STR Holdings Inc.
) posted second-quarter 2012 results with adjusted loss per share
of 4 cents, in line with the Zacks Consensus Estimate and narrower
than the year-ago loss of 28 cents per share. On a reported basis,
loss per share came in at 6 cents compared with earnings of 23
cents per share in the year-ago quarter.
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STR Holdings' quarterly revenues were $25.1 million, representing a
decline of 19.2% sequentially and 65.0% year over year. The
sequential decline was primarily due to a 16.6% volume decline and
a 2.0% decline in average selling price ("ASP"). On a
year-over-year basis, volume declined 53.0% and ASP declined 20.7%.
Quarterly revenue came in below the Zacks Consensus Estimate of $27
Gross profit for the second quarter of 2012 was $1.6 million, or
6.3% of sales, compared with $2.0 million, or 6.4% of sales, in the
first quarter of 2012. The company was able to maintain its gross
margin despite lower sales as a result of its successful
cost-reduction efforts, which curtailed cost per square meter sold
by 3% sequentially.
Selling, general and administrative expenses for the second quarter
of 2012 were $6.7 million compared with $7.7 million in the first
quarter of 2012. The reduction was driven by lower labor and
incentive compensation expense and lower professional fees.
Together, these more than offset increased R&D and selling
Overall, STR Holdings digested a net loss of $2.4 million versus a
net income of $9.7 million in the year-ago quarter.
STR Holdings reported $72.2 million of cash and cash equivalents at
the end of the reported period versus $87.1 million at the end of
the year-ago period. Deferred tax liabilities decreased to $46.2
million from $48.6 million at year-end 2011.
STR Holdings expects sales for the quarter ending September 30,
2012 to be in the range of $23 million to $25 million. During the
quarter it expects its EPS to range between breakeven and a loss of
STR Holdings for full year 2012 expects sales to be in the range of
$102 million to $108 million, along with EPS ranging between a
penny and 7 cents.
Based in Enfield, Connecticut, STR Holdings, Inc. is a diversified
global leader providing high quality, superior performance solar
encapsulants to the photovoltaic module industry. It is also one of
the world's top providers of quality assurance testing, audit,
inspection and responsible sourcing services. The company's
polymeric PhotoCap products consist primarily of
ethylene-vinyl-acetate, or EVA, which is modified with additives
and put through its proprietary manufacturing process to increase
product stability and make the encapsulant suitable for use in
extreme, long-term outdoor applications.
STR Holdings supplies solar module encapsulants to many of the
major solar module manufacturers, including
First Solar Inc.
). Therefore as direct fallout, STR Holdings along with the whole
solar industry is witnessing an oversupply of photovoltaic products
leading to a steep drop in Average Selling Prices.
Also, a volatile euro, apprehension over a reduction in European
solar subsidies and falling crystalline silicon prices remain a
matter of concern for the company.
STR Holdings presently retains a short-term Zacks #4 Rank (Sell).
We have a long-term Neutral recommendation on the stock.