STR Holdings, Inc. Reports Fourth Quarter and Full-Year 2012 Results
Mar 14th 2013 4:21PM
Updated Mar 14th 2013 4:26PM
STR Holdings, Inc. Reports Fourth Quarter and Full-Year 2012 Results
Fourth Quarter 2012 Financial Summary:
- Net sales of $16.1 million
- Diluted GAAP loss per share from continuing operations of $(2.97); Diluted non-GAAP loss per share from continuing operations of $(0.09)
- Free cash flow of $5.1 million
- Finished the quarter with $82.0 million in cash and no debt
- Recorded a $172.9 million non-cash long-lived asset impairment
2012 Financial Summary:
- Net sales of $95.3 million
- Diluted GAAP loss per share from continuing operations of $(5.12); Diluted non-GAAP loss per share from continuing operations of $(0.05)
- Free cash flow of $23.2 million
Net sales for the quarter ended December 31, 2012 were $16.1 million. This represents a decline of 30% sequentially and 56% from Q4 2011. On a sequential basis, the decline was driven primarily by a volume decline of approximately 25% and a 7% decline in average sale price ("ASP"). On a year-over-year basis, volume declined by approximately 43% and ASP declined by approximately 23%.
"In the fourth quarter of 2012, solar industry dynamics remained very challenging, particularly in Western markets, and our sequential volume reflects this," said Robert S. Yorgensen, STR's President and Chief Executive Officer. "We continue to execute our strategic objectives of reducing our cost structure and developing and commercializing innovative products. The launch of our next-generation encapsulant is progressing well with many prospects proceeding to certification and we have received commercial orders for this product from two new customers in China and one of our existing customers in Europe."
Gross profit for the fourth quarter of 2012 was $(6.0) million, or (37.5)% of sales, compared to $0.6 million, or 2.5% of sales, from the third quarter of 2012, primarily driven by $1.0 million of restructuring charges, $2.8 million of accelerated depreciation, lower ASP and unfavorable cost absorption.
Selling, general and administrative expenses for the fourth quarter of 2012 were $4.3 million compared to $4.8 million in the third quarter of 2012. The reduction was driven by lower non-cash stock-based compensation expense.
The Company recorded a $172.9 million non-cash long-lived asset impairment related to its intangible assets and certain fixed assets. The impairment was driven by continued pricing pressure, increased competition in the encapsulant market and the loss of First Solar, Inc. as a customer.
Net loss from continuing operations for the fourth quarter of 2012 was $(123.4) million, or $(2.97) per diluted share. This compares to a net loss from continuing operations of $(3.6) million, or $(0.09) per diluted share, for the third quarter of 2012 and net loss from continuing operations of $(68.5) million, or $(1.67) per diluted share, for the fourth quarter of 2011.
Non-GAAP net loss from continuing operations for the fourth quarter of 2012, which excludes certain tax-effected adjustments (as disclosed following the non-GAAP reconciliation table at the end of this press release), was $(3.7) million, or $(0.09) per diluted share. This compares to non-GAAP net loss from continuing operations of $(1.1) million, or $(0.03) per diluted share, for the third quarter of 2012 and non-GAAP net loss from continuing operations of $1.9 million, or $(0.05) per diluted share, for the fourth quarter of 2011.
Balance Sheet and Liquidity
During the fourth quarter of 2012, the Company generated operating cash flow from continuing operations of $5.3 million primarily due to the receipt of income tax refunds and working capital benefit. Free cash flow from continuing operations was $5.1 million during the fourth quarter of 2012. The Company finished 2012 with $82.0 million of cash and no debt.
The Company today provided guidance for the first quarter and full-year 2013 as follows:
|STR Holdings, Inc.|
|Amounts in millions, except per share amounts|
|Quarter ending March 31, 2013||Low||High|
|Diluted non-GAAP EPS||$||(0.10||)||$||(0.08||)|
|Ending Cash Balance||$||77.0||$||79.0|
|Year ending December 31, 2013||Low||High|
|Diluted non-GAAP EPS||$||(0.25||)||$||(0.15||)|
|Free cash flow||$||(7.0||)||$||(4.0||)|
|Ending cash balance||$||75.0||$||78.0|
Subsequent to the first quarter of 2013, the Company will only provide annual guidance for sales, non-GAAP EPS, free cash flow and its ending cash balance. The Company will no longer provide quarterly guidance for sales and non-GAAP EPS.
Fourth Quarter Conference Call and Presentation
The Company will discuss its financial results and guidance in a conference call today at 4:30 p.m. ET. A live webcast of the conference call and presentation will be available through the Investor Relations section of the Company's website at www.strholdings.com. Investors accessing the live call by phone from the U.S. should dial (866) 362-4832 and enter passcode: 49630401. Those calling from outside the U.S. should dial (617) 597-5364 and use the same passcode. A telephone replay will be available approximately two hours after the call concludes through Thursday, March 21, 2013, by dialing (888) 286-8010 from the U.S., or (617) 801-6888 from international locations, and entering passcode: 89541287. The webcast and presentation will be archived on the Company's website for one year.
About STR Holdings, Inc.
STR Holdings, Inc. is a global provider of encapsulants to the photovoltaic module industry. Further information about STR Holdings, Inc. can be obtained via the Company's website at www.strholdings.com.
This press release and any oral statement made in respect of the information in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to inherent risks and uncertainties. These forward-looking statements present the Company's current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business and are based on assumptions that the Company has made in light of its industry experience and perceptions of historical trends, current conditions, expected future developments and other factors management believes are appropriate under the circumstances. However, these forward-looking statements are not guarantees of future performance or financial or operating results. In addition to the risks and uncertainties discussed in this press release, the Company faces risks and uncertainties that include, but are not limited to, the following: (1) customer concentration in our business and our relationships with and dependence on key customers; (2) technological changes in the solar energy industry or our failure to develop and introduce or integrate new technologies could render our encapsulants uncompetitive or obsolete, particularly in China; (3) our ability to increase our market share; (4) product pricing pressures and other competitive factors; (5) excess capacity in the solar supply chain; (6) the extent to which we may be required to write-off accounts receivable, inventory or other assets; (7) trade complaints and lawsuits diminishing the growth of the solar industry; (8) demand for solar energy in general and solar modules in particular; (9) the extent and duration of the current downturn in the global economy; (10) the impact negative credit markets may have on us or our customers or suppliers; (11) the timing and effects of the implementation of government incentives and policies for renewable energy, primarily in China and the United States; (12) the effects of the announced reductions to solar incentives in Germany and Italy; (13) operating new manufacturing facilities and increasing production capacity at existing facilities; (14) volatility in commodity costs, such as resin or paper used in our encapsulants, and our ability to successfully manage any increases in these commodity costs; (15) our dependence on a limited number of third-party suppliers for raw materials for our encapsulants and materials used in our processes; (16) our reliance on vendors and potential supply chain disruptions, including those resulting from bankruptcy filings by customers or vendors; (17) potential product performance matters and product liability; (18) our ability to protect our intellectual property; (19) the impact of changes in foreign currency exchange rates on financial results, and the geographic distribution of revenues and earnings; (20) maintaining sufficient liquidity in order to fund future profitable growth and long-term vitality; (21) outcomes of litigation and regulatory actions; and (22) the other risks and uncertainties described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in subsequent periodic reports on Forms 10-K, 10-Q and 8-K. You are urged to carefully review and consider the disclosure found in our filings which are available on http://www.sec.gov or http://www.strholdings.com. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove to be incorrect, actual results may vary materially from those projected in these forward-looking statements. We undertake no obligation to publicly update any forward-looking statement contained in this release, whether as a result of new information, future developments or otherwise, except as may be required by law.
STR Holdings, Inc.
CONDENSED CONSOLIDATED INCOME STATEMENTS
All amounts in thousands except shares and per share amounts
|Three Months Ended December 31,||Twelve Months Ended December 31,|
|Cost of sales||22,066||32,289||97,193||160,446|
|Selling, general and administrative expenses||4,302||7,635||21,345||27,832|
|Research and development expense||1,116||1,093||4,371||2,562|
|(Recovery) Provision for bad debt expense||(11||)||(130||)||486||379|
|Intangible asset impairment||135,480||-||135,480||-|
|Operating (loss) income||(184,333||)||(68,296||)||(283,485||)||(24,597||)|
|Other (expense) income, net||(125||)||(247||)||5,646||(4,158||)|
|Loss from continuing operations before income tax (benefit) expense||(184,458||)||(68,543||)||(277,839||)||(28,755||)|
|Income tax (benefit) expense from continuing operations||(61,014||)||(66||)||(66,264||)||10,673|
|Net loss from continuing operations||$||(123,444||)||$||(68,477||)||$||(211,575||)||$||(39,428||)|
|Earnings from discontinued operations before income tax expense (benefit)||-||2,741||-||113,512|
|Income tax expense (benefit) from discontinued operations||18||1,408||(4,228||)||75,388|
|Net (loss) earnings from discontinued operations||$||(18||)||$||1,333||$||4,228||$||38,124|
|Net loss earnings||$||(123,462||)||$||(67,144||)||$||(207,347||)||$||(1,304||)|
|GAAP net (loss) per share:|
|Basic from continuing operations||$||(2.97||)||$||(1.67||)||$||(5.12||)||$||(0.96||)|
|Basic from discontinued operations||-||0.04||0.10||0.93|
|Total basic GAAP net (loss) per share||$||(2.97||)||$||(1.63||)||$||(5.02||)||$||(0.03||)|
|Diluted from continuing operations||$||(2.97||)||$||(1.67||)||$||(5.12||)||$||(0.96||)|
|Diluted from discontinued operations||-||0.04||0.10||0.93|
|Total diluted GAAP net (loss) per share||$||(2.97||)||$||(1.63||)||$||(5.02||)||$||(0.03||)|
|(1) Non-GAAP net (loss) earnings per share:|
|Basic from continuing operations||$||(0.09||)||$||(0.05||)||$||(0.05||)||$||0.82|
|Basic from discontinued operations||-||0.04||0.11||1.00|
|Total basic non-GAAP net (loss) earnings per share||$||(0.09||)||$||(0.01||)||$||0.06||$||1.82|
|Diluted from continuing operations||$||(0.09||)||$||(0.05||)||$||(0.05||)||$||0.80|
|Diluted from discontinued operations||-||0.04||0.11||0.98|
|Total diluted non-GAAP net (loss) earnings per share||$||(0.09||)||$||(0.01||)||$||0.06||$||1.78|
|Weighted-average common shares outstanding:|
|Basic shares outstanding GAAP||41,526,822||41,083,830||41,314,608||40,886,022|
|(2) Diluted shares outstanding GAAP||41,526,822||41,083,830||41,314,608||40,886,022|
|Restricted common stock||-||-||-||397,641|
|(2) Diluted shares outstanding non-GAAP||41,526,822|