MEMC Electronic Materials, Inc. (NYSE: WFR) has reported surprisingly positive second-quarter results that initially increased its share price by 39% to $2.87 per share. The company says that its semiconductor materials and solar energy business, which included project sales in Europe, helped it to surpass Wall Street’s expectations.
This would be the second piece of encouraging news for the global solar industry coming this month, as earlier, First Solar, Inc. (NASDAQ: FSLR) posted $957M in sales while raising its yearend profit forecasts. On the other hand, MEMC hasn’t released any profit or loss forecasts due to high levels of uncertainty in the market.
The firm’s revenue stood at $808.4M, an increase of 56% over the previous quarter’s $519.2M, and a 4% increase over the $745.6M reported in Q2 2011. The surprise came in the form of adjusted quarterly profit of $0.14 per share, as opposed to a loss of $0.02 predicted by analysts. Gross margins also improved slightly from the previous quarter’s 10.9% to the present 13.2%, but remain significantly lower than the 24.3% in Q2 2011. The company says that this was due to weak solar wafer and semiconductor pricing and volumes.
The semiconductor business earned $232.7M, or 29% of the total revenues. This is an increase of just 8% from $216M in the previous quarter, but a decrease of 16% from the $275M of Q2 2011. The company expects to improve on its semiconductor sales in the second half of 2012.
MEMC’s subsidiary SunEdison, which operates in the solar sector, outperformed the semiconductor’s results with impressive non-GAAP earnings from 169MW system sales in Q2 2012, up from the 49MW reported in Q1 2012 and an increase from the 28MW recorded in Q2 2011. Most of the new shipments, about 98MW, were attributed to successful sales in Bulgaria and Italy. Non-GAAP revenue stood at $933.4M, which included $125M earned from real estate and other asset deals. The GAAP revenues stood at $575.7M, showing a massive 90% increase from the previous quarter’s $303.2M, and even showing a 22% increase from the $470.3M seen in Q2 2011.
Commenting on the results, the CEO said, "Our improved results were driven by better performance in both our Semiconductor Materials and Solar Energy segments. We sold several large European solar projects despite highly uncertain market conditions, and we experienced stronger semiconductor wafer demand. As a result, our financial position strengthened." MEMC reported a consolidated operating income of $0.7M, in which its solar sector was the only positive contributor with an operating income of $27.7M.
The business reported a net loss of $61.3M, down from the $92M recorded in the previous quarter. Although this shows an improvement, it is a far cry from the $47.3M income recorded in Q2 2011. However, MEMC was able to post non-GAAP net income of $32.9M, a significant increase from the non-GAAP loss of $59.4M recorded in the previous quarter.
Mr. Chatalia remains hopeful about the future. He said, “For the second half of the year, we remain committed to driving a healthier balance sheet and stronger returns for our stakeholders."
