First Solar Inc. (Nasdaq: FSLR) today announced 2010 financial guidance and plans for the addition of eight production lines at its manufacturing center in Kulim, Malaysia to start production in the first half of 2011.
Fiscal year 2010 net sales are projected to be $2.7 to $2.9 billion, with earnings per share (EPS) of $6.05 to $6.85. The Company plans to invest $365 million of capital to add two production plants, consisting of four manufacturing lines each. This expansion is expected to increase First Solar’s annual capacity by 424 megawatts (MW), assuming the 3Q09 reported annual line run rate of 53 MW.
“First Solar is expanding capacity to satisfy a global contracted and advanced pipeline of over six gigawatts (GW) from 2010-2012,” said Rob Gillette, First Solar CEO. “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.”
With the announced expansion in Malaysia 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 First Solar’s annual or announced production capacity to approximately 1.8GW based on current production levels.
In 2010, First Solar forecasts net sales of $2.7 to $2.9 billion. Consolidated gross margins are expected to be 38% with operating margins at 23-24%, influenced by a mix shift to the systems business, which includes $0.6-0.8 billion of EPC/project development.
Start-up expenses associated with the Malaysian expansion are projected to be approximately $25 million, and stock-based compensation is projected to be $95 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/Euro), and diluted shares outstanding of 86 to 87 million. EPS is projected in the range of $6.05 to $6.85.
Total capital spending is projected to range from $500 to $550 million, including the Malaysian expansion. As a result, the Company expects to generate $730 to $790 million of operating cash flow and $180 to $290 million of free cash flow.
The Company has posted a presentation describing this guidance, including additional details regarding the key assumptions relating to this guidance, on the Investor section of its website.
In Related News..
EDF Energies Nouvelles (EDF EN) (EEN.PA) and the European Investment Bank (EIB) announced a memorandum of understanding to set up a financing structure for solar photovoltaic projects in France and Italy to be supplied by First Solar.
The total amount allocated by the EIB stands at EUR 500 million.
The investment program coveres projects located in 2010-2012 period. These projects, which are currently under development or under construction, will all be equipped with thin-film modules produced by First Solar.
The financing framework agreement states that each project will be implemented jointly with several commercial banks, each financing allocation being independent of the others. The EIB’s contribution will represent up to 50% of the total financing of each project.
Two pilot projects, the Gabardan ground-based solar farm in France (three 12 MWp tranches, Landes) and the Loreo ground-based solar farm in Italy (12.5 MWp, Veneto) will be financed in early 2010 under this agreement. The financing structure to be implemented will then be replicated for each of the subsequent investments carried out under the program.