Massachusetts-based Evergreen Solar Inc. (ESLR) reported fourth-quarter 2010 adjusted loss per share of 84 cents, almost half the year-ago quarterly loss of $1.50 per share. However, this is higher than the Zacks Consensus Estimate of a loss of 70 cents.
Operational Results
Evergreen Solar’s revenues for the fourth quarter of 2010 were $89.3 million, up 3.2% and 19.7% compared with third-quarter 2010 revenues of $86.5 million and year-ago revenues of $74.5 million. Revenues however were below the Zacks Consensus Estimate of $99 million.
Average selling price for the fourth quarter of 2010 was $1.90 per watt, down approximately 6% from $2.02 per watt recorded in the third quarter of 2010.
Gross margin for the fourth quarter of 2010 was a negative 84% compared to 7.5% in the third quarter of 2010. The decrease in gross margin resulted primarily from the write-down of prepaid inventory and the countervailing duties on the company’s imported aluminum frames.
Operating loss for the fourth quarter of 2010 was $399.1 million, compared to $22.7 million for the third quarter of 2010. Operating loss in the fourth quarter of 2010 increased sequentially from the third quarter due mainly to the inventory write-down and the impairment of long-lived assets.
Overall net loss for the fourth quarter of 2010 was $411.0 million compared to $27.2 million in the third quarter of 2010.
Financial Condition
Evergreen Solar used cash of $47.9 million for operations in fiscal 2010, compared with $37.1 million used in the year-ago period. Cash and cash equivalents at the end of the reported period were $61.6 million compared with $112.4 million at the end of the year-ago period. Convertible notes outstanding increased to $389.1 million at the end of the reported period from $323.3 million at year-end 2009.
Outlook
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’s geographically diverse contractual backlog, ongoing expansion programs improving operating efficiencies and up-gradation in technology will help maintain its positive momentum.
However, continuing near-term losses due to start-up costs, capital expenditures, apprehension over a subsidy roll-back in Germany and earnings dilutive stock issuances may stunt the near-term share price upside potential.
Thus we maintain our long-term Neutral recommendation on the Zacks #4 Rank (Sell) Evergreen Solar stock. In the solar space we would advise investors to focus on the Zacks #1 Rank (Strong Buy) stocks like JinkoSolar Holding Company Limited (JKS) and LDK Solar Co. Ltd. (LDK) in the near-term.
EVERGREEN SOLAR (ESLR): Free Stock Analysis Report
JINKOSOLAR HLDG (JKS): Free Stock Analysis Report
LDK SOLAR CO (LDK): Free Stock Analysis Report
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