This estimate is only a current estimate because the Chinese tariffs have not been confirmed or not yet. The premises are that polysilicon prices will be kept low, EU market will not collapse at the face of tariffs, ASP in Europe will rise slightly, and finally REC will keep the 8-9% price premium of the average pvinsight reported price (as confirmed in IR meeting 2.May.) I will probably have to update this estimate again once the tariff situation plays out as this has dramatic effects on how I estimate income. What this estimate clearly will show you is that even with low ASP for polysilicon REC will have a good enough income for handling the 2014 debt. Currently REC have around 0.78$/watt and we are in the middle of q2. It is assumed that prices will increase to around 0.78$/watt on average and REC will get a 9% premium giving them 0.85$/watt.
REC ASP per quarter for modules:
q22013: 0,85 $ per watt
q32013: 0,85 $ per watt
q42013: 0,84 $ per watt
q12014: 0,83 $ per watt
q22014: 0,82 $ per watt
Rec production cost per quarter (module cash cost +sg&a & r&d per watt):
q22013: 0,66 $ per watt (0,58 + 0,08) @ profit 19 cents per watt
q32013: 0,63 $ per watt (0,55 + 0,08) @ profit 20 cents per watt
q42013: 0,60 $ per watt (0,52 + 0,08) @ profit 24 cents per watt
q12014: 0,58 $ per watt (0,50 + 0,08) @ profit 25 cents per watt
q22014: 0,55 $ per watt (0,47 + 0,08) @ profit 27 cents per watt
REC MW shipments per quarter and EBITDA cashflow
q22013: 205 MW shipped @ 38,95 million $ production cash flow.
q32013: 205 MW shipped @ 41,00 million $ production cash flow.
q42013: 205 MW shipped @ 49,20 million $ production cash flow.
q12014: 205 MW shipped @ 51,25 million $ production cash flow.
q22014: 205 MW shipped @ 55,35 million $ production cash flow.
Total 235,75 million $ ~ 1350 million nok
REC ASP per quarter for fbr polysilicon:
(It seems REC contracts are 2/3 into a quarter so the big rise at the end of q1 will probably be reflected in q2 report, that is why I assume 17,6$/kg in q2)
q22013: 17,60 $ per kg
q32013: 16,00 $ per kg
q42013: 16,00 $ per kg
q12014: 16,00 $ per kg
q22014: 16,00 $ per kg
REC FBR EBITDA cost per quarter (polysilicon cash cost + sg&a & r&d per kg)
q22013: 14,5 $ per watt (11,5 + 3) @ profit 3,1 $ per kg
q32013: 14 $ per watt (11,5 + 2,5) @ profit 2,0 $ per kg
q42013: 14 $ per watt (11,5 + 2,5) @ profit 2,0 $ per kg
q12014: 14 $ per watt (12,5 + 2,5) @ profit 1 $ per kg
q22014: 14 $ per watt (11,5 + 2,5) @ profit 2 $ per kg
REC FBR MT shipments per quarter and EBITDA cashflow
q22013: 4125 MT shipped @ 12,79 million $ profit
q32013: 4125 MT shipped @ 8,25 million $ profit
q42013: 4125 MT shipped @ 8,25 million $ profit
q12014: 4125 MT shipped @ 4,13 million $ profit
q22014: 4125 MT shipped @ 8,25 million $ profit
Total 41,67 million $ ~ 239 million nok
Float zone, Electronic grade, simens sg, off spec and silane gass sales:
Total cash flow profit from these volumes has varied between 80-150 million nok in the last quarters. I expect the cashflow from these products to be around 55,72 million nok (10 million $) giving a total of 50 million $ during the next 5 quarters. (286,36 million nok positive cashflow.) In additional there could be a potential cash flow of 16 million $ (91 mil nok) from a tax settlement. source:http://www.columbiabasinherald.com/politics/article_4297eee8-7d33-11e2-8daa-001a4bcf887a.html?mode=jqm
Total all cashflow: 343,42 million $ ~ 1967 million nok.
Capex estimated for period 2013 q2-q4: 35 million $. 2014 q1-q2: 30 mil $. Total: 65 mil $ ~ 372 mil nok.
Interest rate for period 2013 q2-q4: 40 million $. 2014 q1-q2: 30 mil $. Total: 70 mil $ ~ 401 mil nok.
Profit before taxes: 208,42 mil $ ~ 1194 mil nok.
Debt maturing in 2014 is 331 mil $ ~ 1900 mil nok. Cash and cash equivalents is ~ 1600 mil nok. Rec needs around 500-600 MNOK in cash balance. They therefore need to earn 800 MNOK ~ 139 mil $ in the period q2 2013 to q2 2014. The calculations show that even with very low polysilicon prices this is easily achievable.