MEMC Soars on Earnings, Revenue, Decent Forecast (WFR, FSLR, SPWR, TSL)

MEMC Electronic Materials Inc. (NYSE: WFR) reported second-quarter adjusted earnings per share (EPS) of $0.14 and $933.4 million in revenue before markets opened today. EPS for the same period a year ago came to $0.29, and last year’s revenue totaled $779.6 million. The most recent results compare to the Thomson Reuters consensus estimates for an EPS of $0.02 and $749.5 million in revenue. On a GAAP basis, the company reported an EPS loss of -$0.27 on revenue of $808.4 million.

The report offered a good breakdown of not just the company’s revenue, but the direction of the entire solar industry:

Revenue in the company’s Semiconductor Materials business grew sequentially driven by higher volume but declined year-over-year due to price erosion and lower volume. Solar Energy revenue rose sequentially and year over year on higher solar project sales. For the second quarter of 2012, SunEdison recognized non-GAAP revenue on 169 MW of solar energy systems sales, compared to 49 MW in the 2012 first quarter and 28 MW in the 2011 second quarter. Despite these increased solar energy systems sales, SunEdison’s project pipeline remained flat at 2.9 GW.

The company’s CEO said:

We sold several large European solar projects despite highly uncertain market conditions, and we experienced stronger semiconductor wafer demand. As a result, our financial position strengthened.

MEMC did not provide specific guidance on revenue or earnings, but did say that the company expected semiconductor revenue to rise 3% to 8% in the third quarter, and the solar energy systems segment expects average system pricing to top $3.50 per watt. For the full fiscal year, semiconductor revenue is expected to be 2% to 5% lower than last year, although revenue in the second half of this year is forecast to be higher. For the full year, MEMC expects to sell more than 400 megawatts of solar energy systems.

The good news here for the company and its shareholders is that the pricing decline for wafers seems to have stopped. First Solar Inc. (NASDAQ: FSLR) is also recovering its footing after a year and a half of collapsing prices on the back of its solar project installation segment. Sunpower Corp. (NASDAQ: SPWR) is scheduled to report earnings after markets close today, with a consensus estimate for an EPS loss of $0.09 on revenue of $614.4 million. Like First Solar and MEMC, Sunpower also owns a project planning and installation business, which could boost the company past the current estimates.

It’s worth noting that the struggling Chinese solar makers like Trina Solar Ltd. (NYSE: TSL) and others do not have strong project installation divisions, forcing them to rely solely on module pricing.

Shares of MEMC are up more than 23% in premarket trading, at $2.54. The current 52-week range is $1.44 to $7.26. Thomson Reuters had a consensus analyst price target of $6.41 before today’s results were announced.

Paul Ausick