014 were
The year-over-year decrease was primarily driven by
Net loss from continuing operations for the second quarter of 2014 was
The sequential lower net loss was driven by a
The year-over-year decrease was due to the
Adjusted EBITDA for the second quarter of 2014 was
The Company decided to reverse its decision to close its Malaysian production facility due to developments in the trade disputes in the solar industry. The Company believes its
The Company modified its relationship with FeiYu to have them serve as a toller rather than a contract manufacturer. The most significant impact of this change is that the Company will now procure and own raw material inventory and only pay FeiYu for direct labor and certain logistical functions. As part of this modification, approximately
The Company finalized engineering changes required to produce low-shrink paperless encapsulants with its existing production equipment. It successfully retrofitted one production line during the second quarter and achieved a second quarter product mix of approximately 38% paperless. The Company expects to retrofit two additional production lines during the third quarter of 2014. In addition, the Company expects its
In July, the Company executed a purchase and sale agreement to sell its
Balance Sheet and Liquidity
The Company finished the quarter with
The Company had negative operating cash flow of
This press release and any oral statement made in respect of the information in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to inherent risks and uncertainties.
These forward looking statements present our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business and are based on assumptions that we have made in light of our industry experience and perceptions of historical trends, current conditions, expected future developments and other factors management believes are appropriate under the circumstances.
However, these forward looking statements are not guarantees of future performance or financial or operating results.
In addition to the risks and uncertainties discussed in this press release, we face risks and uncertainties that include, but are not limited to, the following: (1) incurring substantial losses for the foreseeable future and our inability to achieve or sustain profitability in the future; (2) the potential impact of pursuing strategic alternatives, including dissolution and liquidation of our Company; (3) our reliance on a single product line; (4) our securing sales to new customers, growing sales to existing key customers and increasing our market share, particularly in
Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove to be incorrect, actual results may vary materially from those projected in these forward looking statements. We undertake no obligation to publicly update any forward looking statement contained in this release, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP Financial Measures
To supplement the Company's condensed consolidated financial statements, which statements are prepared and presented in accordance with generally accepted accounting principles in
Non-GAAP EPS: The Company believes that non-GAAP EPS from continuing operations provides meaningful supplemental information regarding its performance by excluding certain expenses that may not be indicative of the core business operating results and may help in comparing current period results with those of prior periods as well as with its peers.
Non-GAAP EPS from continuing operations is defined as net loss from continuing operations not including the tax effected impact of deferred financing costs, stock-based compensation, and restructuring divided by the weighted-average common shares outstanding. Please refer to the Company's Form 10-Q filed with the
During the current period, the Company has also included a non-cash reversal of a loss contingency and a loss on reclassification on held for sale assets as a non-GAAP adjustment. Information regarding these items is set forth below:
Non-cash reversal of loss contingency: During the second quarter of 2014, the Company reversed
The Company is excluding this positive benefit as it is non-cash in nature and relates to a loss contingency recorded in prior periods. As such, the Company does not believe this benefit is reflective of the operational conditions of its core business and may aid in comparing its current period results with those of prior periods.
Loss on reclassification on held for sale assets: This non-cash write-down relates to the Company's real property located in
Although the Company uses non-GAAP EPS as a measure to assess the operating performance of its business, non-GAAP EPS has significant limitations as an analytical tool because it excludes certain material costs. Because non-GAAP EPS does not account for these expenses, its utility as a measure of its operating performance has material limitations. The omission of restructuring and stock-based compensation expense limits the usefulness of this measure.
Non-GAAP EPS also adjusts for the related tax effects of the adjustments and the payment of taxes is a necessary element of the Company's operations. Because of these limitations, management does not view non-GAAP EPS in isolation and uses other measures, such as Adjusted EBITDA, net loss from continuing operations, net sales, gross loss and operating loss, to measure operating performance.
Diluted non-GAAP Shares Outstanding: Due to the loss from continuing operations for the three and six months ended
Due to the loss from continuing operations for the three and six months ended
A limitation of using free cash flow versus the GAAP measure of cash provided by operating activities as a means for evaluating the Company's business is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period. We compensate for this limitation by providing information about the changes in our cash balance on the face of the Condensed Consolidated Statements of Cash Flows.
ASC 280-10-50 Disclosure about Segment of an Enterprise and Related Information, establishes standards for the manner in which companies report information about operating segments, products, geographic areas and major customers. The method of determining what information to report is based on the way that management organizes the operating segment within the enterprise for making operating decisions and assessing financial performance.
Since the Company has one product line, sells to global customers in one industry, procures raw materials from similar vendors and expects similar long-term economic characteristics, the Company has one reporting segment and the information as to its operation is set forth below.
Adjusted EBITDA is the main metric used by the management team and the Board of Directors to plan, forecast and review the Company's segment performance. Adjusted EBITDA represents net loss from continuing operations before interest income, income tax (expense) benefit, depreciation, stock-based compensation expense, asset impairment, amortization of deferred financing costs, restructuring and certain non-recurring income and expenses from the results of operations.
Vice President and Chief Financial Officer
Tel: +1 (860) 763-7014
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