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Form 8-K FIRST SOLAR, INC. For: Aug 03

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August 3, 2016 4:13 PM EDT





UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2016


FIRST SOLAR, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
 
001-33156
(Commission File Number)
 
20-4623678
(I.R.S. Employer Identification No.)

350 West Washington Street
Suite 600
Tempe, Arizona 85281
(Address of principal executive offices, including zip code)

(602) 414-9300
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02.    Results of Operations and Financial Condition

On August 3, 2016, First Solar, Inc. is issuing a press release and holding a conference call regarding its financial results for the second quarter ended June 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

The information in this Form 8-K and in Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01.    Financial Statements and Exhibits

(d) Exhibits.
Exhibit Number
 
Description
99.1
 
Press Release of First Solar, Inc. dated August 3, 2016

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
FIRST SOLAR, INC.
 
 
 
 
Date: August 3, 2016
By:  
 
/s/ PAUL KALETA
 
Name: 
 
Paul Kaleta
 
Title:  
 
Executive Vice President and General Counsel

3


EXHIBIT 99.1
 
 
 
 
News Release

First Solar, Inc. Announces Second Quarter 2016 Financial Results
•
Net sales of $934 million
•
GAAP earnings per share of $0.13
•
Non-GAAP earnings per share of $0.87
•
Cash and marketable securities of $1.7 billion, net cash of $1.4 billion
•
1.4GWdc bookings year-to-date; 0.8GWdc of new bookings

TEMPE, Ariz., August 3, 2016 - First Solar, Inc. (Nasdaq: FSLR) today announced financial results for the second quarter of 2016. Net sales were $934 million in the quarter, an increase of $86 million from the prior quarter. The increase was due to higher module only sales, the sale of the Kingbird project and revenue recognition across multiple systems projects, partially offset by lower revenue from the Silver State South and Stateline projects which reached or neared completion in the quarter.

The Company reported second quarter earnings per share of $0.13, compared to $1.66 in the prior quarter. The second quarter was impacted by pre-tax restructuring charges of $86 million related primarily to the previously announced decision to end production of the TetraSun crystalline silicon product. Non-GAAP earnings per share, adjusted for TetraSun related charges were $0.87. Net income was also lower versus the prior quarter due to the mix of systems projects sold and under construction and a gain on the sale of certain restricted investments in the first quarter. In addition, results for the second quarter excluded approximately $20 million of profit on the Kingbird sale, which was not recognized in earnings during the period.

Cash and marketable securities at the end of the second quarter decreased to $1.7 billion. Cash flows used in operations were $75 million in the second quarter.

“Our operational execution in 2016 continues to be strong and resulted in another quarter of solid financial results,” said Mark Widmar, CEO of First Solar. “Our lead line module efficiency exited the quarter at over 16.6%, and we further lowered our module cost per watt. We sold our Kingbird project in Q2, and our steady execution across our portfolio of systems projects resulted in significant cost reductions. With our recent decision to reallocate capacity to focus on our Series 5 assembly capabilities we continue to position the Company for future success.”

The Company updated its 2016 earnings per share guidance and updated other forecasted items as follows:
2016 Guidance
Prior GAAP
Current GAAP
Current Non-GAAP
Net Sales
$3.8B to $4.0B
Unchanged
 
Gross Margin %
18% to 19%
18.5% to 19%
 
Operating Expenses
$380M to $400M
$485M to $520M
$380M to $400M
Operating Income
$300M to $370M
$205M to $250M
$310M to $370M
Effective Tax Rate
16% to 18%
4% to 6%
16% to 18%
Earnings per Share1
$4.10 to $4.50
$3.65 to $3.90
$4.20 to $4.50
Net Cash Balance2
$1.9B to $2.2B
Unchanged
 
Operating Cash Flow3
$500M to $700M
$500M to $650M
 
Capital Expenditures
$300M to $400M
$275M to $325M
 
Shipments
2.9GW to 3.0GW
Unchanged
 

1.
Includes a gain of approximately $145 million, net of tax, from the expected sale of an equity method investment and our share of 8point3 earnings and a gain in other income of approximately $20 million, net of tax, from the sale of restricted investments in Q1 2016
2.
Defined as cash and marketable securities less expected debt at the end of 2016
3.
Excludes approximately $320 million from the expected sale of an equity method investment treated as an investing cash flow

1
www.firstsolar.com



For a reconciliation of non-GAAP measures to measures presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”), see the table below.

First Solar has scheduled a conference call for today, Aug 3, 2016 at 4:30 p.m. ET to discuss this announcement. A live webcast of this conference call is available at http://investor.firstsolar.com/events.cfm.

An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Aug 10, 2016 at 7:30 p.m. ET and can be accessed by dialing 888-203-1112 if you are calling from within the United States or 719-457-0820 if you are calling from outside the United States and entering the replay pass code 1037324. A replay of the webcast will be available on the Investors section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.

About First Solar, Inc.

First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems which use its advanced module and system technology. The Company's integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today. From raw material sourcing through end-of-life module recycling, First Solar's renewable energy systems protect and enhance the environment. For more information about First Solar, please visit www.firstsolar.com.

For First Solar Investors

This release contains forward-looking statements which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements, among other things, concerning: effects on our financial statements and guidance resulting from certain tax matters; our business strategy, including anticipated trends and developments in and management plans for our business and the markets in which we operate; future financial results, operating results, revenues, gross margin, operating expenses, products, projected costs (including estimated future module collection and recycling costs), warranties, solar module efficiency and balance of systems cost reduction roadmaps, restructuring, product reliability, investments in unconsolidated affiliates and capital expenditures; our ability to continue to reduce the cost per watt of our solar modules; our ability to reduce the costs to construct PV solar power systems; research and development programs and our ability to improve the conversion efficiency of our solar modules; our ability to expand manufacturing capacity worldwide; sales and marketing initiatives; and competition. These forward-looking statements are often characterized by the use of words such as "estimate," "expect," "anticipate," "project," "plan," "intend," "seek," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," "continue" and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, the matters discussed in Item 1A: "Risk Factors," of our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed with the SEC.

Contacts

First Solar Investors
Steve Haymore
+1 602 414-9315

First Solar Media
Steve Krum
+1 602-427-3359

2
www.firstsolar.com



FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
June 30,
2016
 
December 31,
2015
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
916,660

 
$
1,126,826

Marketable securities
 
750,779

 
703,454

Accounts receivable trade, net
 
369,135

 
500,629

Accounts receivable, unbilled and retainage
 
172,892

 
59,171

Inventories
 
384,504

 
380,424

Balance of systems parts
 
92,796

 
136,889

Deferred project costs
 
112,512

 
187,940

Notes receivable, affiliate
 
372

 
1,276

Prepaid expenses and other current assets
 
276,971

 
248,977

Total current assets
 
3,076,621

 
3,345,586

Property, plant and equipment, net
 
1,268,267

 
1,284,136

PV solar power systems, net
 
410,759

 
93,741

Project assets and deferred project costs
 
1,247,114

 
1,111,137

Deferred tax assets, net
 
351,714

 
357,693

Restricted cash and investments
 
414,019

 
333,878

Investments in unconsolidated affiliates and joint ventures
 
427,243

 
399,805

Goodwill
 
78,888

 
84,985

Other intangibles, net
 
68,218

 
110,002

Inventories
 
103,885

 
107,759

Notes receivable, affiliates
 
22,254

 
17,887

Other assets
 
75,038

 
69,722

Total assets
 
$
7,544,020

 
$
7,316,331

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
263,062

 
$
337,668

Income taxes payable
 
1,518

 
1,330

Accrued expenses
 
354,525

 
409,452

Current portion of long-term debt
 
71,591

 
38,090

Billings in excess of costs and estimated earnings
 
110,514

 
87,942

Payments and billings for deferred project costs
 
94,316

 
28,580

Other current liabilities
 
56,503

 
57,738

Total current liabilities
 
952,029

 
960,800

Accrued solar module collection and recycling liability
 
167,740

 
163,407

Long-term debt
 
161,839

 
251,325

Other liabilities
 
457,767

 
392,312

Total liabilities
 
1,739,375

 
1,767,844

Commitments and contingencies
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 102,349,660 and 101,766,797 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
 
102

 
102

Additional paid-in capital
 
2,773,821

 
2,742,795

Accumulated earnings
 
2,974,083

 
2,790,110

Accumulated other comprehensive income
 
56,639

 
15,480

Total stockholders’ equity
 
5,804,645

 
5,548,487

Total liabilities and stockholders’ equity
 
$
7,544,020

 
$
7,316,331


3
www.firstsolar.com



FIRST SOLAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Net sales
 
$
934,381

 
$
896,217

 
$
1,782,865

 
$
1,365,426

Cost of sales
 
743,216

 
731,734

 
1,328,755

 
1,161,962

Gross profit
 
191,165

 
164,483

 
454,110

 
203,464

Operating expenses:
 
 
 
 
 
 
 
 
Research and development
 
32,931

 
29,479

 
63,118

 
64,235

Selling, general and administrative
 
63,776

 
70,901

 
131,279

 
138,589

Production start-up
 
55

 
6,970

 
55

 
13,620

Restructuring and asset impairments
 
85,532

 
—

 
85,532

 
—

Total operating expenses
 
182,294

 
107,350

 
279,984

 
216,444

Operating income (loss)
 
8,871

 
57,133

 
174,126

 
(12,980
)
Foreign currency loss, net
 
(2,723
)
 
(2,957
)
 
(5,963
)
 
(3,178
)
Interest income
 
6,529

 
6,058

 
12,935

 
11,122

Interest expense, net
 
(7,151
)
 
(826
)
 
(11,793
)
 
(1,020
)
Other income (expense), net
 
6,753

 
(792
)
 
42,306

 
(2,051
)
Income (loss) before taxes and equity in earnings of unconsolidated affiliates
 
12,279

 
58,616

 
211,611

 
(8,107
)
Income tax (expense) benefit
 
(9,047
)
 
33,340

 
(42,811
)
 
39,320

Equity in earnings of unconsolidated affiliates, net of tax
 
10,176

 
1,929

 
15,173

 
1,755

Net income
 
$
13,408

 
$
93,885

 
$
183,973

 
$
32,968

Net income per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.13

 
$
0.93

 
$
1.80

 
$
0.33

Diluted
 
$
0.13

 
$
0.92

 
$
1.78

 
$
0.33

Weighted-average number of shares used in per share calculations:
 
 
 
 
 
 
 
 
Basic
 
102,287

 
100,852

 
102,070

 
100,615

Diluted
 
103,875

 
101,607

 
103,281

 
101,631



4
www.firstsolar.com



Non-GAAP Financial Measures

In the press release above, we provided non-GAAP earnings per share for the three months ended June 30, 2016. We have included this non-GAAP financial measure to adjust for (i) restructuring and asset impairment charges associated primarily with the end of our crystalline silicon module production, (ii) write-downs of our crystalline silicon module inventories, (iii) contingent consideration adjustments related to the likelihood of achieving certain crystalline silicon module shipment milestones and (iv) the tax benefit associated with these items. We believe non-GAAP earnings per share, when taken together with corresponding GAAP financial measures, to be relevant and useful information to our investors because it provides them with additional information in assessing our financial operating results. Our management uses such non-GAAP financial measures in evaluating our operating performance. However, this measure has limitations, including that it excludes the effect of certain changes to our assets and liabilities and certain amounts that we may ultimately have to pay in cash. Accordingly, this measure that excludes certain restructuring and asset impairment charges should be considered in addition to, and not as a substitute for, or superior to net earnings per share prepared in accordance with GAAP. The following is the reconciliation of earnings per share prepared in accordance with GAAP to non-GAAP earnings per share (in millions, except per share amounts):
 
 
Three Months Ended
June 30, 2016
Net income
 
$
13.4

 
 
 
Restructuring and asset impairments
 
85.5

Write-downs of crystalline silicon module inventories
 
8.5

TetraSun contingent consideration adjustments
 
(7.4
)
Tax benefit*
 
(9.8
)
Non-GAAP net income
 
$
90.2

 
 
 
Weighted-average number of shares used for diluted earnings per share
 
103.9

 
 

GAAP earnings per share
 
$
0.13

Non-GAAP earnings per share
 
$
0.87


*Restructuring treated as a non-discrete item for tax purposes and will be reflected in the effective tax rate over the duration of 2016. The $9.8 million benefit is the year-to-date tax impact and the full year benefit is approximately $15 million.


5
www.firstsolar.com



In the press release above, we also provided non-GAAP guidance for our operating expenses, operating income, effective tax rate and earnings per share for the year ending December 31, 2016. We have included these forward-looking non-GAAP financial measures to adjust our GAAP projections of such financial measures for (i) restructuring and asset impairment charges primarily associated with the end of our crystalline silicon operations as described above, (ii) additional restructuring activities expected during the remainder of the year and (iii) the reversal of a liability associated with an uncertain tax position related to the income of a foreign subsidiary. Other GAAP charges, including those related to asset impairments, restructuring programs or litigation, that would be excluded from non-GAAP earnings per share are possible for the year ending December 31, 2016, but such amounts are dependent on numerous factors that we currently cannot ascertain with sufficient certainty or are presently unknown. These GAAP charges are also dependent upon future events and valuations that have not yet occurred or been performed. We believe these forward-looking non-GAAP financial measures, when taken together with our corresponding financial guidance based on GAAP, to be relevant and useful information to our investors because they provide them with additional information in assessing our financial operating results. Our management also uses such non-GAAP guidance in evaluating our operating performance. However, such measures have limitations, including that they exclude the effect of certain changes to our assets and liabilities, certain amounts that we may ultimately have to pay in cash and the resolution of certain matters with tax authorities. Accordingly, these forward-looking non-GAAP financial measures that exclude the aforementioned items should be considered in addition to, and not as a substitute for, or superior to financial guidance based on GAAP. The following is the reconciliation of financial guidance based on GAAP to the corresponding non-GAAP information (in millions, except per share amounts):

2016 GAAP to Non-GAAP Guidance Reconciliation
 
 
GAAP Guidance
 
Restructuring Charges1
 
Foreign Tax Benefit2
 
Non-GAAP Guidance
Operating Expenses
 
$485 to $520
 
($105 to $120)
 
—
 
$380 to $400
Operating Income
 
$205 to $250
 
$105 to $120
 
—
 
$310 to $370
Effective Tax Rate3
 
4% to 6%
 
$15 to $25
 
$35
 
16% to 18%
Earnings per share
 
$3.65 to $3.90
 
$0.85 to $0.90
 
($0.30)
 
$4.20 to $4.50

1.
$90 to $100 million of restructuring, asset impairment and related charges primarily associated with the end of our crystalline silicon module production and $15 to $20 million associated with other actions
2.
Expected tax benefit in Q3 2016 from the reversal of a liability associated with an uncertain tax position related to the income of a foreign subsidiary
3.
Effective tax rate reconciliation provides the estimated tax benefit associated with restructuring and asset impairment charges and the reversal of an uncertain tax position liability


6
www.firstsolar.com


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