North Coast Solar Stocks

October 22, 2009

MEMC Reports Third Quarter Results

Filed under: WFR — Tags: , , , , , , , — Jason @ 5:22 pm

5:22 pm EDT, Thursday October 22, 2009

ST. PETERS, Mo., Oct. 22 /PRNewswire-FirstCall/ — MEMC Electronic Materials, Inc. (WFR) today reported financial results for the third quarter ended September 30, 2009.

Summary:

* Net sales of $310.0 million
* Gross profit of $20.5 million (6.6% of net sales)
* Loss of $0.29 per share including special charges of $44.9 million, net of tax
* Cash and investment balances of $1.2 billion
* Announced acquisition of solar developer SunEdison

The company reported third quarter 2009 net sales of $310.0 million, which represents an increase of 9.6% from second quarter 2009 net sales of $282.9 million, and a decrease of 43.2% from third quarter 2008 net sales of $546.0 million. The sequential increase in sales was primarily the result of significantly higher wafer volumes for both semiconductor and solar applications, partially offset by price reductions in wafers for solar applications.

Gross profit in the quarter was $20.5 million, or 6.6% of net sales, compared to $34.9 million, or 12.3% of net sales, in the 2009 second quarter and $269.7 million, or 49.4% of net sales, in the 2008 third quarter. The sequential decrease in gross profit was primarily the result of price reductions in wafers for solar applications and higher costs due to the previously announced disruption at the company’s Pasadena, Texas facility.

The company reported an operating loss of $66.7 million during the quarter, compared to an operating loss of $23.1 million in the 2009 second quarter and operating income of $227.5 million in the 2008 third quarter. Third quarter 2009 operating expenses of $87.2 million, or 28.1% of sales, include restructuring and impairment charges of $39.7 million relating to the previously announced plant consolidation, and $4.5 million of cost associated with the startup of the company’s Ipoh, Malaysia facility. This compared to $58.0 million, or 20.5% of sales, in the 2009 second quarter, which included an accrual of $8.8 million associated with an adverse ruling in a lawsuit, a charge of $5.6 million relating to restructuring in the company’s Korean facility and $3.0 million of costs associated with the startup of the Ipoh facility.

MEMC’s net loss for the third quarter was $64.6 million, or $0.29 per share, including the restructuring and impairment charges discussed above, additional tax expense of $19.2 million for an unrecognized tax benefit and a negative impact relating to the decrease in the value of the Suntech warrants of $6.3 million.

During the third quarter, the company generated operating cash flow of $0.2 million, compared to $16.4 million in the 2009 second quarter. Capital expenditures for the third quarter totaled $53.1 million. MEMC ended the third quarter with cash and investments of $1.2 billion, and does not maintain any significant debt.

As reported in early September, the company shut down a large portion of its Pasadena, Texas polysilicon facility in the third quarter to repair damaged equipment. The equipment was repaired, the facility resumed operations and normal production levels were restored in September, as expected. The production ramp allowed the company to rebuild inventory before the end of the quarter to the levels seen prior to the equipment failure.

“Revenue grew by nearly 10% from the second quarter, despite the setback in Pasadena,” said Ahmad Chatila, MEMC’s President and Chief Executive Officer. “While it is disappointing that the issue in Pasadena prevented us from taking full advantage of available market demand in the third quarter, we are pleased that we were able to restart production and report revenue within our original guidance range, and above the midpoint of our revised range, while rebuilding our inventory so that we are positioned to respond to fourth quarter demand.”

“During the third quarter, semiconductor wafer demand continued to show improvement across all end markets and geographies, and factory utilization rates continued to improve. In the solar market, wafer demand also showed improvement compared to the second quarter.”

Fourth Quarter 2009 Outlook

“Demand indications from both semiconductor and solar applications customers continue to show gradual improvement. In semiconductors, demand growth is broad-based and utilization rates continue to improve. Pricing in semiconductor is expected to be approximately flat during the fourth quarter compared with the third quarter, but is expected to increase in the first quarter of 2010. In solar, the relative strength in volumes seen in the third quarter continues. Pricing in the overall solar market, however, continues to be uncertain. Considering these factors, we are targeting fourth quarter revenue to be approximately $310-$350 million. In addition, we are targeting gross margin to be approximately 10%-14%, with operating expenses of approximately $47 million, including approximately $5 million of startup costs associated with our Ipoh, Malaysia facility. These targets do not include the SunEdison financial results, as the acquisition is not expected to close until late in the quarter.”

Subsequent Events – Acquisition of SunEdison

In a separate release, the company also announced today that it has reached a definitive agreement to acquire privately-held SunEdison LLC, a transaction that will significantly expand the scope of MEMC’s solar business. SunEdison, a developer of solar power projects and North America’s largest solar energy services provider, develops, finances, operates and monitors solar power plants for commercial clients, including many national retail outlets, government agencies, and utilities. The first company to introduce the innovative Solar Power Purchase Agreement, SunEdison enables customers to take advantage of the benefits of solar power, while enjoying financial savings, commercially competitive prices and incurring no up-front capital outlay to construct the solar facility. The acquisition is expected to be completed by year end.

Conference Call to Discuss Earnings Results and SunEdison Acquisition

MEMC will host a conference call today, October 22, 2009, at 5:30 p.m. ET to discuss the company’s third quarter results, the acquisition of SunEdison and other related business matters. A live webcast will be available on the company’s web site at http://www.memc.com. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.

A replay of the conference call will be available from 7:30 p.m. ET on October 22, 2009, until 11:59 p.m. ET on October 29, 2009. To access the replay, please dial (320) 365-3844 at any time during that period, using passcode 118827. A replay will also be available until 11:59 p.m. ET on October 29, 2009 on the company’s web site at http://www.memc.com.

    MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF (LOSS) INCOME
    (In millions, except per share data)
    Unaudited
                                Three Months Ended         Nine Months Ended
                          -----------------------------   -------------------
                          Sept. 30,  June 30,  Sept. 30,  Sept. 30,  Sept. 30,
                              2009      2009       2008       2009       2008
                              ----      ----       ----       ----       ----

    Net sales               $310.0    $282.9     $546.0     $806.9   $1,578.8
    Cost of goods sold       289.5     248.0      276.3      731.8      767.0
                             -----     -----      -----      -----      -----
        Gross profit          20.5      34.9      269.7       75.1      811.8

    Operating expenses:
      Marketing and
       administration         37.2      42.5       31.5      109.5       89.2
      Research and
       development            10.3       9.9       10.3       29.8       30.6
      Restructuring and
       impairment costs       39.7       5.6        0.4       52.0        3.6
                              ----       ---        ---       ----        ---
        Operating
         (loss) income       (66.7)    (23.1)     227.5     (116.2)     688.4

    Nonoperating (income)
     expense:
      Interest expense         0.4       0.2        0.8        0.9        1.4
      Interest income         (4.9)     (5.8)     (11.2)     (22.4)     (35.3)
      Decrease (increase)
       in fair value
       of warrant              6.3     (10.1)       9.6       (3.7)     231.3
      Other, net               0.2      (0.6)       6.6        2.2       10.6
                               ---      ----        ---        ---       ----
        Total
         nonoperating
         (income) expense      2.0     (16.3)       5.8      (23.0)     208.0
                               ---     -----        ---      -----      -----
       (Loss) income before
        income tax (benefit)
        expense and equity in
        earnings of joint
        venture              (68.7)     (6.8)     221.7      (93.2)     480.4
    Income tax (benefit)
     expense                  (6.3)     (9.7)      38.1      (34.9)     160.0
                              ----      ----       ----      -----      -----
      (Loss) income
       before equity in
       earnings of
       joint venture         (62.4)      2.9      183.6      (58.3)     320.4
    Equity in earnings
     of joint venture,
     net of tax               (2.5)     (3.3)         -       (5.8)         -
                              ----      ----        ---       ----        ---
        Net (loss) income    (64.9)     (0.4)     183.6      (64.1)     320.4
                             -----      ----      -----      -----      -----
    Net loss (income)
     attributable to
     noncontrolling
     interests                 0.3       1.8       (0.8)       2.9       (3.3)
                               ---       ---       ----        ---       ----
    Net (loss) income
     attributable to
     MEMC stockholders      $(64.6)     $1.4     $182.8     $(61.2)    $317.1
                            ------      ----     ------     ------     ------

    Basic (loss) income
     per share              $(0.29)    $0.01      $0.81     $(0.27)     $1.39
    Diluted (loss)
     income per share       $(0.29)    $0.01      $0.80     $(0.27)     $1.38

    Weighted-average
     shares used in
     computing basic
     income per share        223.6     223.5      226.3      223.6      227.7
    Weighted-average
     shares used in
     computing diluted
     income per share        223.6     224.0      227.6      223.6      230.0



    MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (In millions)
    Unaudited
                                          September 30,  December 31,
                                                  2009          2008
                                                  ----          ----
    ASSETS
    Current assets:
      Cash and cash equivalents                 $792.2        $988.3
      Short-term investments                     114.3         148.4
      Accounts receivable, net                   188.3         197.3
      Inventories                                110.0          81.3
      Prepaid and other current assets            99.1          38.9
                                                  ----          ----
        Total current assets                   1,303.9       1,454.2
    Investments                                  329.5         284.7
    Property, plant and equipment, net         1,065.4       1,041.2
    Deferred tax assets, net                      82.4          69.7
    Other assets                                  98.6          86.9
                                                  ----          ----
        Total assets                          $2,879.8      $2,936.7
                                              --------      --------

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Current portion of long-term debt           $5.5          $6.1
      Accounts payable                           151.2         162.4
      Accrued liabilities                         87.6          67.5
      Accrued wages and salaries                  33.9          31.7
      Customer deposits                           83.6         187.0
      Income taxes payable                         6.3          17.9
                                                   ---          ----
        Total current liabilities                368.1         472.6
    Long-term debt, less current portion          23.4          26.1
    Pension and post-employment liabilities       44.8          46.3
    Deferred revenue                              90.1          88.8
    Other liabilities                            229.5         186.1
                                                 -----         -----
        Total liabilities                        755.9         819.9
                                                 -----         -----
    Commitments and contingencies

    Stockholders' equity:
      Preferred stock                                -             -
      Common stock                                 2.3           2.3
      Additional paid-in capital                 451.5         425.6
      Retained earnings                        2,086.2       2,147.1
      Accumulated other
       comprehensive income (loss)                 7.2         (55.6)
      Treasury stock                            (453.3)       (437.4)
                                                ------        ------
        Total MEMC stockholders' equity        2,093.9       2,082.0
      Noncontrolling interests                    30.0          34.8
                                                  ----          ----
        Total stockholders' equity             2,123.9       2,116.8
                                               -------       -------
          Total liabilities and
           stockholders' equity               $2,879.8      $2,936.7
                                              --------      --------



    MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In millions)
    Unaudited
                              Three Months Ended         Nine Months Ended
                        -----------------------------   -------------------
                        Sept. 30,  June 30,  Sept. 30,  Sept. 30,  Sept. 30,
                            2009      2009       2008       2009       2008
                            ----      ----       ----       ----       ----
    Cash flows from
     operating activities:
    Net (loss) income     $(64.9)    $(0.4)    $183.6     $(64.1)    $320.4
    Adjustments to
     reconcile net
     (loss) income to
     net cash provided
     by operating
     activities:
      Depreciation
       and amortization     32.3      28.9       27.3       89.6       75.6
      Stock-based
       compensation          8.4       9.0       11.9       26.6       34.1
      Impairment costs      24.6         -        0.4       24.6        0.4
      Decrease (increase)
       in fair value of
       warrant               6.3     (10.1)       9.6       (3.7)     231.3
      Working capital and
       other                (6.5)    (11.0)    (117.5)     (71.0)    (144.3)
                            ----     -----     ------      -----     ------
        Net cash
         provided by
         operating
         activities          0.2      16.4      115.3        2.0      517.5
                             ---      ----      -----        ---      -----

    Cash flows from
     investing activities:
    Proceeds from
     sales and
     maturities of
     available
     for sale
     investments            17.5      76.6       64.7      131.8      377.6
    Purchases of
     available
     for sale
     investments               -     (10.9)    (208.7)     (10.9)    (448.9)
    Purchases of cost
     and equity method
     investments           (71.0)        -          -      (71.0)         -
    Capital expenditures   (53.1)    (45.5)     (73.1)    (151.8)    (242.3)
    Other                      -         -          -        0.1          -
                             ---       ---        ---        ---        ---
        Net cash
         (used in)
         provided by
         investing
         activities       (106.6)     20.2     (217.1)    (101.8)    (313.6)
                          ------      ----     ------     ------     ------

    Cash flows from
     financing activities:
    Net proceeds from
     (repayments of)
     customer
     deposits related to
     long-term supply
     agreements              1.5     (44.1)      89.5      (78.6)     138.0
    Principal payments
     on long-term debt         -      (3.2)         -       (3.2)      (2.9)
    Excess tax benefits
     from stock-based
     payment arrangements    0.1       0.2        0.4        0.3       19.0
    Dividend to
     noncontrolling
     interest                  -         -          -          -       (3.2)
    Common stock
     repurchased               -         -     (130.6)     (15.8)    (285.5)
    Proceeds from
     issuance of
     common stock            0.1       0.4        1.2        0.6       19.8
                             ---       ---        ---        ---       ----
        Net cash
         provided by
         (used in)
         financing
         activities          1.7     (46.7)     (39.5)     (96.7)    (114.8)
                             ---     -----      -----      -----     ------

    Effect of
     exchange rate
     changes on cash
     and cash
     equivalents             7.0       1.6      (37.3)       0.4      (16.1)

                           -----      ----     ------     ------       ----
    Net (decrease)
     increase in cash
     and cash
     equivalents           (97.7)     (8.5)    (178.6)    (196.1)      73.0
    Cash and cash
     equivalents at
     beginning of
     period                889.9     898.4    1,110.9      988.3      859.3
                           -----     -----    -------      -----      -----
    Cash and cash
     equivalents
     at end of period     $792.2    $889.9     $932.3     $792.2     $932.3
                          ------    ------     ------     ------     ------

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