Hanwha Q CELLS (NASDAQ: HQCL) reported Q1 EPS of $0.33, $0.09 better than the analyst estimate of $0.24. Revenue for the quarter came in at $514.9 million versus the consensus estimate of $542.5 million.

Total module shipments were 912 megawatts ("MW") in the first quarter of 2016, exceeding the guidance range of 850 MW to 900 MW.

DIVESTITURE OF MODULE FAB IN KOREA

The Company decided to dispose its ownership interest of module fab located in Eumseong, Korea to Hanwha Q CELLS Korea Corporation, which is an affiliate of the Company and the current owner and operator of GW-scale cell fab in Jincheon, Korea.

The Parties have reached an agreement of the terms and valuation of the transaction, and it is expected to close before the end of the second quarter of 2016 subject to final approval by the boards and necessary regulatory approvals. Once consummated, Hanwha Q CELLS Korea Corporation will assume all outstanding assets and liabilities of the disposed module fab and the Company will receive cash proceeds of approximately $57 million subject to final approval by a special committee of the Board of Directors of the Company comprised of independent directors.

The Company expects following two key strategic benefits from this divestiture:

• Full optimization of manufacturing cost structure and operational efficiency by combining closely related cell and module manufacturing operations, both located in Korea, under a single entity, which are currently operated by two different companies.
• Improved liquidity and cash proceeds will be used to fund the Company's key strategic initiatives to further strengthen its core competencies including R&D investment and global expansion of sales and marketing operations.

OPERATION UPDATES and BUSINESS OUTLOOK

Capacity Status

As of March 31, 2016, the Company had annualized production capacities of 1,400 MW for ingot, 900 MW for wafer, 4,850 MW for cell and 4,800 MW for module. The Company is currently expanding its cell and module nameplate capacities to 5,200 MW and 5,200 MW respectively, which is expected to be completed by the middle of 2016.

1,000 MW for cell capacity as of the first quarter of 2016 and additional 400 MW for cell capacity to be added in 2016 of the aforementioned new cell capacity is from the production facility operated by Hanwha Q CELLS Korea Corporation, an affiliate of Hanwha Q CELLS Co., Ltd.

• Manufacturing Capacity (in nameplate MW)

Business Outlook

The Company provides the following guidance based on current operating trends and market conditions.

For the second quarter of 2016, the Company expects:

• Module shipments of 1,100 to 1,150 MW, of which approximately 15 to 20 MW will be allocated to the Company's own downstream projects, which will not be recognized in revenue.
• Gross margin of 19 to 20%

For the full year 2016, the Company expects:

• Module shipments of 4,800 to 5,000 GW, up from previous guidance range of 4,500 to 4,700 MW.
• Revenue-recognized module shipments in range of 4,600 to 4,800 MW.
• Capital expenditures of approximately $180 million, of which $100 million for capacity expansion and the remaining $80 million for manufacturing technology upgrades and certain R&D related expenditures.

For earnings history and earnings-related data on Hanwha Q CELLS (HQCL) click here.