First Solar Inc. (FSLR) surpassed the Zacks Consensus earnings per share (EPS) estimate of $1.16 by 17 cents to reach $1.33 in the first quarter of 2011. It, however, came below the year-ago quarterly EPS of $2.00.
The year over year downside came from lower average selling prices and higher expenses. This was partially offset by increased module production and lower module cost per watt. The downtrend was also visible vis-a-vis the sequential quarterly number of $1.80. Here the downside came from lower net sales and gross margin.
Operational Performance
First Solar’s quarterly revenues were $567.3 million, declining marginally versus $568 million in the year-ago quarter. The downside was mainly due to lower average selling prices of solar modules.
Average selling prices fell as the company allocated them to its ongoing solar projects in contrast to the comparable period in the prior fiscal where modules were sold in the open market. Reported quarterly sales however easily beat the Zacks Consensus Estimate of $552 million. Total operating expenses for the quarter rose 43% to $130.3 million from $90.9 million in the year-ago period.
In the reported quarter First Solar produced 407 megawatts, up 3% compared to the corresponding quarter in the previous year. The increase was driven by the ramp up of capacity in its Malaysian facility. The company’s module cost per watt in the first quarter was 75 cents flat versus the prior quarter. Overall core manufacturing costs per watt came in at 73 cents.
First quarter gross margin was 45.8%, down 290 basis points from the sequential quarter. The decrease was the result of more focus on systems sales, as well as lower average selling prices. This was partially offset by improvements in the conversion efficiencies. Module gross margin was 49.7% during the reported quarter, up 60 basis points quarter over quarter.
Overall net income came in at $116 million versus $172.3 million in the year-ago quarter. The decrease was primarily driven by reduced average selling prices and higher expenses, partially offset by increased module production and lower module cost per watt.
Financial Performance
First Solar reported $355.7 million of cash and cash equivalents at the end of the reported quarter down from $765.7 million at year-end 2010. Liquidity was impacted by capital expenditures, debt repayment and investment in ongoing solar projects. Long-term debt decreased to $103.5 million from $210.8 million at December 2010.
Outlook
Based in Phoenix, Arizona, First Solar designs, manufactures and sells solar electric power modules using a proprietary thin film semiconductor technology. The company's solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity.
First Solar’s growth story is marked by its utility-based order backlog and strong balance sheet. The company focuses on capacity build-outs, technological enhancements and cost minimization, enjoys technological superiority over its silicon-based solar peers.
For fiscal 2011, First Solar reaffirmed its sales guidance range of $3.7 billion – $3.8 billion. Fiscal 2011 earning per share guidance range is also reaffirmed between $9.25 and $9.75. We are currently Neutral on the Zacks #3 Rank stock. This is in line with its peers like the Ascent Solar Technologies Inc. (ASTI) and China Sunergy Company Ltd. (CSUN).
ASCENT SOLAR TE (ASTI): Free Stock Analysis Report
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