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.