First Solar weathers downturn, sees quarterly revenues dip, income rise; begins CEO search

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Despite the difficult economic conditions, First Solar saw its quarter-to-quarter revenues slip slightly while its income rose and its gross margin improved during the first quarter. The company also showed marked increases in its manufacturing production and capacity numbers, improvements in its annualized capacity per production line, and further reduction in its manufacturing cost per watt.

The thin-film PV company also announced that it had begun looking for a new CEO to replace long-time chief executive Michael Ahearn, who will step into a new role as executive chairman. 

Revenues for the quarter were $418.2 million, down from the 4Q2008 number of $433.7 million but well over the 1Q2008 figure of $196.9 million. First Solar’s net income rose from $132.8 million in the previous period to $164.6 million for the just-reported quarter, which represented a better-than-tripling of the 1Q08 total of $46.6 million. Gross margins improved 240 basis points, reaching 56.3% for the quarter.

Production capacity rose to 219.5 MW, up 26% from the previous quarter, as the company’s KLM module factories in Malaysia continued to ramp ahead of schedule. On an annualized basis, its production capacity per line inched upward by 4% compared to 4Q2008, reaching 49.4 MW.

Conversion efficiency popped a tenth of a percent, up to 10.9%, in its CdTe TFPV panels, while the manufacturing cost per watt dropped further below the $1 mark, to 93 cents, a reduction attributed to the lower costs incurred in the company’s Malaysian fabs, improved efficiencies, and higher throughputs.

First Solar, which added 479 MW in new module and systems order volume during the quarter, is largely sticking with its guidance for 2009, forecasting revenues in the $1.9 billion-$2 billion range and operating margins of 31-33%. The company still expects to top the 1-GW production capacity mark later this year, once the last of its four Malaysian facilities comes fully online, and to continue to drive down its industry-leading manufacturing cost-per-watt metric.

During the conference call with analysts, Ahearn (pictured) said that the search for a new CEO does not represent a pullback but rather a chance to expand the leadership team at First Solar. “It’s a natural evolution for the company… It’s healthy to inject new talent,” he noted. Praising the strength of the current leadership team and state of the organization, Ahearn said there is no timeline for finding the new chief exec.

Ahearn will remain very active in his new role as executive chairman. He will reallocate his time and focus on public policy development, a critical area where he sees a need for “radical market structure changes.”

In the press release announcing the executive search, Ahearn stated that “we are rapidly reaching the point where the evolution of the energy industry will be constrained not by technology or product costs, but rather by policies, programs, and institutions that cannot adapt rapidly to the innovations that are occurring in clean energy.

“Given First Solar’s leadership position in the industry, I believe we are in a unique position to make a valuable contribution to those policy discussions. This will require virtually full-time focus from the very top of the organization. As a major shareholder and founder of the company, I remain committed to its success.”

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