First Solar charts modest 2016 growth

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U.S. solar PV thin film giant, First Solar has released its guidance for 2016. No big news was announced, with stable growth projected across the board.

During the conference call, CEO, Jim Hughes outlined three main strategic priorities for next year, including increasing total cash position to over US$2.6 billion by the end of the year, and achieving an earnings per share guidance midpoint of $4.25. Up from the $1.3 billion to $1.4 billion expected in net cash this year, First Solar aims to achieve $2 billion to $2.3 billion. A profit of $4.00 to $4.50 a share is anticipated, meanwhile, similar to the $4.30-$4.50 forecast for 2015.

Another priority for the company is to continue "operational execution in both the module and EPC businesses." To this end, First Solar has said it will almost double 2016 CAPEX spending to $300 million to $400 million, and increase module production by around 20% to 3 GW via higher conversion efficiency improved throughput and output from the two lines that began ramping this year. Capacity levels will be looked at again in H1 2016, said Hughes, to evaluate future levels. Furthermore, the company aims to complete 2 GW ac of large-scale solar PV projects before the end of next year.

Overall operating income is forecast to be between $260 million to $330 million, significantly down on the $450 million to $490 million expected for 2015, while at $380 million to $400 million, operating expenses will be slightly less than 2015, which are set to be $395 million to $405 million. 2016 gross margin is forecast to be down on 2015 (24 to 25%), at 16 to 18%.

The third priority is to achieve a book-to-bill ratio of "at least" 1:1. "While we will not have a full update on the latest bookings during today’s call," said Hughes, "we expect over the coming quarters that a significant portion of projects booked during 2016 will be for international projects."

Overall, 2016 shipments are expected to reach 2.9 to 3 GW, similar to the 2.9 GW forecast for this year. Also similar to 2015, First Solar expects to see the majority of 2016 shipments going to its systems segment, with the remaining volume going to module only sales. Net sales of $3.9 billion to $4.1 billion are anticipated, up slightly from the $3.5 billion and $3.6 billion expected this year.

"…we now have over 75% of next year’s available supply already contracted," continued Hughes, adding "As highlighted on our previous earnings call in October … we had over 17 gigawatts of potential bookings opportunities including 3.9 gigawatts of mid to late stage projects. With a large number of mid to late stage projects, we remain well-positioned to contract the remaining 2016 supply and book additional volume into 2017 and beyond."

Regarding its joint yieldco with SunPower, 8point3 Energy, which reported strong results in its first quarterly earnings, First Solar said that its plans for 2016 are to drop down four assets – Kingbird, Stateline, Koyama and Moapa – which were all on the ROFO list announced at the launch of the yieldco. "Kingbird is expected to be drop [sic] down in the first quarter of 2016. The remaining assets in the second half of the year," said CFO, Mark Widmar.

He added that for the time being, the yieldco will stay focused on the ROFO assets. The balance of the four mentioned will hopefully be sold to third-parties, said Widmar. Responding to a question of if financing were not available, he added a "broad set" of customers are "perfectly capable and desirous" of acquiring assets from First Solar.

The company made reference to the scheduled U.S. Investment Tax Credit (ITC) step down on December 31, 2016, from 30% to 10%, saying it expects the reduction to go ahead, and has planned for this. In its Q3 earnings, CEO, Hughes expressed cautious optimism for the U.S. utility scale market beyond 2016. Deutsche Bank also recently supported the company’s ability to develop projects in the U.S.

First Solar avoided providing any guidance for 2017. On the back of the updated 2016 guidance, Bloomberg reported that the company’s shares fell 8.1%to $54.30, after the close of regular trading in New York.