Southwall Reports Profitable Q1 2007

The increase was primarily due to higher revenues in the automotive and window film markets, and was partially offset by a slight decrease in revenues from the electronic display market.



First quarter 2007 net income of approximately $232,000 was a breakeven per fully diluted share, as compared with a net loss of approximately $1,327,000 or ($0.05) per fully diluted share, in the first quarter of 2006. This increase was primarily due to an increasing revenue contribution from higher gross margin markets and lower operating expenses. First quarter 2007 gross margin was 42%, up 5 percentage points from the first quarter 2006, primarily due to improving yields and the successful transfer of manufacturing from Palo Alto, California, to its state-of-the-art facility in Grobrohrsdorf, Germany. Our cash balance decreased from approximately $5,524,000 in Q4 2006 to $3,387,000 in Q1 2007 due to increase in operating working capital.



"We are excited about our positive first quarter net income results," said Gene Goodson, President and CEO. "They are the direct result of our focus on improving gross margin and reducing operating costs to be more in line with revenue growth. As the awareness and demand for green technology continues to gain momentum worldwide, we plan to remain vigilant in reducing operating costs and improving or maintaining our gross margin as our core energy products contribute an increasing share to our overall business."



The Company will hold a teleconference at 2:00 p.m. PT / 5:00 p.m. ET today to discuss the results in more detail.



This call will be open to all investors via a webcast accessible at www.southwall.com and by phone. Both phone and webcast replays will be available for approximately one week after the teleconference, beginning approximately two hours after the call ends.



How to Access the Webcast



Go to the Investor Relations page of the Southwall website at www.southwall.com and click on the CCBN webcast icon. From here, you can listen to the teleconference, assuming that your computer system is configured properly.



How to Access the Call



Using Conference ID #11088279, Domestic U.S. callers can dial (800) 218-0204, while international callers can dial (303) 262-2140. The phone replay will be accessible at (303) 590-3000, pass code #11088279.