STR Holdings, Inc. Reports First Quarter 2013 Results
First Quarter 2013 Financial Summary:
- Net sales of $11.2 million
- Diluted GAAP loss per share from continuing operations of $(0.10); Diluted non-GAAP loss per share from continuing operations of $(0.07)
- Finished the quarter with $78.4 million in cash and no debt
Net sales for the quarter ended March 31, 2013 were $11.2 million. This represents a decline of 30% sequentially and 64% from Q1 2012. On a sequential basis, the decline was driven primarily by a volume decline of approximately 26% and a 5% decline in average sale price ("ASP"). On a year-over-year basis, volume declined by approximately 57% and ASP declined by approximately 15%.
"In the first quarter of 2013, we made some very important strides in the execution of our strategic imperatives," said Robert S. Yorgensen, STR's President and Chief Executive Officer. "These include very encouraging progress in the launch of our next generation encapsulants - both EVA and POE based products - for which we have received positive feedback in the form of customer qualifications, as well as important new customer wins."
Gross profit for the first quarter of 2013 was $(0.7) million, or (6.3)% of sales, compared to $(6.0) million, or (37.5)% of sales, for the fourth quarter of 2012. The improvement was primarily driven by $6.5 million of lower intangible asset amortization and depreciation expense due to the long-lived asset impairment recorded at December 31, 2012 and continued benefit from cost-reduction actions. These benefits more than offset increased restructuring charges, lower ASP and unfavorable cost absorption.
Selling, general and administrative expenses for the first quarter of 2013 were $4.1 million compared to $4.3 million in the fourth quarter of 2012. The reduction was driven by reduced professional fees and other cost-reduction measures that more than offset higher restructuring and non-cash, stock-based compensation expenses.
Net loss from continuing operations for the first quarter of 2013 was $(4.2) million, or $(0.10) per diluted share. This compares to a net loss from continuing operations of $(123.4) million, or $(2.97) per diluted share, for the fourth quarter of 2012 and a net loss from continuing operations of $(82.1) million, or $(2.00) per diluted share, for the first quarter of 2012. The fourth quarter of 2012 was negatively impacted by a $172.9 million non-cash, long-lived asset impairment and the first quarter of 2012 was negatively impacted by a $82.5 million non-cash, goodwill impairment.
Non-GAAP net loss from continuing operations for the first quarter of 2013, which excludes certain tax-effected adjustments (as disclosed following the non-GAAP reconciliation table at the end of this press release), was $(2.9) million, or $(0.07) per diluted share. This compares to non-GAAP net loss from continuing operations of $(3.7) million, or $(0.09) per diluted share, for the fourth quarter of 2012 and non-GAAP net earnings from continuing operations of $2.9 million, or $0.07 per diluted share, for the first quarter of 2012. The first quarter of 2012 benefitted from the receipt of a $7.2 million settlement from a trade secret litigation.
Balance Sheet and Liquidity
During the first quarter of 2013, the Company used cash from continuing operations of $3.7 million primarily due to approximately $2.0 million of restructuring and financial advisor payments. In addition, the Company invested in additional resin inventory necessary to support recent customer wins. Free cash flow from continuing operations was $(4.1) million during the first quarter of 2013. The Company finished the quarter with $78.4 million of cash and no debt. As of March 31, 2013, the Company also has $9.5 million of income tax receivables of which approximately $6.0 million is expected to be received in 2013.
"With our first quarter financial performance and recent customer wins, we do not see the need to update our annual guidance," said Joseph C. Radziewicz, STR's Vice President and Chief Financial Officer. "We are committed to further execution of our previously announced cost-reduction program, repositioning our customer portfolio with the successful launch of our next-generation EVA and POE-based encapsulants and maintaining our strong balance sheet."
As disclosed on its last conference call, the Company is no longer providing quarterly guidance for sales and non-GAAP EPS. The Company previously provided its 2013 annual guidance for sales, non-GAAP EPS, free cash flow and ending cash balance which it is not updating at this time.
First 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) 510-0707 and enter passcode: 36402699. Those calling from outside the U.S. should dial (617) 597-5376 and use the same passcode. A telephone replay will be available approximately two hours after the call concludes through Wednesday, May 8, 2013, by dialing (888) 286-8010 from the U.S., or (617) 801-6888 from international locations, and entering passcode: 87532495. 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 March 31,|
|Cost of sales||11,916||29,083|
|Selling, general and administrative expenses||4,137||6,668|
|Research and development expense||904||1,078|
|Provision for bad debt expense||340||1,606|
|Loss from continuing operations before income tax benefit||(6,054||)||(83,106||)|
|Income tax benefit from continuing operations||(1,844||)||(975||)|
|Net loss from continuing operations||(4,210||)||(82,131||)|
|Earnings from discontinued operations before income tax (benefit) expense||-||-|
|Income tax (benefit) expense from discontinued operations||-||-|
|Net earnings from discontinued operations||-||-|
|GAAP net loss per share:|
|Basic from continuing operations||$||(0.10||)||$||(2.00||)|
|Basic from discontinued operations||$||-||$||-|
|Total basic GAAP net loss per share||$||(0.10||)||$||(2.00||)|
|Diluted from continuing operations||$||(0.10||)||$||(2.00||)|
|Diluted from discontinued operations||$||-||$||-|
|Total diluted GAAP net loss per share||$||(0.10||)||$||(2.00||)|
|(1) Non-GAAP net (loss) earnings per share:|
|Basic from continuing operations||$||(0.07||)||$||0.07|
|Basic from discontinued operations||$||-||$||-|
|Total basic non-GAAP net (loss) earnings per share||$||(0.07||)||$||0.07|
|Diluted from continuing operations||$||(0.07||)||$||0.07|
|Diluted from discontinued operations||$||-||$||-|
|Total diluted non-GAAP net (loss) earnings per share||$||(0.07||)||$||0.07|
|Weighted-average common shares outstanding:|
|Basic shares outstanding GAAP||41,556,736||41,155,562|
|(2) Diluted shares outstanding GAAP||41,556,736||41,155,562|
|Restricted common stock||-||11,193|
|(2) Diluted shares outstanding non-GAAP||41,556,736||41,166,755|
|(1) Please refer to the reconciliation of non-GAAP measures included in this press release.|
|(2) Please refer to the reconciliation of diluted shares outstanding for non-GAAP net earnings per share included in this press release.|
|STR Holdings, Inc.|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|All amounts in thousands|
|March 31, 2013||December 31, 2012|
|Cash and cash equivalents||$||78,375||$||81,985|
|Accounts receivable, net||4,008||5,316|
|Other current assets||13,910||10,732|
|Total current assets||103,785||106,618|
|Property, plant and equipment, net||27,474||27,750|
|Other noncurrent assets||11,289||12,796|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Income taxes payable||780||917|
|Total current liabilities||13,713||14,186|
|Total liabilities and stockholders' equity||$||142,548||$||147,164|