MEMC Electronic Materials Inc.
) reported fourth-quarter 2012 adjusted earnings per share of 8
cents, which outperformed the Zacks Consensus Estimate of 1 cent.
The adjusted figure excludes the impact of direct sales and
lease-back from the Solar Energy segment as well as some tax
benefits, and also excludes restructuring and impairment charges.
On a GAAP basis, MEMC reported fourth-quarter revenues of $600.7
million, down 16.3% from $717.8 million in the year-earlier
quarter. Reported revenues came much below the Zacks Consensus
Estimate of $644.0 million. Lower solar sales volume and weak
semiconductor pricing led to the revenue decrease. Pricing was
mostly affected by industry-wide slowdown.
Including direct sales from the Solar Energy segment and
lease-back transactions, non-GAAP revenues came in at $704.3
million, which decreased 8.8% from the year-ago quarter.
Segment wise, revenues from Semiconductor Materials inched up
0.3% year over year to $228.5 million and was 38.0% of total
revenue. The nominal growth was mainly due to higher volume
offset by weaker pricing. But revenue declined 4.9% sequentially
(at the lower end of guidance range) due to weakness in both
pricing and volume.
The Solar Energy segment (which now includes Solar Materials)
accounted for 62.0% of total revenue. The segment generated
revenues of $372.2 million, down 24.0% year over year. The
decrease was driven by lower project sales and weaker solar wafer
pricing and volume.
Solar Energy segment sold 91 megawatts (MW) of solar energy
systems on a non-GAAP basis and 52 MW on a GAAP basis. This
compares with 102 MW and 109 MW, sold respectively, in the
year-ago period. Projects interconnected during the fourth
quarter represented 106 MW in 29 projects. MEMC also reported
that construction of 73 MW of systems is underway. The project
pipeline was 2.6 gigawatt (GW), down 0.3 GW compared with the
prior quarter and down 0.4 GW from the year-ago period.
Reported gross profit was $108.2 million compared with gross loss
of $58.8 million in the year-ago quarter. Gross margin was 18.0%,
compared with (8.2%) in the year-ago quarter. The margin
expansion was mostly due to cost control measures, partially
offset by lower pricing.
Operating income was $67.8 million compared with operating loss
of $1.25 billion in the year-earlier quarter. Operating margin
was 11.3% compared with (173.9%) in the year-ago quarter.
Total operating expenses decreased 96.6% from the year-ago
quarter with marketing and administration expenses falling 17.4%
and research and development expenses decreasing 28.6%.
Reported net loss was $11.8 million or 5 cents per share compared
with net loss of $1.48 billion or 6.44 cents in the prior-year
quarter. Net loss for the quarter narrowed from the prior-quarter
level. However, adjusted earnings per share (EPS) were 8 cents,
up 138.1% from loss per share of 21 cents in the year-ago
Balance Sheet & Cash Flow
MEMC ended the quarter with cash, cash equivalents and restricted
cash of $645.0 million, down from $694.0 million in the previous
quarter. Long-term debt was $758.7 million, down from $761.8
million in the previous quarter.
MEMC generated $19.2 million cash in operations, up from $3.0
million in the preceding quarter. Capital expenditure was $38.1
million, up from $24.0 million in the previous quarter.
Keeping in mind the ongoing uncertainty in the semiconductor and
solar markets, MEMC refrained from providing any quantitative
revenue and EPS guidance for the upcoming quarter.
However, the company mentioned that it is optimistic about
gaining operating leverage from ongoing cost reduction measures.
Also, it aims to reduce solar materials pricing with the help of
economical and flexible sourcing strategy. Together, these
potential benefits would help MEMC to deliver stronger results in
2013, management believes.
MEMC posted a decent fourth quarter with the bottom line
surpassing the Zacks Consensus Estimate. But revenues failed to
encourage us as it decreased on a year over year basis and came
below our expectation. Solar systems sales were lower than
expected. The demand uncertainty barred the company from
providing any guidance.
However, we are encouraged by management's commentary of
expecting a better demand/supply situation in the semiconductor
market in 2013. Of course, expense control will also provide some
Also, declining solar system pipeline concerns us. But on the
other hand, market share growth in semiconductor is a positive.
Currently, MEMC has a Zacks Rank #3 (Hold). Investors may also
consider other technology stocks that are performing well.
PLX Technology Inc.
) all have a Zacks Rank #1 (Strong Buy) and are worth
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