MEMC Reports 2009 Fourth Quarter Results
ST. PETERS, Mo., Feb. 3 /PRNewswire-FirstCall/ -- MEMC Electronic Materials, Inc. (NYSE: WFR) today reported financial results for the quarter and year ended December 31, 2009.
Fourth quarter highlights:
- Net sales of $356.7 million – up 15.1% vs. previous quarter
- Gross profit of $53.0 million – 14.9% of net sales
- Operating cash flow of $19.4 million
- Cash and investment balances of approximately $1 billion
- Completed acquisition of solar developer SunEdison
Net sales for the fourth quarter were $356.7 million, representing an increase of 15.1% from third quarter 2009 net sales of $310.0 million, and a decrease of 16.2% from fourth quarter 2008 net sales of $425.7 million.
Gross profit in the quarter was $53.0 million, or 14.9% of net sales, compared to $20.5 million, or 6.6% of net sales, in the 2009 third quarter and $193.0 million, or 45.3% of net sales, in the 2008 fourth quarter.
Fourth quarter 2009 operating expenses were $64.0 million or 17.9% of sales, compared to $87.2 million, or 28.1% of sales, in the 2009 third quarter, and $28.2 million, or 6.6% of sales, in the 2008 fourth quarter.
The company reported an operating loss of $11.0 million during the quarter, compared to an operating loss of $66.7 million in the 2009 third quarter and operating income of $164.8 million in the 2008 fourth quarter.
MEMC's net loss for the fourth quarter was $7.1 million, or $0.03 per share, compared to a net loss of $64.6 million, or $0.29 per share in the 2009 third quarter and net income of $70.3 million, or $0.31 per share, in the 2008 fourth quarter.
The 2009 results above include transaction expenses of $2.5 million associated with the company's acquisition of SunEdison as well as SunEdison's operational results from November 20, 2009 through December 31, 2009.
"The fourth quarter marked the third sequential quarterly improvement in revenue as we continue to recover from the economic downturn," said Ahmad Chatila, MEMC's Chief Executive Officer. "Pricing pressure has moderated, product volumes continued to increase and our efforts to improve our competitive positioning are working."
Segment Operating Results
On November 20, 2009, MEMC completed the acquisition of SunEdison, a solar energy solutions provider. As a result, for 2009, the company operated in two reportable segments: Materials Business (historical MEMC business) and SunEdison.
Materials Business Operating Results
Sales for the fourth quarter were $352.9 million, an increase of 13.8% from third quarter 2009 net sales of $310.0 million, and a decrease of 17.1% from fourth quarter 2008 net sales of $425.7 million. The sequential increase in sales was primarily the result of significantly higher wafer volumes for both semiconductor and solar applications.
Gross profit in the quarter was $51.9 million, or 14.7% of net sales, compared to $20.5 million, or 6.6% of net sales, in the 2009 third quarter and $193.0 million, or 45.3% of net sales, in the 2008 fourth quarter. The sequential increase in gross profit was primarily the result of higher volumes and improved operating performance.
Fourth quarter 2009 operating expenses of $52.5 million, or 14.9% of sales, includes $5.4 million of cost associated with the startup of the Ipoh, Malaysia facility and higher sales and customer freight expense relative to Q3 2009. This compared to $87.2 million, or 28.1% of sales, in the 2009 third quarter, which included restructuring and impairment charges of $39.7 million and $4.5 million of cost associated with the startup of the Ipoh facility.
The segment reported an operating loss of $0.6 million during the quarter, compared to an operating loss of $66.7 million in the 2009 third quarter and operating income of $164.8 million in the 2008 fourth quarter.
SunEdison Business Operating Results (11/20/2009-12/31/2009)
Net sales for the period from November 20 through December 31 were $3.8 million. Gross profit was $1.1 million, or 28.9% of net sales. Operating expenses for the period were $11.5 million, and operating loss for the period was $10.4 million. During the period, 13 megawatts were installed and interconnected, with the majority of the associated revenue and profits to be recognized in future periods.
Capital Position
During the fourth quarter, the company generated operating cash flow of $19.4 million, compared to $11.8 million in the 2009 third quarter.
Capital expenditures for the fourth quarter totaled $101.6 million, including $28.0 million for SunEdison related project construction.
Free cash consumed (defined by MEMC as operating cash flow minus capital expenditures, plus net inflows associated with non-recourse SunEdison project financing) was $19.7 million. See the reconciliation table included with the financial statement tables at the end of this press release.
MEMC ended the fourth quarter with cash and investment balances of $1,074.6 million. In addition, non-recourse SunEdison long-term debt was $382.9 million, which relates to $334.3 million of solar energy system assets.
Outlook
The company will provide its 2010 financial guidance in a press release to be issued at approximately 8:30 a.m. ET tomorrow morning, February 4, prior to the company's Capital Markets Day in New York. At the meeting, the company will review its outlook for 2010 and provide business reviews of its new 2010 reportable segments of Solar Materials, Semiconductor Materials, and SunEdison businesses.
Conference Call
MEMC will host a conference call today, February 3 at 5:30 p.m. ET to discuss the company's fourth quarter and full year 2009 results and related business matters. A live webcast will be available on the company's web site at www.memc.com.
A replay of the conference call will be available from 7:30 p.m. ET on February 3 until 11:59 p.m. ET on February 10. To access the replay, please dial (320) 365-3844 at any time during that period, using passcode 142912. A replay will also be available until 11:59 p.m. ET on February 10 on the company's web site at www.memc.com.
MEMC will also host a Capital Markets Day in New York City tomorrow, February 4 for financial analysts and institutional investors. Interested parties are invited to listen to the event via a live internet broadcast on the company's website at www.memc.com beginning at 9:00 a.m. Eastern Time.
About MEMC
MEMC is a global leader in the manufacture and sale of wafers and related intermediate products to the semiconductor and solar industries. With the recent acquisition of SunEdison, MEMC is also a developer of solar power projects and North America's largest solar energy services provider.
MEMC has been a pioneer in the design and development of silicon wafer technologies for 50 years. With R&D and manufacturing facilities in the U.S., Europe and Asia, MEMC enables the next generation of high performance semiconductor devices and solar cells.
MEMC's common stock is listed on the New York Stock Exchange under the symbol "WFR" and is included in the S&P 500 Index. For more information about MEMC, please visit www.memc.com.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; In millions, except per share data)
Three Months Ended Twelve Months Ended
------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Net sales $356.7 $310.0 $425.7 $1,163.6 $2,004.5
Cost of goods sold 303.7 289.5 232.7 1,035.5 999.7
----- ----- ----- ------- -----
Gross profit 53.0 20.5 193.0 128.1 1,004.8
Operating expenses:
Marketing and
administration 52.4 37.2 17.3 161.9 106.5
Research and
development 10.6 10.3 10.2 40.4 40.8
Restructuring and
impairment costs 1.0 39.7 0.7 53.0 4.3
--- ---- --- ---- ---
Operating (loss)
income (11.0) (66.7) 164.8 (127.2) 853.2
Non-operating (income)
expense:
Interest expense 3.1 0.4 0.4 4.0 1.8
Interest income (4.1) (4.9) (11.1) (26.5) (46.4)
(Increase) decline
in fair value of
warrant (1.7) 6.3 61.2 (5.4) 292.5
Other, net (1.3) 0.2 9.7 0.9 20.3
---- --- --- --- ----
Total non-operating
(income) expense (4.0) 2.0 60.2 (27.0) 268.2
---- --- ---- ----- -----
(Loss) income
before income tax
(benefit) expense
and equity in
earnings of
joint venture (7.0) (68.7) 104.6 (100.2) 585.0
Income tax (benefit)
expense (7.3) (6.3) 35.4 (42.2) 195.4
---- ---- ---- ----- -----
(Loss) income
before equity
in earnings of
joint venture 0.3 (62.4) 69.2 (58.0) 389.6
Equity in earnings of
joint venture, net of
tax (6.0) (2.5) - (11.8) -
---- ---- --- ----- ---
Net (loss) income (5.7) (64.9) 69.2 (69.8) 389.6
Net loss (income)
attributable to
noncontrolling
interests (1.4) 0.3 1.1 1.5 (2.2)
---- --- --- --- ----
Net (loss) income
attributable to MEMC
stockholders $(7.1) $(64.6) $70.3 $(68.3) $387.4
----- ------ ----- ------ ------
Basic (loss) income per
share $(0.03) $(0.29) $0.31 $(0.30) $1.71
Diluted (loss) income
per share $(0.03) $(0.29) $0.31 $(0.30) $1.69
Weighted-average shares
used in computing
basic (loss) income per
share 225.3 223.6 224.5 224.0 226.9
Weighted-average shares
used in computing
diluted (loss) income
per share 225.3 223.6 225.1 224.0 228.6
RESULTS BY REPORTABLE
SEGMENT Three Months Ended Twelve Months Ended
------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Net Sales
Materials Business $352.9 $310.0 $425.7 $1,159.8 $2,004.5
SunEdison 3.8 - - 3.8 -
--- --- --- --- ---
Consolidated net sales $356.7 $310.0 $425.7 $1,163.6 $2,004.5
------ ------ ------ -------- --------
Operating (loss) income
Materials Business $(0.6) $(66.7) $164.8 $(116.8) $853.2
SunEdison (10.4) - - (10.4) -
----- - - ----- -
Consolidated operating
(loss) income $(11.0) $(66.7) $164.8 $(127.2) $853.2
------ ------ ------ ------- ------
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; In millions)
December 31, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash equivalents $632.7 $988.3
Restricted cash 37.4 -
Short-term investments 85.9 148.4
Accounts receivable, net 173.3 197.3
Inventories 160.8 81.3
Income taxes receivable 72.5 -
Prepaid and other current
assets 87.0 38.9
---- ----
Total current assets 1,249.6 1,454.2
Investments 297.6 284.7
Property, plant and
equipment, net 1,457.7 1,041.2
Deferred tax assets, net 95.3 69.7
Customer warrant 19.2 13.8
Restricted cash 21.0 -
Other assets 96.0 73.1
Goodwill & intangibles 321.6 -
----- -
Total assets $3,558.0 $2,936.7
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt & capital leases $34.4 $6.1
Accounts payable 219.3 162.4
Accrued liabilities 106.8 67.5
Accrued wages and salaries 39.2 31.7
Customer deposits 83.6 187.0
Income taxes payable 22.5 17.9
---- ----
Total current
liabilities 505.8 472.6
Long-term debt & capital
leases, less current
portion 379.2 26.1
Pension and post-employment
liabilities 46.6 46.3
Deferred revenue 106.3 88.8
Other liabilities 313.3 186.1
----- -----
Total liabilities 1,351.2 819.9
------- -----
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2.4 2.3
Additional paid-in capital 507.4 425.6
Retained earnings 2,079.1 2,147.1
Accumulated other
comprehensive income
(loss) 33.0 (55.6)
Treasury stock (453.3) (437.4)
------ ------
Total MEMC stockholders'
equity 2,168.6 2,082.0
Noncontrolling interests 38.2 34.8
Total stockholders'
equity 2,206.8 2,116.8
------- -------
Total liabilities and
stockholders' equity $3,558.0 $2,936.7
-------- --------
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In millions)
Three Months Ended Twelve Months Ended
------------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Cash flows from
operating activities:
Net (loss) income $(5.7) $(64.9) $69.2 $(69.8) $389.6
Adjustments to
reconcile
net income to net cash
provided by operating
activities:
Depreciation
and amortization 34.4 32.3 28.4 124.0 104.0
Stock-based
compensation 9.9 8.4 (5.6) 36.5 28.5
Impairment costs - 24.6 - 24.6 1.1
Decrease (increase)
on fair value of
warrant (1.7) 6.3 61.2 (5.4) 292.5
Pension and
post-employment
liabilities 0.2 (0.2) (4.3) (1.4) (72.4)
Working capital and
other (17.7) 5.3 (25.9) (75.5) (102.8)
----- --- ----- ----- ------
Net cash provided
by operating
activities 19.4 11.8 123.0 33.0 640.5
---- ---- ----- ---- -----
Cash flows from investing
activities:
Cash paid for
acquisition, net of
cash acquired (188.5) - - (188.5) -
Proceeds from sales and
maturities of
available for
sale investments 140.7 17.5 107.9 272.5 485.5
Purchases of available
for sale investments - - (68.4) (10.9) (517.3)
Purchases of cost and
equity method
investments (50.7) (71.0) - (121.7) -
Capital expenditures (73.6) (53.1) (60.9) (225.4) (303.2)
Construction of solar
energy systems (28.0) - - (28.0) -
Other 2.1 - - 2.2 -
--- --- --- --- ---
Net cash used in
investing
activities (198.0) (106.6) (21.4) (299.8) (335.0)
------ ------ ----- ------ ------
Cash flows from financing
activities:
Net proceeds from
(repayments of) customer
deposits related to long-
term supply agreements (0.2) (10.1) - (90.4) 138.0
Principal payments on
long-term debt (42.8) - (3.1) (46.0) (6.0)
Proceeds from financing
and capital lease
obligations 78.1 - - 78.1 -
Repayments of financing
and capital lease
obligations (15.6) - - (15.6) -
Dividend to
noncontrolling
interest - - - - (3.2)
Excess tax benefits
from stock-based
payment arrangements - 0.1 - 0.3 19.0
Common stock repurchased - - (35.5) (15.8) (321.0)
Proceeds from issuance
of common stock 0.1 0.1 0.1 0.7 19.9
Debt financing fees (3.0) - - (3.0) -
---- --- --- ---- ---
Net cash provided
by (used in)
financing
activities 16.6 (9.9) (38.5) (91.7) (153.3)
---- ---- ----- ----- ------
Effect of exchange rate
changes on cash and
cash equivalents 2.5 7.0 (7.1) 2.9 (23.2)
--- --- ---- --- -----
Net (decrease)
increase in
cash and cash
equivalents (159.5) (97.7) 56.0 (355.6) 129.0
Cash and cash
equivalents at
beginning of period 792.2 889.9 932.3 988.3 859.3
----- ----- ----- ----- -----
Cash and cash
equivalents at end
of period $632.7 $792.2 $988.3 $632.7 $988.3
------ ------ ------ ------ ------
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
As of and for the Quarterly Period Ending December 31, 2009
(Unaudited; In millions)
SUMMARY OF GAAP DEBT OUTSTANDING December 31,
-------------------------------- 2009
----
Consolidated
-------------
Materials Business - Japanese bank debt $25.5
SunEdison - debt 5.2
SunEdison - non-recourse system financing
debt and capital lease obligations 382.9
-----
Total $413.6
======
NON-GAAP RECONCILIATION OF FREE CASH FLOW
-----------------------------------------
Three Months Ended
--------------------
December 31, December 31,
2009 2008
---- ----
Net cash provided by
operating activities $19.4 $123.0
Capital expenditures (73.6) (60.9)
Construction of solar
energy systems (28.0) -
Proceeds from financing
and capital lease
obligations 78.1 -
Repayments of financing and
capital lease obligations (15.6) -
----- ----
Free cash flow $(19.7) $62.1
====== =====
Generally Accepted Accounting Principles (GAAP) is the term used to refer
to the standard framework of guidelines for financial accounting and
reporting. In addition to reporting financial results in accordance with
GAAP, we have provided a non-GAAP financial measure for free cashflows
which we believe is useful to help investors better understand the capital
intensity of our business including our project financing operations. In
addition to other key performance indicators, we evaluate the performance
of the solar project business on the cash generation abilities of the
projects which are typically financed at the inception of the leases
resulting in a gain on sale that is deferred and not immediately included
in net income. Any non-GAAP measure should be considered in context with
the GAAP financial presentation and should not be considered in isolation
or as a substitute for GAAP net earnings.
SOURCE MEMC Electronic Materials, Inc.
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