STR Holdings (STRI) Reports About Inline, But Guides Way Below

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11:26:48 am on August 4, 2011

Another tough day for STR Holdings (STRI) with a big gap down to approach all time lows after the company reported results that were about inline, but guided way below analyst estimates for this quarter and the full year.  The company reported an EPS of .30/share on revenues of $102 million vs the analyst estimate of .31/share on revenues of $98 million.  As is the case with all solar companies, the CEO is blaming Italy FIT uncertainty.

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"The slowdown in global solar demand as a result of uncertainty in Italy’s feed-in-tariff policy and lower project IRRs across Europe impeded our Solar business’ growth in the second quarter of 2011," said Dennis L. Jilot, STR’s Chairman, President and Chief Executive Officer. "The drop off in demand caused a substantial backlog of module inventories and as a result, our customers delayed their production in response to these industry dynamics, impacting demand for our product."

While the CEO is optimistic that the worst is likely over, the company is issuing very weak guidance which is the cause of the gap down today.  "While we believe there is still a backlog of inventory in the channel, much of the uncertainty in Italy and Germany has been resolved. Continuing module ASP declines and higher project IRRs should stimulate end user demand toward the end of the third quarter when the excess inventories have cleared," said Barry A. Morris, STR’s Executive Vice President and Chief Financial Officer. "Additionally, we believe there will be a strong pull-in effect during the fourth quarter ahead of the January 2012 feed-in-tariff reduction in Germany."

The company is forecasting revenue this quarter to be in the range of $82 – $90 million vs the analyst estimate for $110 million.  They see EPS coming in at .17 – .21/share vs the estimate for .36.  For the full year, they’re way off the analyst estimates as well and see EPS of 1.12 – 1.22 vs the estimate for 1.42 on revenues of $381 – $398 million vs the estimate for $425 million.

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