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Tech stocks - Thursday, December 3, 2009

A-Power’s Q3 Results Blow Past Investor Expectations

After a disappointing second quarter, A-Power Energy Generation Systems (APWR:NASDAQ) showed that once again they have the wind at their back by reporting solid numbers for Q3 today.

Revenues were extremely strong as A-Power’s $96.7 million was a 68 percent increase from the previous quarter and a 13 percent increase from the same quarter in the previous year. Non diluted GAAP net income for Q3 was $0.28 per share, a 47 percent increase from the previous quarter and relatively unchanged from the same quarter in the previous year.

Affecting profits for the quarter were write downs and warrants, much of which were related to the company’s $40 million senior convertible note offering that closed back in June.

With improved revenues A-Power’s gross margins grew to 13.1 percent, definitely better than the 12.4 reported in Q3 2008 but slightly down from the 13.4 percent reported in the previous quarter.

Major business wins for A-Power’s third quarter include complete responsibility for building two wind farms in China with contracts valued at $90.5 million for a project in Inner Mongolia and $36.2 million for a project in Shandong Province. The farms in Inner Mongolia and the Shandong Province are expected to be completed by June 2010 and November 2010 respectively. A-Power also announced in Q3 that it will be supplying 240, 2.5MW wind turbines to a wind farm in West Texas.

But the one of the most interesting business highlights that was not featured in the company’s earnings release was A-Power’s acquisition of Japanese thin-film PV equipment maker EVATECH. While the $49.9 million all-cash transaction was expected to close at the end of November, this acquisition would immediately make them a challenger in the solar energy market.

Paying cash for the acquisition shouldn’t be much of an issue as the company closed the quarter with $90.8 million in the bank, down from $128.7 million reported in the previous quarter (this included the $40 million in senior convertible note offering) but far better than the $47.1 million reported in the same quarter in the previous year.

A-Power did miss analyst expectations for profits by $0.03 but investors seemed more focused on company’s increase in revenues as the stock was up almost 7 percent in early afternoon trading.