02 Mar 2022

First Solar Shares Sink After Revenue Miss, Disappointing Guidance

02 Mar 2022  by   

A worker installs First Solar Inc. photovoltaic solar panels at the Agua Caliente Solar Project in Yuma County, Arizona. Joshua Lott | Bloomberg | Getty Images

Shares of First Solar dropped more than 16% during extended trading Tuesday after the company reported missing revenue expectations during the fourth quarter and issued weak full-year guidance.

The solar-panel manufacturer has faced rising raw material costs and supply chain bottlenecks.

Here’s how the company did in its fourth-quarter results relative to estimates compiled by Refinitiv:

EPS: $1.23 per share vs. $1.06 expected

Revenue: $907 million vs. $918 million

First Solar’s full-year guidance also came up short of Wall Street’s expectations. The company expects revenue between $2.4 billion and $2.6 billion, while Wall Street was calling for $2.76 billion.

The company expects earnings per share to be between breakeven and 60 cents for the full year, well short of the $1.92 analysts were expecting.

First Solar CEO Mark Widmar said the solar-manufacturing industry faced a year of “supply chain, logistics, cost and pandemic-related challenges.”

The company also announced that it’s in advanced-stage discussions to sell its project development and operations and maintenance platform in Japan.

Looking ahead, Widmar said 2022 will be a “pivotal year,” with “significant investment” across manufacturing expansion, new producers, R & D and new contracting strategies.

But, on the conference call following the company’s quarterly update, management conceded that 2022 is expected to be a challenging year from an earnings standpoint, especially due to elevated freight costs. Prices for contracted volumes have risen between 200% and 300% above pre-pandemic levels, First Solar said. In 2022, the company expects contracted freight rates to jump 100% year over year.

Along with elevated costs, transit times also have increased, while “reliability and availability has significantly worsened, pushing more volume into a higher price spot market.”

The company also pointed to rising commodity costs, including a 40% jump in steel prices throughout 2021.


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