First Solar Inc.
) posted stellar third quarter 2013 results with adjusted
earnings of $2.28 per share, beating the Zacks Consensus Estimate
of 92 cents approximately by 148%. Earnings were up 79.5% year
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The significant year-over-year increase in earnings was driven by
higher systems business project revenues, increased manufacturing
utilization and higher module sales to third-party customers.
Including an asset impairment charge of 34 cents related to the
recently announced agreement to sell the facility in Mesa, Ariz.,
GAAP earnings came in at $1.94, up from $1.00 in the prior-year
quarter. In Oct 2013, the company had entered into an agreement
to sell its Mesa facility.
First Solar's revenues for the quarter jumped 50.8% year over
year to $1,265.6 million. The significant year-over-year increase
is attributable to the Desert Sunlight and ABW projects and
higher sales volume to third-party module-only customers. These
positives were partially offset by the absence of initial revenue
recognition for the Topaz project that was accounted for in the
third quarter of 2012. The top-line figure surpassed the Zacks
Consensus Estimate of $961 million by 31.7%. Revenues grew 143.5%
Gross profit in the reported quarter was $364 million, up 52.5%
year over year.
Total operating expenses increased 18.6% year over year to $156.1
million. The increase was more than offset by improved revenues,
thereby resulting in an operating income of $207.9 million, up
94.2% year over year.
First Solar had $1,192.6 million of cash and cash equivalents at
the end of the third quarter, up from $901.3 million at year-end
2012. Long-term debt decreased to $168.9 million from $500.2
million at year-end 2012.
For 2013, First Solar cut its revenue outlook to the range of
$3.4 billion to $3.6 billion from the prior $3.6 billion to $3.8
billion. However, the company increased its earnings per share
forecast to the range of $4.25 to $4.50 from $3.75 to $4.25.
The company has decreased its capital expenditure forecast to a
range of $300 million to $350 million versus its prior
expectation of $350.0 million to $400.0 million. It maintained
its operating expenses forecast in the band of $390.0-$410.0
Deal with NextEra Energy Resources
First Solar announced that it has struck a deal with NextEra
Energy Resources, a subsidiary of
NextEra Energy, Inc.
) simultaneously with its earnings release. Per the deal, First
Solar will sell its Silver State South Solar Project to NextEra
Energy. Spread across approximately 3,000 acres of public land in
Clark County, Nev., the project has an electric generation
capacity of 250 megawatt (MW).
At the Peer
) posted third quarter 2013 adjusted earnings per share of 33
cents compared to a loss per share of 5 cents in the year-ago
quarter. Earnings also comfortably surpassed the Zacks Consensus
Estimate of 24 cents.
First Solar's top and bottom lines succeeded in beating the Zacks
Consensus Estimate. Also, both the parameters experienced year
over year increase thanks to higher module sales to third-party
During the quarter, the company made additional bookings of 860
MWdc and made significant reductions to module manufacturing
cost. Going forward, these initiatives would continue to
strengthen the company's position while helping it to maintain
the current surprise and year-over-year trend.
Moreover, the sale of Mesa facility would provide additional
liquidity in the form of cash sale proceeds of approximately $115
million and is expected to curtail annual operating expenses of
approximately $10 million. The company expects to receive the net
cash proceeds from the sale in the fourth quarter of 2013.
The solar industry continues to face a challenging business
environment as a result of intense pricing competition. The
structural imbalance between higher production capacity and
global demand currently as well as in the near term is expected
to continue. This would, therefore, put pressure on pricing and
affect results through the remainder of 2013 and into 2014.
First Solar presently has a short-term Zacks Rank #3 (Hold). In
the near term, we would advise investors to accumulate its
short-term Zacks Rank #2 (Buy) peer