ARISE Technologies Comments on 2008 Financial Results and Outlook
- Plans to release 2008 year-end financial results late on Monday, March 9; conference call and webcast on morning of March 10
- Shipments of PV cells from new German plant increased from third quarter, but lag expectations as customers defer purchasing in weakening business environment
- Scrap rate improved 20% from third-quarter level and continues to improve in January
- Company taking year-end write-down of approximately $2.8 million to cover lower inventory valuation
- Planned start-up date of PV cell manufacturing Line 2 moving back on track
- Tightly managing costs and capital in view of global economic downturn
WATERLOO- ARISE Technologies Corporation which is dedicated to becoming a leader in high-performance,
cost-effective solar technology 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
"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
"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.