7 November 2016

First Solar's sales fall 26% in Q3, to $688m

For third-quarter 2016, First Solar Inc of Tempe, AZ, USA – which makes thin-film photovoltaic modules based on cadmium telluride (CdTe) as well as providing engineering, procurement & construction (EPC) services – has reported net sales of $688m, down 26% on $934m last quarter due to the completion of multiple systems projects during the quarter, offset partially by higher module-only sales.

However, on a non-GAAP basis, earnings per share were $1.22, up from $0.87 last quarter due to lower restructuring charges and the foreign tax benefit.

During the quarter, cash and marketable securities rose from $1.7bn to $2.1bn, primarily due to borrowing under the firm's revolving credit facility. The short-term borrowing is a result of the ongoing construction of large-scale projects which have not yet been sold. Cash flow used in operations was $76m (roughly level with last quarter).

"In the third quarter our operational and financial results were solid," says CEO Mark Widmar. "Our entire fleet module efficiency for the past quarter was 16.5% and our lead line efficiency exited the quarter at 16.9%, demonstrating continued execution on our technology roadmap," he adds.

"Current market conditions are extremely challenging and require us to carefully assess our short- and long-term strategic response," notes Widmar. Based on Q3 results and the revised sale timing for the California Flats and Moapa projects (now expected to be sold in 2017), for full-year 2016 First Solar has slashed its guidance for net sales from $3.8-4.0bn to $2.8-2.9bn. However, the forecast for module shipments has been reduced only slightly, from 2.9-3.0GW to 2.8-2.9GW. Guidance for gross margin has therefore been raised from 18.5-19.0% to 25.5-26.0%. Guidance for non-GAAP operating expenses has been cut from $380-400m to $375-385m. Guidance has hence been increased for operating income from $310-370m to $340-370m, and for earnings per share from $4.20-4.50 to $4.30-4.50. Expectations for operating cash flow have been reduced from $500-650m to between -$100m and zero. Planned capital expenditure has been cut from $275-325m to $225-275m. Net cash balance (cash and marketable securities minus expected debt at the end of 2016) is now expected to be just $1.4-1.5bn rather than $1.9-2.2bn.

Tags: First Solar Thin-film photovoltaic CdTe

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