Solar Energy segment revenue continues to dominate sales at MEMC, predominantly from its PV project development arm, SunEdison.
The company reported fourth quarter and full-year results at the higher-end of guidance, though the weakness in solar wafer sales and strong ASP declines weighed on its Solar Energy segment performance. Solar wafer sales accounted for only around US$70 million of total revenue in the fourth quarter.
MEMC posted overall GAAP revenue for the fourth quarter of 2012 of US$600.7 million, nearly flat with the prior quarter as higher PV power plant sales offset lower semiconductor wafer sales.
Solar Energy sales were US$475.8 million, up only US$7 million or 2% from US$468.6 million in the third quarter of 2012. However, sales were actually down 13% from the same period a year ago.
The revenue increase in the fourth quarter was due to higher MW project sales but also due to higher ASPs due to project and project geographical mix, compared to the previous quarter, which also generated higher gross margins of around 19%. Solar Energy sales accounted for 68% of total revenue in the quarter.
PV project backlog
Interestingly, for the first time since 2011, MEMC provided insight into its PV project backlog. Not to be confused with project pipelines, the backlog refers to projects that have signed PPA’s, or are being built with feed-in tariff schemes in place.
MEMC reported that its project backlog stood at 827MWdc or 32% of the overall project pipeline that stood at 2.6GWdc. According to management the 827MWdc represented projects that had a 90% plus expectation of being completed over a 24-month period and therefore the majority of the project backlog would be completed by the fourth quarter of 2014.
The 827MWdc project backlog also constituted over 500 projects, according to the company.
Digging deeper, management noted that 61% of the project backlog was concentrated in the US, 18% in Canada, 16% in ‘emerging markets’ and only 5% in the EMEA region.
However, management noted that the recently announced project in Chile was not in this backlog number as the PPA was signed in January, but would appear in next quarter’s figures.
Emphasis as outlined in previous conference calls was focused on smaller ‘Distributed Generation’ (DG) projects that had 3-6 month turnarounds compared to larger utility-scale projects that could take between 6 months and 2-years to complete.
“We believe there is a lot of opportunity for growth in the projects less than 10 megawatts in the category we call distributed generation,” commented Brian Wuebbels, Chief Financial Officer at MEMC. “This is an area which includes commercial and residential rooftops where our new line of high-output Silvantis 330-watt modules can really make an impact.”
The Silvantis M330 PV module is the company’s first product to be manufactured exclusively from its polysilicon and CCz p-type mono wafers.
The key to MEMC’s DG strategy is to help smooth-out large quarter-to-quarter fluctuations in revenue recognition that is typical of companies that focus on mainly large-scale projects.
MEMC had raised US$2 billion in low cost project finance in 2012, which is also said to be supporting its above average margins from its project business via SunEdison.
PV project pipeline update
MEMC said that its pipeline stood at 2.6GW yet this had purposely been streamlined by around 300MW as the company had decided not to renew certain land options in one of its emerging market locations, though the company did not identify the country or region.
An abundance of land in this area was behind the move, though management said that these projects had not gone away but due to the strict internal pipeline definition the company uses, did not further qualify as pipeline projects
MEMC noted that the pipeline stood at nearly 900 projects that spanned 5 continents, 14 countries and 18 US states. North America was said to have accounted for around 60% of the pipeline with 48% in the US. Canada accounted for the remaining14%.
As a result 40% of the pipeline remained outside North America and was said to be where more rapid growth existed over the next few years. Management noted that slightly less than 50% of the total pipeline included projects above 50MW.
Like rival, SunPower the company is measuring its build-out of projects at around the 400MW level per annum. Since the acquisition of SunEdison, MEMC has taken installations from 40MW to 430MW in four years.
The company is providing full-year guidance at an invester day event in early March, 2013.