MEMC also revises 2011 guidance down

04. November 2011 | Industry & Suppliers | By:  Becky Stuart

MEMC Electronic Materials Inc. has revised both its full year 2011 and fourth quarter (Q4) guidance downwards after suffering from significantly lower wafer prices and solar energy system sales. While SunEdison’s photovoltaic pipeline increased impressively, revenue saw a sharp decline.

SunEdison solar photovoltaic installation

SunEdison has a 3 GW photovoltaic pipeline. Image: SunEdison.

The company, which also deals in the semiconductor industry, has seen its solar business hit hard, with Q3 GAAP revenues falling 31 percent from Q2 2011 to hit $516.2 million. The results still saw an increase on Q3 2010, however, which achieved revenues of $503.1 million.

MEMC explained that the sequential decrease was due to the $149.4 million Suntech contract resolution, "slightly" lower semiconductor volumes, "sharply" declining solar wafer prices and "significantly" lower solar energy system sales.

If the non-GAAP figures are taken into account, though, the company actually increased its revenues from Q2 2011 to Q3 by 10 percent. "Growth in non-GAAP revenue was driven by higher solar energy system sales at SunEdison," said MEMC in a statement released.

Both Q3 GAAP and non-GAAP gross margins fell significantly, with MEMC having achieved 11.4 percent (Q211 24.3 percent;  Q310 16.9 percent)  and 14.5 percent (Q211 25.2 percent;  Q310 16.6 percent)  respectively.

Again, both GAAP and non-GAAP net loss for Q3 2011 were said to be negatively impacted by a non-cash charge related to the write-off of $56.4 million of "goodwill" in the solar materials segment. As such, the company reported a GAAP net loss for of $94.4 million, compared to a net income of $47.3 million in Q2 2011 and a net income of $17.6 million in Q3 2010.

Meanwhile, non-GAAP net income saw a loss of $50.3 million, compared $66.2 million in Q2 2011 and $22 million in Q3 2011.

Solar specifics

While MEMC says the solar materials segment remains its solar business "foundation", it did not escape the shaky market conditions. Overall, at $199.4 million, revenue was down 38 percent from Q2 2011 and 10 percent from Q3 2010. However, it says that although the quarter experienced "significantly"  lower average selling prices for wafer, external wafer sales were up sequentially.

The segment also saw an operating loss of $65.3 million, compared to an operating profit of $89.2 million in Q2 2011, and $17.6 million in Q3 2010.

For subsidiary SunEdison, GAAP revenue was sharply down at $48.4 million, compared to $147.2 million in Q2 2011, and $21.5 million in Q3 2010. Non-GAAP revenue, however, was more impressive, at $391.2 million, compared to $181.2 million in Q2 and $69.2 million in the last Q3.

"Projects interconnected during the 2011 third quarter represented 85 MW, including 49 MW of direct sales projects, 35 MW of sale-leaseback projects, and one MW of debt financed projects," said MEMC.

The subsidiary also experienced a big Q3 GAAP operating loss, which fell to  $29.6 million, from loss of $8.4 million in Q2, and a loss of $7.2 million in Q3 2010.

Non-GAAP operating income, meanwhile, was very positive at $36.4 million, compared to $7.1 million in Q2 and an operating loss of $0.4 million in Q3 2010. "The sequential and year-over-year increase in non-GAAP operating profit is primarily due to the higher volume of systems sold during the quarter," further explained MEMC.

At the end of Q3 2010, SunEdison is said to have a three gigawatt photovoltaic pipeline, 330 MW of which is said to be under construction.

Guidance revision

Due to the solar downturn and "softening" semiconductor demand, MEMC has revised its full year 2011 guidance downwards. As such, the company now expects to reap non-GAAP sales between $3.3million and  $3.6 billion. In Q4, it predicts non-GAAP sales to be in the range of $800 million to $1.1 billion

Looking at its GAAP predictions, it expects sales to be in the range of $2.7 to $3 billion. "This would result in expected 2011 fourth quarter non-GAAP sales to be in the range of $700 million - $1.0 billion …,"it concluded.


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