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First Solar shares fall with management shuffle

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


First Solar shares fall with management shuffle

shares fell morethan 6% in after-hours trading April27 after the company announced that James Hughes is resigning as CEO and that themanufacturer and project developer reported first-quarter revenue that fell shortof analysts' estimates.

The companyreported net income of $170.6 million, or $1.66 per diluted share, on net salesof $848.5 million. Analysts expected earnings of 97 cents per share on $962.3 millionin revenue, according to S&P Global Market Intelligence consensus estimates.

Earningswere helped by an amended sale agreement with Southern Co. that accelerated earnings on the 300-MW solar projectin California, as well as systems cost improvements. Those items were partiallyoffset by higher tax expenses.

The companymaintained 2016 guidance for net sales at $3.8 billion to $4 billion and raisedguidance for annual earnings per share to $4.10 to $4.50 from $4 to $4.50. Expectedshipments were unchanged at 2,900 MW to 3,000 MW.

The earningsguidance included a gain of approximately $145 million, net of tax, from the expectedsale of an equity method investment, a share of the yieldco 8point3 Energy Partners LP, which the company cosponsorswith SunPower Corp., aswell as a gain of approximately $20 million, net of tax, from the sale of restrictedinvestments in the first quarter.

Lastyear, First Solar reported earnings of $5.37 per share, with net sales of $3.6 billion.Shipments totaled 2,900 MW. The company has not provided guidance for 2017.

"Pending[2017] commentary, we expect the stock to come under pressure on largely unchangedestimates and the unexpected management transition within a team that is widelyheld to be among the strongest in the solar industry," Avondale Partners LLCsenior analyst Michael Morosi wrote in a client note after First Solar reportedearnings.

Shareswere trading at $58.15 after hours on April 27 after closing at $62.03. The company'sshares are down about 4% since the start of the year.

In theleadership shuffle, First Solar CFO Mark Widmar will take over as the company'schief executive on July 1. Hughes will continue advising the company.

"Aswe enter a new phase of growth and development for the company, we believe Mark'sproven leadership and expertise make this an ideal time for him to take the helm,"First Solar Chairman Michael Ahearn said in a news release. "Under Jim's astuteguidance, First Solar achieved the strongest technology position in our history,with record bookings of new business and unparalleled financial strength in theindustry."

Hughessaid he spent the past four years working to improve First Solar's technology andlower costs while navigating market uncertainty stemming from the looming expirationof the 30% investment tax credit. With Congress' decision to extend the incentiveat the end of last year, Widmar takes over a company with a clearer view of demand,Hughes said. The business should be "a little less lumpy" and "alittle more robust," he added.

FirstSolar reported earnings six days after SunEdisonInc. filed for bankruptcy in New York. Hughes said it is too early toknow what the company's failure could mean for the solar industry. The impact "willplay out very slowly," he said.