First Solar (FSLR) Q4 Loss Narrower Than Expected, Sales Lag

First Solar Inc. (NASDAQ:FSLR) reported fourth-quarter 2017 adjusted loss of 25 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 32 cents by 21.9%. The loss figure also deteriorated from the prior-year quarter’s adjusted earnings of $1.24.

Excluding one-time adjustments of restructuring and asset impairment charges and the impact of U.S. tax reform, the company reported fourth-quarter GAAP loss per share of $4.14, compared with earnings of $1.95 in the prior quarter. Notably, higher tax expense associated with the U.S. tax reform enacted in December 2017 and the timing of system project sales led to the loss in the fourth quarter.

For 2017, the company reported adjusted earnings of $2.59 per share, beating the Zacks Consensus Estimate of $2.52 by 2.8%. Earnings however dropped 49.9% from the prior year’s $5.17.

Revenues

Revenues of $339.2 million in the quarter missed the Zacks Consensus Estimate of $433.8 million by 21.8%. Meanwhile, revenues rose 2.5% from the year-ago figure of $330.8 million.

In 2017, the company generated revenues worth $2.94 billion that missed the Zacks Consensus Estimate of $3.03 billion by 3%. However, revenues improved 1.3% from the year-ago figure of $2.90 billion.

Operational Highlights

Gross profit in the reported quarter was $62.1 million, up 690.9% from $7 million a year ago.

Total operating expenses contracted 88.3% to $97.1 million due to lower research and development, selling, general and administrative expenses and restructuring and asset impairments as well as research and development expenses.

Operating loss in the quarter totaled $35.1 million, compared with operating loss of $821.2 million in the year-ago quarter.

Financial Performance

First Solar had $2,268.5 million of cash and cash equivalents as of Dec 31, 2017, up from $1,347.2 million at the end of 2016.

Long-term debt was $380.5 million at the end of 2017, compared with $160.4 million at 2016-end.

2018 Guidance

First Solar raised its revenue guidance to the range of $2.45-$2.65 billion from the prior $2.3-$2.5 billion. Meanwhile, First Solar reiterated its operating cash flow guidance at the band of $100-$200 million. The company raised its panel shipment guidance from the earlier range of 2.7-2.7 gigawatts to 2.9-3.0 gigawatts.

The company however slashed the gross margin guidance to 21.5-22.5% from the earlier band of 22-23%. Meanwhile, the adjusted operating income view was raised to $130-$180 million from the previous $110-$170 million.

The company also lifted its full-year earnings. The company expects adjusted earnings per share in the range of $1.50-$1.90 compared with the prior guidance of $1.25-$1.75.

Zacks Rank

First Solar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Peer Releases

Canadian Solar Inc. (NASDAQ:CSIQ) is expected to release quarterly results on Mar 20. Earnings matched the Zacks Consensus Estimate in the last quarter.

JA Solar Holdings, Co., Ltd. (NASDAQ:JASO) is likely to release quarterly results on Mar 15. Earnings missed the Zacks Consensus Estimate by 27.8% in the last quarter.

Enphase Energy, Inc. (NASDAQ:ENPH) is expected to release quarterly results on Feb 27. The company’s loss was narrower than the Zacks Consensus Estimate by 80% in the last reported quarter.

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