First Solar Q3 Highlights

First Solar FSLR reported its third quarter earnings on Friday. Shares of the company are fairly 10%. Below are some key highlights from its conference call: • Production in the quarter was 449 megawatts DC, which was essentially unchanged from the prior quarter • Our factory capacity utilization was 77%, down 3 percentage points from the prior quarter. • Factory utilization was down sequentially due to the rollout of our anti-reflective coating technology. • The average conversion efficiency of our modules was 14.2% in the third quarter, which is up 20 basis points quarter-over-quarter and 90 basis points higher year-over-year. • Our best line ran at 14.3% efficiency during the quarter, an increase of approximately 20 basis points from the prior quarter. • On a reported basis, third quarter operating income was $84 million compared to $2 million in Q2. • The increase was due to higher sales in gross margin, partially offset by higher operating expenses. • Third quarter GAAP net income was $88 million, or $0.87 per fully diluted share, compared to $0.04 per fully diluted share in the second quarter. • The third quarter results included a one-time tax benefit of $0.26 per share associated with the expiration of the statute of limitations on a discrete uncertain tax position. • Adjusted for this one-time item, earnings per share for the quarter would've been $0.61. • Turning to slide 12, I'll review the balance sheet and cash flow summary. • Cash and marketable securities decreased by approximately $234 million to $1.1 billion. • Our net cash position decreased to just under $900 million. • The decrease in cash was expected as we continue to build Solar Gen 2 and other self-developed projects on balance sheet in the third quarter. • Our debt increased by $23 million in the third quarter with $56 million of the increase related to the funding of the construction of our 141-megawatt • AC Luz del Norte project. • The cash flow guidance range of $300 million to $500 million. • However, note, it is important to highlight this as just a timing issue between Q4 of 2014 and Q1 of 2015. • Finally, our guidance assumes we sell 100% of the interest of Solar Gen. As communicated in the announcement on the sale to Southern, subject to certain terms and conditions, we may retain a minority interest in the project. • If we elect to do this, it will most likely result in achieving the low end, or potentially slightly below, the revenue earnings and cash flow guidance.