First Solar, Inc. Announces First Quarter 2018 Financial Results

April 26, 2018 at 4:07 PM EDT
  • Net sales of $567 million 
  • GAAP EPS of $0.78
  • Cash and marketable securities of $2.9 billion, net cash of $2.4 billion
  • YTD net bookings of 3.3GWDC; 2.0GWDC booked since prior earnings call
  • Series 6 module production commenced in early April

TEMPE, Ariz., April 26, 2018 (GLOBE NEWSWIRE) -- First Solar, Inc. (Nasdaq:FSLR) today announced financial results for the first quarter 2018. Net sales for the first quarter were $567 million, an increase of $228 million from the prior quarter due to the sale of international projects in India and Japan and the sale of the Rosamond project in the U.S., partially offset by lower third-party module sales.

The Company reported first quarter GAAP earnings per share (“EPS”) of $0.78, compared to a GAAP loss per share of $(4.14) in the fourth quarter of 2017. The previous quarter non-GAAP loss per share, adjusted for restructuring and asset impairment charges and the impact of U.S. tax reform, was $(0.25). Net income increased compared to the prior quarter primarily as a result of lower tax expense, improved net sales, the mix of higher gross profit projects and higher other income.

Cash and marketable securities at the end of the first quarter decreased slightly to $2.9 billion from $3.0 billion at the end of the fourth quarter. The decrease primarily resulted from capital expenditures to support the Series 6 manufacturing ramp, partially offset by a reimbursement of overfunded amounts from our module collection and recycling trust.

“Our first quarter earnings and continued bookings momentum provide a positive start to the year,” said Mark Widmar, CEO of First Solar. “Our earnings for the quarter were supported by the sale of both domestic and international projects, combined with efficient management of core operating expenses. Customer demand for our Series 6 product continues to be strong as evidenced by our year-to-date net bookings of 3.3GWDC. We also achieved significant technology milestones this month with the start of Series 6 production in Ohio and the first commercial module shipments to systems projects. We remain focused on leveraging the advantages of our differentiated technology and applying our disciplined operating approach to achieve our near-term and long-term priorities.”

The Company lowered its 2018 net cash guidance by $100 million primarily as a result of higher capital expenditures for additional Series 6 capacity.

     
2018 GAAP Guidance Prior Current
Net Sales $2.45B to $2.65B Unchanged
Gross Margin %1 21.5% to 22.5% Unchanged
Operating Expenses2 $400M to $410M Unchanged
Operating Income $130M to $180M Unchanged
Earnings per Share $1.50 to $1.90 Unchanged
Net Cash Balance3 $2.1B to $2.3B $2.0B to $2.2B
Operating Cash Flow $100M to $200M $0 to $100M
Capital Expenditures $700M to $800M $850M to $950M
Shipments 2.9GW to 3.0GW Unchanged
  1. Includes approximately $60 million of ramp penalty costs
  2. Includes approximately $120 million of production start-up expense
  3. Defined as cash and marketable securities less expected debt at the end of 2018

For a reconciliation of the non-GAAP measure presented above to the corresponding measure presented in accordance with generally accepted accounting principles in the United States (“GAAP”), see the tables below.

First Solar has scheduled a conference call for today, April 26, 2018 at 4:30 p.m. ET to discuss this announcement. A live webcast of this conference call is available at investor.firstsolar.com. 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 May 3, 2018 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 1693973. 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 will 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. All statements in this release, other than statements of historical fact, are forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning: our financial guidance for 2018; the impact of U.S. tax reform; the transition to Series 6 module manufacturing in 2018; and our business and financial objectives for 2018. These forward-looking statements are often characterized by the use of words such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “seek,” “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 and therefore speak only as of the date of this release. 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, whether as a result of new information, future developments or otherwise. 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: structural imbalances in global supply and demand for PV solar modules; the market for renewable energy, including solar energy; our competitive position and other key competitive factors; reduction, elimination, or expiration of government subsidies, policies, and support programs for solar energy projects; our ability to execute on our long-term strategic plans; our ability to execute on our solar module technology and cost reduction roadmaps; interest rate fluctuations and both our and our customers’ ability to secure financing; our ability to attract new customers and to develop and maintain existing customer and supplier relationships; our ability to successfully develop and complete our systems business projects; our ability to convert existing production facilities to support new product lines, such as Series 6 module manufacturing; general economic and business conditions, including those influenced by U.S., international, and geopolitical events; environmental responsibility, including with respect to cadmium telluride (“CdTe”) and other semiconductor materials; claims under our limited warranty obligations; changes in, or the failure to comply with, government regulations and environmental, health, and safety requirements; effects resulting from pending litigation; future collection and recycling costs for solar modules covered by our module collection and recycling program; our ability to protect our intellectual property; our ability to prevent and/or minimize the impact of cyber-attacks or other breaches of our information systems; our continued investment in research and development; the supply and price of components and raw materials, including CdTe; our ability to attract and retain key executive officers and associates; and the matters discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our most recent Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q, as supplemented by our other filings with the Securities and Exchange Commission.

Contacts

First Solar Investors
Steve Haymore
602-414-9315
stephen.haymore@firstsolar.com

First Solar Media
Steve Krum
602-427-3359
steve.krum@firstsolar.com


FIRST SOLAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)



 
  March 31,
 2018
  December 31,
 2017

 
ASSETS        
Current assets:        
Cash and cash equivalents   $ 1,858,338     $ 2,268,534  
Marketable securities   1,020,136     720,379  
Accounts receivable trade, net   273,277     211,797  
Accounts receivable, unbilled and retainage   151,393     174,608  
Inventories   174,070     172,370  
Balance of systems parts   65,374     28,840  
Project assets   10,094     77,931  
Notes receivable, affiliate   20,411     20,411  
Prepaid expenses and other current assets   197,206     157,902  
Total current assets   3,770,299     3,832,772  
Property, plant and equipment, net   1,311,642     1,154,537  
PV solar power systems, net   355,143     417,108  
Project assets   430,678     424,786  
Deferred tax assets, net   64,427     51,417  
Restricted cash and investments   354,082     424,783  
Equity method investments   200,955     217,230  
Goodwill   14,462     14,462  
Intangibles assets, net   79,607     80,227  
Inventories   116,397     113,277  
Note receivable, affiliate   47,798     48,370  
Other assets   94,699     85,532  
Total assets   $ 6,840,189     $ 6,864,501  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable   $ 136,897     $ 120,220  
Income taxes payable   10,164     19,581  
Accrued expenses   297,446     366,827  
Current portion of long-term debt   6,062     13,075  
Deferred revenue   67,336     81,816  
Other current liabilities   35,833     48,757  
Total current liabilities   553,738     650,276  
Accrued solar module collection and recycling liability   170,352     166,609  
Long-term debt   431,817     380,465  
Other liabilities   524,911     568,454  
Total liabilities   1,680,818     1,765,804  
Commitments and contingencies        
Stockholders’ equity:        
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 104,762,691
and 104,468,460 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
  105     104  
Additional paid-in capital   2,797,671     2,799,107  
Accumulated earnings   2,380,178     2,297,227  
Accumulated other comprehensive (loss) income   (18,583)     2,259  
Total stockholders’ equity   5,159,371     5,098,697  
Total liabilities and stockholders’ equity   $ 6,840,189     $ 6,864,501  
                 

FIRST SOLAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

    Three Months Ended
    March 31,
 2018
  December 31,
 2017
  March 31,
 2017
Net sales   $ 567,265     $ 339,181     $ 891,791  
Cost of sales   394,467     277,111     807,607  
Gross profit   172,798     62,070     84,184  
Operating expenses:            
Selling, general and administrative   41,126     54,997     48,199  
Research and development   20,324     23,583     22,799  
Production start-up   37,084     20,488     1,150  
Restructuring and asset impairments       (1,927)     20,031  
Total operating expenses   98,534     97,141     92,179  
Operating income (loss)   74,264     (35,071)     (7,995)  
Foreign currency (loss) gain, net   (2,517)     (3,474)     246  
Interest income   11,824     13,340     6,417  
Interest expense, net   (5,182)     (6,073)     (9,169)  
Other income (expense), net   17,934     (1,215)     25,861  
Income (loss) before taxes and equity in earnings   96,323     (32,493)     15,360  
Income tax expense   (11,625)     (398,765)     (5,679)  
Equity in earnings, net of tax   (1,747)     (1,196)     (552)  
Net income (loss)   $ 82,951     $ (432,454)     $ 9,129  
Net income (loss) per share:            
Basic   $ 0.79     $ (4.14)     $ 0.09  
Diluted   $ 0.78     $ (4.14)     $ 0.09  
Weighted-average number of shares used in per share calculations:            
Basic   104,550     104,448     104,103  
Diluted   106,305     104,448     104,410  
                   

Non-GAAP Financial Measures

In this release, we provide non-GAAP earnings per share for the three months ended December 31, 2017. We have included this non-GAAP financial measure to adjust for (i) restructuring, asset impairment and related charges primarily associated with the transition from Series 4 to Series 6 production, (ii) the tax effect associated with these items and (iii) the tax effect associated with U.S. tax reform. We believe non-GAAP earnings per share, when taken together with corresponding GAAP financial measure, is relevant and useful information to our investors because it provides them with additional information in assessing our financial operating results. Our management uses this non-GAAP financial measure in evaluating our operating performance. However, this measure has limitations, including that it excludes the effect of certain changes to our assets and liabilities and certain amounts that we may ultimately have to pay in cash. Accordingly, this non-GAAP financial measure should be considered in addition to, and not as a substitute for, or superior to earnings per share prepared in accordance with GAAP. The following is the reconciliation of earnings per share prepared in accordance with GAAP to non-GAAP earnings per share for the period presented (in millions, except per share amounts):

     
    Three Months Ended
December 31, 2017
Net loss   $ (432.5) 
     
Restructuring and asset impairments   (1.9)
Tax effect of restructuring and asset impairments*   0.2
Tax effect of U.S. tax reform   $ 408.1
Non-GAAP net loss   $ (26.1)
     
Weighted-average number of shares used for diluted earnings per share   104.4
     
GAAP loss per share   $ (4.14)
Non-GAAP loss per share   $ (0.25)
       

*        Restructuring treated as a non-discrete item for tax purposes and reflected in the effective tax rate over the duration of 2017.

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Source: First Solar, Inc.