First Solar, Inc. (NASDAQ:FSLR) announced financial results for the fourth quarter and year ended December 31, 2016. Net sales for the fourth quarter were $480 million, a decrease of $208 million from the prior quarter due to the completion of multiple systems projects during the quarter, partially offset by higher module-only sales.
The Company reported a fourth quarter loss per share of $(6.92), compared to earnings per share of $1.63 in the prior quarter. The fourth quarter was impacted by pre-tax charges of $729 million, primarily related to previously announced restructuring actions. Restructuring related charges in the third quarter were $4 million. Fourth quarter non-GAAP earnings per share, adjusted for restructuring charges and a tax expense associated with a distribution of cash to the United States, were $1.24. Net income decreased versus the prior quarter as a result of lower net sales, higher restructuring charges and an increase in tax expense, partially offset by an increase in equity in earnings. During the fourth quarter, the Company completed the sale of its remaining interest in the Desert Stateline project and recognized $125 million of profit, net of tax, in equity in earnings.
Cash and marketable securities at the end of the fourth quarter decreased slightly to $2.0 billion from $2.1 billion in the prior quarter. The decrease was due to the repayment in full of the Company’s borrowing under its revolving credit facility, largely offset by cash from project sales. Cash flows from operations were $268 million in the fourth quarter. The approximately $280 million of proceeds received in the quarter from the sale of the remaining interest in the Desert Stateline project were treated as an investing cash flow.
“Despite the difficult restructuring decisions that we undertook in the fourth quarter, we ended the year with strong operational results,” said Mark Widmar, CEO of First Solar. “Our best line exited the quarter running above 16.9% conversion efficiency, and for the full year our fleet averaged 16.4% efficiency, an 80 basis point improvement over the prior year. From a financial perspective we delivered full year non-GAAP earnings per share of $5.17, exceeding our guidance for the year. We ended the year with $1.8 billion of net cash and are well positioned as we move forward with our Series 6 transition.”
The Company updated its 2017 revenue guidance, operating expenses and earnings per share as reflected in the following table. The revised net sales guidance incorporates the final structuring of the Moapa project sale, which allowed for full revenue recognition on the project, while the revised operating expenses guidance reflects the timing of certain restructuring charges that are now anticipated in 2017.
|2017 Guidance||Prior GAAP||Current GAAP||Prior Non-GAAP||Current Non-GAAP|
|Net Sales||$2.5B to $2.6B||$2.8B to $2.9B|
|Gross Margin %||12.5% to 14.5%||11% to 13%|
|Operating Expenses||$290M to $305M||$335M to $380M||$280M to $300M||Unchanged|
|Operating Income||$30M to $75M||($40M) to $25M||$40M to $80M||Unchanged|
|Earnings per Share||($0.10) to $0.45||($0.80) to ($0.05)||$0.00 to $0.50||Unchanged|
|Net Cash Balance||$1.4B to $1.6B||Unchanged|
|Operating Cash Flow1||$550M to $650M||$250M to $350M|
|Capital Expenditures||$525M to $625M||Unchanged|
|Shipments||2.4GW to 2.6GW||Unchanged|
Shares of First Solar are up 2% to $37.35 in after-hours trading Tuesday. FSLR has a 1-year high of $74.29 and a 1-year low of $28.60. The stock’s 50-day moving average is $33.28 and its 200-day moving average is $35.46.
On the ratings front, First Solar has been the subject of a number of recent research reports. In a report released today, Roth Capital analyst Philip Shen reiterated a Hold rating on FSLR, with a price target of $32, which represents a potential downside of 10% from where the stock is currently trading. Separately, on February 9, Credit Suisse’s Maheep Mandloi maintained a Hold rating on the stock and has a price target of $30.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Philip Shen and Maheep Mandloi have a yearly average loss of -15.9% and -1.9% respectively. Shen has a success rate of 26% and is ranked #4420 out of 4490 analysts, while Mandloi has a success rate of 64% and is ranked #3366.
Sentiment on the street is mostly neutral on FSLR stock. Out of 4 analysts who cover the stock, 3 suggest a Hold rating and one recommends to Buy the stock. The 12-month average price target assigned to the stock is $40.00, which represents a potential upside of 13% from where the stock is currently trading.
First Solar, Inc. operates as a solar energy solutions company. It engages in the designing, manufacturing, marketing and distribution of photovoltaic solar power systems and solar modules with an advanced thin-film semiconductor technology. The company operates in two business segments: Components and Systems. The Components segment designs, manufactures and sells solar modules primarily to solar project developers and system integrators. The Systems segment provides a complete solar power system solution, which includes project development, engineering, procurement and construction services, operating and maintenance services. It also develops sites for building solar power systems using solar modules and provides a complete solar power system solution, which includes project development, engineering, procurement and construction services, operating and maintenance services.