Monday, November 1, 2010

Evergreen Solar (NASDAQ: ESLR): Q3 Earnings Preview 2010

Evergreen Solar Inc. (NASDAQ: ESLR) is scheduled to release its third quarter after the closing bell on Monday, November 1, 2010. Analysts, on average, expect the company to report a loss of 11 cents a share on revenue of $87.48 million. In the year ago quarter, the company posted a loss of 40 cents per share on revenue of $77.66 million.

Evergreen Solar, Inc. engages in the development, manufacture, and marketing of solar power products primarily in the United States and Europe. It utilizes its proprietary String Ribbon technology process to produce multi-crystalline silicon wafers by growing thin strips of multi-crystalline silicon that are then cut into wafers.

In the preceding second quarter, the Marlborough, Massachusetts based-company's net loss was $3.3 million or 2 cents per share, compared to a loss of $20.59 million or 11 cents per share in the year-earlier quarter. Revenue jumped 24% to $84.5 million from $62.70 million. Analysts, on average, expected the company to post a loss of 11 cents per share on revenue of $7, to Wuhan, China.

The company is likely to benefit from geographically diversified contractual backlog, improving operating efficiencies, ongoing expansion programs and shifting a part of its manufacturing process to China. 

The company is shifting production of solar fabrication and assembly from its factory in Devens, Masachussets, to  China in order to lower manufacturing costs. The company expects to achieve a cost of about $1.20 per watt by the end of 2011 with a hybrid Devens/China model.  Improvements from oits current cost of $1.94 per watt will come through further operating efficiencies, additional reductions in material costs, including silicon, and the transition of its Devens panel assembly to China. During the second quarter, small quantities of cells produced in Devens were shipped to China to begin fabricating panels. The company expects to gradually increase the number of cells sent to China through the rest of this year and into next year and complete the transition of Devens’ panel fab to China by mid-2011. Evergreen Solar expects to reach a manufacturing cost of sub-$1 per watt by the end of 2012.

In near-term, the company faces significant headwinds due to start-up costs, capital expenditures and subsidy cuts in Germany, the world's largest market. The company generates bulk of its revenue from key European markets like Germany and Spain. In the second quarter, Evergreen Solar sold approximately 84% of its product in Europe, 14% in U.S. and 2% in Asia.

In September, the company announced the appointment of Michael El-Hillow as President and Chief Executive Officer. He replaced Richard Feldt, who accepted the position of Chief Executive Officer with a privately-held company.

In terms of stock performance, Evergreen Solar shares have lost almost 47 percent over the past year.

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