Home Quarter Results First Solar, Inc. Announces First Quarter 2017 Financial Results
First Solar, Inc. Announces First Quarter 2017 Financial Results

First Solar, Inc. Announces First Quarter 2017 Financial Results

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 First Solar, Inc. recently announced financial results for the first quarter of 2017. Net sales for the first quarter were $892 million, an increase of $561 million from the prior quarter primarily due to the sale of the Moapa project, partially offset by lower third-party module sales. The Company reported first quarter earnings of $0.09 per share, compared to a loss of $(7.22) per share in the prior quarter. The first quarter was impacted by pre-tax restructuring and asset impairment charges of $20 million, related to previously announced actions. Restructuring and asset impairment charges in the fourth quarter were $729 million. Net income increased versus the prior quarter primarily as a result of higher net sales, lower restructuring and asset impairment charges and an increase in other income. First quarter non-GAAP earnings per share, adjusted for restructuring and asset impairment charges, were $0.25.

Cash and marketable securities at the end of the first quarter increased to $2.4 billion from $2.0 billion in the prior quarter. The increase was primarily due to receipt of the remaining payments for the Moapa project and other project receipts. Cash flows from operations were $493 million in the first quarter. “Our first quarter results and the sale of our Moapa project are a solid start to 2017,” said Mark Widmar, CEO of First Solar. “The transition to our Series 6 product continues to progress from both a technology and commercial standpoint. We are excited about the competitive position of Series 6 and the long-term opportunities it enables.”

The Company raised its revenue, EPS, operating cash flow and net cash guidance based on improved operational performance and increased visibility into certain upcoming project sales. GAAP EPS was also raised due to a decrease in expected remaining restructuring and asset impairment charges. Operating expenses increased as a result of certain costs previously forecasted to be recorded in cost of sales that are now expected to impact production start-up.

2017 Guidance  Prior GAAP  Current GAAP  Prior Non-GAAP  Current Non-GAAP
Net Sales  $2.8B to $2.9B  $2.85B to $2.95B      
Gross Margin %  11% to 13%  12.5% to 14.5%      
Operating Expenses  $335M to $380M  $360M to $405M  $280M to $300M  $320M to $340M
Operating Income  $(40M) to $25M  $(25M) to $40M  $40M to $80M  Unchanged
Earnings per Share  $(0.80) to $(0.05)  $(0.30) to $0.40  $0.00 to $0.50  $0.25 to $0.75
Net Cash Balance1  $1.4B to $1.6B  $1.5B to $1.7B      
Operating Cash Flow  $250M to $350M  $350M to $450M      
Capital Expenditures  $525M to $625M  Unchanged      
Shipments  2.4GW to 2.6GW  Unchanged      

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, May 2, 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 May 9, 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 8971725. 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.

   
FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 March 31,
2017
December 31,
2016
ASSETS
Current assets:
Cash$1,656,245$1,347,155
Marketable securities789,442607,991
Accounts receivable trade, net151,186266,687
Accounts receivable, unbilled and retainage70,536206,739
Inventories432,602363,219
Balance of systems parts33,26962,776
Project assets700,800
Notes receivable, affiliate19,60015,000
Prepaid expenses and other current assets177,358 217,462 
Total current assets3,330,2383,787,829
Property, plant and equipment, net691,767629,142
PV solar power systems, net452,074448,601
Project assets960,089762,148
Deferred tax assets, net251,453255,152
Restricted cash and investments355,237371,307
Investments in unconsolidated affiliates and joint ventures228,469234,610
Goodwill14,46214,462
Other intangibles, net85,90287,970
Inventories99,714100,512
Notes receivable, affiliates49,99454,737
Other assets85,104 77,898 
Total assets$6,604,503 $6,824,368 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$143,455$148,730
Income taxes payable5,00212,562
Accrued expenses185,337262,977
Current portion of long-term debt11,54027,966
Deferred revenue24,754308,704
Other current liabilities156,963 146,942 
Total current liabilities527,051907,881
Accrued solar module collection and recycling liability169,071166,277
Long-term debt265,823160,422
Other liabilities414,752 371,439 
Total liabilities1,376,697 1,606,019 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 104,289,617 and 104,034,731 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively104104
Additional paid-in capital2,767,9412,765,310
Accumulated earnings2,471,9712,462,842
Accumulated other comprehensive loss(12,210)(9,907)
Total stockholders’ equity5,227,806 5,218,349 
Total liabilities and stockholders’ equity$6,604,503 $6,824,368 
 

 

 
FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
March 31,
2017  2016
Net sales$891,791$876,068
Cost of sales807,607 598,457 
Gross profit84,184277,611
Operating expenses:
Research and development22,79930,187
Selling, general and administrative48,19967,503
Production start-up1,150
Restructuring and asset impairments20,031  
Total operating expenses92,179 97,690 
Operating (loss) income(7,995)179,921
Foreign currency gain (loss), net246(3,240)
Interest income6,4176,406
Interest expense, net(9,169)(4,642)
Other income, net25,861 35,553 
Income before taxes and equity in earnings of unconsolidated affiliates15,360213,998
Income tax expense(5,679)(28,031)
Equity in earnings of unconsolidated affiliates, net of tax(552)9,669 
Net income$9,129 $195,636 
Net income per share:
Basic$0.09 $1.92 
Diluted$0.09 $1.90 
Weighted-average number of shares used in per share calculations:
Basic104,103 101,853 
Diluted104,410 102,919 
 

Adjustments to Previously Reported Financial Statement from the Adoption of Accounting Standards Update 2014-09

The following table presents the effect of the adoption of Accounting Standards Update (“ASU”) 2014-09 on our condensed consolidated statement of operations for the three months ended December 31, 2016 (in thousands, except per share amounts):

 
Three Months Ended December 31, 2016
As Reported  Adoption of
ASU 2014-09
  As Adjusted
Net sales$480,434$(149,639)$330,795
Cost of sales416,845(93,898)322,947
Gross profit63,589(55,741)7,848
Operating loss(765,412)(55,741)(821,153)
Loss before taxes and equity in earnings of unconsolidated affiliates(776,451)(55,741)(832,192)
Income tax expense(89,707)33,654(56,053)
Equity in earnings of unconsolidated affiliates, net of tax146,298(8,843)137,455
Net loss(719,860)(30,930)(750,790)
 
Basic net loss per share$(6.92)$(0.30)$(7.22)
Diluted net loss per share$(6.92)$(0.30)$(7.22)
 

Non-GAAP Financial Measures

In the press release above, we provided non-GAAP earnings per share for the three months ended March 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 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 net 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
March 31, 2017
Net income$9.1
Restructuring and asset impairments20.0
Tax effect* (2.7)
Non-GAAP net income$26.4 
 
Weighted-average number of shares used for diluted earnings per share104.4
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, restructuring programs or litigation, 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
Charges1
Non-GAAP
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 the acceleration of our transition to Series 6 module manufacturing.

      
Reconciliation of Prior Non-GAAP 2017 Guidance to Prior GAAP 2017 Guidance
GAAP
Guidance
Restructuring
Charges1
Non-GAAP
Guidance
Operating Expenses$335 to $380$(55) to $(80)$280 to $300
Operating Income$(40) to $25$80 to $55$40 to $80
Earnings per Share$(0.80) to $(0.05)$0.80 to $0.55$0.00 to $0.50
 

1. $55 to $80 million of restructuring related charges associated with the acceleration of our transition to Series 6 module manufacturing.

 

View source version on businesswire.comhttp://www.businesswire.com/news/home/20170502006804/en/

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

Source: First Solar, Inc.

 

Anand Gupta Editor - EQ Int'l Media Network

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