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Thursday, April 30, 2009

First Solar 1Q:2009 results ( $FSLR )

First Solar reported revenues 20 mil better than expectations with a significant jump in gross margins to 56% versus expectations closer to 51%.  EPS were $1.99, better than mean expectations of $1.51 on the back of hedging gains and a one-time tax benefit.  The company reiterated their guidance of 1.9 – 2.0 bil for 2009 sales and generally sounded confident.

Last quarter First Solar had suggested they intended to use the strength of their balance sheet to build business.  They are certainly following through on that – they’re building plants on spec without owners.  Qualcomm did the same thing early in their life cycle – built networks to show it could be done efficiently and profitably, then resold them… like having a large scale demo.  Accounts receivable tripled to $184 mil on flat sequential sales – which would be a big red flag if the days outstanding wasn’t so low in the first place – the 38-39 days they’re showing now is still reasonable.  The company indicated their was still 10-15% default risk in their customer base – those customers may back out.

While their strategy of building plants in anticipation of buyers is risky and they are clearly providing more financing to customers during these uncertain times which can bite them in the ass later, their execution is excellent.  So far their courage is being rewarded -- the stock is up over 20 points in pre-market trading.

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