First Solar Affirms Positive Outlook with New Cell Efficiency Record

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Solar provider First Solar (Nasdaq: FSLR) had a mixed week. The largest U.S. panel maker had to report its sales were down in the second quarter. The same week, though, brought news that the company has beat its own efficiency record.

Because First Solar relies on revenues from building large solar plants, most of them for utilities, the company can be subject to revenue fluctuations, generally getting large chunks of revenue at inconsistent times.

But the company says it’s still on track to achieve its financial targets for the year, and it reaffirmed the full-year guidance for 2014.

Q2 results

Net sales for Q2 2014 were $544 million in the quarter, a decrease of $406 million from the first quarter of 2014. First Solar says the sequential decrease in net sales is primarily attributable to achieving revenue recognition on the Campo Verde project in the prior quarter and project delays in the second quarter, which resulted in the deferral of some revenue recognition to the second half of the year.

The company reported Q2 GAAP earnings per fully diluted share of $0.04, compared to earnings of $1.10 in the prior quarter. The decrease in net income compared to the prior quarter was again due to the Campo Verde project sale in the first quarter and project delays, partially offset by lower operating expenses.

Cash and Marketable Securities at the end of the second quarter were approximately $1.3 billion, a decrease of approximately $30 million compared to the prior quarter. Cash flows from operations were $118 million in the second quarter.

The company also maintained its full year 2014 earnings per share guidance of $2.40 to $2.80 and operating cash flow guidance of $300 to $500 million. This guidance is highly dependent on, among other factors, the construction progress and sales process related to utility-scale power plants. Any changes in expected timing of these activities would defer earnings and operating cash flow to subsequent fiscal periods and result in a substantial impact on these guidance targets.

Jim Hughes, CEO of First Solar, remained positive about the company’s outlook. “While project delays in Q2 resulted in deferring some earnings to later in the year we remain on track to our financial targets for the year and reaffirm our full-year 2014 EPS and operating cash flow guidance,” he said. “In addition I am proud of the execution by the organization as demonstrated by a new record cell efficiency and new bookings of over 800MWdc.”

An audio replay of First Solar’s earnings conference call is available until Monday, August 11, 2014 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 8760188. A replay of the webcast will be available on the Investors section of the company’s website for approximately 90 calendar days.

(Yet another) New efficiency record

This week, First Solar also announced a new world record for cadmium-telluride (CdTe) photovoltaic (PV) research cell conversion efficiency of 21.0%. That beats the company’s own record of 20.4% announced earlier this year. It’s significant because it represents a milestone as CdTe cell efficiency now exceeds the world records for both multi-crystalline silicon and CIGS thin film technologies.

The record was certified at the Newport Corporation’s Technology and Applications Center (TAC) PV Lab. The record-setting cell was constructed at the company’s Perrysburg, Ohio manufacturing factory and Research & Development Center, using processes and materials designed for commercial-scale manufacturing.

The record has been documented in the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) “Best Research Cell Efficiencies” reference chart.

This certified result represents the seventh substantial update to CdTe record efficiency since 2011. The achievement also places First Solar’s CdTe research cell efficiency above copper indium gallium diselenide based solar cells (CIGS) at 20.9%, and well above multicrystalline silicon (mSi), which peaked at 20.4% in 2004.

“We have just begun to reveal the true unrealized potential of CdTe PV,” said Raffi Garabedian, First Solar’s Chief Technology Officer. “Our Advanced Research team continues to deliver extraordinary results by creating practical devices capable of commercial scale production. Not only have we have now demonstrated the highest single junction thin film cell on record, but just as important, our record cells are based on the same scalable manufacturing processes and commodity materials that we have proven through years of volume production.”

Garabedian noted that while competing technologies are using increasingly costly materials and cell processes in order to deliver moderate performance gains, First Solar is establishing a rapid path to industry-leading energy densities, while simultaneously improving manufacturing metrics.

“Our significant investment in development of CdTe thin-film technology has enabled a rapid rate of improvement and gives us tremendous confidence in the future,” said Markus Gloeckler, First Solar Vice President for Advanced Research. “We have made outstanding improvements in all aspects of our thin-film solar cells and are aggressively pursuing the commercialization of these advanced technologies in our product.”

At an analyst briefing last March, First Solar presented a technology roadmap anticipating a 22% research cell efficiency milestone in 2015. Today’s announcement indicates First Solar is steadily tracking to achieve that goal ahead of schedule.

First Solar has continued to transfer its success in the R&D lab into its commercially produced modules, increasing its average production module efficiency to 14.0% in the second quarter of 2014, up 0.5% from the first quarter of the year, and up 0.7% from FY2013. The company’s lead line was producing modules with 14.1% average efficiency at the end of Q2 2014.