First Solar, Inc. (FSLR) on Q1 2021 Results - Earnings Call Transcript
Operator: Good afternoon, everyone, and welcome to First Solar's First Quarter 2021 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investor.firstsolar.com. As a reminder, today's call is being recorded. I would now like to turn the call over to Mitch Ennis from First Solar Investor Relations. Mr. Ennis, you may begin. Mitch Ennis: Thank you. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its first quarter 2021 financial results. A copy of the press release and associated presentation are available on First Solar's website at investor.firstsolar.com. Mark Widmar: Thank you, Mitch. Good afternoon and thank you for joining us today. I would like to start by thanking the First Solar team for delivering a solid first quarter. Our operational and financial results were strong and market demand for our Series 6 technology continues to be robust. Operationally our second Series 6 factory in Malaysia exited its ramp period. Nameplate manufacturing capacity has increased to 7.9 gigawatts and we're now consistently producing 455 watt modules. Commercially, we have secured 4.8 gigawatts of year-to-date net bookings which include 2.9 gigawatts since previous earnings call. Financially, we reported module segment gross margin in line with our Q1 guidance and earnings per share of $1.96 which includes the completion of our US project development and North American O&M business sales. Overall I'm pleased with our strong start to the year which has positioned us to deliver our annual earnings per share guidance. Turning to Slide 3, I will provide an update on our Series 6 capacity ramp and manufacturing performance. Despite unplanned downtime caused by winter storms in Ohio and a temporary logistic driven billing material shortage in Malaysia along with planned downtime for throughput and technology upgrades which combined adversely impact cost for watt by approximately half a penny. We delivered strong manufacturing results for the first quarter. On a fleet-wide basis in March and in April month-to-date, megawatts produced per day was 20.2 and 22 which represents a 17% and 27% increase compared to December 2020. Capacity utilization was 92% and 99% despite being impacted by the aforementioned planned and unplanned downtime. Manufacturing yield of 96.7% and 97.4% continues to show strength in light of the ramp of our second Series 6 factory in Malaysia, which achieved manufacturing yields of approximately 93% and 97%. Alex Bradley: Thanks Mark. Starting on Slide 7, I'll cover the income statement highlights for the first quarter. Net sales in Q1 were $803 million, an increase of $194 million compared to the prior quarter, an increase in that sales is primarily due to an increase in systems revenue driven by the sales of Sun Streams 2, 4 and 5 project. On second basis, our module segment revenue in Q1 was $535 million compared to $548 million in the prior quarter. And that was given assumptions to project within construction at the time of sale, the majority of the module recognized the revenue in the systems segment. Gross margin was 23% in Q1 compared to 26% in Q4 of 2020. Systems segment gross margin was 31% in Q1 compared to 18% in Q4 of 2020 and this increase was primarily driven by the aforementioned project sales in Q1. Despite the aforementioned delay in certain module delivery as well as higher expected logistics costs. Our Q1 module segment gross margin was 19% which was in line with the guidance we provided on the prior earnings call. Our module segment gross margin in Q1 includes $1 million of charges associated with the initial ramp from manufacturing in Malaysia and $4 million of underutilization expense stemming from plan downsized throughput technology upgrades. Ramping on the utilization expense in total reduced module 7 gross margin by approximately 1%. Also as a reminder sales freight and warranty are included in our cost of sales and reduced module segment gross margin by 8 percentage points in Q1 compared to 7 and 6 percentage points in Q4 and Q3 of last year. Despite utilizing contracted routes, minimizing changes and using a distribution center, we incurred higher rates during Q1. These are constrained container availability yin the global shipping market. SG&A, R&D and startup totaled $72 million in the first quarter, a decrease of approximately $13 million compared to prior quarter. This decrease is primarily driven by $6 million decrease in development project impairment charges between Q1 and Q4 of 2020 and lower share-based compensation expense in Q1, which was partially offset by $2 million in liquidated damages related to US development asset in Q1. Production startup which is included in operating expenses totaled $11 million in the first quarter, a decrease of $5 million compared to the prior quarter. This decrease is driven by the start of production of our second Series 6 factory in Malaysia in February. We also acknowledged the wide spread use of non-GAAP financial measures across financial markets. We recognize the certainty and comparability that consistently providing historical financial and guidance on a GAAP basis comparing to analyst and investors. However, we also appreciate the need to understand non-cash and certain one-time cost in calculating valuation metrics and will therefore as appropriately continue to highlight many of these items. In this context, Q1 operating income is $252 million which included depreciation and amortization of $63 million, share based compensation is $3 million, ramp underutilization and production startup expense totaling $16 million and a gain on the sales of our US project development and North American O&M businesses were $151 million. In Q1, we realized $12 million gain on the sales of certain marketable securities associated with our end-of-life module collection recycling program within the other income line on the P&L. We recorded tax expense of $46 million in the first quarter compared to a tax benefit of $66 million in the prior quarter and the increase in tax expense in Q1 is attributable to an increase in pre-tax income and a discrete tax benefit in Q4 of 2020, $61 million associated with the closing of the statute of limitations on certain positions. Combination the aforementioned items first quarter earnings per share $1.96 compared to $1.08 in Q4 of 2020. Turn to Slide 8 to discuss balance sheet items and summary cash flow information. Our cash, cash equivalents, marketable securities and restricted cash balance ended the quarter $1.8 billion which was largely unchanged compared to the prior quarter. Several factors impacted our quarter end cash balance. Firstly, while we completed the sale of our US project development business and certain equipment on March 31 for an aggregate transaction price of $284 million. The proceeds from the transactions were received in early April. Secondly as previously mentioned, we sold certain restricted marketable securities associated with our end-of-life collection recycling program for total proceeds of $259 million and whilst the intent to subsequently reinvest these proceeds as of quarter end, they were included on the balance sheet as restricted cash. Thirdly, whilst we also completed the sale of our Sun Streams 2, 4 and 5 project during the quarter due to the contemplated payment structure. The closing of these transactions did not have a significant impact on our quarter and cash balance. And finally, the proceeds received from the sale of our North American O&M business were offset by operating expenses and capital expense in Q1. Total debt at the end of the first quarter was $257 million, a decrease of $22 million from the end of Q4. This decrease was driven by payment of loan balance matured during Q1 and partially offset by loan drawn down from projects in Japan. And as a reminder, all of our outstanding debt continues to be project related and will come off our balance sheet when the corresponding project is sold. Our net cash position which includes cash, cash equivalents, restricted cash and marketable securities less debt, increased by approximately $25 million to $1.5 billion as a result of aforementioned factors. Net working capital in Q1 which includes non-current project assets and excludes cash and marketable securities increased by $423 million compared to the prior quarter. This increase primarily driven by $472 million increase in accounts receivables related to our US project development business and our Sun Streams 2 sales which is partially offset by decrease in project assets. Net cash used by operating activities was $279 million in the first quarter which includes the aforementioned increase in accounts receivable relates to the payment timing of our US project development business and Sun Streams 2 sales. And finally, capital expenditures were $90 million in the first quarter compared to $89 million in the prior quarter. Continuing on Slide 9, I'll next discuss 2021 guidance. Our Q1 earnings provided positive stock for the year. But we're leaving our EPS guidance unchanged for time being largely due to the following reasons. Firstly, also the time of prior earnings call we anticipated the gain on sale of our US project development in North American O&M businesses of $135 million to $150 million. At closing, we recognized a pretax gain of $151 million. Secondly, the fifth round of our second Series 6 factory in Malaysia. The factory quickly exited its ramp period. For the result, we anticipated reduction in our full year ramp expense which we anticipate will be partially offset by an increase in production start-up expense. Thirdly, we also have strategies in place to mitigate the potential negative effects of higher cost including sales rate and aluminum. The functions about these costs and our mitigating strategies are impacted in our 2021 guidance. Finally, the February earnings call, we anticipated sales trade will reduce our full year 2021 module segment gross margin by 7 to 8 percentage points whilst we continue to mitigate the effect of high shipping through improved efficiency, expansion while distribution network and implement of Series 6 plus. We currently anticipate sales reg will reduce our 2021 module gross margin by 7.5 to 8.5 percentage points, 50 basis points increase from the prior earnings call. Also whilst the hedge we put in place mitigated some of the effect of high commodity price, uncertainty relating to future cost is considered in our low end of our guidance range. Whilst we're facing near term cost challenges predominantly related to sales trade. Our confidence related to our previously disclosed mid-term, cost per watt reduction roadmap remains unchanged. These factors in mind. We're updating our 2021 guidance as follows; our module segment revenue guidance of $2.45 to $2.55 billion is unchanged. Our updated net sales guidance is $2.85 billion to $3.025 billion which reflects $25 million increase to high end of systems revenue guidance. Our module segment gross margin guidance $565 million, $615 million which represents a $15 million and $10 million reduction respectively to the low and high end of our previous guidance range. This revision reflects our current expectations related to commodity and sales rate cost which is partially offset by reduction in ramp related expense. Note, the results of these cost we anticipate our Q4 module segment gross margin with approximately 25%. This anticipate module segment gross margin includes $10 million of underutilization expenses related to factory upgrades which is expected to reduce module segment gross margin by approximately 2%. We also anticipate approximately 60% of our module segment gross revenue for the year will be recognized in the second half of the year. Our updated system segment gross margin guidance with $130 million to $160 million which reflects $10 million increase to the high end of the range due to the potential recovery at system cost. A portion of which we've already received. We anticipate the majority of our remaining full year systems segment revenue and gross margin will be recognized in the second half of the year. Otherwise, total gross margin is $695 million to $757 million which reflects the $15 million decrease to the low end of the range. SG&A and R&D expenses have been lowered by $5 million to wide range to $265 million to $275 million. Production startup expenses increased by $5 million and as a result operating expense guidance range of $285 million to $300 million is unchanged. Operating income guidance $535 million to $640 million in unchanged. It includes anticipated depreciation amortization of $263 million, share based compensation of $21 million, ramp underutilization of production startup expense totaling $61 million to $66 million. And a gain on the sale of our US project development in North American O&M businesses $151 million. Our tax guidance of $100 million to $120 million is unchanged and includes approximately $34 million of expense related to the sale of our US project development and North American O&M businesses. Earnings per share guidance $4.05 to $4.75 remains unchanged and our net cash, capital expenditures and shipments guidance also remain unchanged. Turning to Slide 10, I'll summarize key messages for call today. Financial sectors, with a strong Q1 EPS and $1.96, module segment gross margin in line with our Q1 guidance and reiterated our 2021 EPS guidance range of $4.05 and $4.75 per share. Operating, second Series 6 factory exited its ramp period and our nameplate manufacturing capacity increased to 7.9 gigawatts. Additionally as a result of continued execution we're on track to achieve our target 11% cost per watt produced reduction between the end of fourth quarter of 2020 and 2021. And finally, Series 6 demand has been robust with 4.8 gigawatts year-to-date net bookings which includes 2.9 gigawatts since the previous earnings calls. And with that, we conclude our prepared remarks and open the call for questions. Operator: your first question is from Philip Shen with ROTH Capital. Philip Shen: The first one is on pricing. I know Mark, you gave some detail on the decrease of 11% year-over-year in 2022 with the bookings you have. But crystalline silicon pricing is up meaningfully, our checks are for pricing at $0.35 to $0.38 level at the spot market and so how is that impacting your discussions, how much of that can you benefit from? And then just my second question here as it relates to capacity. Was wondering if you could provide a little bit more color India was on the roadmap for a bit, with COVID problems there I can imagine, India is off the table. So what variable are you using and thinking about as you consider locking in as expansion in a decision? Do you need more clarity from the Biden Administration and I know it's going to come on in Q2? But some initial color there will be fantastic. Thanks. Mark Widmar: Phil, first on the pricing environment. Clearly, we've seen pricing from up - as we look across horizon whether it's not a lot of volume for occurring. But at the extent we had US available supply and current use. You'll see from our pricing. But your eventual look across the horizon and to 2022, 2023 and 2024. The one limiting factor that you know relative to the number that you referenced is that, there's - in the US in particular the projects that people have bid are under significant pressure really from all dimensions. And ultimately it all come down, an affordability, although there's going to be a number of these project that just not going to happen because when you look at the general cost pressures that they're seeing, just commodity cost pressures, right? When steel going up, aluminum going up, copper going up. You're seeing pretty much the entire balance system labor cost under pressure as well. It's pretty strange in all these projects and one of things we got to be mindful of it. We price across the horizon. It still has to fundamentally work within a customers pro forma, their financials have to work. And so to, to try to go out and capture the highest potential price point. I'm not sure it's going to serve us the best when it comes to ensuring the viability of the project. And so we've been trying to work with very capable well financed counterparties and having high certainty and quality of the execution of the projects which form our views around certainty of execution, we need to make sure that the economics on pricing works. The other thing I would say that falls into the equation is the, our confidence around our cost reduction roadmap. So as to look to our cost reduction roadmap we are very happy with where we are and the opportunities that still in front of us to drive cost down meaningfully lower than where it is right now. The one piece of the cost structure that is not as robust inability to control, they were highlighting right now a sales trade. But as we're looking forward into these new contracts. We're putting variable structures and there around sales trade such that we're not carrying that risk profile. The customer is going to share in that and to the extent the sales trade environment phase similar to where it's right now then there's pass through at that cost with slightly different dynamic than what we had historically. So those variables all factor in how we price it. There's an opportunistic moment right now. We look to ourselves as establishing deep partnership in relationships with our own customers. Customers that we now have capabilities and execute and try to create a solution that works for both parties in that regard. As it relates to the capacity expansion, look India is going through horrible time right now. I mean you see cases there closes 400,000 a day I mean which is horrific but I don't want you to think that because of that, we're confident that with the help India will continue to receive from international partners and allies like United States and others. This will be a difficult challenge. We'll have to get through but they'll get through it. And we're still evaluating India very significantly as a growth market for us. We look at the technology and competitiveness of the technology in India, it's ideally suited. When you have CdTe cell technology especially with CuRe and improved long-term degradation rate, hot, humid climate. Mainly fixed tilt structures, mainly model facial therefore for the true value uplift we get from the CuRe against monofacial realizes itself and then higher ASPs. The fact that the duties that have been imposed right now for imports, makes even more critical for us and say how we address that market, even the events are the approved list of module manufacturers is another constraints to access in either markets. India is a very important market for us. US we're very well positioned to - we've got - already when we stayed in Ohio, we had an option on, actually purchased additional land that would accommodate a large facility. The current savings and commitments that we're seeing from the administration positive. But unfortunately slow back in some regards so that is little frustrating. But generally think pretty good undertones for enabling our work past of the year, our most important market in. As we highlighted in the call sale trade being closed to market. You can take a penny or so, a cost up from sales trade, right to drive across down even more competitive. So that's how important. The only thing I would say to make sure it's clear so is that, the other thing they were doing is that, the next factory or factories. Will be larger than anything we have today and they will be our most advanced and competitively positioned product and, in some case, we're also going to further enhance automation and through the factory process. So it's going to be best product, highest performing, lowest cost that will be said function and proven from where we're right and so that's taking a little bit more time to validating, solidifying all that, that worked to get comfortable with that. We've been spending a lot of time. I wanted to make it clear in the call that we will be making a final decision by the July earnings because I know it's something we continue get asked questions around. We're pretty advanced in our evaluation. To extent we make the decision to move forward and if you hit all the criteria's that we highlighted, then we'll make sure we make that announcement in July if we chose not to do it. Then we'll provide the direction that we're going to move forward in lieu of that. So yes, lot of good work being done right now. But we want to make sure whatever we do, is that we really create again competitively, its damage, disruptive product from where we're right now. Alex Bradley: So just one thing I'll add on the ASPs, is that for the deals we're booking right now these are deals that we've likely been in discussion with customers on calls, many months and I think the phenomenon you're seeing around crystalline silicon is pricing come relatively recently, whilst I'm sure many of our competitors will have taken the opportunity to reneged on pricing that was perhaps put out as as Mark said, we look for long-term relationships - customers we chose not to do that. So we've held pricing despite what we're seeing in the market. I just wanted to make that point also. Operator: Your next question is from Michael Weinstein of Credit Suisse Securities. Michael Weinstein: Do you have any potential plans to produce a residential product getting continuous efficiency improvements? I was thinking perhaps the tandem junction product you mentioned. Mark Widmar: Yes, that product will be ideally suited for that type of application. So it's going to be highest efficiency, best energy profile and that would be - we would target segments as a market that will pay a premium for the efficiency and residential would be primary market for that. And so as further along and commercializing that and scaling up that technology. Yes, I think it expands in a market segment that today we historically not sold into. But there'll be other high efficiency markets that will love to in terms of land constraint and other challenges that you have to deal with where our efficiency product would be advantageous. But yes, residential would be one. Michael Weinstein: That's great. Just a follow-up on the call couple questions you were asked. You answered about optionality and pricing. How about tariffs? How do you deal with the possibility there might be additional tariffs? Or tariffs might be going away in your pricing going forward like out for 2022, 2023, 2024? Mark Widmar: I've kind of alluded to this for a while. I mean we haven't really been - if the issue is tariffs on competition or tariffs on owned product. I mean assume, tariffs that were imposed on crystalline silicon, . Unfortunately after the first 16 months being implemented the tariff went away because the bifacial exemption and yes and that's been reinstated, I guess late last year. But most of what we had already sold really through from whenever it was June 2019 until now. It hasn't really been influenced by tariff, the 201 tariffs because of the bifacial exemption and product coming in from Southeast Asia into the US market without having to pay tariffs. The fact that it was then re-imposed late last year really didn't change much for us either because most of our 21 filing was already sold through at that point. We try to continue to manage and develop relationships and partnerships and even with the 201 were first imposed. It wasn't like we took that as an opportunity to gouge our customers. It doesn't service any good. We're still in the early innings of this industry and the relationships that we establish and the trust that we create with our partners will determine each of our success in over the next decades to come. So yes, they can influential. We do believe that they're important. But we also do believe that there's a need to have additional US manufacturing capabilities and tariffs can help enable that. But it's not something we feel that we would try to take advantage of. As it relates to, if our product were to be - a product that we import from Southeast Asia manufacture somehow would be subject to tariffs and we have provisions within our contracts to try to address those types of events and circumstances if they were to occur. My assumption from your question was just really more related to tariffs relative to our crystalline silicon competitors. It informs the thought around pricing. But we would never want to take it as an opportunity to gouge our customers. Operator: Your next question is from J.B. Lowe with Citi. J.B. Lowe: I just wanted to circle back on the project economics comment that you made, Mark. Because we're seeing kind of the same commentary from the crystalline silicon guys that. They would like to push pricing higher given all their cost issues on the polysilicon side. But they're getting push back from customers who - the economics are pretty thin on their front. So they're not having success pushing through prices increases. So there's that. but I'm also wondering, is there anything in your backlog that you think is more at risk than anything else just given that maybe some of the products in your backlog have some of those thin margins? Just wondering what you're thinking about that. Mark Widmar: Look again when we price those modules, they all aligned up to pro forma financials that would work for the end customers. Now to the extent that they have a price pressures that they're going to be seeing across their supply chain, not a cost increases and things like that yet. It potentially is that drive, thinner margins on their part. It could happen. But as we said before our pricing for our contracts our firm obligations would security behind them. We have not seen that event happening relative to issue our customers are incurring or there's any discussion in that regard. What we try to do, we try to find customers that they value the certainty of working with First Solar and also working with counterparties that we can trust as well and honoring against their commitment and we've been pretty successful in doing that. When things get evolved differently. But what I will say right now is, when you try to think through a balanced relationship and trying to ensure certainty that certainty has to go both ways, gets our commitments and our customers to accept their commitment they made as well when they contract you for the modules. Operator: Your next question is from Moses Sutton of Barclays. Moses Sutton: Of the 2.9 booked, 2.9 gigawatts since last call. Would you include the recently signed Sun Streams projects? How much of that 2.9 originated from pure third-party module pipeline versus something that was originally in systems? Mark Widmar: So with the Sun Streams, the Sun Streams module volume when you say systems, was not part of the systems sales. I want to make sure that clear, right. So that was a module. Moses Sutton: I mean part of the systems pipeline originally. Mark Widmar: Were really Sun Streams 3, 4 and 5 was never part of the systems pipeline. 3 got terminated, right? But most of that volume was not part of the systems pipeline. But in terms of and Alex you may know this one, in terms of the module volume that when we sold how much of that was included in the 2.9? Alex Bradley: About three quarters of gig. Mitch Ennis: 744. Alex Bradley: About three quarters of a gigawatt. Mark Widmar: So the 29744 and Moses, I know it's not part of the actual number. But I also want to make sure, since you asked the question. The other gigawatt that we just booked today 3.9 was not at all tied to the systems business. So if you look at it, we've got 3.9 gigawatts that were booked since the last earnings call and about 707 megawatts would have been tied into business . Moses Sutton: Got it. And then do you think your panel weight against the freight cost per watt are the same first currency refix before the new initiatives then for an average or common mono-PERC, probably competitor. We noticed the virgin claims made by some buyers. Mark Widmar: Moses, can you repeat the question one more time? The weight I got that, make sure I understand your question. Moses Sutton: So really freight cost per watt, your panel versus an average mono-PERC. I know they're all different. Would you say they compare or higher freight cost typically? Mark Widmar: What we're seeing right now because of large form factors, how we're seeing modules now that are like three square meters and alike, they're even shipping them vertically. Those cost of sales freight for those products are going to be much higher than where we're right now. So if you looked at where we would have been again for the - let's say the two-meter square form factor which was the standard before now there's variance all over the place. We would have been slightly higher and mainly because of we wait out on a container. So they would actually be able to get more modules onto a container than we would and they had a slightly higher efficiency. But now if you go to bifacial glass, larger form factor. What's actually happening is they're creating a disadvantage on a freight cost for themselves. Operator: Your next question is from Brian Lee with Goldman Sachs. Brian Lee: I had two, one on systems and just one on kind of the cost reduction path. First on the systems, Mark you said there is - there's $130, $160 million in gross profit this year in the guide. Just wondering after all the divestiture here recently how much of any there's left pretty monetized in 2022 and then if there's any Japan in the near to medium term, you're kind of you phrased it as like three to five-year opportunity. Just wondering if there's anything in the next one to two years there. And then on the cost reduction side, you mentioned 11% reduction in ASPs for 2022 bookings at the moment. Cost reductions have been at that level or below it seems like so just wondering, is there a scenario in which you kind of start to accelerate that and maintain a stable gross margin on modules given, you're starting already 11% in the whole if you will on the pricing side adding into next year. Thanks guys. Alex Bradley: On the systems side, how we guided to the 132, 160 num fee. There's a valid $80 million recognized in Q1, $60 million to the midpoint from rest of the year. Most of that comes from Japan. You're going to see that happen in the second half of the year. And then if you look through the on lag, you can think about there being a little bit of Japan, here it's potentially more sort of out. But you're going to see Japan coming over the next three to five years. So you'll see an impact every year out of there. On the cost side, on cost per watt. I think we talked about 11% cost per watt reduction on produced basis for the year. So we see a production number that's matching. But we see in terms of decline on ASP and obviously that's on a percentage basis on lower number. You're going to have a little bit gross margin squeeze if you have the same reduction from an ASP in a cost per watt size. The other thing to bear in mind and mark my words, totaling more in the cost, rather stay on the OpEx side. We talk a lot about gross margin. I think it's important that we match that gross margin or continue to beat it. But one of the benefits of scale and one of the things we're talking about in terms of expansion and looking at manufacturing capacity is the ability to leverage fixed cost base as well. So we can even if we just maintain a matching number in terms of cost reduction relative to where the revenue decreases are. We can actually see a benefit coming through on the operating cost side. We've done a pretty good job there. I think if you look back over the last decade or so bringing that sell for number down from 20 or so 10 years ago, maybe $0.10 a watt and five years ago. This year if you look at, it will be somewhere around three and half cents a watt and as we go forward given that operating cost structure is largely fixed. It's managed and fixed. You can see as go over past year, it's going to come down and so you can get either maintaining operating margins or poor expansion, the operating margin levels. There's lot of work still to do it at the gross margin level. But just want to make sure that comment is not missed. We look it at also further down to operating margin level. Mark Widmar: The other thing I would say Brian is that, there are lot of things that are in the mix now that will help continue to drive down the cost per watt. I mean part of this year is you got to remember we're taking a little bit of headwind around the impact of planned downtime as we made a number of upgrades before CuRe in particular. So that's costing us about half penny of watt or so that for the year. Now for into next year, we don't have as significant upgrades as we currently envision relative to the technology roadmap that we need to rollout that would have as significant of a headwind given the downtime we had to take for this year. So that has normalized itself. We also have the efficiency continues to improve from this point through the end and we have an exit from 465 watt and then we'll exit 2022. I think its 480 watt or something like that as well. What we previously indicated. So that helps drive. But then we've got a number of other billing material initiatives that will drive improvement and one of them just even on our last cost because there's different tiered pricing as we drive more volume across our contracts for glass. We hit different tiers would actually drive down pricing. So there's number, we used that bridge before. When you look at the throughput lever, where there's more throughput to go. There's more efficiency benefit and then we have the watt, the improvement that we'll make and we don't have as much planned downtime at least as we currently envision it. So those who all will help us manage and cross that horizon for 2022. Operator: And ladies and gentlemen, this concludes today's conference call. You may now disconnect.
First Solar, Inc. Downgraded Amid Solar Industry's Growth and Challenges
- Janney Montgomery downgraded First Solar, Inc.to Neutral from Buy, setting the stock price at $261.33.
- The downgrade reflects a broader context of the solar industry's growth and the increasing urgency to transition to solar energy as a crucial step in combating greenhouse gas emissions.
- Despite the downgrade, First Solar has seen its share price surge over 40% since its earnings report on May 1st, indicating strong investor confidence in its growth prospects.
First Solar, Inc. (NASDAQ:FSLR) is a leading company in the solar energy industry, known for manufacturing solar panels and providing photovoltaic solutions. The company operates in a competitive landscape with other key players like SunPower (SPWR) and Nextracker (NXT), focusing on leveraging the shift towards renewable energy sources. Recently, Janney Montgomery downgraded First Solar to Neutral from its previous Buy rating, setting the stock price at $261.33, as reported by TheFly. This downgrade reflects a change in the firm's outlook on First Solar, amidst a broader context of the solar industry's growth and challenges.
The downgrade comes at a time when the urgency to transitioning to solar energy is increasingly recognized as a crucial step in combating greenhouse gas emissions. The shift from fossil fuels to renewable energy sources not only represents a significant investment opportunity but also demands substantial financial commitments and time. Within this evolving landscape, First Solar, along with its competitors, is strategically positioned to benefit from the growing demand for solar power. This is underscored by the U.S. Energy Information Administration's (EIA) forecast, which predicts an increase in the share of renewable energy in domestic electricity generation to 23% this year, up from 21% the previous year.
First Solar's role in the renewable energy sector is further highlighted by its recent performance and market position. Despite the recent downgrade, the company has seen its share price surge over 40% since its earnings report on May 1st, indicating strong investor confidence in its growth prospects. This optimism is supported by the broader trend of increasing reliance on solar energy, which is expected to account for a majority of the increase in domestic power generation. First Solar's strategic focus on expanding its solar panel manufacturing capabilities and enhancing its photovoltaic solutions positions it well to capitalize on these industry trends.
However, the recent decrease in First Solar's stock price, closing at $261.33 with a decline of approximately 4.49%, reflects the market's reaction to the downgrade and the inherent volatility in the renewable energy sector. Despite this, the company's strong market capitalization of about $27.97 billion and its significant trading volume on the NASDAQ exchange demonstrate its substantial presence and investor interest in the solar energy market. This is further evidenced by the stock's performance over the past year, reaching a peak of $306.77 and a low of $129.22, showcasing the potential for growth amidst fluctuating market conditions.
In conclusion, First Solar's downgrade by Janney Montgomery to Neutral from Buy reflects a cautious outlook on the company's future performance. However, the broader context of the solar energy sector's growth, driven by the transition towards renewable energy sources, suggests that First Solar remains a key player in the industry. With its strategic positioning and recent performance, First Solar is poised to navigate the challenges and opportunities that lie ahead in the renewable energy landscape.
BMO Capital Upgrades First Solar, Inc. (NASDAQ:FSLR) to Outperform
- BMO Capital upgrades First Solar, Inc. to Outperform, raising the price target from $224 to $311, indicating strong confidence in the company's growth potential.
- First Solar's stock performance stands out with a 43.17% surge over the past month, outperforming its sector peers and the broader oil and energy sector.
- Anticipated earnings per share (EPS) of $2.91 billion and projected net sales of $1.01 billion for the upcoming earnings report highlight First Solar's strong operational performance and growth in the renewable energy sector.
BMO Capital's recent upgrade of First Solar, Inc. (NASDAQ:FSLR) to Outperform from a previous hold status, as reported by TheFly, marks a significant turning point for the company and its investors. This upgrade, coupled with a raised price target from $224 to $311, underscores a strong vote of confidence in First Solar's future performance and growth potential. First Solar, a leading U.S. solar company, has been at the forefront of the renewable energy sector, consistently outperforming market expectations and its sector peers.
The optimism surrounding First Solar is further justified by its recent stock performance. The company's shares closed at $273.45, a modest increase, on a day when the broader market showed mixed results. This resilience and the stock's impressive 43.17% surge over the past month, as highlighted by Zacks Investment Research, clearly differentiate First Solar from its competitors and the broader oil and energy sector, which saw a loss of 2.35% in the same period. Such performance not only reflects investor confidence but also suggests a robust business model capable of weathering market volatility.
Investors are particularly focused on First Solar's upcoming earnings report, with expectations set for a significant increase in earnings per share (EPS) and revenue. Anticipated EPS of $2.91 represents a 57.3% increase from the previous year, while projected net sales of $1.01 billion indicate 24.86% year-over-year growth. These projections highlight First Solar's strong operational performance and its ability to capitalize on the growing demand for renewable energy solutions.
The company's recent financial and operational successes are not mere coincidences but are rooted in strategic decisions and market positioning. First Solar's market capitalization of about $28.62 billion and its trading volume reflect its substantial presence and investor interest in the renewable energy sector. The stock's performance, ranging from a low of $129.22 to a high of $286.6 over the past year, showcases its volatility but also its significant growth potential, as recognized by BMO Capital's upgraded rating and price target.
First Solar's journey in the renewable energy sector, marked by its recent stock performance and positive financial projections, illustrates the company's resilience and potential for continued growth. As the largest U.S. solar company, First Solar is well-positioned to benefit from the increasing shift towards renewable energy, supported by favorable market trends and investor sentiment. The company's strong performance, both in stock price and financial metrics, underscores its leading role in the renewable energy transition and its attractiveness to investors looking for sustainable and profitable investment opportunities.
First Solar Shares Surge 8% Following Q4 Results
First Solar’s (NASDAQ:FSLR) shares saw an uplift of 8% intra-day today after announcing Q4 earnings that exceeded analysts' forecasts. The solar energy company reported earnings of $3.25 per share for the quarter, surpassing the $3.15 consensus estimate. However, its revenue of $1.16 billion fell below the expected $1.31 billion.
For the full year of 2024, First Solar anticipates earnings per share to be in the range of $13.00 to $14.00, compared to the Wall Street consensus of $13.33. The company's revenue forecast for 2024 is between $4.4 billion and $4.6 billion, compared to the Street forecast of $4.56 billion.
First Solar Earns an Upgrade at Morgan Stanley
First Solar (NASDAQ:FSLR) earned an upgrade from Morgan Stanley, which came in the wake of a 20% decline in the stock over the past three months.
Morgan Stanley analysts revised their rating from Equalweight to Overweight. Additionally, they increased the price target for the stock from $214 to $237. This new target suggests a significant potential upside of 64% from the stock's closing price on Thursday.
The analysts pointed out that First Solar presents one of the strongest risk-adjusted earnings profiles among U.S. Clean Tech companies within their coverage. This assessment is based on the company's sold-out position through 2026 and its effective cost-hedging strategies. These factors are expected to contribute to a substantial margin expansion of approximately 1,020 basis points through 2026, with relatively low risk.
Morgan Stanley's analysis of solar panel costs leads them to anticipate that First Solar's pricing will remain robust in the short to medium term, supporting a positive outlook for the company's financial performance.
First Solar Posts Q2 Beat, Announces $1.1B Factory Investment Plan
First Solar (NASDAQ:FSLR) reported its Q2 results, which surpassed analyst expectations. The company's EPS for the quarter came in at $1.59, significantly exceeding the Street estimate of $1.00. Additionally, First Solar's revenue reached $811 million, which also beat the Street estimate of $722.21 million.
Looking ahead to the full year 2023, First Solar anticipates EPS within the range of $7.00 to $8.00, compared to the Street estimate of $7.22. The company's revenue forecast of $3.4 billion to $3.6 billion is in line with market expectations, which were set at $3.48 billion.
In addition to strong financial performance, First Solar announced its plan to invest up to $1.1 billion in establishing a new, fully vertically integrated manufacturing facility in the United States. This facility will be the company's fifth in the country.
Goldman Sachs is Bullish on First Solar
Goldman Sachs reiterated its Buy rating and $272.00 price target on First Solar (NASDAQ:FSLR), noting it is bullish on the company due to upcoming catalysts in H2/23 that could boost Street estimates and the stock price.
Based on their research, the analysts said that it appears that there are increasingly active conversations about expanding manufacturing capacity, possibly in the Southeastern United States. This development has the potential to be a significant catalyst leading into the second quarter earnings. Additionally, their discussions with the supply chain indicate that bookings in the US utility-scale sector have shown signs of improvement. This improvement can be attributed to the Treasury's updated guidance regarding domestic content rules in the Inflation Reduction Act.
Goldman Sachs is Bullish on First Solar
Goldman Sachs reiterated its Buy rating and $272.00 price target on First Solar (NASDAQ:FSLR), noting it is bullish on the company due to upcoming catalysts in H2/23 that could boost Street estimates and the stock price.
Based on their research, the analysts said that it appears that there are increasingly active conversations about expanding manufacturing capacity, possibly in the Southeastern United States. This development has the potential to be a significant catalyst leading into the second quarter earnings. Additionally, their discussions with the supply chain indicate that bookings in the US utility-scale sector have shown signs of improvement. This improvement can be attributed to the Treasury's updated guidance regarding domestic content rules in the Inflation Reduction Act.
