REC Silicon ASA - Fourth quarter 2015 results

Fornebu, Norway - February 12, 2016: REC Silicon ASA (REC Silicon) reports fourth quarter revenues of USD 74.9 million, compared to USD 87.5 million in the previous quarter. The corresponding EBITDA during the fourth quarter was a loss of USD 29.6 million compared to a loss of USD 14.1 million for the previous quarter. The decrease in revenue and EBITDA can be attributed to lower sales volumes, the recognition of USD 7 million in bad debt expense and approximately USD 6.1 million of write down of finished inventories to estimated net realizable values during the fourth quarter.
Fourth quarter total polysilicon production volumes were 3,022 MT, or 2% over guidance of 2,980 MT. FBR production was 2,321 MT, exceeding guidance of 2,220 MT, and semiconductor production was 288 MT, compared to guidance of 300 MT.  FBR cash cost was $16.50/kg for the quarter, compared to guidance of $17.10/kg.
Silicon gas sales volumes were 709 MT, slightly above guidance of 700 MT.  However, silicon gas sales prices were 2% lower than the previous quarter.
REC Silicon will also recognize an impairment of USD 151.5 million, due to anticipated lower future prices caused by the uncertainty from the solar trade war been the US and China and the impact of Moses Lake production curtailments and the oversupply in the polysilicon industry.
Due to ongoing negative effects from the trade war between the US and China, the company has been prevented from accessing the Chinese market during the fourth quarter, which has resulted in lower sales than previously anticipated.  As a result, fourth quarter polysilicon sales volumes were 2,740 MT, compared to guidance of 4,855 MT, and finished goods inventory decreased by 131 MT, compared to guidance of 1,700 MT of inventory depletion.  Additionally, average sales prices for solar grade polysilicon declined by 4% compared to the previous quarter.
In order to reduce existing inventory levels and maintain a healthy cash position, given the current market conditions in the ongoing solar trade war, the company will shut down the Silane IV unit and remaining FBR production in Moses Lake.  Production is currently expected to be shut-down from February until June of this year, dependent on the ongoing negotiations towards a resolution in the solar trade war and the general market development outside China.  The company intends to perform equipment inspections and preventative maintenance on Silane IV while the unit is shut-down and will utilize current employees to perform this inspection and maintenance work. Additionally, also on account of existing inventory levels, Silane III, which has been out of production since July 2015 and was previously expected to resume production in January 2016, is also expected to remain out of production until there is a resolution to the solar trade war.  The company will continue to limit capital expenditures to critical maintenance.
Butte operations will be unaffected, as its product lines are not affected by the solar trade war. 
There continue to be ongoing negotiations between the US and China towards a resolution of the trade war.  But, as this is a political process, timing and outcome of such a resolution remain uncertain.
In light of these developments, Q1 2016 FBR production is expected to be 820 MT, semiconductor production is expected to be 450 MT, and total polysilicon production is expected to be 1,540 MT.  Q1 2016 silicon gas sales are expected to be 600 MT.  The company also expects Q1 2016 polysilicon sales volumes to be approximately in line with Q4 2015 levels.
REC Silicon's cash balance on December 31, 2015 was USD 95.4 million.  Given the initiatives currently being undertaken by management to conserve cash, the company will be capable of paying its existing debt obligations in 2016 from existing cash and cash flow from operations under current projections, without seeking additional funding.

For more information, please see the attached fourth quarter 2015 report.
Morning Program:
The company will give a presentation at 8:00 am CET today at Høyres Hus Konferansesenter, Stortingsgaten 20, Oslo, Norway. The presentation will be in English.
A live webcast from the presentation can be accessed at or the following link hegnar tv webcast
It will also be possible to listen to the presentation through a conference call. Please make sure to dial in 5-10 minutes prior to scheduled start time on one of the following numbers:
Norway Toll Free: 800 56053
Norway: +47 2350 0486
UK: +44 (0)20 3427 1904
USA:  +1 646 254 3361
Other international: +44 20 3427 1904
Please provide confirmation code 7726594 and state your name, company and country of residence.
Afternoon Program:
REC Silicon will host an analyst conference call later the same day at 3:00 p.m. CET. Please make sure to dial in at least 5-10 minutes ahead of time to complete your registration.
Norway Toll Free: 800 56054
Norway: +47 2350 0486
UK: +44 (0)20 3427 1900
USA:  +1 212 444 0481
Other international: +44 20 3427 1900
Please provide confirmation code 2067854 and state your name, company and country of residence.
For further information, please contact:
Chris Bowes, Investor Relations
REC Silicon ASA
Phone: +1 509 793 8127
Nils O. Kjerstad
IR Contact Europe
Phone: +47 9135 6659
About REC Silicon
REC Silicon is a leading producer of advanced silicon materials, delivering high-purity polysilicon and silicon gas to the solar and electronics industries worldwide. We combine 25 years of experience and proprietary technology with the needs of our customers, and annual production capacity of more than 20,000 MT of polysilicon from our two US-based manufacturing plants. Listed on the Oslo Stock Exchange (ticker: REC), the company is headquartered in Moses Lake, Washington and employs approximately 675 people.
For more information, go to:
This information is subject of the disclosure requirements acc. to §5-12 Vphl (Norwegian Securities Trading Act)