First Solar Sets Far Too Conservative Guidance
EnerTuition • 29 Comments
EnerTuition • 29 Comments
First Solar Proves Solar Skeptics Wrong Again
Jun. 15, 2015, 11:07 AM
- First Solar (NASDAQ:FSLR) states it has developed a thin-film solar module (in lab tests) that sports an 18.6% aperture-area efficiency, and an 18.2% full-area conversion efficiency. The company adds the latter figure tops a 17.7% record for rival multi-crystalline silicon (c-Si) modules; it's also well above the 17.0% efficiency reported by First Solar for a lab test module in March 2014.
- For reference, First solar had a 14.7% fleet-average Q1 conversion efficiency (+30 bps Q/Q and +120 bps Y/Y), and a 15.6% best-line efficiency (+80 bps Q/Q and +140 bps Y/Y). The company has been gradually narrowing c-Si's historical efficiency lead as c-Si narrows thin-film's historical cost advantage.
- First Solar insists it still has plenty of room to improve thin-film efficiency, while claiming silicon modules "have approached their theoretical efficiency entitlement" (rivals might disagree). In January, First Solar showed off a thin-film research cell sporting a 21.5% efficiency.
- Shares have rallied in the face of a market selloff. Following a rough 2014, they're up 17% YTD.
Jun. 10, 2015, 1:21 PM
- First Solar (FSLR +2.2%) and SunPower's (SPWR +4.6%) 8point3 Energy solar project YieldCo is looking to sell 20M shares at $19-$21 under the symbol CAFD (known to YieldCo and REIT followers as shorthand for cash available for distribution). The IPO underwriters: Goldman, Citi, Deutsche, JPMorgan, HSBC, Baird, MUFG, Mizuho, CLSA, and HSBC. (prospectus)
- At the price range's midpoint, 8point 3 would be valued at $1.02B and reap gross proceeds of $400M; the latter figure rises to $460M if a 3M-share overallotment option is used. Net proceeds will be partly used to make a cash distribution to First Solar and SunPower.
- 8point3 plans to pay an initial quarterly distribution of $0.2097/share; that spells a 4.2% yield at the price range's midpoint. As previously disclosed, 8point3 has an initial portfolio consisting of 432MW of U.S. projects. It also has a right of first offer for 1.14GW of projects owned by First Solar and SunPower, the lion's share of which are in the U.S.
- First Solar and (especially) SunPower are higher on a good day for markets in general, and solar stocks in particular.
Jun. 5, 2015, 1:26 PM
- Solar stocks are doing well (TAN +1.1%) on a quiet morning for equities after JA Solar disclosed a going-private offer from its CEO, and beaten-down Yingli provided mixed Q1 results (revenue beat, EPS missed) and better-than-feared guidance.
- Aside from JA/Yingli, gainers include First Solar (FSLR +3.4%), Canadian Solar (CSIQ +3.6%), JinkoSolar (JKS +4.1%), ReneSola (SOL +10.8%), China Sunergy (CSUN +5.4%), Trina (TSL +3%), Sky Solar (SKYS +2.9%), and Daqo (DQ +4.2%).
- Chinese solar names might also be benefiting from an overnight rally in Shanghai (see Chinese Internet stocks). First Solar, meanwhile, has seen a (questionable) rumor about a Wal-Mart buyout offer surface.
May 26, 2015, 10:15 AM
- "While we are modeling gross margin in line with company expectations provided at the 2014 analyst day, we model flattish revenue growth in 2015 and 2016, compared to the company's previous guidance of 19% growth in 2015 and 2.5% growth in 2016, based on analysis of the company’s backlog and project list" says RBC's Mahesh Sanganeria, downgrading to Underperform and cutting his target by $20 to $34.
- Sanganeria notes standard C-Si solar modules have gradually narrowed the pricing edge held by First Solar's (NASDAQ:FSLR) thin-film modules, and estimates C-Si module production costs will be only $0.02 higher by year's end. "Considering that lower efficiency may incur higher [bill of systems] cost, First Solar may lose its cost advantage for the whole system compared to competitors using multicrystalline silicon technology."
- His 2016 revenue and EPS estimates of $3.4B and $1.37 are well below a Thomson/First Call consensus of $4.04B and $3.40. First Solar has fallen to its lowest levels since February.
Apr. 30, 2015, 5:26 PM
Apr. 30, 2015, 5:13 PM
- Though it missed Q1 estimates, First Solar (NASDAQ:FSLR) is guiding for Q2 revenue of $750M-$850M and EPS of $0.45-$0.55 vs. a consensus of $779.7M and $0.40.
- The company also announces it's partnering with construction machinery giant Caterpillar (NYSE:CAT) to provide integrated solar systems for microgrids in places where reliable grid electricity is lacking. CAT +0.7% AH to $87.50.
- First Solar will "design and manufacture a pre-engineered turnkey package for use in remote microgrid applications, such as small communities and mine sites," and also manufacture Caterpillar-branded panels. Caterpillar will act as the exclusive seller of the solution, which will be paired with related generator sets and energy storage hardware.
- Q1 sales weakness is blamed on the retaining of projects meant for First Solar/SunPower's YieldCo JV, as well as on multiple project delays and a higher mix of module-only sales.
- Potential bookings opportunities rose by 500MW Q/Q to 14GW, and expected future systems/3rd-party module revenue by $300M to $7.6B. Expected module shipments rose by 200MW to 3.9GW. Module production rose 6% Q/Q and 22% Y/Y to 540MW; capacity utilization rose 300 bps Q/Q and 500 bps Y/Y to 87%.
- First Solar's Q1 results, PR, slides (.pdf)
Apr. 30, 2015, 4:59 PM
- First Solar (NASDAQ:FSLR): Q1 EPS of -$0.62 misses by $0.33.
- Revenue of $469.2M (-50.6% Y/Y) misses by $130.27M.
Apr. 29, 2015, 5:35 PM
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Apr. 15, 2015, 1:42 PM
- First Solar (NASDAQ:FSLR) is among the standouts on a fairly good day for tech stocks in general, and solar stocks in particular. The U.S. solar module/project giant is now up 43% YTD, thanks in part to enthusiasm for its 8Point3 Energy YieldCo JV with SunPower.
- With 8M shares (11% of the float) shorted as of March 31, short-covering could be aiding today's gains. Shares now go for 18x a 2016 EPS consensus of $3.49.
Mar. 25, 2015, 3:41 PM
- A day after posting fresh gains while broader equity markets barely moved, solar stocks are posting steep losses (TAN -4%) amid a 2.2% drop for the Nasdaq.
- Hurting the group's cause: Yingli (down 14.7%) posted a Q4 miss this morning in spite of topping its solar module shipment guidance. ASP declines and a weak euro/yen weighed on the company's top line.
- Chinese firms ReneSola (SOL -7.5%), Daqo (DQ -5.7%), Trina (TSL -4.1%), and JinkoSolar (JKS -3.5%) are among the major decliners. But so are North American firms First Solar (FSLR -3.5%), SunEdison (SUNE -4.2%), Vivint (VSLR -3.8%), and Canadian Solar (CSIQ -3.2%).
- SunEdison announced today it plans to buy 1K vanadium flow batteries (good for over 100MWh) from Imergy Power Systems to store solar electricity produced by Indian minigrid projects. Along with the move, SunEdison is upping its equity stake in Imergy. The move comes shortly after SunEdison announced it's entering the solar/wind battery storage market itself by acquiring assets from private Solar Grid Storage.
Mar. 24, 2015, 2:24 PM
- Buoyed this year by decent Q4 numbers, solid 2015 guidance, and YieldCo news, solar stocks are adding to their gains today even as the Nasdaq barely budges. The Guggenheim Solar ETF (TAN +0.7%) is up 35% YTD and nearing a 52-week high of $47.00.
- Chinese firms are adding to last week's gains - JinkoSolar (JKS +3.7%), ReneSola (SOL +3.3%), Daqo (DQ +4.8%), Trina (TSL +1.9%), JA Solar (JASO +2.7%), and China Sunergy (CSUN +12.5%) stand out. Beijing recently hiked its 2015 solar installation target by 2.8GW to 17.8GW (up from 2014's 14GW), while setting no specific targets for utility vs. distributed solar installations. The lack of utility/distributed targets is expected to make the goal easier to hit.
- U.S. names aren't getting left out: First Solar (FSLR +3.5%) and SolarCity (SCTY +2.1%) are rallying, as are microcaps RGS Energy (RGSE +6.5%) and Solar3D (SLTD +12.7%). Solar3D, a California installer, has risen 58% over the last 4 trading days.
Mar. 10, 2015, 10:02 AM
- Two weeks after announcing they're discussing a joint solar project YieldCo (and seeing their shares soar in response), First Solar (FSLR -1.4%) and SunPower (SPWR -2%) have filed a public S-1 for the JV, known for now as 8point3 Energy Partners. (PR) (prospectus)
- Each company will own a 50% stake. No symbol has been proposed yet; Goldman and Citi will serve as underwriters.
- 8point3 will initially have interests in 432MW of First Solar and SunPower's solar projects; no word yet on initial quarterly cash distributions. At IPO time, the YieldCo will "own interests in six utility-scale solar energy projects, four of which are operational and two of which are in late-stage construction."
- Its initial 432MW asset base will consist entirely of U.S. projects, with most of them in California. They include First Solar's 150MW Solar Gen 2 CA project, and SunPower's 108MW Quinto CA project. 39MW of SunPower residential assets are also thrown in.
- The YieldCo also has right of first offer (ROFO) agreements for 1.13GW of projects, most of which will be finished in the 2015-2016 timeframe. 82% of the projects are in the U.S., 17%, in Chile, and 1% in Japan. 87% are utility-scale, and the rest commercial/residential.
- First Solar and SunPower have joined solar peers in selling off. The Nasdaq is down 1.1%.
- Previously: Analyst commentary on the YieldCo
Feb. 25, 2015, 9:34 AM
- BofA/Merrill and Northland Securities have upgraded First Solar (NASDAQ:FSLR) to neutral ratings after the company provided mixed Q4 results and light Q1 guidance in the wake of its YieldCo announcement. Needham and RBC have hiked their targets.
- Northland's Colin Rusch: "With FSLR’s announcement of its intention to list a yield co, we are moving to the sidelines for now until further details are available on the yield co." His $51 target (upped from $46) assumes the YieldCo will be worth $6B, sport a 3.5% dividend yield, and have cash available for distribution (CAFD) of $0.08/watt, with First Solar deploying 3GW into it by the end of 2017.
- Needham's Edwin Mok (target hiked by $5 to $75): "With the announced negotiations between FSLR and SPWR to form a joint yieldco, we are not surprised by the lowered 1Q15 guidance ... we believe management is executing its prior plans on project pipeline development, increasing efficiency and capacity expansions. The yieldco strategy coupled with FSLR's strong market position and a well capitalized balance sheet should enable FSLR to extract significant value from the joint yieldco."
- Prior First Solar coverage
Feb. 24, 2015, 5:57 PM
- Along with mixed Q4 results, First Solar (NASDAQ:FSLR) has guided for Q1 revenue of $550M-$650M and EPS of -$0.25 to -$0.35, below a consensus of $933M and $0.84. The company blames "the completion of the Desert Sunlight and Topaz projects and the retention of projects on balance sheet in relation to the announced plan to pursue a joint YieldCo vehicle with SunPower."
- 509MW of solar modules were produced in Q4, +13% Q/Q and +15% Y/Y. Conversion efficiency (fleet average) rose to 14.4% from 14.2% and 13.4%, and capacity utilization to 84% from 77% and 83%.
- Potential project bookings opportunities are down by 200MW Q/Q to 13.5GW, and expected future systems/3rd-party module revenue up by $100M to $7.5B. However, expected module shipments are up by a healthy 700MW to 4GW.
- Gross margin rose 930 bps Q/Q and 600 bps Y/Y to 30.6%. R&D spend fell 9% Y/Y to $35M, and SG&A 8% to $71M. First Solar ended 2014 with $1.99B in cash/investments, and just $217M in long-term debt.
- Shares are down just fractionally AH, as investors keep focusing on the YieldCo. They rose 10.2% in regular trading.
- Q4 results, PR, earnings slides (.pdf)
- YieldCo coverage: I, II
Feb. 24, 2015, 4:07 PM
- First Solar (NASDAQ:FSLR): Q4 EPS of $1.89 beats by $1.13.
- Revenue of $1B (+30.1% Y/Y) misses by $280M.
Feb. 24, 2015, 1:16 PM
- SunPower (NASDAQ:SPWR) states in its Q4 earnings slides (.pdf) its planned solar project YieldCo with First Solar (NASDAQ:FSLR) will be a 50/50 JV, and promises it will lower the companies' cost of capital and improve their financing options for solar projects.
- Meanwhile, Deutsche's Vishal Shah (a long-time solar bull) has upgraded First Solar to Buy ahead of this afternoon's Q4 report, and declares the YieldCo could be "one of the best growth stories out there."
- Under "conservative assumptions," he sees SunPower and First Solar respectively having 640MW and 755MW of projects they can contribute, resulting in an equity value of $2.8B. Assuming an 85% payout ratio, Shah sees the YieldCo providing a 5% dividend yield. He adds the companies could each contribute another ~1.5GW of projects (via their pipelines) by the end of 2016.
- Raymond James' Pavel Molchanov compares the alliance to a Duke/UNC or Coke/Pepsi partnership. "By joining forces, First Solar and SunPower can create an asset base that is even larger ... With the S-1 set to be filed in 1Q, we see no reason why the IPO couldn’t take place in 2015."
- The YieldCo news is easily overshadowing SunPower's light Q1 guidance: Revenue of $410M-$460M and EPS of $0.05-$0.15 vs. a consensus of $544.7M and $0.25. Though the company says its "business fundamentals for 2015 remain strong," it's withdrawing its full-year guidance until YieldCo plans are finalized.
- SunPower recognized revenue on 293MW of solar systems in Q4, a little below guidance of 300MW-340MW. It expects to recognize 240MW-270MW in seasonally weak Q1. Q4 gross margin was 20.4%, +370 bps Q/Q and flat Y/Y. Q1 GM guidance is at 18%-20%.
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:... More
Industry: Semiconductor - Specialized
Country: United States
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