STR Holdings, Inc.
), a worldwide leader in Solar Panel Encapsulation, believes that
its largest customer
First Solar, Inc.
) will terminate its relationship with it. The company expects
First Solar to begin the termination process in the first quarter
of 2013 and end the long-lived relationship over the next few
The exact timing remains uncertain. Meanwhile, STR Holdings
) to review its strategic options.
Transactions with First Solar had enabled STR Holdings to
generate revenues of $39.0 million during 2012. The loss of a
long-standing customer would have a material negative affect on
the company's top and bottom line.
Though the adverse affect of losing First Solar cannot be
avoided, the company is trying to compensate this loss in several
ways. STR Holdings plans to stop its manufacturing operations at
its East Windsor, Connecticut facility by the end of the first
quarter of 2013. It is planning a strategy that will provide
services to its customers in North America from its production
facilities in Spain and Malaysia.
In the process of comprehensive review of its cost structure, the
company intends to make significant headcount reductions
throughout the organization. Also, the company is evaluating its
long-lived assets for impairment, and thereby expects to incur
significant restructuring charges in 2013.
Meanwhile, addition of three new customers in China would also
compensate the loss incurred due to the annihilation of bond with
First Solar to some extent.
STR Holdings is a global provider of high quality solar
encapsulants to the photovoltaic module industry. The initiatives
taken by the company would help it in minimizing the costs and
maintain strong balance sheet. Of late, the company has been
focusing on product innovation, making strategies for growth in
Asia, taking cost reduction initiatives while maintaining its
balance sheet. Going forward, this would prove to be beneficial
for the company.
On the flip side, these positives would be offset by huge
expenditure on research and development, severance charges
incurred on closure of the facility and lowering average selling
Like one other solar company,
LDK Solar Co., Ltd.
), STR Holdings also presently retains a short-term Zacks Rank #3
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