MEMC Announce $7-$8 Billion Solar Wafer Agreement With Conergy; Releases Financial Results
MEMC Electronic Materials, Inc. and Conergy announced that they have executed a definitive agreement for MEMC to supply solar grade silicon wafers to Conergy.
Under the terms of the definitive agreement, MEMC will supply solar wafers to Conergy over a 10-year period, with pre-determined pricing, on a take or pay basis beginning in the third quarter of 2008. Sales of the wafers over the 10-year period would generate between $7 billion and $8 billion in revenue for MEMC. As part of the definitive agreement, Conergy will advance funds to MEMC in the form of a capacity reservation deposit. In addition, MEMC will participate in 5% of the increase in value of Conergy’s solar module/cell subsidiary.
MEMC also reported financial results for the quarter ended September 30, 2007. The company reported third quarter net sales of $472.8 million versus second quarter 2007 net sales of $472.7 million. This represents an increase of 15.9% over third quarter 2006 net sales of $408.0 million.
Gross margin in the quarter was $238.8 million, or 50.5% of net sales, compared to $245.6 million, or 52.0% of sales, in the 2007 second quarter and $192.6 million, or 47.2% of sales, in the 2006 third quarter. The impact associated with the previously disclosed construction incident at the company’s Pasadena polysilicon manufacturing facility was the primary factor contributing to the sequential reduction in gross margin. Compared to the 2006 third quarter, gross margin improved 24.0% in dollar terms and 330 basis points as a percentage of net sales.
The company reported operating income during the quarter of $200.1 million, or 42.3% of net sales. This compares to $207.3 million, or 43.9% of net sales, for the 2007 second quarter and $160.7 million, or 39.4% of net sales, for the 2006 third quarter. Operating expenses were $38.7 million, or 8.2% of sales, compared to $38.3 million, or 8.1% of sales, in the 2007 second quarter, and $31.9 million, or 7.8% of sales, in the 2006 third quarter. Non- operating income in the quarter includes a non-cash benefit of $9.3 million.
