First Solar Inc. (FSLR) surpassed the Zacks Consensus earnings per share (EPS) estimate of $1.69 by 31 cents to reach $2.00 in the first quarter of fiscal 2010. It also beat the year-ago quarterly EPS of $1.99.
Operational Performance
First Solar’s quarterly revenues were $568.0 million, up 36% from $418.2 million in the first quarter of 2009. The upside came from strong PV (photovoltaic) module demand and increased production, partially offset by a decline in pricing. However, compared to the fourth quarter of 2009, sales in the reported quarter declined $73.3 million, primarily due to a shift from turnkey system sales to module sales.
First Solar produced 322.1 MW (megawatts) during the reported quarter, up 47% compared to the prior-year quarter. Cost per watt produced for the reported quarter was 80 cents compared to 90 cents in the year-ago quarter. The improvement came from lower material costs, higher throughput and conversion efficiency.
Net income in the reported quarter was $172.3 million, up from the year-ago net income of $164.6 million and $141.6 million for the fourth quarter 2009. This was due to higher volumes, increased module prices and the absence of certain non-recurring expenses.
Financial Performance
First Solar reported $420.9 million of cash and cash equivalents at the end of the reported quarter down from $664.5 million at year-end 2009. Long-term debt reduced to $136.1 million from $146.4 million at December 2009.
Outlook
First Solar’s growth story will continue with its utility-based order backlog and strong balance sheet. The company focused on capacity build-outs, technological enhancements and cost minimization, enjoys technological superiority over its silicon-based solar peers.
In fiscal 2010, First Solar forecasts net sales in the range of $2.6 – $2.7 billion, reflecting reallocation of module capacity from its systems business to meet stronger module demand from its European customers. Earnings per share are projected in the range of $6.80 – $7.30.
This is in line with the Zacks Consensus estimate of $6.80 for fiscal 2010. Total capital spending is projected in the range of $625 million – $650 million. The company expects to generate $725 million – $775 million of operating cash flow.
However, a volatile Euro, declining German subsidies, and the modules oversupply situation in the market may partially hamper short-term growth. This justifies our neutral recommendation for the stock (Zacks #3 Rank).
Read the full analyst report on “FSLR”
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