First Solar announces surprise Q4 loss, considers sale of its development business

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First Solar’s financial results for the fourth quarter and full year 2019 included a surprise loss and a massive announcement.

The big news, aside from the numbers, was First Solar’s intention to evaluate its options regarding its U.S. project development business. The company is currently employing “a third-party EPC model.”

Mark Widmar, the CEO of First Solar said that the company  “…at its core, is a technology and module manufacturing company. Given the significant evolution of developing utility-scale PV projects in the United States, we believe now is an appropriate time to evaluate our options with respect to our U.S. project development business line.”

The statement continued: “The consideration of potential options for its U.S. project development business by First Solar is at a preliminary stage and may not result in any transaction being consummated.”

Shares of the vertically-integrated U.S. thin-film solar firm fell 14 percent on Friday, after an unexpected quarterly loss and sales that missed analyst targets.

  • The company lost $59 million in the fourth quarter compared to a profit of $52 million a year ago.
  • Sales were up to $1.4 billion in the quarter, compared to $691 million a year ago
  • Net sales for 2019 were $3.1 billion
  • 6.1 GW of solar was booked in 2019, 0.7 GW has been booked in 2020, so far

The CEO added, “Despite our reported loss, I am pleased with the continued execution of our Series 6 roadmap.”

First Solar provided 2020 guidance.

  • Net sales $2.7 billion to $2.9 billion with third party module net sales expected to comprise approximately 70% of the total net sales.
  • Gross margin:  26% to 27%
  • Earnings per share: $3.25 to $3.75
  • Shipments: 5.8 GW to 6.0 GW

This announcement confirms a rumor that First Solar was moving out of the development business. Vertical integration, as SunPower has also learned, doesn’t seem to be the optimum corporate structure at this stage of the solar market.