MEMC posted GAAP revenue in the second of US$746 million, while excluding the Suntech cash benefit, revenue would have been US$596.2 million, a 19% decline sequentially.
Excluding the Suntech payment, solar material revenue declined 47% in Q2 with wafer volumes down 40%.
Excluding the one time financial benefit of a US$149.4 million influx from a recently announced
wafer supply contract cancellation with Suntech, MEMC’s solar materials business took a significant hit across key financial metrics in the second quarter of 2011. Solar material revenue was US$323.1 million in 2Q, down 1% sequentially however, excluding the Suntech payment, solar material revenue would have been US$173.7 million, a 47% decline from the first quarter.
Solar wafer volumes declined 40% in the second quarter and wafer pricing fell 17% compared with the previous quarter. However, MEMC management noted that wafer prices in general had fallen 40% from the first quarter.
MEMC posted GAAP revenue in the second of US$746 million, while excluding the Suntech cash benefit, revenue would have been US$596.2 million, a 19% decline sequentially. The decline, excluding Suntech was said to be due to weaker solar wafer pricing and volumes as well as the timing of some SunEdison PV project completions. Management also noted that uncertain solar demand, especially in Europe were to blame.
“Responding quickly to market conditions in solar wafers, our Solar Materials business took actions to restructure customer and supplier agreements and right-size the business,” noted MEMC's CEO Ahmad Chatila. “We are pleased to have reached the resolution with Suntech, and we expect that our future relationship with Suntech will be much improved, and that they will continue to buy from us in 2011 and beyond.”
Management noted in a conference call to discuss quarterly results that a further US$29 million of deferred revenue from Suntech was expected to be realized in the second half of the year.
MEMC’s solar materials business operating profit was US$89.2 million, compared to US$39.4 million in the 2011 first quarter, and US$19.1 million in 2Q10.
The sequential increase was driven by the Suntech contract resolution, partially offset by US$52.4 million in cost of goods sold charges resulting from adverse purchase obligations, US$1.3 million in restructuring charges, and a $14.2 million charge due largely to low initial volumes at Kuching (300mm semiconductor wafers) as the ramp of that facility progresses, according to the company.
Chatila also noted that it’s wafering business changes, which have included bringing a key amount of wafering in-house or with key partners was on track to provide a fully blended module costs of less than US$1 per watt in 2012.
Management also noted in the call that wafer price declines were expected in the second-half of the year, but didn’t provide specific guidance.