First Solar has unveiled the financial results for the first quarter of 2016 along with an announcement of leadership transition.
Financial results highlights
In the first quarter of 2016, net sales sequentially decreased US$94 million to US$848 million due to the timing of systems revenue recognition across multiple projects, partially offset by higher revenue from the Desert Stateline project. Net sales from modules plus offering also decreased compared with the prior quarter.
In comparison to net sales, gross profit significantly increased from US$39 million to US$263 million. The increase was contributed by the increase in Desert Stateline revenue in 1Q, which also partially contributed to the increase in net income.
The revenue increase in Desert Stateline was resulted from an amendment to the original sale agreement with Southern Company to include an additional 15% interest in the project. Although the amendment will not impact expected full year 2016 earnings, it would accelerate the timing of certain earnings, relative to prior expectations, from the second half of the year to the first quarter.
The EPS was US$1.66, higher than US$1.60 in the prior quarter. The cash and marketable securities were US$1.9 billion. Net cash of US$1.6 billion; cash flows from operations were US$50 million.
First Solar decided to raise some guidance for 2016. The guidance for gross margin is raised from 17~18% to 18~19%, operation income from US$260~330 million to US$300~370 million. Operating cash flow is raised to US$500~700 million, and the EPS guidance is raised from US$4.00~4.50 to US$4.10~4.50.
Leadership transition
First Solar’s current CFO Mark R. Widmar will become the CEO since July 1, 2016 and will join the First Solar Board of Directors simultaneously. The current CEO, James A. Hughes, will step down on June 30, 2016, but will remain his position in the Board and support the company as an advisor.
“Leadership succession planning has been a joint effort between Jim and the board,” said Michael J. Ahearn, First Solar’s Chairman of the Board. “As we enter a new phase of growth and development for the company, we believe that Mark’s proven leadership and expertise make this an ideal time for him to take the helm.”
Alexander Bradley, First Solar’s Vice President, Treasury and Project Finance, has been appointed interim Chief Financial Officer, effective July 1, 2016.
