The Week In Cleantech: Solar Companies at Firesale Prices, and More to Come – 5/12/2012

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Tom Konrad CFA

May 7: Auction of Uni-Solar Fails to Draw a Qualified Bid

As if there weren’t enough bad signs for the solar industry these days, Energy Conversion Devices (OTC:ENERQ.PK) is cancelling the auction for United Solar Ovonic LLC (A.k.a. Uni-solar) as a going concern because of the failure to receive a qualified bid in the court-approved bankruptcy proceeding.  The companies have retained an auction services firm to prepare for the sale of Uni-solar’s assets.

May 8: Earnings Misses Hide Strong Revenue Trends at Ameresco (AMRC) and Pike Electric (PIKE)

Ameresco (AMRC) and Pike Electric (PIKE) reported earnings before the market open, and both missed analyst expectations, yet showed strong underlying strength in revenue growth.  I went into more detail on Ameresco here.

Pike chart.pngLast week, I predicted that Pike would have a strong quarter because of strong earnings announcements and revenues at Quanta Services (PWR) and MasTec (MTZ). 

While the earnings number was a slight disappointment, coming in at 6 cents compared to a predicted 8 cents, the underlying trend was strong.

While the mild winter led to a large percentage drop in storm repair revenue, down $10 million from $16 million to $6 million,  Pike’s core business showed strong year-over year growth, and even made up for the storm repair shortfall.  Core revenue was up $19 million to $157 million from $138 million the previous year.

Pike initially opened down 11 cents at $8.01 on the earnings headline, but finished the day up 19  cents at $8.31 after the market had had a chance to sort out the difference between recurring core revenues and the highly variable storm repair work.

May 9: Westinghouse Solar Bought by Australia’s CBD

This morning, CBD Energy (ASX:CBD) and Westinghouse Solar (NASD:WEST) announced an all-share merger which will give Westinghouse shareholders and preferred shareholders 15% of the combined company on an as-converted basis.  Westinghouse will gain the benefit of CBD’s financial strength, much needed because all solar manufacturers are struggling with declining prices and margins, as well as better access to global markets.

CBD will gain a foothold in the North American market, where it hopes to leverage Westinghouse’s existing relationships to sell not only for solar, but for CBD’s industrial energy efficiency products and energy storage systems. 

Finally, CBD shareholders will gain the improved liquidity of a US stock market listing and Westinghouse’s assets at a firesale price.  Based on prices at the close on Tuesday  ($0.40 per share for WEST, A$0.05 per share for CBD), the share swap amounts to a 50% haircut for Westinghouse common  shareholders.

May 10: MEMC’s Earnings call shows there is more pain in store for solar stocks

Yesterday, I wrote about the signs we might look for in MEMC Electronic Materials’ (NASD:WFR) first quarter earnings call that would indicate a revival for solar stocks.  Cliff’s notes: There’s more pain ahead.

The signs to look for were:

  • The first signs of improving cash flow and margin expansion.
  • Progress towards MEMC’s stated goal of getting wafer production cost down to $0.20 a watt. One potential bullish sign would be if management signaled an even more aggressive $0.15 per watt goal.
  • Continued growth in SunEdision and and external distribution channels. Any slowdown here would be a very bearish sign.

This is what we got:

Gross margin fell to 10% from 11.6% in the previous quarter, and 18% for all of 2011.
  • The company “made progress” on reducing production costs, but their “cost reduction efforts are not finished.”  No mention was made of adopting more aggressive cost reduction goals.
  • SunEdison’s pipeline of projects under construction fell to 147MW from 255MW in the previous quarter.  Solar project sales declined 60%.

I’d score that about a half point out of three, for the “progress on cost reduction.”  Any way you slice it, it looks bad.  Other bad signs:

  • Weak revenue outlook for the rest of the year.
  • Loss per share was 26 cents, 10 cents below analyst expectations.
  • Revenue declined 15.6% from Q1 2011.
  • Margins continued to slip.

Look for a further decline in most solar stocks.  There will be a bottom, but Q1 2012 was not it.


LSB Industries (NYSE:LXU) and Waterfurnace Renewable Energy (TSX:WFI, OTC:WFIFF) both introducing much more efficient geothermal heat pumps (EER 40.) More here.

May 11: New Flyer (TSX:NFI, OTC:NFYEF) Sees Strengthening North American Transit Bus Market

  • New Flyer(TSX:NFI, OTC:NFYEF) says that more transit agencies are putting out tenders for transit buses during first quarter conference call, but the market remains very competitive.  They expect selling prices to stabilize, but not increase for the rest of the year.
  • A123 (AONE) Systems expects to spend $6.68 million recalling potentially defective battery packs.
  • Investors don’t understand Lime Energy’s (NASD:LIME) strategy.  More here.

Next Week: Alterra (TSX:AXY, OTC:MGMXF) and Ram Power (TSX:RPG, OTC:RAMPF)
report first quarter earnings.


Tom Konrad Ph.D. CFA is Editor of, and a blogger on, where his notes were first published.


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