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Power-One Management Discusses Q2 2012 Results - Earnings Call Transcript

Now I'd like to share some operational highlights for the second quarter. First, we gained market share in the global PV market. Based on preliminary figures from IMS, we estimate that our worldwide market share increased to over 14% in the second quarter, up from 11% for the full year 2011. Second, our new product introductions are continuing to gain traction. Our recently introduced TRIO line of 20KW and 27.5KW inverters, that address rooftop applications, are being extremely well received in the marketplace. TRIO has already become our largest-selling product line representing 1/3 of our RE revenue in the second quarter and demand continues to be robust. Third, we experienced stable pricing in the second quarter as strong demand in Europe moderated industry pricing pressures. The average revenue per watt decreased in the quarter due to a shift towards higher-wattage products in the Commercial segment. These products contributed to our margin improvement in the quarter as they have a correspondingly lower cost. Lastly, we continue to reduce cost and improve our manufacturing operation, lower material cost and increased absorption on higher production volumes in Europe also contributed to higher margins this quarter. In addition, we have recently recruited new operations management in the U.S., where we have been capacity constrained.

Now for some more details on each of our SBUs. Our Renewable Energy SBU earned $55 million in operating profit on sales of $255 million. Record shipments of 1.3 gigawatts of inverters were up 88% sequentially and 76% year-over-year, driven by the strength in the Italian and German markets. As mentioned, the large part of our first half success is due to the phenomenal market acceptance of our TRIO 20KW and 27.5KW inverters designed specifically for rooftop commercial applications. TRIO provides our customers with a cost competitive product that delivers higher performance while meeting the increasingly more-stringent grid standards. The higher wattage of the TRIO results in fewer inverters versus our competitors' offerings, and at a lower cost per watt. In addition, installers appreciate the built-in combiner box that is also detachable, allowing easy installation and servicing, along with dual MPPT channels that allow maximum optimization of the strings. In fact, installers are finding that TRIO's futures can make this product the more economical solution than using central units on installations of up to several megawatts.

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