BURNABY, Canada, March 31, 2011 /PRNewswire/ -- Day4 Energy Inc. , a leading global provider of solar photovoltaic (PV) products and solutions, today reports its operating results for the fourth quarter and full year 2010.

"During this past year, we achieved a number of objectives including improving our product cost structure and reaching new levels of market adoption for our technology. In addition, we established the foundation for the business strategy that we believe will allow us to capitalize on these accomplishments moving forward. As we enter 2011, our industry is at a critical point in its development due to a combination of factors, including volatile feed-in tariff environments and continued price reductions as supply is widely expected to exceed demand. We believe the consequences of this shift in the market will be a very challenging business environment in which consolidation among companies will be likely, and survivors will be identified by their strong, competitive and differentiated product offerings," says George Rubin, President of Day4 Energy Inc.

"In the fall of 2010 we successfully completed the acquisition of our long-term manufacturing equipment development partner, ACI ecoTec GmbH ("ACI"). ACI's acquisition provides us with accelerated manufacturing technology development capabilities, as well as a manufacturing solutions and equipment sales, production and delivery infrastructure. With this acquisition, we commenced the transformation of our business from technology scale-up, and the required market development associated with PV module manufacturing and distribution, to a manufacturing technology and product marketing solutions company. We believe this strategy allows us to benefit from the strengths of our brand and technology, and address the challenges of the coming months" concludes Mr. Rubin.

Key events of the quarter and full year 2010 included:

1. Increasing Market Penetration

During the last year we successfully increased sales volumes to $166.7 million, an increase of 178% from the previous year. Furthermore, we entered new markets and expanded geographic diversification of our market presence. Our Italian market sales increased to $76.6 million compared to $4.3 million in 2009. At the same time we expanded our sales presence in emerging markets, including Australia, where our sales increased to $3.7 million compared to $Nil in 2009.

2. Improving Product Cost Structure

During the last 12 months we concentrated our production and R&D efforts on improving the cost structure of our product offering. During the first and second quarters of 2010 our product cost reduction efforts focused on the transition to new, lower cost product design and expanding our manufacturing footprint at the Jabil facility in Poland. During the second half of the year we further improved our product cost structure by adjusting the bill of materials to include low cost components while maintaining high quality standards of our product offering. As a result of these efforts we maintained positive gross margin throughout the year and reached 8% in gross margin in Q4 of 2010, even though adverse fluctuations in foreign exchange (FX) rates had a strong negative impact on our cost of sales during the year.

3. Creating the Foundation for Future Growth

While our operating expenses continued to exceed gross profits for the year, we established a foundation for the business model that we believe will enable us to leverage the full potential of our now established proprietary manufacturing process and ultimately improve our profit margins to sustainable levels. By acquiring ACI in the fall of 2010 we have combined experience as technology developers, module and equipment manufacturers and marketing and sales experts to customers around the world wishing to establish or expand their PV business through our Day4 solarSYSTEMS licensing program.

Q4 and FY 2010 FINANCIAL RESULTS

Worldwide Product Revenues

Fourth quarter revenues of $57.7 million increased by $21.1 million or 57% from the same period in 2009 and by $16.3 million or 40% from the prior quarter. Revenues for the full year ended December 31, 2010 increased by $106.6 million when compared to the same period in 2009.

Gross Margins

Gross margin was $4.7 million (8%) for the fourth quarter 2010 as compared to a gross margin of $1.7 million (4%) in the prior quarter and $2.6 million in the fourth quarter 2009. We improved gross margin in the fourth quarter due to stabilizing costs, near capacity production and favourable FX rates. The change to a 5% gross margin in 2010 from a 14% gross loss in 2009 was due to continuous improvement in the overall manufacturing cost structure of our business, including: continuous reductions in the bill of materials, production volume expansion and the transition to a lower cost product mix which yielded a higher average selling price per watt.

Expenses

For the fourth quarter of 2010, general and administrative (G&A) expenses were $2.5 million, an increase of $0.6 million and $1.8 million over expenses of $1.9 million in the prior quarter and $0.7 million for the same period in 2009, respectively. The increase in G&A expenses from the prior quarter relates primarily to the acquisition of ACI and ACI's contribution to G&A expenses in the period.

G&A expenses were $9.7 million for the full year ended December 31, 2010 and $7.6 million for the same period in 2009. The increase in G&A expenses in 2010 primarily relates to due diligence activities for the acquisition of ACI and the production capacity expansion at our facility in Poland.

Sales and marketing expenses were $1.2 million for the fourth quarter 2010 compared to $1.0 million in the same period in 2009 and $0.8 million in the third quarter 2010. The increase in marketing expenses in the quarter reflects the addition of ACI's sales and marketing activities since acquisition.

Sales and marketing expenses for the full year ended December 31, 2010 were $4.1 million compared to $3.5 million for the prior year. The increased expenditures in 2010 reflect the increases in our sales and marketing activities through the year to take advantage of opportunities in the growing European markets. These efforts were essential to address the rapidly expanding opportunities in each of our core markets and to align our infrastructure to roll out our turn-key manufacturing technology solution.

R&D expenses in the fourth quarter were $1.8 million compared to $0.8 million for the prior quarter and $1.0 million for same period in 2009.The increase was due to investments made to process improvements and products.

For the full year ended December 31, 2010 R&D expenses were $4.1 million compared to $3.1 million the prior year same period. The increase in R&D expenses reflect additional research and development activities conducted by ACI since acquisition and the repurposing of our Burnaby facility.

Loss per Share The net loss for the fourth quarter 2010 was $1.3 million ($0.04 per share) compared to $2.3 million ($0.06 per share) in the prior quarter and a net income of $0.6 million ($0.02 per share) for the same period in 2009.

The net loss for the full year ended December 31, 2010 was $9.8 million ($0.26 per share) compared to $20.4 million ($0.56 per share) for the same period in 2009. The lower net loss in 2010 was primarily due to improvements in gross margin. Also, approximately $9.8 million loss in 2009 related to inventory write-downs.

Cash and Short-Term Investments

Working capital was $20.7 million at the end of the fourth quarter and full year ended December 31, 2010 a decrease of $5.0 million compared to the previous quarter. Cash and cash equivalents, restricted cash and short-term investments totaled $12.3 million at December 31, 2010, a decrease of $2.1 million from $14.4 million at September 30, 2010; a decrease of $14.9 million from $27.2 million at December 31, 2009. Cash and cash equivalents have decreased since December 31, 2009 primarily due to the utilization of funds to finance operations.

Detailed financial results and management's discussion and analysis can be found on our website at http://www.day4energy.com or on SEDAR at http://www.sedar.com.