First Solar Tops Wall Street Q4 Views, But Lowers 2016 Sales Guide
No. 1 solar installer First Solar ( FSLR ) topped Wall Street’s Q4 and 2015 views late Tuesday but lowered its 2016 sales guidance by $100 million, largely as a result of the late-2015 extension of a key solar tax credit. First Solar’s Q4 earnings, released after the close Tuesday, came hours after the company announced it had surpassed 6 gigawatts in cumulative installed capacity in its power plant segment globally. Worldwide, First Solar is installing about 30 to 40 megawatts per week on 2 GW of active projects, the company says. First Solar stock was up 3% in after-hours trading following the release of its earnings, and No. 2 installer SunPower ( SPWR ) was up 1.5%. First Solar stock fell 3.8% in Tuesday’s regular session, and SunPower shares lost 6.1%. Yield company 8point3 Energy Partners ( CAFD ), a First Solar-SunPower partnership, plunged 6.8% in Tuesday’s regular session. EPS Shatters Expectations For Q4, First Solar reported $942 million in sales and $1.60 earnings per share, down 6.5% and 15%, respectively, vs. the year-earlier quarter. Both measures beat the consensus expectations of 19 analysts polled by Thomson Reuters for $929 million and just 76 cents. During Q4, First Solar saw 761 MW in solar rooftop production, up 50% vs. the year-earlier quarter, CFO Mark Widmar told analysts during the company’s earnings conference call. In all of 2015, the company produced 2.5 GW, up 36%. First Solar wrapped up 2015 with $3.6 billion in sales and a record-smashing $5.37 EPS, up a respective 6% and 37% and topping the consensus for $3.56 billion and $4.51. Three months earlier, First Solar guided to $3.5 billion-$3.6 billion in sales and $4.30-$4.50 in EPS. Bookings hit the 3.4 GW mark in 2015, Widmar said. But First Solar lowered its 2016 sales guidance to $3.8 billion-$4 billion — which would be down 8% at the midpoint — from its previous guidance of $3.9 billion-$4.1 billion. First Solar maintained its $4-$4.50 EPS guidance, which would be down 21% at the midpoint. Prior Guidance Discounted ITC First Solar CEO Jim Hughes, speaking on the call, described 2015 as an “outstanding” year. First Solar delivered on its promise circa-2014 to reach 22% cell conversion efficiency within its solar modules, with a record 22.1% announced Tuesday. CFO Widmar noted First Solar’s earlier 2016 guidance didn’t include the possibility of an extension to the Investment Tax Credit on solar power. Congress extended the ITC, a key subsidy underpinning the solar industry, in late December. Wall Street previously saw a cliff for 2017 installations, with the ITC scheduled to sunset Dec. 31, 2016. Now, some projects planned to have been completed in 2016 — to benefit from the outgoing ITC — have been extended into 2017, Widmar told analysts. “The outlook we provided at the time did not incorporate the extension of the ITC,” he said. “Some projects could be extended into 2017 to achieve lower installation cost per watt on the construction of these plans.” He added: “While our guidance anticipates we will recognize a significant portion of California Flats in 2016,” two other big projects will be recognized entirely in 2017. California Flats is a 280 MW project in Monterey County, Calif., about 100 miles south of San Francisco. Apple ( AAPL ) is a partner in the project and will be using much of the energy generated. 8point3 Drop-Downs Hit Sales First Solar’s 2016 sales outlook was also impacted by project drop-downs to the 8point3 yieldco. SunPower experienced the same shifted revenue conundrum when issuing Q1 guidance that halved analyst projections earlier this month. First Solar isn’t leaving much business on the table in 2016, Widmar said. But the ability to push projects out to 2017 “gives us a little bit more flexibility in terms of supply.” Hughes said the ITC extension removed some of the uncertainty shadowing the U.S. solar market. First Solar is now seeing utilities embrace solar and new developers in new territories seeking greener energy. The ITC extension “allowed us to advance some of our own projects, it allows our customers to advance some of their projects, and it’s firmed up what the financial environment looks like,” he said. “The competitive environment has improved a little bit vs. the past 18 months or so.”