First Solar (FSLR, Financial), nation’s largest solar panel manufacturer, started fiscal 2015 on a horrible note. First-quarter fiscal 2015 results missed to beat top- and bottom-line expectations by a huge margin. Consolidated revenues declined a whopping 50.6% year-over-year to $469.2 million, falling short of expectations by $130.27 million. As a result, adjusted loss per share came in at $0.62 versus expectations of $0.33.
The solar panel manufacturer exited the quarter with 593 megawatt, or MW, DC of bookings, $779.9 million of cash and cash equivalents, and $200.4 million long-term debt.
What went wrong?
Few things that added to woes are:
- West Coast port strike which caused shipment delays.
- Delay in sales of part of its Los Hills-Blackwell project to Southern Co (SO, Financial), which now ill carry over to the second-quarter of fiscal 2015
- Delays on getting permissions for various projects as a result of which projects got delayed.
- Retaining of projects meant for YieldCo in joint-venture with peer SunPower (SPWR, Financial)
Three growth drivers
First Solar announced that it is partnering with construction machinery giant Caterpillar (CAT, Financial) for providing microgrid at locations where reliable grid electricity is not available. The company will design and manufacture pre-engineered turnkey packages to be used in microgrid applications. In addition First Solar will also manufacture Caterpillar-branded panels. Caterpillar will act as exclusive reseller of the packaged solution, paired with generator sets and energy storage solutions.
YieldCo vehicle, a joint-venture with SunPower, will be another growth driver in the long run. It will be a publicly traded company that will make it easier for renewable energy companies to raise low cost funds for new projects or use the same for reducing high-cost debt. This is expected to hold about 432 MW projects in eight solar farms, in addition to about 39 MW roof-top solar installations on 5900 customer homes.
The fast growing global solar energy market is another catalyst for long-term growth. According to the latest NPD Solarbuzz market report, the global solar PV industry is growing at a blistering pace and is headed for cumulative installed capacity of 500 gigawatts (GW) by 2018. Additionally, in January this year, Deutsche Bank also predicted that 46GW of PV would be installed across the world in 2014, and 56GW in 2015.
Looking ahead
During the second-quarter fiscal 2015, First Solar expects earnings of $0.45 to $0.55 per share on revenues of $750 million to $850 million.
Final take
First Solar reported weak first-quarter fiscal 2015 numbers. However, the company will rebound as it now has a deal with Caterpillar in place which is a new opening for the company. Also, the company is executing well on product development and efficiency improvement initiatives.
In addition, the company is planning to increase its footprint in the international markets like Middle East, India, Japan, Australia and South America.
Hence, despite the miss in first quarter, the stock still remains a good buy.
