MEMC ELECTRONIC MATERIALS, INC. 
By ST. PETERS, Mo., May 9, 2013 /PRNewswire/ --
First Quarter 2013 Highlights:
-- GAAP revenue of $443.6 million and GAAP EPS of ($0.40)
-- Non-GAAP revenue of $431.3 million and non-GAAP EPS of ($0.16)
-- Semiconductor Materials free cash flow grew sequentially and
year-over-year
-- Solar Energy recognized non-GAAP revenue related to 45 MW of solar
energy systems, interconnected 41 MW and ended the quarter with 135 MW
under construction
-- Solar project pipeline grew to 2.7 GW and backlog grew to 925 MW
-- Cash and cash equivalents of $421.6 million at quarter end
MEMC Electronic Materials, Inc. (NYSE: WFR) announced financial results for the 2013 first quarter that reflected improved execution in the Semiconductor Materials segment and the impact of the decision to slow solar project development spending during 2012. Relative to the prior quarter, Semiconductor Materials segment revenue grew slightly despite continued industry headwinds while Solar Energy segment revenue declined due to lower solar project and solar materials sales. Cash declined $151.0 million, driven primarily by changes in working capital related to solar project construction and timing of collections.
"I am pleased with our Semiconductor Materials performance and excited about our opportunities in Solar Energy," commented Ahmad Chatila, Chief Executive Officer. "We grew revenue in our Semiconductor Materials segment and again generated cash despite a continued industry slowdown, and we expect to see improving performance through the year. Sales in our Solar Energy segment were soft due to a downward adjustment of our development spending rate last year. We expect the recent increase in construction activity to produce better results later this year. In addition, during the quarter we grew both our pipeline and backlog. We remain committed to maintaining a strong, flexible balance sheet and to generating strong returns for our stakeholders," Chatila concluded.
Key summary financial results for the 2013 first quarter are set out in the following table. See the financial statement tables at the end of this press release for a reconciliation of all GAAP to non-GAAP financial measures.
US$ Millions except for EPS
---------------------------
Financial Highlights 1Q'13 4Q'12 1Q'12 Qtr/Qtr Yr/Yr
-------------------- ----- ----- ------- -----
GAAP
----
Net Sales $443.6 (1),(2) $600.7 (3) $519.2 ($157.1) or -26% ($75.6) or -15%
Gross Margin % 11.2% (1),(2) 18.0% (3) 9.6% (681) bps 155 bps
Operating Income (Loss) ($33.5) (1),(2) $67.8 (3),(4) ($54.2) ($101.3) $20.7
Net Income (Loss) ($89.4) (1),(2) ($11.8) (3),(4) ($98.6) ($77.6) $9.2
EPS ($0.40) (1),(2) ($0.05) (3),(4) ($0.43) ($0.35) $0.03
Non-GAAP
--------
Net Sales $431.3 (1) $704.3 $523.8 ($273.0) or -39% ($92.5) or -18%
Gross Margin % 9.7% (1) 13.1% 8.8% (343) bps 93 bps
Operating Income (Loss) ($41.4) (1) $52.0 (4) ($58.4) ($93.4) $17.0
Net Income (Loss) ($35.5) (1) $19.9 (4) ($66.0) ($55.4) $30.5
EPS ($0.16) (1) $0.08 (4) ($0.29) ($0.24) $0.13
Cash Flow
---------
Capital Expenditures $30.8 $38.1 $40.0 ($7.3) ($9.2)
Cash Flow from Operations ($118.6) $19.4 ($386.7) ($138.0) $268.1
Free Cash Flow ($110.6) ($16.3) ($241.0) ($94.3) $130.4
(1) Includes $25.0 million, or EPS of $0.11, due to the amendment of a supply contract with Tainergy.
(2) Includes $8.2 million, or EPS of $0.02, related to previously deferred GAAP revenue.
(3) Includes $54.4 million, or EPS of $0.17, related to previously deferred GAAP revenue related to the
Rovigo solar project.
(4) Includes $11.6 million, or EPS of $0.05, related to restructuring and asset impairments and $31.7 million,
or EPS of $0.14, related to a gain on the acquisition of a TCS plant as part of a contract settlement with Evonik.
Note: Table unaudited
Cash Flow
Operating cash used in the 2013 first quarter was $118.6 million and was primarily driven by changes in working capital related to project construction and timing of collections. Free cash flow was ($110.6) million and was largely influenced by solar project construction costs, capital expenditures and repayments of solar energy project financing. See the reconciliation of free cash flow in the financial statement tables at the end of this press release.
Capital expenditures were $30.8 million, and included $4.7 million related to the previously announced acquisition of a TCS plant as part of a contract settlement with Evonik. Similar to last quarter, the majority of 2013 first quarter capital expenditures were incurred in the Semiconductor Materials segment.
MEMC ended the 2013 first quarter with cash and cash equivalents of $421.6 million, a decrease of $151.0 million from the prior quarter. Cash declined in the quarter largely due to project timing, which influenced receivables and payables balances. Unrestricted cash and unused corporate revolver capacity was $661.1 million at the end of the 2013 first quarter, as compared to $850.7 million at the end of the 2012 fourth quarter.
Segment Results
Key segment financial results for the quarter are set out in the following table. See the financial statement tables at the end of this press release for a reconciliation of all GAAP to non-GAAP financial measures.
Segment Summary 1Q'13 4Q'12 1Q'12 Qtr/Qtr Yr/Yr
--------------- ----- ----- ------- -----
Net Sales
---------
Semiconductor Materials $229.8 $228.5 $216.0 $1.3 or 1% $13.8 or 6%
Solar Energy GAAP $213.8 (1),(2) $372.2 (3) $303.2 ($158.4) or -43% ($89.4) or -29%
Solar Energy Non-GAAP $201.5 (1) $475.8 $307.8 ($274.3) or -58% ($106.3) or -35%
------------ ------
Operating Income (Loss)
----------------------
Semiconductor Materials $1.4 $3.1 ($12.5) ($1.7) $13.9
Solar Energy GAAP ($10.8) (1),(2) $91.8 (3),(4) ($17.1) ($102.6) $6.3
Solar Energy Non-GAAP ($18.7) (1) $76.0 (4) ($21.3) ($94.7) $2.6
------------ -------- ------ --- ----- --- ------ ------ ----
(1) Includes $25.0 million, or EPS of $0.11, due to the amendment of a supply contract with Tainergy.
(2) Includes $8.2 million, or EPS of $0.02, related to previously deferred GAAP revenue.
(3) Includes $54.4 million, or EPS of $0.17, related to previously deferred GAAP revenue related to the
Rovigo solar project.
(4) Includes $11.6 million, or EPS of $0.05, related to restructuring and asset impairments and $31.7 million,
or EPS of $0.14, related to a gain on the acquisition of a TCS plant as part of a contract settlement with Evonik.
Note: Table unaudited
Semiconductor Materials
Semiconductor Materials revenue was up year-over-year as increased volume across all diameters offset price declines and an unfavorable mix. Year-over-year pricing declined across most diameters, but the decline was greatest among large diameter products. The year-over-year weakness in the Japanese Yen contributed to lower pricing. Volumes increased year-over-year in all diameters, with the largest increase in large diameter products. The sequential revenue increase was primarily driven by higher volumes of small diameter products despite the price declines across all diameters. Based on customer order patterns, the company is cautiously optimistic regarding further volume increases through the remainder of the year, with flat to slightly higher pricing.
The year-over-year increase in operating income was due primarily to higher gross margin and profits driven by increased shipments and lower costs as a result of the company's restructuring efforts. Segment operating income was down sequentially due to lower pricing and a $4.6 million restructuring benefit recognized in the 2012 fourth quarter.
In the 2013 first quarter, Analog Devices awarded MEMC the "2012 Supplier Excellence Award" for outstanding quality, service and support by our Semiconductor Materials segment.
Solar Energy: GAAP
Solar Energy segment 2013 first quarter revenue was down year-over-year due to fewer megawatts sold, a change in solar project mix driven by EPC only projects and lower solar materials sales. EPC solar projects pricing per watt is generally lower than fully developed solar system projects per watt because the company is not involved in every phase of the solar project design, financing and development. Sequentially lower revenue was the result of lower solar project and solar materials sales, a change in solar project mix driven by EPC only projects and the recognition of deferred revenue in the 2012 fourth quarter related to a previously sold solar project. Fourth quarter 2012 and first quarter 2013 GAAP revenue included $54.4 million and $8.2 million, respectively, of previously deferred revenue related to the sale of projects in prior quarters for which the same amounts were recognized in non-GAAP revenue in the corresponding prior periods. First quarter 2013 also included revenue of $25.0 million related to the amendment of a supply contract with Tainergy. In the 2013 first quarter, Solar Energy recognized GAAP revenue from solar projects totaling 43 MW, compared to 52 MW in the 2012 fourth quarter and 47 MW in the 2012 first quarter.
The increase in year-over-year operating income resulted primarily from $25.0 million of margin recognized as a result of the Tainergy contract amendment, recognition of the previously mentioned $8.2 million of margin from the project-related revenue deferral and a favorable restructuring adjustment of $4.5 million. The sequential decrease in operating income was largely due to lower solar project and solar materials sales.
Solar Energy: Non-GAAP
Revenue decreased year-over-year and sequentially due to lower solar project sales, a change in solar project mix driven by EPC only projects and lower solar materials sales. Non-GAAP revenue was recognized from 45 MW of solar project sales in the 2013 first quarter, compared to 91 MW in the 2012 fourth quarter and 49 MW in the 2012 first quarter. Of the 45 MW that were recognized for non-GAAP revenue in the 2013 first quarter, 41 MW were direct sales and 4 MW were sale-leaseback transactions.
The year-over-year reduction in operating loss resulted primarily from profits associated with the supply contract amendment with Tainergy. The sequential decline in operating income was driven primarily by fewer megawatts sold during the 2013 first quarter and a change in solar project mix driven by the EPC only projects. The 2012 fourth quarter also included benefits of $11.6 million related to a favorable restructuring adjustment and $31.7 million related to a gain on the acquisition of the TCS plant from Evonik.
Solar Project Pipeline, Backlog & Construction
Solar Energy ended the 2013 first quarter with a project pipeline of 2.7 GW, up 0.1 GW compared to the prior quarter and down 0.2 GW from the year ago period. Backlog at March 31, 2013 was 925 MW, an increase of 98 MW compared to the prior quarter. There can be no assurance that all pipeline or backlog projects will convert to revenue because in the ordinary course of our development business some fall-out is typical and certain projects will not be built.
Solar projects interconnected during the 2013 first quarter totaled 41 MW from 27 projects and consisted of 38 MW of direct sale and joint venture projects and 3 MW of sale-leaseback projects. During the 2013 first quarter, 104 MW of projects started construction as compared to 38 MW in the prior quarter. A project is deemed to have started construction when adequate internal approvals have been issued, notice to proceed has been issued and the first construction contractor begins mobilization. As of March 31, 2013, 135 MW of the pipeline was under construction. "Under construction" refers to projects within pipeline and backlog, in various stages of completion, which are not yet operational.
Outlook
The company provided the following key metrics for the second quarter and revised metrics for full-year 2013. Assuming no significant worldwide economic issues or other significant shocks in these periods, the company expects the following:
For the second quarter 2013:
-- Semiconductor Materials revenue between $235 million and $245 million
-- Solar energy systems total non-GAAP sales volume in the range of 29 MW
to 54 MW
-- Solar energy systems MW retained on the balance sheet between 0 MW and 3
MW
-- Fully-developed solar energy systems average project pricing between
$3.40/watt and $3.55/watt
-- Capital spending between $30 million and $40 million
For the full year 2013:
-- Semiconductor Materials revenue between $960 million and $1 billion
-- Solar energy systems total non-GAAP sales volume in the range of 430 MW
to 500 MW
-- Solar energy systems MW retained on the balance sheet between 50 MW and
100 MW
-- Total solar energy systems average project pricing between $3.10/watt
and $3.40/watt
-- Capital spending between $120 million and $140 million
Use of Non-GAAP Measures
Management has determined that certain non-GAAP metrics for the Solar Energy segment presented herein are the key metrics that will help investors understand the ultimate income and near-term cash flows generated by our Solar Energy segment. These non-GAAP measures and metrics include deferrals required under GAAP real estate and lease accounting for some of SunEdison's direct sales and or its sale-leaseback transactions. Management has also determined that the non-GAAP measure of "free cash flow" is useful to help investors better understand the capital intensity of our business, including our project financing operations. For a complete description of our non-GAAP measures, see the non-GAAP reconciliation tables below.
Conference Call
MEMC will host a conference call today, May 9, 2013, at 8:00 a.m. ET to discuss the company's 2013 first quarter results and related business matters. A live webcast will be available on the company's web site at www.memc.com.
A replay of the conference call will be available from 10:00 a.m. ET on May 9, 2013, until 11:59 p.m. ET on May 23, 2013. To access the replay, please dial (320) 365-3844 at any time during that period, using pass code 292367. A replay will also be available on the company's web site at www.memc.com.
About MEMC
MEMC is a global leader in semiconductor and solar technology. MEMC has been a pioneer in the design and development of silicon wafer technologies for over 50 years. With R&D and manufacturing facilities in the U.S., Europe, and Asia, MEMC enables the next generation of high performance semiconductor devices and solar cells. Through its SunEdison subsidiary, MEMC is also a developer of solar power projects and a worldwide leader in solar energy services. MEMC's common stock is listed on the New York Stock Exchange under the symbol "WFR." For more information about MEMC, please visit www.memc.com.
Forward-Looking Statements
Certain matters discussed in this press release are forward-looking statements, including our expectations regarding the increased construction activity in our Solar Energy business and that for the second quarter of 2013, the company expects Semiconductor Materials revenue to be between $235 million and $245 million, solar energy systems total non-GAAP sales volume to be in the range of 29 MW to 54 MW, solar energy systems MW retained on the balance sheet to be between 0 MW and 3 MW, fully developed solar energy systems average project pricing to be between $3.40/watt and $3.55/watt, and capital spending to be between $30 million and $40 million; that for the 2013 full year, the company expects Semiconductor Materials revenue to be between $960 million and $1 billion, solar energy systems total non-GAAP sales volume to be in the range of 430 MW to 500 MW, solar energy systems MW retained on the balance sheet to be between 50 MW and 100 MW, total solar energy systems average project pricing to be between $3.10/watt and $3.40/watt, and capital spending to be between $120 million and $140 million. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include concentrated project development risks related to large scale solar projects; the availability of attractive project finance and other capital for Solar Energy projects; market demand for our products and services; changes in the pricing environment for silicon wafers and polysilicon, as well as solar power systems; the availability and size of government and economic incentives to adopt solar power, including tax policy and credits and renewable portfolio standards; the ability to effectuate and realize the savings from the restructuring plan; our ability to maintain adequate liquidity and compliance with our debt covenants; the need to impair long lived assets or other intangible assets due to changes in the carrying value or realizability of such assets; the effect of any antidumping or countervailing duties imposed on photovoltaic cells and/or modules in connection with any trade complaints in the United States, Europe or elsewhere; the result of any Chinese government investigations of unfair trade practices in connection with polysilicon exported from the United States or South Korea into China; changes to accounting interpretations or accounting rules; existing or new regulations and policies governing the electric utility industry; our ability to convert solar project pipeline into completed projects in accordance with our current expectations; dependence on single and limited source suppliers; utilization of our manufacturing volume and capacity; the terms of any potential future amendments to or terminations of our long-term agreements with our solar wafer customers or any of our suppliers; general economic conditions, including interest rates; the ability of our customers to pay their debts as they become due; changes in the composition of worldwide taxable income and applicable tax laws and regulations, including our ability to utilize any net operating losses; failure of third-party subcontractors to construct and install our solar energy systems; quarterly fluctuations in our Solar Energy business; the impact of competitive products and technologies; inventory levels of our customers; supply chain difficulties or problems; interruption of production; outcome of pending and future litigation matters; good working order of our manufacturing facilities; our ability to reduce manufacturing and operating costs; assumptions underlying management's financial estimates; actions by competitors, customers and suppliers; changes in the retail industry; damage to our brand; acquisitions of pipeline in our Solar Energy segment; changes in product specifications and manufacturing processes; changes in financial market conditions; changes in foreign economic and political conditions; changes in technology; changes in currency exchange rates and other risks described in the company's filings with the Securities and Exchange Commission. These forward-looking statements represent the company's judgment as of the date of this press release. The company disclaims, however, any intent or obligation to update these forward-looking statements.
-tables to follow-
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions; except per share data)
Three Months Ended
------------------
March 31, 2013 December 31, 2012 March 31, 2012
-------------- ----------------- --------------
Net sales $443.6 $600.7 $519.2
Cost of goods sold 393.9 492.5 469.1
----- ----- -----
Gross profit 49.7 108.2 50.1
Operating expenses:
Marketing and
administration 70.3 69.5 83.2
Research and development 17.4 16.0 20.1
Restructuring (reversals)
charges (4.5) (13.4) 1.0
Gain on receipt of
property, plant and
equipment - (31.7) -
--- ----- ---
Operating (loss) income (33.5) 67.8 (54.2)
----- ---- -----
Non-operating expense (income):
Interest expense 47.5 35.0 27.7
Interest income (0.5) (0.8) (0.8)
Other, net 1.1 6.9 0.2
--- --- ---
Total non-operating
expense 48.1 41.1 27.1
---- ---- ----
(Loss) income before
income taxes and equity
in (loss) earnings of
joint venture (81.6) 26.7 (81.3)
Income tax expense 19.5 37.0 17.0
---- ---- ----
Loss before equity in
loss of joint venture (101.1) (10.3) (98.3)
Equity in loss of joint
ventures, net of tax (0.3) (1.4) (1.2)
---- ---- ----
Net loss (101.4) (11.7) (99.5)
Net loss (income)
attributable to
noncontrolling interests 12.0 (0.1) 0.9
---- ---- ---
Net loss attributable to
MEMC stockholders $(89.4) $(11.8) $(98.6)
====== ====== ======
Basic loss per share [*] $(0.40) $(0.05) $(0.43)
Diluted loss per share
[*] $(0.40) $(0.05) $(0.43)
[*] During the three months ended March 31, 2013 and December 31, 2012, the company recorded an adjustment to redeemable noncontrolling interest which
affected the numerator of the EPS calculation by ($2.4) million and ($0.7) million, respectively.
RESULTS BY REPORTABLE
SEGMENT Three Months Ended
------------------
March 31, 2013 December 31, 2012 March 31, 2012
-------------- ----------------- --------------
Net sales:
Semiconductor Materials $229.8 $228.5 $216.0
Solar Energy 213.8 372.2 303.2
----- ----- -----
Consolidated net sales $443.6 $600.7 $519.2
====== ====== ======
Operating income (loss):
Semiconductor Materials $1.4 $3.1 $(12.5)
Solar Energy (10.8) 91.8 (17.1)
Corporate and Other (24.1) (27.1) (24.6)
----- ----- -----
Consolidating operating
(loss) income: $(33.5) $67.8 $(54.2)
====== ===== ======
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
March 31, December 31,
ASSETS 2013 2012
---- ----
Current assets:
Cash and cash
equivalents $421.6 $572.6
Restricted cash 54.6 72.4
Accounts receivable,
net 278.5 220.4
Inventories 227.6 247.8
Solar energy systems
held for development
and sale 221.0 133.8
Prepaid and other
current assets 190.3 212.2
----- -----
Total current assets 1,393.6 1,459.2
Property, plant and
equipment, net:
Non-solar energy
systems 1,170.6 1,213.1
Solar energy systems 1,409.3 1,459.9
Restricted cash 55.1 50.2
Other assets 524.6 519.2
Total assets 4,553.2 4,701.6
======= =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term debt &
short term borrowing 5.7 3.4
Short-term solar
energy system
financing, current
portion of solar
energy system
financing and
capital lease
obligations 128.2 97.8
Accounts payable 402.6 477.0
Accrued liabilities 365.1 344.2
Contingent
consideration
related to
acquisitions 22.9 23.1
Deferred revenue for
solar energy systems 140.2 113.1
Customer and other
deposits 37.4 77.2
---- ----
Total current
liabilities 1,102.1 1,135.8
Long-term debt, less
current portion 757.7 758.7
Long-term solar
energy system
financing and
capital lease
obligations, less
current portion 1,535.6 1,508.4
Customer and other
deposits 174.4 184.5
Deferred revenue for
solar energy systems 152.6 146.0
Non-solar energy
deferred revenue 29.1 29.2
Other liabilities 263.8 261.6
----- -----
Total liabilities 4,015.3 4,024.2
======= =======
Redeemable
noncontrolling
interest 11.9 11.3
Stockholders' equity:
Preferred stock - -
Common stock 2.4 2.4
Additional paid-in
capital 654.8 647.7
Retained earnings 333.7 425.3
Accumulated other
comprehensive loss (72.9) (39.8)
Treasury stock (460.5) (460.3)
------ ------
Total MEMC
stockholders' equity 457.5 575.3
Noncontrolling
interests 68.5 90.8
---- ----
Total stockholders'
equity 526.0 666.1
Total liabilities and
stockholders' equity $4,553.2 $4,701.6
======== ========
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Ended
------------------
March 31, December 31, March 31,
2013 2012 2012
---- ---- ----
Cash flows from operating activities
Net Loss $(101.4) $(11.7) $(99.5)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 60.8 78.8 52.9
Stock-based compensation 7.2 9.6 7.3
(Benefit) expense for deferred taxes (7.5) 6.2 7.3
Other (10.9) (29.3) 4.4
Changes in operating assets and liabilities
Accounts receivable (60.5) 30.9 (56.4)
Inventories 18.6 17.6 42.3
Solar energy systems held for development and sale (36.8) 39.8 (172.4)
Accounts payable (67.5) (61.0) (113.7)
Deferred revenue for solar energy systems 36.4 (34.5) (17.9)
Customer and other deposits (19.6) (5.4) (16.7)
Accrued liabilities 46.7 (18.2) (46.1)
Other long term liabilities 6.8 (8.2) 1.2
Other 9.1 4.8 20.6
--- --- ----
Net cash (used in) provided by operating activities (118.6) 19.4 (386.7)
------ ---- ------
Cash flows from investing activities:
Capital expenditures (30.8) (38.1) (40.0)
Construction of solar energy systems (47.4) (153.7) (99.0)
Purchases of equity method investments (18.5) (12.2) -
Net proceeds from equity method investments 11.7 2.4 9.3
Change in restricted cash 8.8 8.6 34.4
Receipts from vendors for refundable deposits on long-term agreements - 3.3 -
Other - (0.1) (0.2)
--- ---- ----
Net cash used in investing activities (76.2) (189.8) (95.5)
----- ------ -----
Cash flows from financing activities:
Cash paid for contingent consideration for acquisitions (0.8) (11.3) (3.8)
Proceeds from solar energy system financing and capital lease obligations 98.5 183.9 351.5
Repayments of solar energy system financing and capital lease obligations (12.4) (62.3) (72.8)
Net repayments of customer deposits related to long-term supply agreements (26.2) (0.7) -
Principal payments on long-term debt - (1.8) -
Common stock issued and repurchased (0.2) (0.4) (0.1)
Proceeds from noncontrolling interests 0.1 34.5 6.0
Debt financing fees (8.1) (7.1) (5.3)
---- ---- ----
Net cash provided by financing activities 50.9 134.8 275.5
---- ----- -----
Effect of exchange rate changes on cash and cash equivalents (7.1) (1.6) 1.5
---- ---- ---
Net decrease in cash and cash equivalents (151.0) (37.2) (205.2)
Cash and cash equivalents at beginning of period 572.6 609.8 585.8
----- ----- -----
Cash and cash equivalents at end of period $421.6 $572.6 $380.6
====== ====== ======
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL INFORMATION
NON-GAAP FINANCIAL MEASURES
(In millions, except per share data and percentages) [A]
Three Months Ended
------------------
March 31, December 31, March 31,
2013 2012 2012
---- ---- ----
Consolidated Non-GAAP Financial Measures
Non-GAAP net sales $431.3 $704.3 $523.8
Non-GAAP gross margin 41.8 92.4 45.9
Non-GAAP gross margin
percentage 9.7 % 13.1 % 8.8 %
Non-GAAP operating (loss)
income (41.4) 52.0 (58.4)
Non-GAAP net (loss) income (35.5) 19.9 (66.0)
Non-GAAP fully diluted
(loss) earnings per share (0.16) 0.08 (0.29)
Reconciliations of GAAP to Non-GAAP Measures
MEMC Inc. Consolidated
GAAP net sales $443.6 $600.7 $519.2
Direct sales[B] (14.9) (3.7) (5.3)
Financing sale-leasebacks
[C] 2.6 107.3 9.9
Non-GAAP net sales $431.3 $704.3 $523.8
====== ====== ======
GAAP gross margin $49.7 $108.2 $50.1
Direct sales[B] (4.1) (36.3) (3.0)
Financing sale-leasebacks
[C] (3.8) 20.5 (1.2)
Non-GAAP gross margin $41.8 $92.4 $45.9
===== ===== =====
Non-GAAP Gross Margin % 9.7 % 13.1 % 8.8 %
GAAP operating (loss) income $(33.5) $67.8 $(54.2)
Direct sales[B] (4.1) (36.3) (3.0)
Financing sale-leasebacks
[C] (3.8) 20.5 (1.2)
Non-GAAP operating (loss)
income $(41.4) $52.0 $(58.4)
====== ===== ======
GAAP net loss attributable
to MEMC stockholders $(89.4) $(11.8) $(98.6)
Recurring Non-GAAP
adjustments, net of tax [B,
C and D] 53.9 31.7 32.6
Non-GAAP net (loss) income $(35.5) $19.9 $(66.0)
====== ===== ======
GAAP fully diluted loss per
share $(0.40) $(0.05) $(0.43)
Recurring Non-GAAP
adjustments [B, C and D] 0.24 0.13 0.14
Non-GAAP fully diluted
(loss) earnings per share $(0.16) $0.08 $(0.29)
====== ===== ======
[A]Generally Accepted Accounting
Principles (GAAP) is the term used
to refer to the standard framework
of guidelines for financial
accounting and reporting. In
addition to reporting financial
results in accordance with GAAP, we
have provided non-GAAP financial
measures for the Solar Energy
segment. The Company believes that
these non-GAAP measures represent
important internal measures of
performance for our Solar Energy
business, and better reflect Solar
Energy's results from operations
and near term cash flows.
Accordingly, where these measures
are provided, it is done so that
investors have the same financial
data that management uses to
evaluate the operational and
financial performance of the Solar
Energy segment. MEMC management
uses these measures to manage the
Solar Energy segment because it
believes these measures are more
representative of the operational
health and performance of that
segment. These non-GAAP measures
should not be considered as a
substitute for, and should only be
read in conjunction with, measures
of financial performance prepared
in accordance with GAAP and the
reconciliation of each non-GAAP
measure to the directly comparable
GAAP measure set forth in the press
release.
[B]These non-GAAP measures include
adjustments to revenue in the
Company's Solar Energy business
from direct sales of solar energy
systems where we have received
upfront partial payments and,
absent real estate accounting
requirements, we would have
recognized revenues under the
percentage of completion accounting
method. The non-GAAP measures
also include adjustments to non-
GAAP revenue and/or profit
deferred related to our maximum
exposure for power warranties,
system uptime guarantees and breach
of contract provisions offered to
the direct sale customers for these
systems that are considered
continuing involvement by us in the
sold solar energy systems. This
revenue is not recognized as of the
reporting date under GAAP real
estate accounting rules because the
solar energy systems are considered
integral to the real estate on
which they were built. Absent real
estate accounting requirements,
deferred revenues related to
continuing involvement would be
recognized under GAAP during the
reporting period because we have
historically experienced minimal
losses related to these guarantees.
For these direct sales, the sales
contracts have been executed and we
have either received payment in
full or maintains a valid and legal
note receivable for the full sales
price that we expect to collect
within a short period after
completion of the project.
[C]Adjustment relates to revenue
from our sale-leaseback
transactions accounted for as
financings. This includes cash
received for the legal sale of the
solar energy system to the
purchaser that will not be
recognized as revenue under GAAP.
Non-GAAP operating income includes
the upfront cash margin in an
amount equal to the difference
between (a) the cash received as of
the reporting date from our
financing partners in sale-
leaseback transactions considered
financings and (b) our total costs
to construct the solar energy
systems sold under the sale-
leaseback transactions. These
sale-leaseback transactions are
classified as financing
transactions under GAAP because the
system is considered integral to
the land or building on which it
resides and because we have
continuing involvement with the
system through a purchase option.
This system development margin will
be recognized under GAAP upon
termination of the related lease
through the non-cash
extinguishment of the debt offset
by any remaining net book value of
the solar energy system asset.
[D]Income tax has been calculated
using the estimated effective tax
rate for MEMC in the jurisdictions
giving rise to the related
adjustments and assumes sale-
leaseback deferred tax assets will
be realized.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL INFORMATION
NON-GAAP FINANCIAL MEASURES
(In millions, except percentages) [A]
Three Months Ended
------------------
March 31, December 31, March 31,
2013 2012 2012
---- ---- ----
Non-GAAP Financial Measures
Solar Energy Segment Non-
GAAP net sales $201.5 $475.8 $307.8
Solar Energy Segment Non-
GAAP operating (loss)
income (18.7) 76.0 (21.3)
Reconciliations of GAAP to Non-GAAP Measures
-----------------------------------------
Solar Energy Segment
--------------------
Solar Energy GAAP net
sales $213.8 $372.2 $303.2
Direct sales [B] (14.9) (3.7) (5.3)
Financing sale-leasebacks
[C] 2.6 107.3 9.9
--- ----- ---
Solar Energy Non-GAAP net
sales $201.5 $475.8 $307.8
====== ====== ======
Solar Energy GAAP
operating (loss) income $(10.8) $91.8 $(17.1)
Direct sales[B] (4.1) (36.3) (3.0)
Financing sale-leasebacks
[C] (3.8) 20.5 (1.2)
---- ---- ----
Solar Energy Non-GAAP
operating (loss) income $(18.7) $76.0 $(21.3)
====== ===== ======
[A], [B], [C] - See previous page
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL INFORMATION
(In millions) Three Months Ended
------------------
March 31, December 31, March 31,
EBITDA CALCULATION [A] 2013 2012 2012
--------------------- ---- ---- ----
Net loss attributable to MEMC stockholders $(89.4) $(11.8) $(98.6)
Net interest expense 47.0 34.2 26.9
Depreciation and amortization 60.8 78.8 52.9
Income tax expense 19.5 37.0 17.0
---- ---- ----
EBITDA [A] $37.9 $138.2 $(1.8)
[A]EBITDA is a non-GAAP disclosure consisting of net loss attributable to MEMC stockholders plus interest expense, net, depreciation and amortization and income taxes. The Company believes that
EBITDA is useful to an investor in evaluating the company's operating performance and liquidity because (i) it is widely used to measure a company's operating performance without regard to items such
as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, (ii) it presents a meaningful measure of corporate performance exclusive of the
company's capital structure and the method by which the assets were acquired, and (iii) it is a widely accepted financial indicator of a company's ability to service its debt, as the company is
required to comply with certain covenants and limitations that are based on variations of EBITDA in the company's financing documents.
MEMC ELECTRONIC MATERIALS,
INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL
INFORMATION
(In millions)
March 31, December 31,
SUMMARY OF CONSOLIDATED DEBT
OUTSTANDING 2013 2012
---------------------------- ---- ----
Senior notes $550.0 $550.0
Term loan 196.3 196.1
Semiconductor Materials -Bank
debt 17.1 16.0
Solar Energy - Debt 42.6 43.3
Solar Energy - Current
portion of non-recourse
system financing debt and
capital lease obligations 128.2 97.8
Solar Energy - Non-recourse
system financing debt and
capital lease obligations,
less current portion 1,493.0 1,465.1
-------
Total $2,427.2 $2,368.3
======== ========
NON-GAAP RECONCILIATION OF FREE CASH
FLOW [A] Three Months Ended
------------------------------------ ------------------
March 31, December 31, March 31,
2013 2012 2012
---- ---- ----
Net cash (used in) provided by
operating activities $(118.6) $19.4 $(386.7)
Capital expenditures (30.8) (38.1) (40.0)
Construction of solar energy systems (47.4) (153.7) (99.0)
Proceeds from solar energy system
financing and capital lease
obligations 98.5 183.9 351.5
Repayments of solar energy system
financing and capital lease
obligations (12.4) (62.3) (72.8)
Proceeds from noncontrolling
interests 0.1 34.5 6.0
--- ---- ---
Free cash flow [A] $(110.6) $(16.3) $(241.0)
======= ====== =======
[A]Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting and
reporting. In addition to reporting financial results in accordance with GAAP, we have provided a non-GAAP financial measure for free cash flow which
we believe is useful to help investors better understand the capital intensity of our business, including our project financing operations. In addition
to other key performance indicators, we evaluate the performance of the solar project business on the cash generation abilities of the projects, which
are typically financed at the inception of a lease, resulting in a gain on sale that is deferred and not immediately included in net income (loss). Any
non-GAAP measure should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for
GAAP net income (loss).
SOURCE MEMC Electronic Materials, Inc.
