• Net sales of $892 million
  • GAAP EPS of $0.09 and non-GAAP EPS of $0.25
  • Cash and marketable securities of $2.4 billion, net cash of $2.2 billion
  • Raises 2017 revenue, EPS, operating cash flow and net cash guidance

First Solar, Inc. (Nasdaq: FSLR) today announced financial results for the first quarter of 2017. Net sales for the first quarter were $892 million, an increase of $561 million from the prior quarter primarily due to the sale of the Moapa project, partially offset by lower third-party module sales.

The Company reported first quarter earnings of $0.09 per share, compared to a loss of $(7.22) per share in the prior quarter. The first quarter was impacted by pre-tax restructuring and asset impairment charges of $20 million, related to previously announced actions. Restructuring and asset impairment charges in the fourth quarter were $729 million. Net income increased versus the prior quarter primarily as a result of higher net sales, lower restructuring and asset impairment charges and an increase in other income. First quarter non-GAAP earnings per share, adjusted for restructuring and asset impairment charges, were $0.25.

Cash and marketable securities at the end of the first quarter increased to $2.4 billion from $2.0 billion in the prior quarter. The increase was primarily due to receipt of the remaining payments for the Moapa project and other project receipts. Cash flows from operations were $493 million in the first quarter.

“Our first quarter results and the sale of our Moapa project are a solid start to 2017,” said Mark Widmar, CEO of First Solar. “The transition to our Series 6 product continues to progress from both a technology and commercial standpoint. We are excited about the competitive position of Series 6 and the long-term opportunities it enables.”

The Company raised its revenue, EPS, operating cash flow and net cash guidance based on improved operational performance and increased visibility into certain upcoming project sales. GAAP EPS was also raised due to a decrease in expected remaining restructuring and asset impairment charges. Operating expenses increased as a result of certain costs previously forecasted to be recorded in cost of sales that are now expected to impact production start-up.

2017 Guidance     Prior GAAP     Current GAAP     Prior Non-GAAP     Current Non-GAAP Net Sales     $2.8B to $2.9B     $2.85B to $2.95B             Gross Margin %     11% to 13%     12.5% to 14.5%             Operating Expenses     $335M to $380M     $360M to $405M     $280M to $300M     $320M to $340M Operating Income     $(40M) to $25M     $(25M) to $40M     $40M to $80M     Unchanged Earnings per Share     $(0.80) to $(0.05)     $(0.30) to $0.40     $0.00 to $0.50     $0.25 to $0.75 Net Cash Balance1     $1.4B to $1.6B     $1.5B to $1.7B             Operating Cash Flow     $250M to $350M     $350M to $450M             Capital Expenditures     $525M to $625M     Unchanged             Shipments     2.4GW to 2.6GW     Unchanged            

1. Defined as cash and marketable securities less expected debt at the end of 2017

For a reconciliation of the non-GAAP measures presented above to measures presented in accordance with generally accepted accounting principles in the United States (“GAAP”), see the tables below.

First Solar has scheduled a conference call for today, May 2, 2017 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 May 9, 2017 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 8971725. 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 will 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 certain module manufacturing changes and associated restructuring activities; 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 technology and 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 expand manufacturing capacity worldwide; 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," "seek," "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, and other filings with the Securities and Exchange Commission.

     

FIRST SOLAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

March 31, 2017

December 31, 2016

ASSETS Current assets: Cash $ 1,656,245 $ 1,347,155 Marketable securities 789,442 607,991 Accounts receivable trade, net 151,186 266,687 Accounts receivable, unbilled and retainage 70,536 206,739 Inventories 432,602 363,219 Balance of systems parts 33,269 62,776 Project assets — 700,800 Notes receivable, affiliate 19,600 15,000 Prepaid expenses and other current assets 177,358   217,462   Total current assets 3,330,238 3,787,829 Property, plant and equipment, net 691,767 629,142 PV solar power systems, net 452,074 448,601 Project assets 960,089 762,148 Deferred tax assets, net 251,453 255,152 Restricted cash and investments 355,237 371,307 Investments in unconsolidated affiliates and joint ventures 228,469 234,610 Goodwill 14,462 14,462 Other intangibles, net 85,902 87,970 Inventories 99,714 100,512 Notes receivable, affiliates 49,994 54,737 Other assets 85,104   77,898   Total assets $ 6,604,503   $ 6,824,368   LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 143,455 $ 148,730 Income taxes payable 5,002 12,562 Accrued expenses 185,337 262,977 Current portion of long-term debt 11,540 27,966 Deferred revenue 24,754 308,704 Other current liabilities 156,963   146,942   Total current liabilities 527,051 907,881 Accrued solar module collection and recycling liability 169,071 166,277 Long-term debt 265,823 160,422 Other liabilities 414,752   371,439   Total liabilities 1,376,697   1,606,019   Commitments and contingencies Stockholders’ equity: Common stock, $0.001 par value per share; 500,000,000 shares authorized; 104,289,617 and 104,034,731 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively 104 104 Additional paid-in capital 2,767,941 2,765,310 Accumulated earnings 2,471,971 2,462,842 Accumulated other comprehensive loss (12,210 ) (9,907 ) Total stockholders’ equity 5,227,806   5,218,349   Total liabilities and stockholders’ equity $ 6,604,503   $ 6,824,368      

FIRST SOLAR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

Three Months EndedMarch 31,

2017     2016 Net sales $ 891,791 $ 876,068 Cost of sales 807,607   598,457   Gross profit 84,184 277,611 Operating expenses: Research and development 22,799 30,187 Selling, general and administrative 48,199 67,503 Production start-up 1,150 — Restructuring and asset impairments 20,031   —   Total operating expenses 92,179   97,690   Operating (loss) income (7,995 ) 179,921 Foreign currency gain (loss), net 246 (3,240 ) Interest income 6,417 6,406 Interest expense, net (9,169 ) (4,642 ) Other income, net 25,861   35,553   Income before taxes and equity in earnings of unconsolidated affiliates 15,360 213,998 Income tax expense (5,679 ) (28,031 ) Equity in earnings of unconsolidated affiliates, net of tax (552 ) 9,669   Net income $ 9,129   $ 195,636   Net income per share: Basic $ 0.09   $ 1.92   Diluted $ 0.09   $ 1.90   Weighted-average number of shares used in per share calculations: Basic 104,103   101,853   Diluted 104,410   102,919    

Adjustments to Previously Reported Financial Statement from the Adoption of Accounting Standards Update 2014-09

The following table presents the effect of the adoption of Accounting Standards Update ("ASU") 2014-09 on our condensed consolidated statement of operations for the three months ended December 31, 2016 (in thousands, except per share amounts):

  Three Months Ended December 31, 2016 As Reported    

Adoption ofASU 2014-09

    As Adjusted Net sales $ 480,434 $ (149,639 ) $ 330,795 Cost of sales 416,845 (93,898 ) 322,947 Gross profit 63,589 (55,741 ) 7,848 Operating loss (765,412 ) (55,741 ) (821,153 ) Loss before taxes and equity in earnings of unconsolidated affiliates (776,451 ) (55,741 ) (832,192 ) Income tax expense (89,707 ) 33,654 (56,053 ) Equity in earnings of unconsolidated affiliates, net of tax 146,298 (8,843 ) 137,455 Net loss (719,860 ) (30,930 ) (750,790 )   Basic net loss per share $ (6.92 ) $

(0.30

) $ (7.22 ) Diluted net loss per share $ (6.92 ) $

(0.30

) $ (7.22 )  

Non-GAAP Financial Measures

In the press release above, we provided non-GAAP earnings per share for the three months ended March 31, 2017. We have included this non-GAAP financial measure to adjust for (i) restructuring, asset impairment and related charges primarily associated with the transition from Series 4 to Series 6 production and (ii) the tax effect associated with these items. We believe non-GAAP earnings per share, when taken together with corresponding GAAP financial measures, to be relevant and useful information to our investors because it provides them with additional information in assessing our financial operating results. Our management uses this non-GAAP financial measure in evaluating our operating performance. However, this measure has limitations, including that it excludes the effect of certain changes to our assets and liabilities and certain amounts that we may ultimately have to pay in cash. Accordingly, this non-GAAP financial measure should be considered in addition to, and not as a substitute for, or superior to net earnings per share prepared in accordance with GAAP. The following is the reconciliation of earnings per share prepared in accordance with GAAP to non-GAAP earnings per share for each period presented (in millions, except per share amounts):

 

Three Months Ended

March 31, 2017 Net income $ 9.1 Restructuring and asset impairments 20.0 Tax effect*   (2.7 ) Non-GAAP net income $ 26.4     Weighted-average number of shares used for diluted earnings per share 104.4

Diluted GAAP earnings per share

$ 0.09

Diluted non-GAAP earnings per share

$ 0.25  

*Restructuring treated as a non-discrete item for tax purposes and will be reflected in the effective tax rate over the duration of 2017.

In the press release above, we provided non-GAAP guidance as of the date of this press release for our operating expenses, operating income and earnings per share for the year ending December 31, 2017. We have included these forward-looking non-GAAP financial measures to adjust our GAAP projections of such financial measures for, as applicable, (i) restructuring, asset impairment and related charges primarily associated with the transition from Series 4 to Series 6 production and (ii) additional restructuring activities expected during the remainder of the year. Other GAAP charges, including those related to certain asset impairments, restructuring programs or litigation, that would be excluded from non-GAAP earnings per share are possible for the periods presented, but such amounts are dependent on numerous factors that we currently cannot ascertain with sufficient certainty or are presently unknown. These GAAP charges are also dependent upon future events and valuations that have not yet occurred or been performed. We believe these forward-looking non-GAAP financial measures, when taken together with our corresponding financial guidance based on GAAP, to be relevant and useful information to our investors because they provide them with additional information in assessing our financial operating results. Our management also uses such non-GAAP guidance in evaluating our operating performance. However, such measures have limitations, including that they exclude the effect of certain changes to our assets and liabilities, certain amounts that we may ultimately have to pay in cash and certain tax impacts. Accordingly, these forward-looking non-GAAP financial measures that exclude the aforementioned items should be considered in addition to, and not as substitutes for or superior to, financial guidance based on GAAP. The following are the reconciliations of our current and prior non-GAAP 2017 guidance to our current and prior GAAP 2017 guidance (in millions, except per share amounts):

           

Reconciliation of Non-GAAP 2017 Guidance to GAAP 2017 Guidance

 

GAAPGuidance

RestructuringCharges1

Non-GAAPGuidance

Operating Expenses $360 to $405 $(40) to $(65) $320 to $340 Operating Income $(25) to $40 $65 to $40 $40 to $80 Earnings per Share $(0.30) to $0.40 $0.55 to $0.35 $0.25 to $0.75  

1. $40 to $65 million of restructuring related charges associated with the acceleration of our transition to Series 6 module manufacturing.

           

Reconciliation of Prior Non-GAAP 2017 Guidance to Prior GAAP 2017 Guidance

GAAPGuidance

RestructuringCharges1

Non-GAAPGuidance

Operating Expenses $335 to $380 $(55) to $(80) $280 to $300 Operating Income $(40) to $25 $80 to $55 $40 to $80 Earnings per Share

$(0.80) to $(0.05)

$0.80 to $0.55 $0.00 to $0.50  

1. $55 to $80 million of restructuring related charges associated with the acceleration of our transition to Series 6 module manufacturing.

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

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