First Solar To Cut Jobs, Now Sees Loss In 2016; Stock Plunges

(RTTNews) - First Solar Inc. (FSLR) said that it will reduce its workforce at its manufacturing facilities both domestically and internationally as a result of the transition from Series 4 to Series 6 production. Additional reductions in administrative and other staff are also planned.

FSLR closed Wednesday's regular trading at $32.82, down $0.37 or 1.11 percent. In the after-hours, the stock further dropped $4.05 or 12.34 percent

Resulting from the transition to Series 6 from Series 4 and other competitive factors, the Company expects to incur restructuring and asset impairment charges of $500 million to $700 million, which includes a cash impact of $70 million to $100 million.

These pre-tax restructuring and asset impairment charges are expected to have an offsetting tax benefit of $50 million to $100 million.

In addition to the restructuring and asset impairment charges, the Company also expects to incur $220 million to $250 million of tax expense in 2016 associated with the distribution of between $700 and $750 million of cash to the United States from a foreign subsidiary. This distribution will provide liquidity for the restructuring of U.S. operations and Series 6 investment. The cash tax impact related to this transfer is expected to be between $8 and $10 million.

The company announced an acceleration of Series 6 production into 2018, with approximately 3 Gigawatts of production expected in 2019. Over the course of 2017 and 2018 the Company's existing production facilities will be converted to Series 6 production and the current Series 4 product will be phased out. As a result of the change in roadmap the Company will cancel its Series 5 product.

For 2016, the company now expects GAAP loss per share to be in the range of $2.00 - $4.00, compared to prior outlook of earnings $3.75 to $3.90 per share.

The company raised its 2016 non-GAAP earnings per share guidance to a range of $4.60 to $4.80 from the prior estimation of $4.30 to $4.50.

The company still expects net sales for fiscal year 2016 to be in the range of $2.8 billion - $2.9 billion.

Analysts polled by Thomson Reuters expect the company to report earnings of $4.42 per share and revenues of $3.01 billion for fiscal year 2016. Analysts' estimates typically exclude special items.

Forecasted net sales for 2017 are $2.5 billion to $2.6 billion, with solar power systems net sales expected to comprise 70% to 75% of the total net sales and third party module sales the remainder. GAAP result per share is forecasted to be between loss $0.10 and earnings $0.45, with non-GAAP EPS of breakeven to $0.50 per share. The ending net cash balance is projected in the range of $1.4 to $1.6 billion. Capital expenditures of $525 to $625 million are higher than 2016 expected levels resulting from investment in Series 6 production equipment.

Wall Street currently is looking for fiscal year 2017 earnings of $1.96 per share on annual revenues of $2.96 billion.