Power-One (PWER)
Q3 2012 Earnings Call
October 25, 2012 5:00 pm ET
Executives
Larry Clark
Richard J. Thompson - Chief Executive Officer, President and Director
Gary R. Larsen - Chief Financial Officer, Principal Accounting Officer, Senior Vice President of Finance, and Treasurer
Analysts
Amir Rozwadowski - Barclays Capital, Research Division
Shawn E. Lockman - Piper Jaffray Companies, Research Division
Wes Anderson - Stephens Inc., Research Division
Kelly A. Dougherty - Macquarie Research
Pavel Molchanov - Raymond James & Associates, Inc., Research Division
Carter W. Driscoll - Capstone Investments, Research Division
Mark W. Bachman - Avian Securities, LLC, Research Division
Joseph A. Maxa - Dougherty & Company LLC, Research Division
Edwin Mok - Needham & Company, LLC, Research Division
Presentation
Operator
Good day, everyone, and welcome to the Power-One Inc. Third Quarter 2012 Earnings Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to Mr. Larry Clark, Investor Relations for Power-One. Mr. Clark, please go ahead, sir.
Larry Clark
Good afternoon, everyone. Thank you for joining us today to discuss Power-One's 2012 third quarter results. Joining me today are Richard Thompson, Chief Executive Officer; and Gary Larsen, Chief Financial Officer.
By now, you should have received a copy of today's press release. If not, it is available on the company's website at www.power-one.com. In addition, this quarter, we are including an accompanying slide presentation that you can refer to during the call. You can access these slides in the Investor Relations section of the website.
Before we begin, I would like to remind you that this conference call may contain forward-looking statements reflecting Power-One's views of future events, projections or expectations. Any such forward-looking statements may deal with or include matters, which involve risks and uncertainties. Power-One's actual results may differ materially from those results discussed or information provided in the forward-looking statements. We refer you to the company's reporting documents filed with the SEC for a discussion of the risk factors that may have a material impact on results.
Today's call may also contain historical non-GAAP financial measures. Additionally, in adherence with Regulation FD we have opened up this call so that all interested investors are free to listen in. The press release and this conference call will be our only forum to answer questions regarding our estimated performance going forward. Consequently, should you have any questions regarding our estimates of sales and profits or other financial matters for the upcoming quarter as well as how they may affect our income statement models and balance sheet, this is the time that we are able to respond to these questions.
I will now turn the call over to Richard Thompson, Power-One's Chief Executive Officer. Please go ahead, Rich.
Richard J. Thompson
Thank you, Larry. Good afternoon. I'll begin today's call with a recap of our third quarter performance, including a review on some of our key operational highlights. I will then spend time providing our current outlook for the global PV market and our approach to its changing dynamics. After my remarks, Gary Larsen, our Chief Financial Officer, will discuss the key operating metrics and drivers for our Renewable Energy and Power Solutions business units and provide greater detail on the financial statement, including the results for the quarter and the fourth quarter guidance. After our prepared remarks, we will answer your questions.
In the third quarter, we recorded total revenue of $284 million, up 16% year-over-year. Our Renewable Energy business delivered continued strong performance by shipping 1.0 gigawatts of inverters in the first quarter as we benefited from higher demand in Europe and growth in residential and commercial installations in North America and Asia Pacific.
Our Renewable Energy business generated $216 million, or 76% of total revenues, and our Power Solutions segment revenue was $67 million or 24% of the total.
The Power business continues to be impacted by ongoing global macroeconomic uncertainties, as revenues were flat sequentially and down 5% year-over-year. Despite the lower-than-planned sales, the Power team has steadily improved both EBITDA and working capital utilization.
On a consolidated basis, we generated strong operating income and cash flow in the quarter, which was a result of our focused efforts to increase operational efficiency and to improve -- and to introduce new products that improve our operating margin. Operating income was $43 million, up 27% year-over-year, and cash from operations was $32 million. Net income for the quarter was $21 million, or $0.13 per share. That includes an after-tax loss of $0.03 per share on foreign currency remeasurement.
First, I'd like to share some operational highlights for the third quarter. We maintained our solid #2 position in the global PV market. Based on preliminary figures from IHS, formerly known as IMS, we estimate that our worldwide market share was 13% in the third quarter, up from 11% for the full year of 2011. This was partially driven by our strong growth in North America and Asia Pacific. Specifically, in Australia, where we have increased our market share to greater than 20%.
Second, our commercial rooftop and residential products continued to gain traction. Our 3-phase TRIO line of string inverters that address commercial rooftop applications, and our single-phase inverters for residences are being well received in the marketplace. We shipped over 450 megawatts of these product lines during Q3 and 1,070 megawatts year-to-date.
Third, we experienced only modest price declines in the third quarter. The average revenue per watt increased in the quarter due to a shift towards lower wattage products in the commercial and residential segments. I will discuss near-term pricing a bit later in my remarks.
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