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First Solar slips into Q2 loss, updates 2018 guidance


First Solar slips into Q2 loss, updates 2018 guidance

July 27 (Solar) – First Solar Inc (NASDAQ:FSLR) on Thursday reported a second-quarter (Q2) net loss and updated its 2018 guidance, narrowing the expected range of net sales.

The revised 2018 forecast also reflects a decrease in gross margin due to near-term increases in the cost per watt of its Series 6 products. Projections for earnings per share (EPS) remain unchanged due to lower operating costs and other items that offset the revised gross margin forecast.

The table below shows First Solar’s previous and new forecast for 2018.

2018 GAAP Guidance (in USD, unless otherwise noted) Old New
Net sales 2.45bn-2.65bn 2.5bn-2.6bn
Gross margin (%) 21.5-22.5 20.5-21.5
Operating expenses 400m-410m 390m-400m
Operating income 130m-180m 120m-160m
EPS 1.50-1.90 Unchanged
Net cash balance 2bn-2.2bn 2.2bn-2.4bn
Operating cash flow 0m-100m 100m-200m
Capital expenditures 850m-950m 800m-900m
Shipments (GW) 2.9-3.0 2.8-2.9

First Solar said it enjoys “solid” customer demand for its Series 6 products as contracts for almost 900 MW of capacity were signed since its previous earnings update in April. The company has launched first commercial shipments from its Malaysia manufacturing facility and last month broke ground on a 1.2-GW factory in Ohio, planned to become operational in late 2019. The Series 6 modules are also made in Vietnam.

“With two factories now producing Series 6 modules and a third factory on the cusp of starting production we have made significant progress during the past quarter, said CEO Mark Widmar. He went on to say that First Solar has year-to-date bookings of 4.1 GW in direct current (DC) and total contracted volume of 10.9 GW extending to end-2020, providing the company with “good visibility to future demand.”

The thin-film solar modules maker closed Q2 with a net loss of USD 48.5 million (EUR 41.6m), against a profit of USD 52 million a year before. Net sales marked a decrease to USD 309.3 million from USD 623.3 million in the second quarter of 2017 and from USD 567.3 million in January-March 2018 as a result of decreased system and third-party module sales and lower gross margins. The company also noted its system sales suffered from the timing of certain project sales.

More details about the Q2 performance can be seen in the table.

Figures in USD Q2 2018 Q2 2017
Net sales 309.3m 623.3m
Operating profit (loss) (103.6m) 13.9m
Net profit (loss) (48.5m) 52m
Earnings (loss) per diluted share – diluted (0.46) 0.50
Gross margin (%) (2.6) 17.8

Cash and marketable securities at the end of June stood at USD 3.1 billion, an improvement from USD 2.9 billion at the end of the first quarter. The increase came mostly due to the cash from the sale of renewables yieldco 8point3 Energy Partners LP (NASDAQ:CAFD) to an equity fund managed by Capital Dynamics Inc in June but was partly offset by investments in Series 6 production capacity.

(USD 1.0 = EUR 0.858)

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