MEMC says some production delays experienced in wake of Hurricane Ike

In the wake of Hurricane Ike, MEMC Electronic Materials has experienced some production slowdowns largely caused by delays in raw materials deliveries from suppliers to the company's Pasadena, TX, polysilicon plant. As a result, the company has updated its financial outlook targets and lowered its third-quarter revenue targets from a previous guidance range of $560 million-$620 million to $520 million-$540 million.

"Our Pasadena facility did not experience any apparent major damage, and we were able to start up the plant systems in preparation for production to begin Monday, Sept. 14, as planned," said MEMC CEO  Nabeel Gareeb. "However, some of our regional suppliers had startup difficulties primarily due to power availability, plant issues, and pipeline damage as a result of the hurricane, preventing them from starting high-volume delivery of some raw materials until yesterday (Sept. 23)."

"This resulted in the Pasadena facility running at very low utilization levels through the early part of this week," he continued. "We now believe we are at the tail end of these raw material issues, which should allow us to achieve normal production rates within the next few days.

"Assuming there are no significant issues during this ramp, we now expect the cumulative impact of these delays to be approximately 15 days' worth of production instead of the 5 days originally forecasted. Consequently, we are now targeting third-quarter 2008 revenue to be approximately $530 million, plus or minus $10 million, with gross margin of approximately 51%, plus or minus 1%. Operating expenses are still targeted to be approximately $43 million.

"We do not expect any long-term impacts from these delays nor do we expect any significant interruption to our ongoing capacity expansion activities. We would like to publicly recognize the commitment and hard work of our employees, as well as those of our vendors, in enabling us to recover from the effects of this storm, in spite of the challenges the hurricane has presented to them in their personal lives," concluded Gareeb.

-- Tom Cheyney