Here’s a refreshing change: Some positive news about a solar company.
First Solar [FSLR], a prominent stock in the beleaguered solar sector that has held up relatively well of late, posted earnings for the quarter ended June 30, and the numbers were well ahead of what Wall Street had been expecting. The stock shot up 7 percent in aftermarket trading on the news.
First Solar’s revenue grew to $267 million in the quarter, 36 percent above the $196 million in the previous quarter and more than three times larger than the $77 million in the second quarter of 2007. Analysts were looking for revenue of $217 million.
Net income came in at $69.7 million, or 85 cents a diluted share. That was not only above the 57 cents from the previous quarter, but far ahead of the 58 cents a share in profit that Wall Street had been expecting.
Michael Ahearn, CEO of First Solar, said in a conference call that production rose to 114.1 megawatts in the quarter. “We continue to ramp capacity in our new production facilities,” Ahearn said, noting that construction of new facility being constructed in Malaysia was also “proceeding well.”
“Looking at our production volumes in relation to market demand, we were able to increase throughput in existing production lines faster than conceived and to bring up new lines at a faster rate,” Ahearn said.
CFO Jens Meyerhoff said he expects revenue for all of 2008 to come in between $1.175 billion and $1.225 billion as more production lines open up. The midpoint of that range, $1.2 billion, would be 138 percent above 2007 revenue of $504 million and higher than the $1.04 billion that analysts had been forecasting.
As First Solar’s revenues grow, its margins are expanding. Gross profit came in a 54.2% of revenue, compared with 36.7% a year earlier. Operating profit was 33.2 percent in the quarter, up from 7.5 percent a year ago. Meyerhoff said operatng margins for the full year would come in between 31 percent and 33 percent, slightly lower than the second quarter margin.
For the most part, First Solar’s stock has been trading between $250 and $300 for several months, holding up relatively well as other solar stocks have slumped. First Solar’s stock rose as high as $305 in the hour after releasing its earnings, up 7% from the official close and approaching the record high of $317 reached in May.
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