Evergreen Posts Higher Losses - Analyst Blog

Massachusetts-based Evergreen Solar Inc. (ESLR) reported first-quarter 2011 adjusted loss per share of $1.21, more than double the year-ago quarterly loss of 60 cents per share. Results also missed the Zacks Consensus Estimate of a loss of 68 cents.

On a reported basis, the company digested a loss of 93 cents versus a loss of 70 cents in the year-ago quarter.

Operational Results

Revenues for the first quarter of 2011 were $35.3 million, down 60.4% sequentially compared to fourth quarter of 2010 revenues of $89.3 million. Revenues also were below the Zacks Consensus Estimate of $67 million.

Shipments for the first quarter of 2011 were approximately 17.8 megawatts, compared to fourth quarter 2010 shipments of 46.6 megawatts. Average selling price for the first quarter of 2011 was $1.86 per watt, down approximately 2% from $1.90 per watt recorded in the fourth quarter of 2010.

Performance in the reported quarter was impacted by the decline in average selling prices, lower sales volume, and shut down of its Devens facility. Operating loss for the first quarter of 2011 was $46.2 million, compared to $399.1 million for the fourth quarter of 2010.

However operating loss in the fourth quarter of 2010 was impacted by an inventory write-down and impairment of long-lived assets totaling $377.5 million in connection with the company's decision to close its Devens manufacturing facility. Overall net loss for the first quarter of 2011 was $33.4 million compared to $411 million in the fourth quarter of 2010.

Financial Condition

Evergreen Solar used cash of $25.7 million for operations in the reported quarter, compared with $23.5 million used in the year-ago period. Cash and cash equivalents, including restricted cash, at the end of the reported period were $38.5 million. Convertible notes outstanding decreased to $355.8 million at the end of the reported period from $389.1 million at year-end 2010.

Outlook

Massachusetts-based Evergreen Solar engages in the development, manufacturing and marketing of solar power products worldwide, including solar cells, panels and photovoltaic systems. The company, through its crystalline silicon technology known as String Ribbon, uses approximately half the silicon for manufacturing wafers, compared to peers using the conventional sawing method.

These modules are designed for a range of solar electric power applications, including water pumping, communications, outdoor lighting, rural electrification, recreational vehicles and stand-alone applications. The company sells its products through distributors, system integrators, and other value-added resellers. Its products are sold primarily in the U.S. and Europe.

Evergreen Solar currently has a short term Zacks #3 Rank (Hold) in line with peers like JinkoSolar Holding Co. Ltd. (JKS) and LDK Solar Co. Ltd. (LDK). Over the longer run, we maintain our Neutral recommendation on Evergreen Solar shares.