First Solar Inc.
) reported adjusted second quarter 2013 earnings of 39 cents per
share, well below the Zacks Consensus Estimate of 50 cents by 22%
and 43.5% from the preceding quarter. The company's reported
number also saw a 74.3% decline from the year-ago period. The
shares declined 1.11% to $46.75 in New York, after the close of
regular U.S. trading.
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On a reported basis, adjusting for one-time items, earnings came
in at 37 cents in the reported quarter as compared to $1.27 per
share in the second quarter of 2012 and earnings of 66 cents in
the first quarter of 2013.
The considerable plunge in earnings reflects lower revenue
recognition from the AVSR project and lower sales volumes to
third-party module-only customers. Again, lower systems business
revenue recognition also led to the decrease that was partially
offset by higher manufacturing utilization and higher module
sales to third-party customers in the second quarter of 2013
compared to the second quarter of 2012.
First Solar's revenue for the quarter ending Jun 30 fell 45.7% to
$519.8 million from $957.3 million in the second quarter 2012,
missing the Zacks Consensus Estimate of $684.0 million. The
number also decreased 31.2% sequentially. This was primarily due
to tepid business project revenue and a tough year-ago
Gross profit in the reported quarter dropped significantly to
$140.1 million from $243.7 million in the year-ago period.
On the cost front, total operating expenses declined to $101.0
million from $104.1 million in the second quarter 2012.
First Solar reported $928.7 million of cash and cash equivalents
at the end of the second quarter, up from $901.3 million at
year-end 2012. Long-term debt was $255.8 million (including
current portion) versus $562.6 million at year-end 2012. The
debt-to-capitalization ratio was 5.8% in the reported quarter.
For 2013, the company cut its revenue outlook to the range of
$3.6 billion to $3.8 billion from the prior $3.8 billion to $4
billion. First Solar also slashed its earnings per share forecast
to the range of $3.75 to $4.25 from the prior range of $4 to
$4.50. The reduced expectation was mainly due to a plan to hold
onto projects longer than expected, and also due to higher
For 2013, the company has maintained its capex at $350 million to
$400 million. It expects its operating expenses to fall in the
band of $390-$410 million, operating income between $405-$435
million and the effective tax rate at 15% to 17%. Operating cash
flow will likely be between $0.8 billion and $1.0 billion.
Deal with General Electric
First Solar has struck a partnership deal with GE to develop
solar cells based on First Solar's thin film technology. Per the
agreement, First Solar will buy GE's own cadmium telluride solar
technology that will likely lift operating costs this year.
Cadmium telluride is a material found in solar cells. The company
will issue 1.75 million shares to GE as part of the deal, making
GE one of First Solar's biggest shareholders. General Electric
will hold the shares for at least three years.
This transaction enables First Solar to step up its cadmium
telluride manufacturing capabilities that will perk up its
overall solar production technology.
Separately, First Solar said it would acquire a 1.5 gigawatt
pipeline of projects in the United States and Mexico from
developer Element Power. The terms of the deal were however not
First Solar presently retains a short-term Zacks Rank #3 (Hold).
In the near term, we would advise investors to accumulate its
). SunPower sports a Zacks Rank #1 (Strong Buy), while ReneSola
carries a Zacks Rank #2 (Buy).