The turnaround of the solar market and fortunes of module producers is evident in the latest quarterly report of U.S. giant First Solar. With bookings for the year of 3.1 GW, the company says it will ship 2.9 GW in 2015, and has revised upwards some its key financial metrics for the year.
First Solars net sales increased by $375 Q/Q to $1.3 billion, primarily as a result of the majority sale of the 550 MW Desert Stateline project to NextEra Energy Resources, GE Energy Financial Services, and Sumitomo Corporation of America. The company has reported that gross margins on the project exceeded expectations.
First Solars 2015 financial guidance has been revised upwards across a number of metrics. Gross margin is forecast to come in at 24 to 25% for the year, up from 21 to 22%. Expenses are set to decline from $415 to $425 million to $395 to $405 million. Operating income is also being guided higher by the company, from $330 to $370 million to $450 to $490 million, while net cash balance guidance is also set to increase from $1.2 to $1.4 billion to $1.3 to $1.4 billion.
For Q3 2015, First Solar cited systems project cost decreases along with a decrease in module collection and recycling obligation, totaling $70 million, as behind its reductions in sales costs and operating expenses.
In a conference call announcing the results, First Solar CEO James Hughes expressed cautious optimism for the U.S. utility scale market beyond 2016, despite the scheduled Investment Tax Credit decrease.
Our total 1.7 GW of bookings since last earnings call are not only impressive in size, but also reflect some positive indications of utility-scale solar demand in the U.S. after 2016, said Hughes. Approximately 60% or over 1 GW DC of the total 1.7 GW DC booked are projects in the U.S. that have commercial operation dates after 2016.
One such deal for shipments post-2016 is a 400 MW module supply deal with Strata Solar for projects in the southeast of the U.S. Geographically, Hughes notes that the southeast is proving to provide good demand for First Solars modules and power plants, and in particular Texas. Along with this, the company reported growing demand across the southern states including Georgia, Mississippi, Tennessee in Florida.
While the markets of the South remain smaller than the west and southeast of the U.S., Hughes pointed to the technical performance of the companys thin film modules it hot and humid environments. The CEO claimed that First Solars CdTe technology was delivering a 5% energy yield surplus in hot and humid environments when compared to multicystalline silicon modules.
On the technology front, First Solar reported that its fleet average efficiency stands at 15.8% with a lead line efficiency of 16.5%. Earlier this year First Solar had reported a ‘champion module' efficiency of 18.2%, pointing to a major potential upside with its technology. It is currently rolling out efficiency upgrades across its entire production, in partnership with technology partners including deposition equipment provider Von Ardenne, however will first prioritize achieving full manufacturing utilization to meet strong demand.
In the third quarter, we had tremendous execution across all parts of the organization, which has resulted in strong results from a financial, bookings and technology standpoint, said Hughes.
First Solar did point to an ongoing tax matter that it is currently working to resolve, relating to an income tax matter involving one of its foreign holding companies. While CFO Mark Widmar did not provide details as to the matter, he indicated that it could cost the company $40 million and is not the result of an active audit or controversy with tax authorities.
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