First Solar Falls on Dismal Q2 Earnings, Maintains Guidance

First Solar Inc. FSLR reported weak second quarter 2014 earnings of 4 cents per share, badly missing the Zacks Consensus Estimate of 33 cents per share by 87.9%. Quarterly earnings also plunged 89.2% from the year-ago profit of 37 cents per share. The weak results pushed its share price down by 4.8% in after-hour trade.

The downside was due to the sale of the 139-megawatt MW Campo Verde Solar Project, located in Imperial County, CA in the first quarter as well as project delays that deferred the recognition of some earnings to the latter part of the year. Lower operating expenses, however, provided some relief.

Revenue

First Solar's revenues for the quarter climbed 4.7% year over year to $544.4 million. The top-line figure nevertheless failed to meet the Zacks Consensus Estimate of $789.0 million.

Operational Highlights

Gross profit in the reported quarter was $92.7 million, down 33.8% year over year.

Total operating expenses decreased 10.1% year over year to $90.8 million during the second quarter due to a 13% decline in selling, general and administrative expenses.

Operating income of $1.9 million was down by a significant 95.1% from the year-earlier quarter.

In the second quarter 2014, the company's net interest expense was $4.5 million versus $3.4 million a year ago.

Financial Performance

First Solar had $851.3 million of cash and cash equivalents as of Jun 30, 2014, down from $1,325.1 million at year-end 2013. Long-term debt was $133.8 million at the end of the second quarter 2014 compared with $162.8 million as of Dec 31, 2013.

2014 Guidance Intact

First Solar reaffirmed its 2014 financial guidance. For 2014, the company expects earnings per share to range between $2.40 and $2.80. The company expects operating income of $290 million to $340 million. The company also maintained its operating cash flow guidance of $300 million to $500 million.

Other Upcoming Releases

JA Solar Holdings Co., Ltd. JASO is scheduled to release its second quarter earnings on Aug 20. The Zacks Consensus Estimate is currently at 17 cents.

ReneSola Ltd. SOL is scheduled to release its second quarter earnings on Aug 12. The Zacks Consensus Estimate is currently at a loss of 15 cents.

Canadian Solar Inc. CSIQ is scheduled to release its second quarter earnings on Aug 13. The Zacks Consensus Estimate is currently at 57 cents.

Our Take

First Solar disappointed the Street consensus expectation in the second quarter due to some project delays. Yet, the company maintained its full year expectation. The company is busy building solar plants for major U.S. power companies rather than only supplying panels.

The company booked 800 MW of new power-plant orders in the quarter besides the 250-MW Silver State South and 50-MW Macho Springs projects.

First Solar presently has a Zacks Rank #1 (Strong Buy).