Spire posts US$3.7 million in Q3 revenue but cash position precarious

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PV module assembly equipment specialist, Spire Corporation reported third quarter 2014 revenue of US$3.7 million and nine months revenue of US$11.7 million, a 6% increase over the prior year period. 

Management had noted back in May, 2014 that it expected higher PV equipment sales in 2014. However, quarterly sales have declined sequentially since the peak (US$4.1 million) in the first quarter of 2014. 

Spire has made concerted efforts to significantly reduce losses in the last six months. The company reported a third quarter net loss of US$0.9 million, compared to a net loss of US$2.2 million for the same period in 2013.

However, the company is facing a major liquidity issue, exciting the third quarter with cash and cash equivalents of only $722,000, compared to US$4.0 million at the end of 2013. 

The lack of liquidity was compounded by the expiration of its revolving credit facilities with Silicon Valley Bank in the second quarter and the imposition of stricter payment terms from some of its suppliers that contributed to a ‘going concern’ status being imposed on the company by its accountants. 

Rodger W. LaFavre, President and CEO, stated, “While our performance metrics for the nine months ended September 30, 2014 are improved over the nine months ended September 30, 2013, we continue our focus towards further improving our sales volume, related profitability, and cost reduction strategies. We recognize that further strides are required to improve Spire’s financial standing. Accordingly, we are diligently working to accomplish these tasks and improve our cash position.”

Although Spire does not report order backlog, a key metric for future revenue generation, PV Tech is aware from industry sources that the company has expected revenue due from a completed module assembly plant in North Africa. 

However, Spire’s continued cost reductions and reduction in quarterly losses would need to continue in the fourth quarter, coupled to good revenue generation and new forms of liquidity in place to offset major financial issues. 

The PV equipment sector has suffered almost three years of a downturn, caused by chronic overcapacity and limited capital expenditure during two years of profitless prosperity for PV manufacturers. 

Although the sector is recovering strongly in 2014, the majority of PV manufacturers have retained tight control over capacity expansions. New module assembly entrants, a key market for Spire have been sparse during this period. 

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