First Solar reports higher net sales

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The company reported second quarter net income of $1.27 per fully diluted share, compared to a net loss of $5.20 per fully diluted share in the first quarter of 2012, and net income of $0.70 per fully diluted share in the second quarter of 2011. Q2 2012 was impacted by pre-tax charges of $36 million (reducing EPS by $0.39), relating to restructuring and certain costs in excess of normal warranty.

Based on reductions in First Solar’s ongoing cost structure related mainly to restructuring initiatives, the company increases its 2012 guidance to:

  • Net sales of $3.6-$3.9 billion, compared to prior guidance of $3.5-$3.8 billion; and
  • Earnings per fully diluted share to $4.20-$4.70, compared to prior guidance of $4.00-$4.50, in each case excluding restructuring and impairment charges, and certain costs in excess of normal warranty expense.

In a conference call this week, CFO Mark Widmar said that some of the Malaysia and Perrysburg lines will continue to idle and be updated. He added that for the second half of the year, in response to higher demands, First Solar will increase production and run its plants at 90 percent capacity utilization.

Widmar added that the company’s net debt decreased by $345 million from the end of the first quarter primarily due to repaying outstanding balances of its German facility agreement and repaying a portion of their revolving line of credit. "First Solar is in a strong financial position currently to navigate the current market turbulence," Widmar stated.

First Solar’s CEO, Jim Hughes said the global market remains in an oversupply situation. With the bankruptcy announcements and subsidy cuts in European markets, the company is taking a new strategy path for sustainable growth and moving to emerging markets as well. This will take some time to develop. Hughes added, "Sustainable markets are those with the fundamental need for energy and where public budgetary financing in the form of subsidies or other incentives are not required to create demand."

First Solar has also started to execute on such strategies. The company aims to capture 30 percent market share in Australia where the utility scale PV market is taking off. First Solar has already announced plans with AGL to develop 159 MW in Australia. It is also actively bidding on other projects. In India, First Solar is expecting to win 20 percent of the market. It is also establishing a local presence in these markets.