First Solar Inc. (FSLR) reported third quarter 2011 results with earnings of $2.25 per share, 42 cents below the Zacks Consensus Estimate of $2.67. Earnings were, however, 10.3% higher than $2.04 earned in the year-ago quarter.
Operational Performance
First Solar’s quarterly revenues were $1.005 billion, up from the year-ago revenue of $0.797 billion. The top line also failed to meet the Zacks Consensus estimate of $1.022 billion.
Cost of sales increased to $626 million in the quarter to $476 million in the year ago quarter.
Third quarter gross margin was 37.7%, down from 40.3% in the third quarter 2010, contracting 260 basis points.
Total operating expenses for the quarter rose 41.9% to $156.4 million from the year-ago period driven by higher research and development cost, selling, general and administrative expenses as well as higher production start-up.
Overall net income came in at $196.5 million, up 3.5% year over year.
Financial Performance
First Solar exited the third quarter with $678.6 million of cash and cash equivalents, down from $765.7 million at the end of 2010. Long-term debt increased to $582.7 million at third quarter end from $210.8 million at the end of 2010.
2011 Guidance
The company expects net sales of $3.0 to $3.3 billion.
Operating income in projected to a range of $650 to $760 million.
The company estimates manufacturing start-up expenses of approximately $35 million and factory ramp costs of $10 to $12 million.
Earnings per share in projected in the range of $6.50 to $7.50.
The quantitative Zacks #5 Rank (short-term Strong Sell rating) for First Solar indicates downward pressure on the stock over the near term.
Headquartered in Tempe, Arizona, First Solar Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology.The company competes with Suntech Power Holdings Co. Ltd. (STP).
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