First Solar(US:FSLR)2019-08-02 01:24Financial Data and Key Metrics Changes - The company reported a second-quarter loss of $0.18 per share, attributed to increased variable compensation and tax expenses, but maintained full-year earnings per share guidance [4][33] - Net sales in Q2 were $585 million, an increase of $53 million compared to the prior quarter, primarily due to increased module sales and project sales [30] - Gross margin improved to 13% in Q2 from breakeven in Q1, with the systems segment gross margin at 18% and module segment gross margin at 5% [31] Business Line Data and Key Metrics Changes - The Series 6 program achieved record quarterly production and shipments, with 893 megawatts produced in Q2 and 322 megawatts in July, marking the best production month [13][11] - The company recorded 4.3 gigawatts of net bookings in 2019, including over 2 gigawatts since the last earnings call, with future expected shipments at 12.9 gigawatts [16][20] - The systems revenue accounted for 61% of total quarterly net sales, down from 63% in Q1 [31] Market Data and Key Metrics Changes - The U.S. solar market is seeing increased momentum with eight states adopting 100% clean energy goals and a projected increase in grid-connected energy storage to 2.5 gigawatts by 2023 [7][8] - Corporate power purchase agreements (PPAs) reached over 13 gigawatts in 2018, doubling from 2017, indicating strong corporate demand for solar solutions [8] Company Strategy and Development Direction - The company is focused on expanding its Series 6 production capacity and improving cost per watt, with a target of a 30% reduction from Q1 to Q4 [15][36] - The company plans to leverage synergies from its multi-factory operations to enhance production efficiency and throughput [14][50] - The company is also exploring options for additional capacity and efficiency improvements across its factories [52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growing demand for utility-scale solar driven by economic factors and community commitments to renewable energy [5][6] - The company acknowledged challenges posed by the exemption of bifacial panels from tariffs, which could impact competitive dynamics in the market [18][49] - Management highlighted the importance of maintaining a strong customer relationship and the ability to deliver on contracts as a competitive advantage [66] Other Important Information - The company is involved in an ongoing class action lawsuit, with a trial set to begin in January 2020, and is preparing to defend its position vigorously [25] - The company’s cash and marketable securities balance at the end of Q2 was $2.1 billion, with total debt reduced to $481 million [34] Q&A Session Summary Question: Update on cost per watt trajectory and bookings - Management confirmed satisfaction with the first-half cost per watt reduction and highlighted ongoing efforts to improve yields and reduce labor costs [44][45] - Bookings have remained strong, with new customer agreements secured post-bifacial exemption [47] Question: Insights on gross margins and capacity expansion - The gross margin impact from the Cove Mountain and Muscle Shoals projects was clarified, with higher margins recognized upfront [70] - Capacity expansion involves debottlenecking processes with minimal CapEx, allowing for potential rollout across the fleet [68]