Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Silicon gas sales price increased by 16.5%, indicating strong demand for higher-value products.
- Progress in mitigating impurity issues in the Moses Lake facility, with a task force actively working on solutions.
- Stable and growing semiconductor market, with increased gas ASP due to mix effect.
- Potential for significant capacity expansion in silane production, both at Moses Lake and Butte facilities.
- Constructive dialogue with multiple silicon anode material producers, targeting resolutions in the next 5 months.
Negative Points
- Higher EBITDA loss due to increased startup costs at Moses Lake and lower value product production.
- Continued weak demand for CZ and PV poly offerings, with Chinese oversupply affecting market conditions.
- Polysilicon production at the Butte site has been stopped, indicating a strategic shift but also potential revenue loss.
- Ongoing issues with product handling affecting purity, requiring additional remediation efforts.
- Cash balance affected by startup and CapEx costs, with bridge financing alternatives being considered.
Q & A Highlights
Q: Assuming that you reached the first shipment target of mid-September, what kind of delivery ramp-up could be expected? Would you be willing to give some more figures as far as tons expected in Q3 and Q4?
A: No, we're not currently disclosing that simply because our focus is on the first shipment. - Kurt Levens, President and Chief Executive Officer
Q: Are you willing to guide on projected cash cost for Moses Lake once at full production?
A: Not at this time. We've guided upon an EBITDA range that we expected out of the Moses Lake facility. - Kurt Levens, President and Chief Executive Officer
Q: Could you disclose the long-term purity risk and expectations in the offtake agreement with Hanwha?
A: Yes, our target is to produce granular polysilicon that is usable in N-type wafers and cell processes. Everything we're doing is targeted towards that quality. - Kurt Levens, President and Chief Executive Officer
Q: How much more debt is expected to be taken on by the company? And is it possible that an equity issue would be in the future?
A: We are monitoring the situation with regards to debt that we may need to take on. Equity is not something that is being considered right now. - Kurt Levens, President and Chief Executive Officer
Q: Can you expand on the problems being experienced in product handling? Why does product handling affect the purity?
A: Product handling is there to remove some constituents that are a result of the FBR reaction process where we grew the polysilicon beads. - Kurt Levens, President and Chief Executive Officer
Q: Moses Lake restart has been postponed several times. Is this due to low visibility and a high degree of uncertainty in the outcome?
A: Yes. We set a target and work towards it. Until you're at the point where you need to make a decision, the operating thesis is that you're progressing and you're going to make it. - Kurt Levens, President and Chief Executive Officer
Q: Can you elaborate on the revenue potential from the semiconductor market for REC Silicon's high-quality silicon gas?
A: The ASPs we achieve from our higher-quality products that go into advanced nodes and from silane sold into the semiconductor market contribute at a much higher percentage than the overall baseline silane price. - Kurt Levens, President and Chief Executive Officer
Q: Does REC Silicon plan to enter silicon gas contracts directly with customers in the semiconductor market or through agreements with distributors?
A: Our strategy is to have a supply chain that makes the most sense for the ultimate end-user customer. We are not precluding any route. - Kurt Levens, President and Chief Executive Officer
Q: Is the MoU with Group 14 still in effect or has it been terminated?
A: That agreement has expired. - Kurt Levens, President and Chief Executive Officer
Q: Can you provide more details on the total amount of silane gas these discussions with silicon anode companies represent for 2025 and beyond?
A: The amount of silane shown in the debottleneck scenario could be consumed if you believe some of the projections over time, over 5, 6, 7 years out. - Kurt Levens, President and Chief Executive Officer
Q: Can you elaborate on management policy for interaction with the capital markets going forward?
A: We communicate as required and when we have something significant to say. We participate in various forums or conferences as it makes sense. - Kurt Levens, President and Chief Executive Officer
Q: Can you expand on the revenues reported for the Solar Materials segment in the second quarter of $1.3 million?
A: We're not going to disclose the customers, but that's for materials that were either moved to off-spec or for other qualification purposes. - Kurt Levens, President and Chief Executive Officer
Q: How confident are you that this time you can meet the first shipment date?
A: We have a time line and a process. Right now we are on that time line and there's nothing in the process to say that we will not meet that date. - Kurt Levens, President and Chief Executive Officer
Q: If there's a Republican sweep scenario this coming election, any chance that the Trump administration can reverse the existing tax credits?
A: Anything is possible, but in my experience, it is rare that wholesale changes such as that are made by an incoming administration. - Kurt Levens, President and Chief Executive Officer
Q: Is the low end of $100 million EBITDA guidance still valid assuming all markets remain unchanged over the next years?
A: Yes. - Kurt Levens, President and Chief Executive Officer
Q: How many silicon anode contracts are currently under final negotiations?
A: We are in discussion with multiple silicon anode producers and supply some of them now for their smaller production and/or pilot requirements. - Kurt Levens, President and Chief Executive Officer
Q: Did the Yulin JV reach N-type purity in their operation?
A: They do supply some material to N-type producers, but I can't speak to how much material or at what blend. - Kurt Levens, President and Chief Executive Officer
Q: How realistic is a brownfield expansion at Moses Lake and Butte?
A: It's very realistic up to certain sizes, but it needs to make sense from a financial perspective. - Kurt Levens, President and Chief Executive Officer
Q: What is a realistic silane gas sales volume out of Moses Lake in '25 and 2026?
A: It will depend on our
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
