Blog Post

Energy Conversion Devices Helps Customers Raise Money

Mark Morelli, CEO of Energy Conversion Devices, sees a lot of new customers lining up for his company’s thin-film solar laminates in the next few years. That’s not the problem. The problem is, how are they going to be able to pay? So Energy Conversion has started to help them find money.

Energy Conversion, whose proprietary thin-film technology has long been cheaper than the more-efficient crystalline silicon embraced by many solar companies, reported earnings for the last three months of 2008. Overall, investors like the news: Revenue grew 83 percent from the same quarter a year earlier to $103.1 million. The company also swung to a 33 cents a share profit, versus a 14 cent loss. Both were slightly above analyst expectations, and the stock rallied 9 percent on Monday to $28.16.

On the conference call to discuss the numbers, the company said its accounts receivables in the quarter

“increased due to delayed receipt of certain customer payments…. Certain of our customers at the end of the quarter didn’t make their payments on time to meet our cutoff and those payments came in sometime in January. So we did have some late payments come through.”

One big reason for the delayed payments seems to be that customers are having trouble getting access to project financing. So Energy Conversion is sticking its toe into the business of helping them find money. It’s been working with companies like Wells Fargo (s WFC) and JP Morgan Chase (s JPM)  in the U.S. One project in Europe involved multiple financing partners. It’s a new direction for them, Morelli said,

“We have not really been active out there working with our channel partners and their financing solution. That hasn’t been part of our business model. We haven’t had to do that. So this is really a new activity in itself just matching the right resources to work with them and with the banks. And when we do do this, we do see that the projects move forward.”

Thin-film makers have another reason to offer whatever help they can to customers. Their crystalline-silicon rivals have been cutting prices to spur sales, and analysts worry they may fall so far as to blunt thin film’s key advantage: its low cost. Morelli said its prices will fall in the low single digits, thanks in part to its work in cutting its own costs.

In the longer term, Morelli’s vision is brighter. Demand for its products is strong in Italy and France, and says he expects the U.S. solar market to be one of the fastest growing in the world during the next five years. The company drew only 18 percent of its revenue last quarter from the U.S., but utility spending and federal stimulus may boost that.

In the near term, though, the outlook is cloudy — evidenced by the company’s guidance. Energy Conversion sees revenue between $95 million and $110 million this quarter, well below analysts’ consensus forecast of $118.5 million.