FSLR
$48.89
First Solar
$1.16
2.43%
Earnings Details
2nd Quarter June 2017
Thursday, July 27, 2017 4:03:00 PM
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Summary

First Solar Beats

First Solar (FSLR) reported 2nd Quarter June 2017 earnings of $0.71 per share on revenue of $623.3 million. The consensus earnings estimate was $0.03 per share on revenue of $535.5 million. The Earnings Whisper number was $0.11 per share. Revenue fell 33.3% compared to the same quarter a year ago.

The company said it expects 2017 earnings of $2.00 to $2.50 per share on revenue of $3.08 billion to $3.10 billion. The company's previous guidance was earnings of $0.25 to $0.75 per share on revenue of $2.85 billion to $2.95 billion and the current consensus earnings estimate is $0.55 per share on revenue of $2.93 billion for the year ending December 31, 2017.

First Solar Inc is a provider of solar energy solutions. It designs, manufactures and sells PV solar modules with a thin-film semiconductor technology. It also manufactures crystalline silicon solar modules.

Results
Reported Earnings
$0.71
Earnings Whisper
$0.11
Consensus Estimate
$0.03
Reported Revenue
$623.3 Mil
Revenue Estimate
$535.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Solar, Inc. Announces Second Quarter 2017 Financial Results

GAAP EPS of $0.50 and non-GAAP EPS of $0.64

--Cash and marketable securities of $2.2 billion, net cash of $1.9 billion

--Quarterly bookings of 1.5GWdc and new year-to-date bookings of 2.1GWdc

--Raise 2017 revenue, EPS, operating cash flow and net cash guidance

First Solar, Inc. (FSLR) today announced financial results for the second quarter of 2017. Net sales for the second quarter were $623 million, a decrease of $269 million from the prior quarter primarily due to lower systems sales, partially offset by higher third-party module sales.

The Company reported second quarter earnings of $0.50 per share, compared to earnings of $0.09 per share in the prior quarter. The second quarter was impacted by pre-tax restructuring and asset impairment charges of $18 million, related to previously announced actions. Restructuring and asset impairment charges in the first quarter were $20 million. Net income increased versus the prior quarter primarily as a result of improved gross margin and a discrete income tax benefit, partially offset by a decrease in other income. Second quarter non-GAAP earnings per share, adjusted for restructuring and asset impairment charges, were $0.64, compared to $0.25 in the first quarter.

Cash and marketable securities at the end of the second quarter decreased to $2.2 billion from $2.4 billion in the prior quarter. The decrease primarily resulted from a higher accounts receivable balance associated with the timing of certain recent module and project sales where payment is expected to be received in the third quarter. Cash flows used in operations were $168 million in the second quarter.

"We executed well in the second quarter with solid non-GAAP earnings of $0.64, record quarterly shipments of nearly 900MWdc and bookings of 1.5GWdc since our last earnings call," said Mark Widmar, CEO of First Solar. "We are encouraged by the continuing strong demand for our Series 4 product and are focused on meeting our customers’ current needs. At the same time, our efforts to ensure the manufacturing and market readiness of Series 6 remains our highest priority. With the first Series 6 equipment being installed at our Ohio factory, and an increasing number of mid-to-late stage Series 6 bookings opportunities, we are pleased with our progress thus far."

The Company raised its revenue, earnings per share, operating cash flow and net cash guidance for the year as a result of improved visibility into the sale of systems projects, a discrete tax benefit in the second quarter and continuing operational improvements.

2017 Guidance
Prior GAAP
Current GAAP
Prior Non-GAAP
Current Non-GAAP
Net Sales
$2.85B to $2.95B
$3.0B to $3.1B
Gross Margin %
12.5% to 14.5%
17.0% to 18.0%
Operating Expenses
$360M to $405M
$370M to $395M
$320M to $340M
$330M to $340M
Operating Income
$(25M) to $40M
$115M to $180M
$40M to $80M
$170M to $220M
Earnings per Share
$(0.30) to $0.40
$1.55 to $2.20
$0.25 to $0.75
$2.00 to $2.50
Net Cash Balance(1)
$1.5B to $1.7B
$2.1B to $2.3B
Operating Cash Flow
$350M to $450M
$850M to $950M
Capital Expenditures
$525M to $625M
$400M to $500M
Shipments
2.4GW to 2.6GW
2.6GW to 2.7GW
1.
Defined as cash and marketable securities less expected debt at the
end of 2017.

For a reconciliation of the non-GAAP measures presented above to measures 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, July 27, 2017, 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 Aug 3, 2017 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 6484224. 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. These forward-looking statements include statements, among other things, concerning: effects on our financial statements and guidance resulting from certain module manufacturing changes and associated restructuring activities; 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 (including estimated future module collection and recycling costs), warranties, solar module technology and cost reduction roadmaps, restructuring, product reliability, investments in unconsolidated affiliates and capital expenditures; our ability to continue to reduce the cost per watt of our solar modules; the impact of public policies, such as tariffs or other trade remedies imposed on solar cells and modules; our ability to expand manufacturing capacity worldwide; our ability to reduce the costs to construct 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," "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. 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 most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission.

FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands, except
share data)
(Unaudited)
June 30,
December 31,
2017
2016
ASSETS
Current assets:
Cash and cash equivalents
$ 1,509,516
$ 1,347,155
Marketable securities
719,569
607,991
Accounts receivable trade, net
260,994
266,687
Accounts receivable, unbilled and retainage
347,920
206,739
Inventories
344,473
363,219
Balance of systems parts
26,147
62,776
Project assets
35,992
700,800
Notes receivable, affiliate
19,600
15,000
Prepaid expenses and other current assets
172,701
217,462
Total current assets
3,436,912
3,787,829
Property, plant and equipment, net
784,937
629,142
PV solar power systems, net
461,617
448,601
Project assets
786,207
762,148
Deferred tax assets, net
262,879
255,152
Restricted cash and investments
383,722
371,307
Investments in unconsolidated affiliates and joint ventures
225,967
234,610
Goodwill
14,462
14,462
Other intangibles, net
83,834
87,970
Inventories
101,748
100,512
Notes receivable, affiliates
49,996
54,737
Other assets
88,005
77,898
Total assets
$ 6,680,286
$ 6,824,368
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
118,075
$
148,730
Income taxes payable
1,554
12,562
Accrued expenses
190,453
262,977
Current portion of long-term debt
13,574
27,966
Deferred revenue
31,503
308,704
Other current liabilities
148,689
146,942
Total current liabilities
503,848
907,881
Accrued solar module collection and recycling liability
175,001
166,277
Long-term debt
307,459
160,422
Other liabilities
402,669
371,439
Total liabilities
1,388,977
1,606,019
Commitments and contingencies
Stockholders’ equity:
104
104
Common stock, $0.001 par value per share; 500,000,000 shares
authorized; 104,395,532
and 104,034,731 shares issued and
outstanding at June 30, 2017 and December 31,
2016,
respectively
Additional paid-in capital
2,779,294
2,765,310
Accumulated earnings
2,523,934
2,462,842
Accumulated other comprehensive loss
(12,023 )
(9,907 )
Total stockholders’ equity
5,291,309
5,218,349
Total liabilities and stockholders’ equity
$ 6,680,286
$ 6,824,368
FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands,
except per share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Net sales
$ 623,326
$ 1,016,424
$ 1,515,117
$ 1,892,492
Cost of sales
512,433
834,373
1,320,040
1,432,830
Gross profit
110,893
182,051
195,077
459,662
Operating expenses:
Research and development
21,341
32,931
44,140
63,118
Selling, general and administrative
48,957
63,776
97,156
131,279
Production start-up
8,381
55
9,531
55
Restructuring and asset impairments
18,286
85,532
38,317
85,532
Total operating expenses
96,965
182,294
189,144
279,984
Operating income (loss)
13,928
(243 )
5,933
179,678
Foreign currency loss, net
(2,444 )
(2,723 )
(2,198 )
(5,963 )
Interest income
7,555
6,529
13,972
12,935
Interest expense, net
(6,374 )
(7,151 )
(15,543 )
(11,793 )
Other (loss) income, net
(2,699 )
6,753
23,162
42,306
Income before taxes and equity in earnings of unconsolidated
9,966
3,165
25,326
217,163
affiliates
Income tax benefit (expense)
40,028
(7,288 )
34,349
(35,319 )
Equity in earnings of unconsolidated affiliates, net of tax
1,969
(7,292 )
1,417
2,377
Net income (loss)
$
51,963
$
(11,415 )
$
61,092
$
184,221
Net income (loss) per share:
Basic
$
0.50
$
(0.11 )
$
0.59
$
1.80
Diluted
$
0.50
$
(0.11 )
$
0.58
$
1.78
Weighted-average number of shares used in per share calculations:
Basic
104,338
102,287
104,221
102,070
Diluted
104,611
102,287
104,511
103,378

Non-GAAP Financial Measures

In the press release above, we provided non-GAAP earnings per share for the three months ended June 30, 2017 and March 31, 2017. We have included these non-GAAP financial measures to adjust for (i) restructuring, asset impairment and related charges primarily associated with the transition from Series 4 to Series 6 production and (ii) the tax effect associated with these items. We believe non-GAAP earnings per share, when taken together with corresponding GAAP financial measures, to be 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 each period presented (in millions, except per share amounts):

Three Months Ended
June 30, 2017
Net income
$
52.0
Restructuring and asset impairments
18.3
Tax effect*
(3.8 )
Non-GAAP net income
$
66.5
Weighted-average number of shares used for diluted earnings per share
104.6
Diluted GAAP earnings per share
$
0.50
Diluted Non-GAAP earnings per share
$
0.64
*
Restructuring treated as a non-discrete item for tax purposes and
will be reflected in the effective tax rate over the duration of
2017.
Three Months Ended
March 31, 2017
Net income
$
9.1
Restructuring and asset impairments
20.0
Tax effect*
(2.7 )
Non-GAAP net income
$
26.4
Weighted-average number of shares used for diluted earnings per share
104.4
Diluted GAAP earnings per share
$
0.09
Diluted Non-GAAP earnings per share
$
0.25
*
Restructuring treated as a non-discrete item for tax purposes and
will be reflected in the effective tax rate over the duration of
2017.

In the press release above, we provided non-GAAP guidance as of the date of this press release for our operating expenses, operating income and earnings per share for the year ending December 31, 2017. We have included these forward-looking non-GAAP financial measures to adjust our GAAP projections of such financial measures for, as applicable, (i) restructuring, asset impairment and related charges primarily associated with the transition from Series 4 to Series 6 production and (ii) additional restructuring activities expected during the remainder of the year. Other GAAP charges, including those related to certain asset impairments or restructuring programs, that would be excluded from non-GAAP earnings per share are possible for the periods presented, but such amounts are dependent on numerous factors that we currently cannot ascertain with sufficient certainty or are presently unknown. These GAAP charges are also dependent upon future events and valuations that have not yet occurred or been performed. We believe these forward-looking non-GAAP financial measures, when taken together with our corresponding financial guidance based on GAAP, to be relevant and useful information to our investors because they provide them with additional information in assessing our financial operating results. Our management also uses such non-GAAP guidance in evaluating our operating performance. However, such measures have limitations, including that they exclude the effect of certain changes to our assets and liabilities, certain amounts that we may ultimately have to pay in cash and certain tax impacts. Accordingly, these forward-looking non-GAAP financial measures that exclude the aforementioned items should be considered in addition to, and not as substitutes for or superior to, financial guidance based on GAAP. The following are the reconciliations of our current and prior non-GAAP 2017 guidance to our current and prior GAAP 2017 guidance (in millions, except per share amounts):

Reconciliation of Non-GAAP 2017 Guidance to GAAP 2017 Guidance
GAAP Guidance
Restructuring
Non-GAAP
Charges(1)
Guidance
Operating Expenses
$370 to $395
$(40) to $(55)
$330 to $340
Operating Income
$115 to $180
$55 to $40
$170 to $220
Earnings per Share
$1.55 to $2.20
$0.45 to $0.30
$2.00 to $2.50
1.
$40 to $55 million of restructuring related charges associated with
our transition from Series 4 to Series 6 module manufacturing.
Reconciliation of Prior Non-GAAP 2017 Guidance to Prior GAAP
2017 Guidance
GAAP Guidance
Restructuring
Non-GAAP
Charges(1)
Guidance
Operating Expenses
$360 to $405
$(40) to $(65)
$320 to $340
Operating Income
$(25) to $40
$65 to $40
$40 to $80
Earnings per Share
$(0.30) to $0.40
$0.55 to $0.35
$0.25 to $0.75
1.
$40 to $65 million of restructuring related charges associated with
our transition from Series 4 to Series 6 module manufacturing.

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SOURCE: First Solar, Inc.

First Solar Investors
Steve Haymore
+1 602-414-9315
stephen.haymore@firstsolar.com
or
First Solar Media
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+1 602-427-3359
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