Massachusetts-based Evergreen Solar Inc. (ESLR: 1.19 0.00 0.00%) reported fiscal fourth-quarter loss per share of 13 cents, which is identical to the year-ago quarter. This is however higher than the Zacks Consensus Estimate of a 9-cent loss. The fall came from lower average selling prices.
Out of the 19 analysts covering the stock, two have revised their estimates downwards in the last 30 days for fiscal 2010. We expect Evergreen Solar to narrow its losses in fiscal 2010 with a loss per share of 25 cents.
In the reported quarter, Evergreen Solar improved its total manufacturing cost to $2.05 per watt from $2.24 per watt in the third quarter of fiscal 2009. However, this is lower than $75.5 million of product revenue in the third quarter of fiscal 2009.
Evergreen Solar clocked revenues of $74.5 million in the reported quarter compared to $44.2 million in the third quarter of fiscal 2009. Product revenues were $74.5 million compared to $41.1 million in the year-ago quarter. Royalty and fee revenues were only $0.02 million in the reported quarter compared to $3.1 million in the year-ago quarter.
In the reported quarter, Evergreen Solar produced about 34 megawatts and shipped approximately 31.9 megawatts, compared to 31.3 megawatts in the third quarter 2009. The sequential decrease in product revenues was due mainly to a 3.7% decline in average selling prices. Average selling price during the reported quarter was $2.32 per watt, down from $2.41 per watt in the third quarter of 2009.
Evergreen Solar sold approximately 68% of its production in Europe and 32% in US in the reported quarter, compared to approximately 73% of production in Europe, 24% in the US and 3% in Asia during the third quarter of fiscal 2009.
Gross margin in the reported quarter was 11.9%, up from 9.7% in the third quarter of 2009. Product gross margin was 11.9% in the quarter compared to 7.1% for the third quarter of 2009.
Evergreen reported cash and cash equivalents of $112.4 million at fiscal-end 2009 from $100.9 million at fiscal-end 2008. The company used $37.1 million of cash in operating activities in fiscal 2009, compared to $65.9 million in fiscal 2008. Senior convertible notes increased to $323.3 million at fiscal-end 2009 from $311.5 million at fiscal-end 2008.
Evergreen Solar’s geographically diversified contractual backlog, ongoing expansion programs and shifting a part of its manufacturing process to China, improving operating efficiencies and upgrading 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. We maintain our market Neutral recommendation on the Zacks #3 Rank (’hold’) stock.
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