- First Solar shipped 2.8 modules in Q3/2022 and produced 2.4 GW; signed new bookings of 16.6 GW since last earnings call
- It paid $30 million demurrage charge for excess storage fees for its containers and modules
- Logistics challenges forced it to change the annual FY 2022 guidance for net sales and shipment
- It will open an R&D center in Ohio worth $270 million with a pilot manufacturing line to produce full-size prototypes of both thin film and tandem PV modules
Sold out American solar module maker First Solar suffered a net loss of -$45 million in Q3/2022, while growing its net sales of $629 million by around 8% YoY. It reduced FY 2022 earnings guidance citing unforeseen logistics costs and announces $270 million investment in a dedicated R&D line at Ohio.
Logistics challenges
Higher module volumes sold from its plants in Malaysia and Vietnam led to an increase in net sales for the reporting quarter. During the reporting quarter, it shipped 2.8 GW modules and produced 2.4 GW. Company’s CEO Mark Widmar said even as overall shipping and logistics environment has started to ease, it continues to remain challenging.
CFO Alex Bradley added that the company had to pay a demurrage charge of approximately $30 million as excess storage fees charged as a result of containers and modules remaining in port beyond a contractually agreed period.
“Whilst the shipping environment over the past two years has largely been characterized by container shortages and transit times well above pre-pandemic norms, the recent significant reversal in vessel waiting times and container turnaround times, though welcomed on a long-term basis if sustained has created near-term logistical challenges,” explained Bradley.
Order bookings
The company has been signing a slew of new orders with delivery deadlines running way into the future till 2027. Having booked 16.6 GW of new bookings since the previous earnings call, it counts the company’s total YTD bookings of 43.7 GW.
The total backlog of future deliveries is now 58.1 GW, which does not include the contracted volume for India for which it claims to be sold out for 2025 and close to selling out for 2026 (see Azure Power To Source Modules From First Solar).
First Solar’s total booking opportunities stand at 114 GW, and its mid-to-late-stage opportunities of 71 GW include 62.5 GW in North America, 4 GW in India and 3.3 GW in the European Union (EU).
New R&D center
The company has announced a $270 million investment in a new dedicated R&D line at Perrysburg, Ohio which will be a 1.3 million sq. ft. innovation center, expected to be completed in 2024. It will feature a pilot manufacturing line where it will be able to produce full-size prototypes of both thin film and tandem PV modules.
First Solar said this facility is believed to be the 1st of its scale in the US. It already has R&D centers in California and Ohio. “This investment allows us to create an R&D sandbox separate from our commercial manufacturing operations, ensuring that we can accelerate innovation without the cost of taking mission-critical tools offline,” said Widmar.
Speaking to analysts, Widmar added the tandem product will initially target residential rooftop PV market pointing at the previously announced partnership with residential PV installer SunPower (see SunPower & First Solar To Collaborate Again).
Guidance
The company has revised its annual guidance for FY 2022 to expect net sales of $2.6 billion to $2.7 billion, changed from $2.55 billion to $2.8 billion previously. Gross profit is also now guided to between $75 million to $110 million, operating income is forecast as -$30 million to $20 million. Shipments will be within the range of 9.1 GW to 9.4 GW, up from 8.9 GW to 9.4 GW guided previously (see First Solar’s Q2/2022 Financial Results).
In his key takeaways from the call, financial analyst Jeff Osborne from Cowen said, “Overall 3Q22 results came in well below expectations as First Solar missed on both the top and bottom lines. That said, the company narrowed its revenue guidance for the year, now expecting to generate between $2.6-$2.7bn (was $2.55-$2.8bn), so we believe the miss in revenue is simply a function of timing recognition.” However, he also pointed to First Solar’s ‘strong bookings momentum during the quarter as it recorded 16.6 GW of new bookings since its prior earnings call in July.’ Moreover, and positive for First Solar, the company “was able to make certain amendments to existing contracts, increasing its backlog by $52mn across 1.4 GW for an ASP of $0.037 per watt and resulting in a portfolio average ASP increase of $0.012 per watt.”
