STR Holdings sales continue to decline as restructuring continues

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Specialist encapsulant supplier, STR Holdings, continues to struggle following the loss of its major customer, First Solar, last year, as third quarter sales continued to decline, forcing further plant closures and restructuring efforts.

The company reported third quarter sales of US$6.2 million, down from US$7.8 million in the prior quarter and US$11.2 million in the first quarter of 2013.

STR Holdings' revenue decline was approximately 20% sequentially and 73% from the third quarter of 2012. On a year-over-year basis, volume declined in the third quarter of 2013 by approximately 64%. 

The sales and ASP decline (7%) were marked by the final scale-down of shipments to First Solar and lower ASPs expected from sales to Chinese tier one customers.

Gross profit for the third quarter of 2013 was a loss of US$800,000 or 13.2% of sales. Net loss from continuing operations was US$5.9 million, compared to a net loss of US$4.5 million in the prior quarter.

STR finished the third quarter of 2013 with US$62.2 million of cash and no debt, down from US$78.4 million of cash and no debt at the end of the first quarter.

Further restructuring

Due to next-generation EVA encapsulant product launch delays in the second quarter and the need to preserve cash, STR Holdings said that its planned production facility in China would be idled along with the upgrades and renovation. The China plant would have given the company 1.2GW of capacity.

Instead, the company said it would seek to outsource anticipated production levels to meet Chinese customer demand to third parties, without providing further details. 

However, with the loss of First Solar as a customer, STR is also closing its material manufacturing plant in Malaysia and will incur charges of approximately US$0.5 to US$0.7 million during the fourth quarter of 2013, while the company expects to generate approximately US$2.0 million of associated annual pre-tax savings as a result of the plant closure.

STR also noted that it further reduced its workforce at its Connecticut facilities during the quarter, without providing further details, except to say it incurred US$0.3 million of related severance expense and approximately $1.3 million of associated annual pre-tax savings as a result of the headcount reduction.

The company is continuing to look at potential strategic alternatives.

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