STR Holdings, Inc. STRI, believes that First Solar, Inc., a
long-standing customer, will terminate its relationship with the Company in
2013. Though the exact timing remains uncertain, the Company expects that
First Solar will begin a transition away from STR in the first quarter of
2013, completely cutting over to a new supplier during the course of the next
few months.
As previously disclosed, First Solar is STR's largest customer and such loss
is likely to have a material adverse effect on the business and financial
results of the Company. Sales to First Solar during 2012 were approximately
$39 million.
Robert S. Yorgensen, President & Chief Executive Officer commented, “We have
enjoyed a very long and prosperous relationship with First Solar. Their
loyalty over the years is a testament to our value as a reliable supplier of
excellent quality products and service, for which First Solar honored us with
their Top Supplier Award just over a year ago.” Yorgensen continued, “We have
had no claim for defective product from First Solar, nor have we had any
returns, and the product we have been supplying for years has been according
to specification. Unfortunately, I cannot elaborate on their decision to work
with another supplier at this time. On a more positive note, we have recently
added three new customers in China, two of which have qualified and ordered
our next-generation encapsulants. While this new work won't make up for the
loss of First Solar's business in the short-term, we believe it represents
very important progress toward increasing our share of the burgeoning Chinese
market.”
The Company will continue its comprehensive review of its cost structure, and
expects to cease manufacturing operations at its East Windsor, Connecticut
facility by the end of the first quarter of 2013, and make significant
headcount reductions throughout the organization. The Company is assessing its
long-lived assets for impairment and expects to incur significant
restructuring charges in 2013. The Company will communicate its restructuring
plan in more detail at a later date. The Company plans to service its North
American customer base from its production facilities in Spain and Malaysia.
Joseph C. Radziewicz, Vice President & Chief Financial Officer, said, “While
the loss of First Solar as a customer is certainly an unfortunate development
for STR, we have already taken swift action to reduce our costs, which will
help to preserve our strong balance sheet as well as our options going
forward.”
Separately and unrelated to the loss of First Solar as a customer, the Company
engaged UBS Investment Bank as its financial advisor in December 2012 to
assist the Board of Directors with a review of the Company's strategic
alternatives.
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