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4 November 2009


First Solar raises full-year revenue guidance to high end of prior range

For third-quarter 2009, First Solar Inc of Tempe, AZ, USA, which manufactures thin-film photovoltaic modules based on cadmium telluride (CdTe), has reported revenue of $480.9m. This is up 38% on $348.7m a year ago but down 8.6% from $525.9m last quarter, despite shipping all modules that were produced.

This is because, in contrast to Q2 being boosted by $27m deferred from Q1 (for the 53MW Lieberose project with renewable energy firm juwi near Cottbus, Germany), First Solar was unable to recognize $58m of revenue shipped to its 20MW project near Sarnia, Ontario, Canada (which was two-thirds completed at quarter end, and should be completed in December), since the contract for the project’s sale to Toronto-based energy distributor Enbridge Inc was not signed until early Q4. Sarnia is the first Canadian project from First Solar’s acquisition in April of the project development business of OptiSolar Inc of Hayward, CA (a pipeline of more than 1GW of projects).

Production from First Solar’s 22 production lines amounted to 292.4MW in Q3, up 1% on last quarter. Annualized capacity per production line was 53MW, up 2.5% due to not only improved throughput but also conversion efficiency (11%, up from 10.9% last quarter and 10.7% a year ago). This brings total existing and announced annual capacity to 1.4GW.

Manufacturing cost was $0.85/Watt, down from $0.87/W last quarter and $1.08/W a year ago, driven by the higher throughput and conversion efficiency as well as lower material costs. “We expect continued throughput and conversion efficiencies and material cost improvement, in line with our long-term cost roadmap, partially offset by near-term ramp cost associated with the Perrysburg expansion,” says chief financial officer Jens Meyerhoff. During the quarter, First Solar started to decommission its original line 1 in Perrysburg, OH as it transitions the site to a four-line configuration. The expansion is on track to ramp up in first-quarter 2010.

Despite the reduced manufacturing and materials costs, gross margin was 50.9% in Q3, down from 56.7% last quarter due to the effect of a more competitive pricing environment, customer mix and foreign exchange rates.

Net income was $153.3m, down from $180.6m last quarter but up from $99.3m a year ago.

Operating cash flow of $179m minus capital expenditure of $65m yielded free cash flow of $114m (compared to minus $41m last quarter). Total cash has hence risen from $777m to $830m (offset by debt repayment of $49m for the financing of First Solar’s manufacturing site in Frankfurt/Oder, Germany).

“We made significant progress in Q3 building our pipeline of business for the future in new markets,” says executive chairman Michael J. Ahearn. During the quarter, First Solar signed power purchase agreements (PPAs) totaling 550MW with Southern California Edison (300MW at Stateline, 250MW at Sunlight) and a 55MW PPA with Los Angeles Department of Water and Power (in Niland). It also announced a memorandum of understanding with China’s Ordos City in Inner Mongolia to develop a 2GW solar power plant (by 2020) and was selected by Juwi for 27MW of US installations (in Florida and Ohio). In addition, Enbridge is a major player in the natural gas business in Canada and the USA and will be a significant ongoing customer, believes First Solar.

For fourth-quarter 2009, First Solar expects revenue of $550-600m and positive free cash flow after CapEx of $50-65m.

For full-year 2009, the firm now expects revenue of $1.975-2.025bn (at the high end of the previous guidance range of $1.9-2bn), capital expenditure of $260-275m (down from guidance of $270-300m) and plant start-up costs of $14m (up from the prior estimate of $10m).

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