correction: corrects intro to say the company forecast 2010 sales guidance above analysts' expectations.
Wednesday, solar module maker First Solar, Inc. (FSLR) provided its fiscal year 2010 financial guidance that is indicated to come in line with the Street estimates, while sales are expected to come in above the Street expectations. The company has also forecast its capacity level to increase with the addition of eight production lines at its manufacturing center in Kulim, Malaysia that starts production in the first half of 2011.
The Tempe, Arizona-based company said it expects fiscal year 2010 earnings to be in the range of $6.05 - $6.85 per share. Sales for the fiscal year 2010 are projected to be in the range of $2.7 billion - $2.9 billion.
On average, analysts polled by Thomson Reuters currently expect the company to earn $6.55 per share for fiscal 2010, on revenues of $2.40 billion. Analysts estimates typically exclude special items.
First Solar also indicated plans to invest $365 million capital to add two production plants, consisting of four manufacturing lines each. The expansion is expected to increase First Solar's annual capacity by 424 megawatts, assuming the third quarter 2009 reported annual line run rate of 53 MW.
In addition to the Malaysian expansion project and the previously announced two-line factory in France, First Solar expects to add 10 production lines during 2010 and 2011, increasing capacity by over 48% from current levels, bringing its annual or announced production capacity to about 1.8GW based on current production levels.
First Solar anticipates consolidated gross margins for fiscal year 2010 to be 38% with operating margins of 23% - 24%, influenced by a mix shift to the systems business, which includes $0.6 billion - 0.8 billion of EPC/project development.
Total capital spending is projected to range from $500 million to $550 million, including the Malaysian expansion. As a result, the company expects to generate $730 million to $790 million of operating cash flow and $180 million to $290 million of free cash flow.
The company expects to record start-up expenses of about $25 million related to the Malaysian expansion project. Stock-based compensation is projected to be $95 million to $105 million.
Other assumptions include a tax rate of 15%, annual blended euro exchange rate of $1.38, based on a 2010 spot rate of $1.40 per Euro, and shares outstanding of 86 to 87 million.
Commenting on the guidance, First Solar chief executive officer, Rob Gillette said, "First Solar is expanding capacity to satisfy a global contracted and advanced pipeline of over six gigawatts from 2010-2012. In 2009 we increased our contracted North American pipeline by approximately 1.5GW, expanding our penetration in transition markets. This drives further capacity needs around a demand pool that is less volatile and more predictable than the traditional feed in tariff-based markets."
On October 2009, while reporting its third quarter results, First Solar said it expects full-year 2009 revenue in the range of $1.975 billion to $2.025 billion, which is at the higher end of the earlier issued guidance range.
Analysts currently expect the company to report revenues of $2.00 billion for the full year 2009.
Amongst competitors, The San Jose, California-based Xilinx Inc. (XLNX) last week raised its third quarter sales and gross margin outlook, citing broad-based strength across all end market categories and geographies. Xilinx now expects third quarter sales to be 16% to 20% higher sequentially.
Wednesday, FSLR closed at $136.74, down $2.25 or 1.62%, on a volume of 3.69 million shares on the Nasdaq. The stock, however, gained 6.05% or 4.42%, at $142.50 in after hours trading.
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