27 February 2010


First Solar officers execute company stock transactions

First Solar Inc of Tempe, AZ, USA, which makes thin-film photovoltaic modules based on cadmium telluride (CdTe) as well as providing engineering, procurement and construction (EPC) services, says that several of its officers executed transactions in the company’s shares last week, as reported to the US Securities and Exchange Commission in Form 4 filings. The 22–26 February trading window is one of four annual open trading windows for First Solar’s directors and Section 16 officers.

In furtherance of a personal diversification plan, executive chairman Michael Ahearn (who was CEO from 2000 until 2009) sold 1.5 million shares of common stock in the open market, although he continues to own more than 1.5 million shares in First Solar. CEO Rob Gillette purchased 10,000 shares in the open market with his personal funds, and executive VP of marketing & product management TK Kallenbach purchased 1000 shares in the open market with his personal funds.

First Solar’s share price has fallen from more than $125 on 18 February to about $103. This came after reporting fourth-quarter revenue up 33% on Q3’s $480.9m to $641.3m, but net income down from $153.3m to $141.6m as gross margin fell from 50.9% to 41.5% (due to the rise in lower-margin EPC/project development business to 14% of sales). However, the share price has since rebounded somewhat to $105.75.

“First Solar’s management team has confidence in the 2010 financial guidance we gave on 18 February as well as the company’s prospects for long-term growth,” says Gillette. First Solar expects sales to rise about 35%, from 2009’s $2,066m to $2.7–2.9bn (including module sales of $2.1bn and EPC/project development sales of $600–800m). The firm correspondingly expects gross margin to fall from 50.6% to 38% (48–50% for modules, but only 5–6% for EPC/project development) and operating margin to fall from 32.9% to 23–24% (30–33% for modules, but only break-even for EPC/project development). Despite operating cash flow rising from $675m to $730–790m, free cash flow should fall from $395m to $180–290m, due to capital spending almost doubling from $280m to $500–550m, as well as start-up expenses of about $25m to expand the firm's manufacturing center in Kulim, Malaysia. Of the $500–550m in CapEx, First Solar is investing $365m in Malaysia to add eight production lines (in two production plants — plants 5 and 6 — consisting of four manufacturing lines each), starting operation in first-half 2011 at 427MW (bringing First Solar’s total annual capacity to 1.7GW).

“We continue to execute on our technology and strategic roadmaps and are making significant progress on our goal to make photovoltaic solar generation competitive with fossil fuel sources of electricity,” concludes Gillette.

See related item:

First Solar grows 33% sequentially, but project development hits profits

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