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Luz del Norte

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Luz del Norte last won the day on October 26 2019

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  1. What exactly was so bad about those earnings? If you look at only the S6 you will see that is has similar margins to Enphase with more than double the revenue. Yet Enphase now has a larger market cap. When FSLR gets out of the systems development business its earnings will stop being so erratic and start to be kind of boring.
  2. If you don't see improvement in First Solar's business I don't know what to tell you. The company has been undergoing two major transitions and remained profitable except for the settlement of an 8 year old litigation matter. While the change from the small S4 to the S6 was much discussed, the shift away from systems business has largely gone under the radar. Going from a 70/30 systems/modules business to 30/70 (and what looks like 0/100 in the future) does things to revenue. The biggest news in the earnings, though, seems to be that the company is still getting more than 30 cents/W in 2022, the year after the Trump tariffs expire. For 2021 the company will sell 8GW of modules for around 14 cents/W in profit.
  3. So the subsidy is going to be $216M rather than an expected $252M? A $36M drop doesn't seem to be all that significant.
  4. The question is how will exempting bifacial panels from the Section 201 tariffs affect the US market and First Solar in particular. Considering that the tariffs were set to expire in 2022, predictions about 2024 are irrelevant. If the US bifacial market grows from 500MW to 2GW as the article suggests in 2020, it doesn't seem like the impact will be all that great. The total world supply of bifacial next year is not that large and i am not sure companies will rush to convert production lines given how erratic the Trump administration is. The loophole didn't seem to affect First Solar all that much when it was first created in June.
  5. I am not Klothilde and I don't think there is any need for spin, but I do think bifacial has been overhyped so far. 2.6 GW of bifacial was installed in 2018 and 5.4 will be installed this year. Virtually all of that has been in China. Despite the hype there isn't a whole lot of bifacial on the market and performance data is limited. I doubt too many developers want to be guinea pigs testing out the technology. Degradation is a very serious issue with PERC panels. There are solar farms in existence that have experienced degradation of 20% in only 2-3 years of operation. A year ago someone bought PERC modules from several vendors and found most of them had over 5% LeTID degradation in just a few weeks. Degradation with bifacial seems to be even worse. I would imagine most developers would rather build farms that they know will be profitable than build ones that might be slightly cheaper but could force them into bankruptcy because a new technology did not turn out to work as expected. https://www.researchgate.net/publication/333211247_Physics_of_potential-induced_degradation_in_bifacial_p-PERC_solar_cells
  6. The company has over $1B in project assets. When these sell the revenue will add to the net cash position, whether as cash or by removing debt from the books. In addition, the $2B spent on factories is starting to depreciate, leading to a rather sizable positive cash flow boost. After this quarter FSLR has only around $100M left to spend on building the factories. Cash flow will grow significantly over the next two years.
  7. The company planned on spending $120M on startup (OPEX) and ramp (COGS) expenses. The original plan was for $95M startup and $25M ramp. When the factories went into production earlier than expected this changed to $45M startup and $75M ramp. OPEX is not used for gross margin calculations so this shift cause the GM to drop. Most of the factory costs will be considered a cost of goods sold and so will have little impact on OPEX. From the 10Q, "In addition, our cost of sales includes direct labor for the manufacturing of solar modules and manufacturing overhead, ...depreciation of manufacturing plant and equipment, facility-related expenses, environmental health and safety costs, and costs associated with shipping, warranties, and solar module collection and recycling (excluding accretion). " First Solar differs from the c-Si companies because it considers shipping, warranty and recycling a COGS rather than an operating expense.
  8. Once again, you are arguing in bad faith. First Solar predicted gross margins of 20-21% on its guidance call last year. This included $20-30M in ramp costs. Last quarter the company predicted the annual margin to be 19-20% with $70-$80M to be from ramp costs. Take the ramp costs out and margin guidance has gone up.
  9. When you say the company has Opex and Interest of $440M it is clear you are not arguing in good faith. First Solar expects to have Opex of $320-$370M this year which includes $40-$50 in startup expenses and EPC overhead. As for interest, the only debt the company has is for foreign projects and that is more than offset by the income of the cash position. If the company has debt then it also has systems revenue you are intentionally ignoring.
  10. The obsession people have with analysts and their quarterly predictions is really weird. First Solar has been extremely consistent in its guidance for the year. A year ago it predicted sales of $3.25B - $3.45B, EPS of $2.25 - $2.75, shipments of 5.4-5.6GW, and ending net cash of $1.6B - $1.8B. Current guidance is $3.5B- $3.7B, EPS of $2.25 - $2.75, shipments of 5.4-5.6GW, and ending net cash of $1.7B - $1.9B. Just because analysts failed to guess when projects would be sold doesn't mean the company is not meeting the guidance it gave. As there is only one quarter left this year that means this is the only time FSLR is giving a quarterly estimate. Doing the math, the company expects to have sales of around $1.75B, EPS of $2.78-$3.28 and cash flow of around $550M - $750M this quarter. Not bad.
  11. From the latest 10Q the company says, "As of September 30, 2019, we had entered into contracts with customers for the future sale of 11.7 GWDC of solar modules for an aggregate transaction price of $4.0 billion." That seems to indicate the company has an ASP of around 34.1 cents for the next two years. With the factories at full capacity and two years worth of orders, not sure what the risk is. For those who want to criticize the company, I am surprised why no one has jumped on the $80M warranty liability reserves reduction last quarter. That seemed like an "in case of emergency break glass" kind of thing. Without that out of the blue occurrence last quarter would have been red again. In addition, FSLR seems to be getting out of systems development. For now they say they are only closing the EPC business but the pipeline has shrunk and early stage projects were sold in Q2. The writing is on the wall. Losing systems revenue will hurt but it would lessen the need for cash which could be returned to shareholders. Their push into O&M seems odd, too. That business is fairly low margin and only brings in around $100M in revenue. Maybe they will come up with an O&M+ business that addresses curtailment. A lot of energy is being wasted and there could be a market opportunity there.
  12. You don't make money by building factories, you make money selling the product that is made in those factories. I really don't understand why this is so hard a concept for some to understand. First Solar only started shipping Series 6 modules to 3rd parties in Q1. Last quarter was the first time a large quantity of S6 was sold and the numbers were impressive. Next year the company will sell twice as many modules every quarter. First Solar's transition to the S6 is something that will likely be studied in business schools for the next few decades. It is an amazing accomplishment that has been overlooked because analysts misjudged the quarter a few projects would be sold in.
  13. Once again, I will take the opinion of Finlay Colville over a guy who seems to have little understanding of the company. https://www.pv-tech.org/editors-blog/pv-celltech-2020-to-explain-huge-shift-in-pv-production-landscape "The success of First Solar’s Series 6 roll-out in the past 12 months in particular must come as even a pleasant surprise to the most optimistic proponents within the company. It is perhaps the most significant technology move undertaken ever in the PV industry, for a whole host of reasons that I will not go into here, as many of these have been discussed in features I have written on PV-Tech over the past couple of years. Let’s frame this to get some perspective however. Imagine you are a 2-3 GW scale module supplier today to the sector, and not based in China. How to you compete with a 100-GW China machine working at arms-length to own the industry globally? Not just from a cost standpoint, but a technology-one now that the industry has made the critical multi-to-mono transition. Now add in here having a company-specific manufacturing/equipment/materials based PV module technology that requires 100% of the R&D and factory optimization has to be done in-house. And finally – go spend $1billion setting up multi-GW scale factories across different countries/regions globally, get the factories running within 12 months, and secure firm orders within 6 months that cover output from all factories for the next two years? Oh, and not to mention one more thing… Make sure module ASPs are 10-20% above global averages, and blended production costs (or COGs) are as good (or better) than the best-in-class c-Si producer in China. Okay – this is what First Solar has done in the past few years with its Series 6 technology. In looking at all the investments by all the companies in PV manufacturing over the past couple of decades, I cannot recall anything that comes remotely close to this in terms of success."
  14. I recommend setting up a google news search and checking it once in a while. Some interesting things occasionally show up. There was an article from a couple days ago pushing for contracting based on capacity rather than MWh. Not sure what it means but it seems interesting. https://pv-magazine-usa.com/2019/11/04/first-solar-advises-contracting-for-solar-capacity-not-mwh-to-enable-flexible-operation/ Here is a link to some of the current research being funded. Looks like First Solar is again working with Colorado State, this time to possibly bring PERC and bifacial to CdTe. https://www.energy.gov/eere/solar/seto-fy2019-photovoltaics
  15. Interestingly, there was a story a couple days ago about how First Solar and the NREL are collaborating with the University of Toledo to develop thin-film perovskite modules. http://media.utoledo.edu/2019/11/06/u-s-department-of-energy-invests-5-7-million-into-utoledo-solar-technology-research/ First Solar knows thin-film so if perovskite emerges as a viable solution the company should be well positioned. The death of Series 6 will likely be greatly exaggerated as the technology has probably already been built into the assembly lines.
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