First Solar’s Q3/2021 Financial Results

Elevated Freight Costs Impact First Solar’s 3rd Quarter Business

First Solar’s Q3/2021 Financial Results

Even as its Q3/2021 shipments were ‘modestly below’ its expectations, First Solar guides for its in-transit volumes to improve in Q4/2021 as a large percentage of shipments come from the company’s Perrysburg factory and US distribution centers. (Source: First Solar, Inc.)

  • First Solar’s Q3/2021 net sales declined 37% on YoY and 7% QoQ basis to $584 million
  • It could not count around 820 MW of modules shipped for revenues as these remained in transit at Q3/2021 end
  • Management has reiterated net sales and shipment guidance for 2021, but expects extended transit times and freight costs to remain elevated into 2022

American CdTe solar thin-film module maker First Solar, Inc. has reiterated its 2021 net sales guidance despite its Q3/2021 net sales declining 37% over previous year and 7% over last quarter to $584 million. This is thanks mainly due to lower systems segment revenue, partially offset by an increase in module segment revenue.

During Q3/2021, its gross profit was 21.4%, down from 27.7% in Q2/2021 and 31.6% in Q3/2020.

Management admitted experiencing ‘extended transit times for ocean freight’ having impacted its Q3/2021 results, calling 2.1 GW shipments during the quarter as ‘modestly below’ its expectations. In India, its booking opportunities add up to over 17 GW since its capacity expansion announcement for this market.

CEO Mark Widmar pointed out to the analysts, “Despite this total shipment results, the global freight market continues to experience record levels of scheduled delays and reliability issues. As a result, approximately 820 MW of modules shipped, remained in transit at quarter end, nearly double that of the preceding four quarters and were therefore not recognized as revenue in the quarter.”

In the near future, First Solar continues to expect extended transit times and freight costs to remain at current elevated levels into 2022, but guides for its in-transit volumes to improve in Q4/2021 as a large percentage of shipments come from the company’s Perrysburg factory and US distribution centers.

The manufacturer increased its year-to-date (YTD) bookings to 10.5 GW DC taking its total booking opportunities to 44.9 GW DC with 21.4 GW DC in mid- to late-stage customer engagement.

First Solar produced 2 GW DC of solar modules and increased its top production bin to 465W, started construction of its Ohio fab, and also started ordering equipment of its 1st module factory in India, according to  Widmar (see First Solar’s 3.3 GW DC Ohio Fab Enters Construction).

First Solar continues to forecast between 7.6 GW to 8.0 GW shipments and $2.87 billion to $3.1 billion net sales in 2021 (see First Solar Q2/2021 Revenues Declined To $629 Million).

Jeff Osborne, analyst at Cowen, drew the following conclusions from First Solar’s Q3 results. “Management has some wood to chop in ’22, with the buildout of 2 facilities in the U.S. & India coupled with a transition to its new CuRe technology. Against this backdrop we have higher logistic costs and a lack of meaningful project sales. However, as 2023 progresses and CuRe transition is behind them, with S7 ramping and visibility to 16+ GWs of capacity, we see a path to a $5-$6 EPS run rate,” up from a $4.37 estimate for 2021 and $1.13 for 2022, he wrote in a note to investors.

About The Author

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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