FSLR First Solar Inc

• Record Quarterly Net sales of $1.3 billion
• Preliminary Quarterly GAAP earnings per fully diluted share of $3.38
• Cash and marketable securities of $1.8 billion, net cash of $1.5 billion
• Raise preliminary 2015 EPS guidance to $4.30 to $4.50
• Record 1.7GWdc of new bookings; Record annual bookings of 3.1GWdc year-to-date

First Solar, Inc. (Nasdaq: FSLR) today announced preliminary financial results for the third quarter of 2015. The Company expects to release complete condensed consolidated financial results and file its Quarterly Report on Form 10-Q on or prior to November 9th, 2015.

The Company is issuing preliminary results while it completes its analysis of a discrete income tax matter related to a foreign jurisdiction. The Company believes that based on its preliminary analysis, the tax matter could have an adverse financial impact of up to $40 million. Preliminary results are being issued pending the determination of the financial impact of this matter, if any.

Preliminary Financial Results

Net sales were $1.3 billion in the quarter, an increase of $375 million from the second quarter of 2015. The increase in net sales from the prior quarter resulted primarily from initial revenue recognition on the sale of a majority interest in the partially constructed Desert Stateline project. In addition revenue increased due to higher third party module sales and an increase in systems revenue across multiple projects.

The Company reported preliminary third quarter GAAP earnings per fully diluted share of $3.38, compared to $0.93 in the prior quarter. The sequential increase in net income was due to higher gross margins associated with the majority sale of the Desert Stateline project, improvements in systems project costs and a decrease in our module collection and recycling obligation, which reduced cost of sales by $70 million and operating expenses by $10 million.

Cash and marketable securities at the end of the third quarter were approximately $1.8 billion, an increase of approximately $34 million compared to the prior quarter. Cash flows from operations were $21 million in the third quarter. The increase in cash and marketable securities during the quarter was primarily due to cash received related to the majority sale of the Desert Stateline project, partially offset by continued project construction on balance sheet.

“We had tremendous execution in the third quarter from both a financial and bookings perspective,” said Jim Hughes, CEO of First Solar. “We have now exceeded our book-to-bill target for the year, booked over 1GWdc of volume with deliveries after 2016, achieved strong quarterly earnings and have significantly raised our full year earnings guidance. We remain confident in our long term strategy and our ability to execute successfully.”

The Company also provided preliminary updated guidance for 2015. The following guidance is preliminary pending the determination of the financial impact of the tax matter discussed previously.

  2015 Guidance Update       Prior       Current Net Sales       $3.5B to $3.6B       Unchanged Gross Margin %1       21% to 22%       24% to 25% Operating Expenses1       $415M to $425M      

$395M to $405M

Operating Income1       $330M to $370M       $450M to $490M Effective Tax Rate4       2% to 5%       4% to 6% Earnings per Share1,4       $3.30 to $3.60       $4.30 to $4.50 Net Cash Balance2, 4       $1.2B to $1.4B       $1.3B to $1.4B Capital Expenditures       $175M to $200M       Unchanged Working Capital3       $1.1B to $1.3B       $1.1B to $1.2B Shipments       2.8GW to 2.9GW       Unchanged   1-   Includes $80M benefit ($70M Gross Margin, $10M Opex) for a reduction in EOL obligation. EPS impact is $0.60 2- Cash & Marketable securities less debt at end of 2015 3- Expected increase in working capital from December 31, 2014 4- Excludes impact of up to $40 million related to pending tax matter  

First Solar has scheduled a conference call for today, October 29, 2015 at 4:30 p.m. ET to discuss this announcement. A live webcast of this conference call is available at http://investor.firstsolar.com/events.cfm.

An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Thursday, November 5, 2015 at 7:30 p.m. ET and can be accessed by dialing 888-203-1112 if you are calling from within the United States or 719-457-0820 if you are calling from outside the United States and entering the replay pass code 3562138. A replay of the webcast will be available on the Investors section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.

About First Solar, Inc.

First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems which use its advanced module and system technology. The Company's integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today. From raw material sourcing through end-of-life module recycling, First Solar's renewable energy systems protect and enhance the environment. For more information about First Solar, please visit www.firstsolar.com.

For First Solar Investors

This release contains forward-looking statements which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements, among other things, concerning: effects on our financial statements and guidance resulting from the pending tax matter described in this release, including our assessment of the likelihood and amount of penalties that may be imposed on us (which penalties, if any, could cause the estimated financial impact to be significantly greater than the estimate provided in this release); our business strategy, including anticipated trends and developments in and management plans for our business and the markets in which we operate; future financial results, operating results, revenues, gross margin, operating expenses, products, projected costs (including estimated future module collection and recycling costs), warranties, solar module efficiency and balance of systems cost reduction roadmaps, restructuring, product reliability, investments in unconsolidated affiliates and capital expenditures; our ability to continue to reduce the cost per watt of our solar modules; our ability to reduce the costs to construct PV solar power systems; research and development programs and our ability to improve the conversion efficiency of our solar modules; sales and marketing initiatives; and competition. These forward-looking statements are often characterized by the use of words such as "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," "continue" and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, the matters discussed in Item 1A: "Risk Factors," of our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed with the SEC.

 

FIRST SOLAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

PRELIMINARY

 

September 30,2015

 

December 31,2014

ASSETS Current assets: Cash and cash equivalents $ 1,189,703 $ 1,482,054 Marketable securities 619,814 509,032 Accounts receivable trade, net 328,927 135,434 Accounts receivable, unbilled and retainage 241,119 76,971 Inventories 379,183 505,088 Balance of systems parts 104,392 125,083 Deferred project costs 98,421 29,354 Deferred tax assets, net 78,092 91,565 Notes receivable, affiliate 1,279 12,487 Prepaid expenses and other current assets 210,399   202,151 Total current assets 3,251,329 3,169,219 Property, plant and equipment, net 1,330,054 1,419,988 PV solar power systems, net 93,420 46,393 Project assets and deferred project costs 1,030,436 810,348 Deferred tax assets, net 264,200 222,326 Restricted cash and investments 403,160 407,053 Investments in unconsolidated affiliates and joint ventures 299,103 255,029 Goodwill 84,985 84,985 Other intangibles, net 112,470 119,236 Inventories 108,558 115,617 Notes receivable, affiliates 17,754 9,127 Other assets 65,173   61,670 Total assets $ 7,060,642   $ 6,720,991 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 303,593 $ 214,656 Income taxes payable 2,028 1,727 Accrued expenses 412,167 388,156 Current portion of long-term debt 34,082 51,399 Billings in excess of costs and estimated earnings 74,102 195,346 Payments and billings for deferred project costs 22,699 60,591 Other current liabilities 43,035 88,702 Total current liabilities 891,706 1,000,577 Accrued solar module collection and recycling liability 164,304 246,307 Long-term debt 251,395 162,074 Other liabilities 332,392   284,546 Total liabilities 1,639,797   1,693,504 Commitments and contingencies Stockholders’ equity:

Common stock, $0.001 par value per share; 500,000,000 shares authorized; 100,919,021 and100,288,942 shares issued and outstanding at September 30, 2015 and December 31, 2014,respectively

101 100 Additional paid-in capital 2,734,161 2,697,558 Accumulated earnings 2,658,092 2,279,689 Accumulated other comprehensive income 28,491   50,140 Total stockholders’ equity 5,420,845   5,027,487 Total liabilities and stockholders’ equity $ 7,060,642   $ 6,720,991    

FIRST SOLAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

PRELIMINARY

 

Three Months EndedSeptember 30,

  Nine Months EndedSeptember 30, 2015   2014 2015   2014 Net sales $ 1,271,245 $ 889,310 $ 2,636,671 $ 2,383,821 Cost of sales 786,880   700,023   1,948,842   1,865,098   Gross profit 484,365 189,287 687,829 518,723 Operating expenses: Research and development 29,630 37,593 93,865 109,025 Selling, general and administrative 53,716 66,528 192,305 182,859 Production start-up 3,198   1,406   16,818   1,897   Total operating expenses 86,544   105,527   302,988   293,781   Operating income 397,821 83,760 384,841 224,942 Foreign currency (loss) gain, net (3,726 ) 169 (7,674 ) (389) Interest income 5,322 4,297 16,444 13,151 Interest expense, net (1,775 ) (89 ) (2,795 ) (1,429 ) Other expense, net (1,678 ) (2,476 ) (3,729 ) (5,416 ) Income before taxes and equity in earnings of unconsolidated affiliates 395,964 85,661 387,087 230,859 Income tax (expense) benefit (49,644 ) 7,108 (10,324 ) (19,579 ) Equity in earnings of unconsolidated affiliates, net of tax (115 ) (4,345 ) 1,640   (6,321 ) Net income $ 346,205   $ 88,424   $ 378,403   $ 204,959   Net income per share: Basic $ 3.43   $ 0.88   $ 3.76   $ 2.05   Diluted $ 3.38   $ 0.87   $ 3.72   $ 2.02   Weighted-average number of shares used in per share calculations: Basic 100,906   100,197   100,713   99,981   Diluted 102,299   101,415   101,845   101,686    

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First Solar InvestorsSteve Haymore+1-602-414-9315stephen.haymore@firstsolar.comorFirst Solar MediaSteve Krum+1-602-427-3359steve.krum@firstsolar.com