First Solar constrained on revenue projections for year despite Q1 performance



Leading photovoltaics energy provider, First Solar, has reported first quarter 2014 revenue well above guidance on a PV project pull-in but reiterated full-year revenue guidance would be unchanged at up to US$4 billion.

The company reported first quarter revenue of US$950 million an increase of US$182 million from the fourth quarter of 2013, primarily from the pull-in and completion of its Campo Verde project in the quarter. Management noted in an earnings call that revenue was partially offset by lower revenue recognition in its Desert Sunlight project, due to fewer PV power blocks being completed. First Solar had guided revenue of US$800 million to US$900 million.

Although the company guided a small increase in gross margin (17-18%) for the year, compared to its previous forecast of between 16-18%, significantly lower second quarter revenue guidance would mean full-year revenue guidance remains unchanged at US$3.7 billion to US$4 billion.

A number of major projects were completed in 2013, while the company was unable to fully replenish its project pipeline for 2014 and beyond.

Project pipeline update

Critical for First Solar’s revenue growth over the next few years is filling-out its future pipeline that will also enable the company to return to full manufacturing capacity and take advantage of its continued module efficiency gains and lower manufacturing costs as part of its technology roadmap.

The company said that its business development team booked 404MW (DC) of new business year-to-date, exceeding shipments of 312MW in the quarter, generating a book-to-bill ratio of over 1.

Included in the project bookings was the 53MW Shams Ma'an PV project in Jordan that First Solar is providing EPC and operations services as well as recently announced projects totalling 43MW for EDF Renewable Energy.

The company also won an EPC contract for a 150MW project in California with a so far unidentified customer. First Solar said that  construction of the project was forecasted to begin later in 2014 with full commercial operation expected in mid-2016.

Management also noted that its PV project “opportunity set” increased from 10.6GW to 12.2GW, indicating that its pipeline backlog was being replenished for next year and beyond. Mid-to-late-stage opportunities were said to have increased by 250MW to 1.25GW.

The near-term project pipeline includes 600MW in the south east region of the US, with a total North America pipeline standing at 6.9GW, accounting for 57% of the total.

Manufacturing update

First Solar’s complete module manufacturing line upgrades are ongoing but the impact from high relative capital expenditure over the last 24-months is starting to pay-off with its lead production lines reaching an average efficiency of 14.2% in the first quarter.

The average module conversion efficiency across all production lines reached 13.5% in the quarter. Management noted that days before reporting first quarter results, nearly all of its 24 production lines had achieved conversion efficiencies of 14% or higher.

First Solar has two further efficiency improvement programs planned for the second half of the year to keep pace with its aggressive efficiency and lines productivity roadmap. The company noted that capital expenditures in the first quarter totalled US$51 million.

However, production utilisation rates remain lower than any of its major rivals at 82% in the quarter, 1% down from the previous quarter. Production line upgrades including process material changes were behind the small utilisation rate decline, according to the company.

Higher production line throughput due to the upgrades is masking overall productivity improvements though it can be assumed with a stronger project pipeline in 2015, utilisation rates should climb considerably nearer the end of this year. 

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