First Solar, Inc. (Nasdaq: FSLR) on Thursday announced an increase in 3Q profit, but the company’s share price has dropped steeply in the last two days of trading–due perhaps to concerns over the company’s shrinking margins.
3Q10 net income per fully diluted share was $2.04, up from
$1.84 in 2Q10 and up from $1.79 in 3Q09. That figure beat Wall Street
expectations, as analysts polled by Thomson Reuters expected a profit of
only $1.95.
However, First Solar’s share price fell steeply from Thursday’s closing
price about $151 per share to an opening price of $139.19 on Friday.
Trading has continued downard to around $135 in Monday mid-morning
trading.
A Dow Jones report credits the fall to a fifth-straight quarter
of decreasing margins for the thin-film solar company. 3Q10 gross margin narrowed to 40.3% from 50.9%, suggesting that dropping module pricing may be outpacing the company’s ability to drop production costs.
Nonetheless, the company said the increased quarterly profit was teh result of increased module production and decreased per-watt production costs.
3Q net income includes a one-time tax
expense of $14.7 million, or $0.17 per fully diluted share, relating to
the Company’s decision to repatriate $300 million of earnings from
certain of its foreign subsidiaries. Quarter over quarter, the net
income increase was primarily driven by higher net sales partially
offset by the one-time tax expense.
3Q10 net sales were $797.9 million, an increase of $210.0 million from 2Q10, primarily due to increased system sales (driven principally by the sale of the 60 megawatt (AC) Sarnia Phase 2 project in Canada), partially offset by a decline in module average selling prices and lower blended euro exchange rates. Quarterly net sales grew 66% from $480.9 million in 3Q09.
For full-year 2010, First Solar projects:
- Net sales of $2.58 to $2.61 billion, increased from the previous guidance range of $2.5 to 2.6 billion.
- Earnings per fully diluted share of $7.50 to $7.65, increased from the previous guidance range of $7.00 to $7.40.
- Total capital spending of $550 to $600 million.
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