SatCon Technology Corporation (NASDAQ:SATC) today announced its preliminary unaudited results for revenue and gross margin for the second quarter ended June 30, 2011.
The Company, on the basis of preliminary financial data and depending on the final closing of the company’s financial statements, projects its second-quarter 2011 revenue to be in the range of $45 million and $47 million, which is below the previously announced guidance of $50 million to $60 million. This weakened pattern of revenue range is the result of the continued impact of changes in government incentives in the company’s higher margin markets in Europe, apart from the delays on a few projects that have been pushed into the third quarter.
The company has also modified its gross margin projection for the relevant quarter at between 7% and 11%, against the earlier announced guidance of 17% to 20%. This modification has been credited to the lower revenue range, apart from the effects of the slowdown in the European market. Further, it has also incurred one-time revaluation expenditures of material due to lower component costs, an excess inventory provision, and a non-recurring expense associated with a major project in North America. It is known that this project, will also contribute in the company’s operating expenses for the second quarter, along with an increase in its accounts receivable reserves.
Steve Rhoades, Satcon’s President and Chief Executive Officer stated that they have anticipated Q2 to be a transitional quarter and have taken on the appropriate measures to ensure that they achieve profitability. He added that even after facing the challenges in the quarter, the Company has attained significant milestones on its path to achieve long term margin expansion and profitability, and they managed to successfully introduce several new products, which further strengthens their continued leadership position in the global utility scale inverter markets. Moreover he also clarified that their achievements in both the supply chain and product engineering continue to lower the cost structure and position them to expand margins in the third and fourth quarters of the year.
Moreover the company announced today that it conducted a global restructuring of its workforce that resulted in a 15% reduction in staff, to support its margin expansion efforts. It is likely to result in compensation-related cash savings of around $5.0 million per year, beginning in Q3 of 2011. In addition it anticipates recording a pre-tax charge of about $1.0 million in Q2 related to this initiative.
Satcon also announced its entrance into a securities purchase agreement with an institutional investor through which it raised $16 million in gross proceeds through the issuance of subordinated convertible notes which are to mature on July 1, 2013.
It received net inflow in the form of proceeds amounting nearly $15 million from the financing which is to be used for general corporate purposes.
Lazard Capital Markets LLC has acted as the sole placement agent.
The Company shall release its second-quarter 2011 financial results at the post market hour on Tuesday, August 9, 2011. In addition to the announcement, the management will also host a conference call that day at 5:00 p.m. ET.
Satcon Technology Corporation is a clean energy technology provider of utility grade power solutions for the renewable and distributed energy markets.
The shares of the Company are trading at $1.95 after declining 23.23% at 4:00 PM EDT, on Tuesday. As of now it has ranged at $1.91 – $2.51. The market cap of the Company amounted $229.75 million.
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