First Solar announced its second-quarter 2016 financial numbers.
- Net sales of $934 million, above consensus of $891 million, and an increase of $86 million from the previous quarter. The increase was driven by higher module-only sales.
- Gross margin was 20.5 percent, well above Street estimates.
- Backlog is down to $6 billion from $6.4 billion at the end of April.
- Discontinuing production of the TetraSun crystalline silicon product drove restructuring charges of $86 million.
In a recent analyst note, UBS noted that "solar stocks have continued to face pressure throughout 2016 due to worries about potential module overcapacity and pricing pressure, weaker project demand in China expected in 2H '16, and uncertainty over 2017 U.S utility-scale demand."
First Solar lowered its 2016 per-share guidance and updated other forecasted items as follows:
Mark Widmar, in his first earnings call as CEO of First Solar, said, "Our lead-line module efficiency exited the quarter at over 16.6 percent, and we further lowered our module cost per watt." The firm has reduced module costs by a percentage in the middle to upper teens over the last year.
Widmar spoke of "a reduction in EPC workforce" because of a reduced need for internal EPC resources. He noted that options were being explored for the disposition of the recently acquired O&M player skytron energy.
Utility-scale and community solar
According to GTM Research, First Solar currently has 2,397 megawatts (DC) of projects in development, which represents 10 percent of the contracted pipeline. With respect to projects in operation, First Solar currently has 3,177 megawatts, which is 1,792 megawatts ahead of the No. 2 player, SunPower.
First Solar "has sales bookings of 121 megawatts (DC) in utility-based community solar installations in the U.S," although the owner or offtaker was not disclosed. “This scale of community solar implementation is extraordinary, and suggests the enormous potential for this market segment,” said Georges Antoun, First Solar’s chief commercial officer.
In a recent interview with GTM's Julia Pyper, outgoing CEO Jim Hughes said, "I really think we're going to see the dominance of community solar as opposed to residential dominance."