Power-One posts 2011 revenue of US$1.02 billion but withholds 2012 guidance

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PV inverter manufacturer, Power-One, reported net sales of US$267 million, with Renewable Energy Solutions contributing US$191 million and Power Solutions segment sales reaching US$76 million for the fourth quarter of 2011. Driving sales was greater market penetration in the utility-scale sector in North America and Asia-Pacific, as revenue in these regions increased to 25%, compared to 17% in the prior quarter. Power-One had sales of 829MW of PV inverters in the fourth quarter.

“In 2011, Power-One again recorded over $1 billion in sales, highlighting our ability to execute and generate profits in difficult operating environments,” said Richard Thompson, chief executive officer of Power-One. “Both SBUs performed well in the fourth quarter, as Power-One generated US$48 million of operating cash flow in the quarter and finished the year with over US$200 million in cash. Further, during the quarter, Power-One shipped 829MW of inverters, bringing the 2011 total to 2.9 GW, versus 2.6 GW in 2010.”

However, management declined to provide 2012 financial guidance, following PV inverter leader SMA Solar. Power-One cited ‘uncertainty on feed-in-tariffs and other legislation for not providing guidance. For the first quarter of 2012, Power-One is forecasting revenue in the range of US$190-US$210 million, said to reflect traditional seasonality in the first quarter.

Management noted in a conference call to discuss financial results that they had noted a surge in demand in the fourth quarter as PV installers met year-end demand as feed-in tariff cuts loomed, but did not see a demand surge in January 2012, on the back of further feed-in tariff cuts in Germany and the mild winter weather. Management noted that they expected world-wide demand to be flat in 2012. 

According to Jeffries analyst, Jesse Pichel, in a research note that a key business factor for the company in 2012 would be to ‘capitalize on utility scale solar growth in the US, China, Japan, and India, which can mitigate weakness in Europe. Launch of a micro inverter may also enhance [share price] valuations.

Pichel also noted that Power-One was ramping manufacturing capacity in China to 500MW, up from 250MW and would manufacturer microinverters in China. Power-One is believed to have 5GW capacity with the current potential to expand to 6GW.

Analyst, Mark Bachman at Avian Securities said in another research note that “Expansion into the US solar market is opening up new opportunities and especially so for utility scale inverter sales, but we remain concerned about the resolution of the Chinese/US solar trade war and the potential disruption in this market.”
According to equity analyst, Julien Desmaretz at Bryan & Garnier, Power-One expects “ASP erosion in the low-double digit range, with the majority of this to incur in H1 2012. In our SMA’s model, we assume a 10% ASP decline in 2012. However, Power-One is more exposed to the utilities clients than SMA (50% of sales vs. 30%), where the price pressure is more intense”, noted Desmaretz. 


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