First Solar, Inc. (NASDAQ: FSLR) will report financial results for the fourth quarter and full-year ended December 31, 2013 after the market closes on Tuesday, Feb. 25, 2014. The company will hold its quarterly conference call to discuss these results at 4:30 p.m. ET.
First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems which uses its advanced module and system technology. The company's results would be helped by Desert Sunlight and ABW projects.
Wall Street expects First Solar to earn 99 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies a decrease of 51.5 percent from $2.04 a share in the same quarter last year.
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The company's earnings have topped Street view twice in the past four quarters while it came in below the estimates in the remaining two periods. The consensus view has gained a penny in the past 90 days.
Quarterly revenue is expected to fall 10.2 percent to $965.38 million from $1.08 billion in the same quarter last year.
Bookings growth remains a key metric for First Solar. As of the end of the third quarter, First Solar booked 860 MW of new business while shipping 406 MW, equaling a book-to-bill ratio over two-to-one. The company's potential new booking opportunities total around 7.7 GW. The Street will look for comments over its progress in converting these opportunities into new orders.
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Among the key developments in the fourth quarter, First Solar has signed power purchase agreements (PPA) with member cities of the Southern California Public Power Authority (SCPPA) for electricity to be generated at the 40 megawatt (MW) AC Kingbird photovoltaic solar power plant.
In November, First Solar and JX Nippon Oil & Energy announced that they have signed an agreement for the distribution of First Solar's high efficiency solar photovoltaic modules in Japan through April 2015. The company will invest approximately $100 million in Japan to develop solar power plants.
Japan is expected to become one of the key solar markets due to its significant energy demand, with a government-set target to install 28GW by 2020. Solar PV plants can be built quickly and safely, providing robust solutions to idled nuclear power. The market will want updates on the company's expansion in Japan.
Margins would be another focus point for investors as the company claims it is a low cost producer. For the third quarter, the company reported gross margins of 28.8 percent and an upside to this number would be welcomed.
During the fourth quarter, the company incurred project pipeline costs in new countries, expenses over new equipment and processes to increase module conversion efficiency significantly. These costs may impact margins.
The average efficiency of their solar panels is being closely monitored. In its last quarterly report, the metric rose to 13 percent from 12.6 percent a year ago. Any improvement on this front will also be welcomed.
Investors could watch production numbers. First Solar is expected to produce about 1.6-1.7 GW of solar modules in 2013 compared to a manufacturing capacity of 2.2 GW. Higher production may indicate stronger demand for their product while a lower number may signal that customers are going to competitors for their solar requirements.
The Street should be looking for updates on the company's thin-film business as it is considered as in thin-film manufacturing via its acquisition of TetraSun. The business offers First Solar the opportunity to get into the residential market, and it expects TetraSun modules is supposed to start in the second half of 2014. Any color on that front is pretty much anticipated.
Meanwhile, the market could closely watch the firm's progress in further expanding the systems business into international markets and Latin America in particular. Its strategy towards Chile (with the acquisition of a PV developer in the country) could be watched as Chile is considered as an attractive market for unsubsidized solar power given the high cost of energy. Any updates on the Middle East markets such as Dubai would also be watched.
The Street may also focus on updates over the recent acquisition of all of GE's (NYSE: GE) cadmium telluride (CdTe) solar intellectual property and entry of a technology collaboration agreement with GE, with the intent to advance thin-film solar cells and modules
In addition, investors will be curious to see how First Solar's modules business is faring, especially the focus being on the third party module sales. However, the company needs to cut production costs as silicon-based panels more efficient than First Solar's thin film panels (GE deal should help on this front). Production costs should be the key focus point for the investors.
The sales, margin and earnings outlook for the first quarter will be the next key thing to watch in the print.
For the third quarter, the Tempe, Arizona-based company First Solar's profit rose to $195.0 million or $1.94 a share from $87.9 million or $1.00 a share last year. Adjusted earnings for the quarter were $2.28 a share. Sales climbed to $1.27 billion from $839.1 million last year.
Shares of FSLR have gained 12 percent since its last quarterly report and 70 percent in the last year. They trade 16.8 times its forward earnings and have traded between $24.46 and $65.99 during the past 52-weeks.
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