Earnings Preview: Evergreen Solar, Inc. (NASDAQ:ESLR)
Monday, February 01, 2022 10:26 AM

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Evergreen Solar, Inc., is scheduled to report December 2009 quarter (Q4 2009) results on Monday, February 8, 2010. In the last four quarters ending September 2009, the company underperformed the market by huge margins. The company remained in red in the last four quarters.

Evergreen Solar develops, manufactures and markets solar panels, utilizing its proprietary String Ribbon technology. The company sells its solar panels using domestic and international distributors, system integrators, project developers and other resellers. It primarily operates in the US, Germany and Korea.

In the third quarter, the company shipped a record amount of product due to the continued successful ramp of its Devens facility. Shipments during the quarter increased to 31.3 megawatts, an increase of 35% over the second quarter of 23.2 megawatts. In general, demand was holding firm in the face of challenging macroeconomic conditions around the world. Activity in Germany and other markets was fairly robust as customers moved to take full advantage of the then feed and tariff incentives before anticipated rate decreases.

Analysts' estimates for the quarter ending December 2009 range from a low of -$0.17 to a high of -$0.03, compared to a consensus estimate of -$0.09. The consensus EPS forecast has remained flat over the past week to past two months at -$0.09. However, EPS decreased over the past three months from -$0.06 to -$0.09.

Near stagnant state in EPS estimates is attributable to the lack of meaningful action in the market prospects. In fact demand for the company's shipments is estimated to have petered out in the fourth quarter. However, margins could have increased due to declining operating costs. Manufacturing costs were $2.24 per watt for the third quarter versus $2.70 for the second quarter, representing a 17% improvement. Manufacturing costs are estimated to have improved substantially in the fourth quarter as well. Declining manufacturing costs are attributable to both declining input costs (wafer cost for the third quarter was about $0.75 per watt versus $0.85 per watt for the second quarter) and gains from learning curve. However, the positive impact of declining manufacturing costs would have been partially offset by declining selling prices. Net on net, the company is expected to book EPS loss of $0.07 in the fourth quarter on revenue of $74 million.

If long-term demand for panels manufactured in the US significantly increases, the company will be well positioned to quickly reintroduce panel assembly once again at Devens.

 The stock closed Friday at $1.44, compared to the 52 week range of $1.00 and $2.96. In the last one year the share price has lost more than 34.8%. The company's revenue could support a price in excess of $1.6 in the next two quarters.

 

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