First Solar reported its results for the first quarter of 2013 yesterday (May 6) and while the company’s results were positive with diluted earnings per share of 66 cents, the results did not necessarily live up to the company’s bullish guidance issued in April.
In all, the company reported net sales of $755 million for the first quarter; that’s $258 million more than the first quarter of 2012. It also reported a net income of $59 million, compared to a net loss of $449 million in last year’s first quarter. “On a year-over-year basis net sales increased 52 percent,” said First Solar CFO Mark Widmar in a Seeking Alpha transcript of the call.
On a sequential basis, the company’s sales and net income flagged. For the fourth quarter of 2012, First Solar reported $1.75 billion in sales, a net income of $154.2 million and earnings per share of $1.74. Widmar said, “The sequential decrease in net sales was primarily driven by lower revenue for Topaz and AVSR which was adversely impacted by weather-related construction delays in Q1 while the increase over the first quarter of 2012 was primarily due to higher sales volume and revenue recognition for both systems' project and third party module sales.”
While First Solar is one of the few PV companies that continues to issue positive results despite the chronic oversupply in the market, SunPower’s recent results were also positive—showing that the solar industry may be starting to recover.
But First Solar’s results weren’t enough to assuage at least one industry analyst. “After the extensive guidance given at its April 9 analyst day, First Solar's 1Q13 results were decidedly underwhelming,” wrote Raymond James Analyst Pavel Molchanov in a research note. “Very little incremental information came out, and certainly nothing to change our view that, following a 76 percent recent run (inclusive of the analyst day's short squeeze), shares have gotten ahead of themselves.”
While First Solar has a project pipeline it’s building out and a better balance sheet than many of its peers, Raymond James maintained its underperform rating of First Solar. The company’s adjusted 69 cents of earnings per share missed guidance of 70 to 90 cents per share, Molchanov wrote, but a bigger concern for him is whether or not First Solar’s CdTe thin-film PV can remain cost competitive with silicon-based PV. While First Solar previously guided that its modules will cost between 47 cents per watt to 50 cents per watt in 2015, Molchanov anticipates that silicon PV modules will fall to 53 cents in 2015, giving First Solar little to no cost advantage because silicon PV will also become more efficient over the period.
Still, First Solar continues to book more projects at a rapid pace. “We have booked an additional 328 megawatts of demand year-to-date including Solar Gen 2, Macho Springs and NorthStar,” said CEO Jim Hughes. He said the company now has 2.5 gigawatts DC of future projects to build out. The company could book up to 4 gigawatts DC of potential bookings this year alone—including its captive Solar Chile projects, that number jumps to 5.5 gigawatts, according to Hughes.
The majority of First Solar’s business is primarily in early stage development, which is allowing the company to replenish its pipeline primarily in 2014 and beyond, Hughes said. “As a matter of fact, we are sold out until late Q3 of this year,” he added.
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