First Solar, Inc. Announces Third Quarter 2014 Financial Results

  • Net sales of $889 million
  • GAAP earnings per fully diluted share of $0.87
  • Cash and Marketable Securities of $1.1 billion, Net Cash of $0.9 billion
  • Maintain 2014 guidance for EPS of $2.40 to $2.80 and operating cash flow of $300-$500M
  • 521MWdc of new bookings. Year to date bookings of 1.7GWdc

TEMPE, Ariz.--()--First Solar, Inc. (Nasdaq: FSLR) today announced financial results for the third quarter of 2014. Net sales were $889 million in the quarter, an increase of $345 million from the second quarter of 2014. The sequential increase in net sales resulted primarily from increased revenue recognition on the Desert Sunlight project.

“Following the project delays experienced in the prior quarter, our third quarter earnings have improved, and we continue to make progress towards our financial targets for the year”

The Company reported a third quarter GAAP earnings per fully diluted share of $0.87, compared to earnings of $0.04 in the prior quarter. The increase in net income compared to the prior quarter was due to higher profit from the Desert Sunlight project and other systems projects under construction, partially offset by an increase in operating expenses. The sequential increase in net income was also due to a one-time income tax benefit in the third quarter of $0.26 per fully diluted share.

Cash and marketable securities at the end of the third quarter were approximately $1.1 billion, a decrease of approximately $234 million compared to the prior quarter. Cash flows used in operations were $47 million in the third quarter. The reduction in cash and marketable securities during the quarter was due to the construction of multiple utility scale power plants which have not yet been sold. The Company continues to construct these projects while determining the optimal sales strategy for these projects.

The Company maintained its full year 2014 earnings per share guidance of $2.40 to $2.80 and operating cash flow guidance of $300 to $500 million. Other financial guidance items have been updated as shown in the table below.

                             
2014 Guidance Update            

Prior

            Current
Net Sales             $3.7B to $4.0B             $3.6B to $3.9B
 
Gross Margin (%) 18% to 19% 19% to 20%
 
Operating Expenses $380M to $395M $390M to $400M
 
Operating Income $290M to $340M $300M to $340M
 
Effective Tax Rate 15% to 20% 18% to 20%*
 
Earnings Per Share $2.40 to $2.80 Unchanged*
 
Operating Cash Flow $300M to $500M Unchanged
 
Capital Expenditures $300M to $350M $250M to $300M
 
Production 1.8GW to 1.9GW Unchanged
 
*Excludes impact of $0.26 per share one-time tax benefit in Q3’14
 

“Following the project delays experienced in the prior quarter, our third quarter earnings have improved, and we continue to make progress towards our financial targets for the year,” said Jim Hughes, CEO of First Solar. “Our year to date book-to-bill ratio is well above our objective of a one-to-one ratio, and we are on track to meet or exceed our bookings goal for the year.”

First Solar has scheduled a conference call for today, November 6, 2014 at 4:30 p.m. ET to discuss this announcement. A live webcast of this conference call is available at http://investor.firstsolar.com/events.cfm.

An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Thursday, November 13, 2014 at 7:30 p.m. ET and can be accessed by dialing 888-203-1112 if you are calling from within the United States or 719-457-0820 if you are calling from outside the United States and entering the replay pass code 5135099. A replay of the webcast will be available on the Investors section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.

About First Solar, Inc.

First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems which use its advanced module and system technology. The company's integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today. From raw material sourcing through end-of-life module recycling, First Solar's renewable energy systems protect and enhance the environment. For more information about First Solar, please visit www.firstsolar.com.

For First Solar Investors

This release contains forward-looking statements which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements, among other things, concerning: our business strategy, including anticipated trends and developments in and management plans for our business and the markets in which we operate; future financial results, operating results, revenues, gross margin, operating expenses, products, projected costs, warranties, solar module efficiency and balance of systems (BoS) cost reduction roadmaps, restructuring, product reliability and capital expenditures; our ability to continue to reduce the cost per watt of our solar modules; our ability to reduce the costs to construct photovoltaic (PV) solar power systems; research and development programs and our ability to improve the conversion efficiency of our solar modules; sales and marketing initiatives; and competition. These forward-looking statements are often characterized by the use of words such as "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," "continue" and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, the matters discussed in Item 1A: "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2013, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed with the SEC.

     

FIRST SOLAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

September 30,
2014

 

December 31,
2013

ASSETS
Current assets:
Cash and cash equivalents $ 622,523 $ 1,325,072
Marketable securities 492,875 439,102
Accounts receivable trade, net 282,783 136,383
Accounts receivable, unbilled and retainage 538,913 521,323
Inventories 445,201 388,951
Balance of systems parts 101,120 133,731
Deferred project costs 546,409 556,957
Deferred tax assets, net 62,372 63,899
Assets held for sale 20,728 132,626
Note receivable, affiliate 7,829
Prepaid expenses and other current assets 132,273   94,720  
Total current assets 3,253,026   3,792,764  
Property, plant and equipment, net 1,384,429 1,385,084
PV solar power systems, net 47,901
Project assets and deferred project costs 645,477 720,916
Deferred tax assets, net 228,661 296,603
Restricted cash and investments 489,388 279,441
Goodwill 84,985 84,985
Other intangible assets, net 119,448 117,416
Inventories 113,111 129,664
Other assets 73,528   76,629  
Total assets $ 6,439,954   $ 6,883,502  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 219,997 $ 261,333
Income taxes payable 5,346 6,707
Accrued expenses 348,602 320,077
Current portion of long-term debt 54,607 60,543
Billings in excess of costs and estimated earnings 133,779 117,766
Payments and billings for deferred project costs 100,264 642,214
Other current liabilities 56,077   179,421  
Total current liabilities 918,672   1,588,061  
Accrued solar module collection and recycling liability 247,441 225,163
Long-term debt 163,646 162,780
Other liabilities 316,978   404,381  
Total liabilities 1,646,737   2,380,385  
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 100,209,077 and 99,506,941 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively 100 100
Additional paid-in capital 2,682,199 2,646,022
Accumulated earnings 2,087,731 1,882,771
Accumulated other comprehensive income (loss) 23,187   (25,776 )
Total stockholders’ equity 4,793,217   4,503,117  
Total liabilities and stockholders’ equity $ 6,439,954   $ 6,883,502  
 
   

FIRST SOLAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

Three Months Ended September 30,

Nine Months Ended September 30,

 

2014   2013 2014   2013
Net sales $ 889,310 $ 1,265,587 $ 2,383,821 $ 2,540,552
Cost of sales 700,023   901,553   1,865,098   1,867,094  
Gross profit 189,287 364,034 518,723 673,458
Operating expenses:
Research and development 37,593 34,984 109,025 95,879
Selling, general and administrative 66,528 63,870 182,859 204,600
Production start-up 1,406 1,897 2,768
Restructuring and asset impairments   57,276     62,004  
Total operating expenses 105,527   156,130   293,781   365,251  
Operating income 83,760 207,904 224,942 308,207
Foreign currency gain (loss) 169 (705 ) (389 ) (155 )
Interest income 4,297 4,197 13,151 12,549
Interest expense, net (89 ) (275 ) (1,429 ) (1,900 )
Other expense, net (6,821 ) (2,433 ) (11,737 ) (2,762 )
Income before income taxes 81,316 208,688 224,538 315,939
Income tax (benefit) expense (7,108 ) 13,650     19,579   28,161  
Net income $ 88,424   $ 195,038   $ 204,959   $ 287,778  
Net income per share:
Basic $ 0.88   $ 1.98   $ 2.05   $ 3.14  
Diluted $ 0.87   $ 1.94   $ 2.02   $ 3.08  
Weighted-average number of shares used in per share calculations:
Basic 100,197   98,720   99,981   91,751  
Diluted 101,415   100,378   101,686   93,517  

Contacts

First Solar Investors
David Brady
+1 602-414-9315
dbrady@firstsolar.com
or
Steve Haymore
+1 602-414-9315
stephen.haymore@firstsolar.com
or
First Solar Media
Steve Krum
+1 602-427-3359
steve.krum@firstsolar.com

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