MEMC sees increased sales, profits in quarter, but SunEdison unit takes hit

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MEMC Electronic Materials’ net sales and operating profits were up in the second quarter, but the company’s SunEdison solar energy systems business unit saw revenues plummet nearly 50% quarter-to-quarter. The solar materials unit experienced higher sales and profits, and also consolidated the Solaicx purchase earlier in the month.  

The St, Peters, MO-based company’s net sales for the quarter were $448.3 million, up 2.4% from $437.7 million in Q1 2010 and up 58.5% from $282.9 million in Q2 2009. 

Gross profit in the quarter was $76.9 million, or 17.2% of net sales, an increase of 29.7% from $59.3 million in Q1 2010 and 120.3% from $34.9 million in Q2 2009. The company reported an operating profit of $3.3 million for the quarter, compared to an operating loss of $15.3 million in Q1 and an operating loss of $23.1 million in Q2 2009. 

MEMC’s net Q2 income was $13.8 million, or $0.06 per share, compared to a net loss of $9.6 million, or $0.04 per share, in Q1 and a net income of $1.4 million, or $0.01 per share, in Q2 2009.
The solar materials unit posted Q2 sales of $168 million, an increase of 6.5% from Q1 net sales of $157.7 million and an increase of 22.4% from Q2 2009 net sales of $137.3 million.  Segment operating profit was $19.1 million in Q2, compared to $12.2 million in Q1 and $53.2 million in Q2 the previous year.

SunEdison Q2 sales were $30.7 million with an operating loss of $4.4 million, compared to Q1 sales of $60.7 million and an operating profit of $6.8 million. 

The company attributed the sequential decrease in sales as a result of lower direct sales in the just-completed quarter, which fell from 6.7MW to 2.8MW sequentially. 

During Q2, SunEdison interconnected 3.8MW, down from 10.9MW in the previous quarter and 14.5MW in Q4 2009. As of the end of the period, the group had 111.5MW of projects under construction that are expected to be completed during the second half of the year.

Capital expenditures were $94.9 million in the quarter, driven by investments in polysilicon capacity and internal wafering capabilities. In addition, construction spending for SunEdison was $66.8 million in the quarter for solar projects classified as owned projects and carried as fixed assets.

As for the outlook for the remainder of FY 2010, the company expects to exceed its previous guidance for 2010 revenue of $1.75 billion to $1.85 billion; to generate EPS below the previously guided range of $0.70 to $0.80; and to achieve previous guidance for positive free cash flow in 2010, based on current expectations of the timing of SunEdison projects.

The outlook for the solar materials segment calls for sequentially higher wafer volumes and modest price increases from the first half, with continued productivity improvement, lower conversion costs from diversification and partnering, and improvements in the price cost dynamic.

The SunEdison outlook includes interconnections reaching around 150MW for the full year (including the Rovigo project), direct sales accounting for 65% of the total, and backlog building for 2011 and beyond. A higher direct sales mix and solid project returns are expected to result in a return to profitability.

“Our second-quarter results extend a pattern of steady improvement,” said MEMC CEO Ahmad Chatila. “We are experiencing stronger market demand, reacting to solar supply chain challenges, reducing our cost structure, and ramping the SunEdison business. We are simultaneously making prudent investments in our selling capabilities, capacity expansion, technological differentiation, and in acquisitions which are all meant to catalyze future period growth.”

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