Share and debt bloat in solar:
FSLR, and maybe STP, seem to be funding their manufacturing capacity additions, without increasing shares and debt at a rate faster than sales and profits are increasing. Those two companies are the only ones I found that decreased debt last year. Are there any others?
FSLR is in a class by itself, with only 146M$ of LongTerm (LT) debt.
Shares (year-end, fully diluted):
49M 2005
58M 2006 (+18%)
78.0M 2007 (+34%, the last year of rapid share expansion)
82.1M 2008 (+1.1%)
85.1M 2009 (+1.0%)
86-87M 2010 (They were the only company I looked at, which gave guidance for 2010 on share count, indicating they were the only company who had anything good to say on this issue.)
longterm debt (year-end):
49M$ 2005
81M$ 2006
108M$ 2007
198M$ 2008
175M$ 2009
Unlike all the other companies I'm reviewing here, they have no short-term debt, no convertibles, or the mysterious category of "other longterm liabilities".
1114M$ = end-2009 cash + equiv. + "marketable securities". They have more cash than anyone else.
From 2006 to 2009, sales went up 15 times, from 135M$ to 2066M$, while debt doubled, and shares increased by 47%.
STP is the next best. During 2009, shares went from 160M to 172M (7.5% increase), EPS was flat (+0.52 to +0.53, in $/ADS GAAP numbers), sales went down 12% (1.92B$ to 1.69B$). Also, they managed to decrease debt (from 1620M$ to 1488M$), and increase cash (from 508M$ to 1034M$).
TSL:
shares, EPS, end-year:
21M, $0.45, 2006
47M, $0.76, 2007
54M, $1.20, 2008
63M, $1.69, 2009
71M, $2.00, 2010 estimate
(EPS is GAAP, fully diluted shares.)
7.9M+ ADSs secondary stock offering for 2010 announced. End-2009 cash 478M$, debt 585M$. So, for the 4-year period from end-2006 through end-2010, EPS quadrupled, but shares more than tripled.
SPWRA: From 2005 to 2009, sales increased from 79M$ to 1.52B$, an impressive X19 increase, but shares went from 23M to 93M, and debt went from zero to 707M$. Just during 2009, shares increased from 84M to 93M, an 11% increase. Cash 678M$.
GAAP EPS:
2008 $1.05
2009 $0.36
2010 $0.20 (midpoint of latest guidance)
Unless earnings rebound sharply in 2011, they are going to start having trouble servicing debt.
LDK currently has debts of 1788M$, cash 454M$. Much of their debt is short-term. 4Q09 results: Gross margin was 9.9%, net loss for the fourth quarter was $7.3 million, and loss per diluted ADS was $0.07. Investors seemed to like those results (why?), because they bought LDK's secondary stock offering that raised $111M.
YGE: During 2009, shares went up from 128M to 148M (16% increase), earnings were negative (-0.48$/ADS, GAAP results) while revenue fell (1.11B$ to 1.06B$). Currently, cash is 532M$ and debt is 623M$.
Then there are the LivingDead, like ENER and ESLR.
Disclosure: 20% of my investments in FAN (wind ETF) currently, at prices $12-13. No solar holdings. I think the time to buy stocks in solar, will be when the discussion is dominated by talk of cash, cash burn, debt loads, manufacturing costs, ability to roll-over short-term debt, and which companies have viable business strategies. We're not there yet. Maybe later this year, maybe 2011. |
