March 17, 2009

Burnaby, Canada: Day4 Energy Reports Q4 and FY2008 Results

Day4 Energy Inc., a solar electric technology developer and manufacturer of high performance solar modules, today reported operating results for the fourth quarter and fiscal year 2008.

Fourth quarter revenues of $16.6 million represent a 48% decrease from the prior quarter revenues of $31.7 million and up 141% from $6.9 million for the same period in 2007. While seasonality is typical for this sector in the fourth quarter the early and persistent snowfall in our primary market (Germany) combined with the economic downturn slowed deliveries to a greater extent than expected in November and December. Global sales for the full year 2008 were $76.8 million, a nearly four-fold increase from the prior year sales of $21.0 million.

The gross loss of 45% for the fourth quarter compared to a loss of 1.4% in the third quarter 2008 and a loss of 26.3% for the same period in 2007. We were unsuccessful in maintaining modest positive gross margins achieved during the first half of 2008 because of inventory write downs reflecting the decline of average selling prices (ASP's) experienced in the sector at year end, and increased raw materials costs due to foreign exchange fluctuations. A significant increase in the value of the US dollar against the Canadian had a significant impact on our cost of goods sold. With most of our raw materials, primarily PV cells, denominated in US dollars the 17% rise from the third quarter cut into our margins. In the fourth quarter the company wrote down $5.2 million of inventory to net realizable value. Gross loss excluding inventory write-down was 13% for the fourth quarter and 3% for fiscal 2008. Reported fiscal year over year gross loss has improved significantly to a loss of 9% in 2008 from a loss of 21% in 2007. Average unit costs improved throughout the year as we increased production volumes, diversified our supplier base and refined production processes.

During the fourth quarter changing financial conditions and a significant decline in our market value at year end resulted in our reassessment of the fair values of our long-lived assets. We have recorded total impairment charges of $8.7 million including $0.5 million for the value of intangible assets on the purchase of Day4 Systems acquired in November 2007 and $8.2 million related to our property, plant and equipment.

During the second half of 2008 there were a number of fundamental changes in the economics of the entire photovoltaic (PV) industry. The global economic recession and financial crisis coupled with severe weather conditions in the core PV market resulted in inventory build-ups, production overcapacity and rapid deterioration of average selling prices across the value chain. Weak sales, slowing demand and gross margin compression have been widespread throughout the solar sector and have been reflected in numerous negative earnings reports and announcements over the past several weeks.

"There is little doubt that 2008 presented a number of operating challenges that affected our company alongside the rest of the industry," said George Rubin, president of Day4 Energy. "Our objectives in managing through the current shakeout in the sector are to continue to evolve the business strategically and conserve cash so that our differentiated technology and low capital intensity business model reaches its potential to bring future value to our shareholders."

Industry experts agree that the reduction in prices accelerate the path to grid parity. While in the interim the price reductions pose challenges for companies they have driven up the returns for capital investments in PV projects to nearly all time high levels and will eventually be beneficial to the sector as a whole. The pricing phenomena coupled with the increased political will for renewable energy technologies and accompanying subsidy programs currently being implemented all around the world suggest a positive long-term outlook for the industry.

"The low capital cost models with technological differentiation and a strong downstream position are going to be critical to success during these difficult times. Our long-term manufacturing supply partnership with Jabil Circuit Inc., a leading global electronic solutions company, will help to reduce our working capital requirements and allow us to concentrate our capital and management attention on our two core business objectives: technological leadership and sales and marketing. We now have market presence in eight different geographic markets and our R&D group has made significant progress in the development of our breakthrough Generation II solar cell technology," he concluded.

The underlying instability in the economy and an extended weather delay in our primary market well into the first quarter of 2009 are expected to impact our results for the early part of 2009. In addition to an expected impact on our revenues and gross margins in the first half of the year, the continued downward pressure on ASP may result in further write-downs of inventory in the first quarter of 2009.

Day4 Energy has reduced production at our Burnaby based facility to minimal levels to avoid build up of additional inventory and manage our cash position. Day4 Energy's first priority is to continue with the production ramp at Jabil to take advantage of the lower cost, more efficient production and closer proximity to its primary market. Day4 Energy expects demand to pick up through the second quarter allowing the company to move current inventory while the Jabil facility completes its ramp and becomes fully operational.

Day4 Energy's normal practice is to secure volume commitments from our customers and to set prices no more than one year into the future. We have concluded pricing discussions with approximately 41% (22.4MW) of our 55MW order book. The balance of this contracted volume is contingent on reaching mutually satisfactory agreements as per pricing with channel partners. Day4 Energy will continue discussions with the remainder of the outstanding contracts throughout the year.

Further details about: Day4 Energy