First Solar Q1: Beats Street and Raises Guidance on Strong US Utility and Global Growth

Efficiency improvements continue, but First Solar is no longer disclosing cost-per-watt “for commercial reasons.”

Vertically integrated thin-film solar supplier First Solar almost doubled Wall Street estimates with earnings of $112 million on a posted first quarter revenue of $950 million, an increase of $182 million from the fourth quarter of 2013.

Jim Hughes, First Solar's CEO, noted a positive book-to-bill ratio and "strong utility-scale growth" in the U.S., as well as sustainable demand in Latin America and Africa.

Vishal Shah of Deutsche Bank noted the strong beat and guidance raise as a positive, along with strong solar industry pricing, demand and U.S. utility demand. The DB analyst said, "We see upside to [the] 2014 earnings outlook," adding, "We also believe 2016 targets are conservative and given the strong demand from U.S. utility segment, we see upside to 2016 earnings targets."

Baird observes, "Bears may focus on Q1 bookings of 312 megawatts, but growing pipeline should support bookings throughout the year. Total outstanding bookings increased from 2.7 gigawatts to 2.8 gigawatts. Additionally, FSLR’s total development pipeline increased to 12.2 gigawatts from 10.6 gigawatts DC, with ~600 gigawatts coming from the U.S., including the Southeast U.S. where solar has historically been underutilized."

First Solar's CFO noted the improvement in module conversion efficiency as part of a company-wide change in "back-contact material." He said that the rollout of the back-contact program over the last few days had brought "nearly all twenty-four of our lines" to running at 14 percent efficiency or better. There are two remaining efficiency programs to be instituted in the third and fourth quarters of this year.

The CFO noted that First Solar was no longer disclosing cost per watt "for commercial reasons."

The CEO mentioned that the firm is involved in a 5-megawatt hybrid solar and diesel project at a mining site in Australia and sees hybrid installations as an emerging market.

Analysts repeatedly asked the CEO about First Solar's YieldCo plans. The CEO noted that First Solar has been more likely to take on construction risk "because the value of the asset justifies the risk." He said that First Solar had thought about that long before the current YieldCo wave and that the firm noted all YieldCo filings and announcements but did not feel compelled to make an urgent decision. 

Update to guidance

First Solar is boosting 2014 guidance as follows:

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Here's a bit of our coverage from First Solar's analyst day in March:

New efficiency roadmap