First Solar Inc. (FSLR - Analyst Report) reported adjusted third-quarter 2014 earnings of 61 cents per share, missing the Zacks Consensus Estimate by 3 cents. Quarterly earnings plunged 73.2% from the year-ago profit of $2.28 per share.

First Solar, Inc - Earnings Surprise | FindTheBest

After adjusting for a one-time tax benefit of 256 cents per share, third-quarter 2014 earnings came in at 87 cents per share compared with $1.94 per share a year ago.

The downside was mainly due to lower revenue generation as utility project sizes got smaller. Lower operating expenses, however, provided some relief.

Revenue

First Solar’s revenues for the quarter plunged 29.7% year over year to $889.3 million. The top line once again failed to meet the Zacks Consensus Estimate of $1,041 million.

Operational Highlights

Gross profit in the reported quarter was $189.3 million, down 48% year over year.

Total operating expenses decreased 32.4% year over year to $105.5 million during the third quarter largely due to the absence of restructuring and asset impairments charges.

Operating income of $83.8 million was down by a significant 59.7% from the year-earlier quarter.

Financial Performance

First Solar had $622.5 million of cash and cash equivalents as of Sep 30, 2014, down from $1,325.1 million at year-end 2013. Long-term debt was $163.6 million at the end of the third quarter 2014 compared with $162.8 million as of Dec 31, 2013.

2014 Guidance Lowered

First Solar lowered its 2014 revenue forecast by about 2.6% to a range of $3.6 billion to $3.9 billion, from its earlier projection of $3.7 billion to $4 billion.

For 2014, the company reaffirmed its earnings per share guidance in the range of $2.40 to $2.80. The company however revised its operating income projection, raising the low end of its guidance to $300 million from $290 million while keeping the high end unchanged at $340 million. Gross margin is expected in a range of 18% to 19%.

The company raised its operating expense guidance to $390−$400 million (380−$395 million earlier). The operating cash flow projection of $300 million to $500 million remained unchanged. The company maintained its 2014 production forecast at 8 gigawatt (GW) to 1.9 GW for 2014.

At the Peer

SunPower Corp. (SPWR - Analyst Report) reported third-quarter 2014 adjusted earnings per share of 30 cents, ahead of the Zacks Consensus Estimate by 7 cents. Earnings, however, dropped 31.8% from 44 cents in the year-ago quarter. Yet, it marked a 7.1% sequential increase.

Other Upcoming Releases

JA Solar Holdings Co., Ltd. (JASO - Analyst Report) is slated to release its third quarter earnings on Nov 18. The Zacks Consensus Estimate is currently at 15 cents.

Canadian Solar Inc. (CSIQ - Analyst Report) is scheduled to release its quarterly results on Nov 12. The Zacks Consensus Estimate is currently at $1.15.

Our Take

First Solar disappointed the Street consensus expectation in the third quarter because the largest U.S. photovoltaic panel maker expects to book new utility projects to replace the big desert projects that helped the company to score big marks last year. First Solar’s third-quarter 2013 revenues almost doubled as most of it came from the 550-megawatt (MW) Desert Sunlight project in Southern California. Desert Sunlight and the 550-MW Topaz project are the biggest in the U.S. First Solar now misses these big shots in its portfolio.

The company is busy building solar plants for major U.S. power companies rather than just supplying panels. The company booked 521 MW of new power-plant orders in the quarter, bringing the year-to-date figure to 1.7 GW.

First Solar presently has a Zacks Rank #4 (Sell).

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