First Solar Q3 2010 Earnings Call Transcript

First Solar Q3 2010 Earnings Call Transcript
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First Solar (FSLR)

Q3 2010 Earnings Call

October 28, 2010 4:30 pm ET

Executives

Jens Meyerhoff - Chief Financial Officer and President of the Utility Systems Business Group

Robert Gillette - Chief Executive Officer and Director

Bruce Sohn - President

Larry Polizzotto - Vice President of Investor Relations

Analysts

Mark Wienkes - Goldman Sachs Group Inc.

Smittipon Srethapramote - Morgan Stanley

Shawn E. Lockman

Stephen Chin - UBS Investment Bank

Peter Kim - Deutsche Bank AG

Marc Bachman - Auriga USA LLC

Kelly Dougherty - Macquarie Research

Sanjay Shrestha - Lazard Capital Markets LLC

Vishal Shah - Barclays Capital

Timothy Arcuri - Citigroup Inc

Jesse Pichel - Jefferies & Company, Inc.

Satya Kumar - Crédit Suisse AG

Steven Milunovich - BofA Merrill Lynch

Burt Chao - Simmons

John Hardy - Gleacher & Company, Inc.

Christopher Blansett - JP Morgan Chase & Co

Daniel Ries - Collins Stewart LLC

Robert Stone - Cowen and Company, LLC

Presentation

Operator

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Good day, everyone, and welcome to the First Solar Third Quarter 2010 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Larry Polizzotto, Vice President of Investor Relations for First Solar, Inc. Mr. Polizzotto, you may begin.

Larry Polizzotto

Thank you. Good afternoon, everyone, and thank you for joining First Solar's Third Quarter 2010 Conference Call. Today, after the market closed, the company issued a press release announcing its third quarter financial results and our guidance update for 2010. If you did not receive a copy of the press release, you can obtain one from the Investors section of First Solar's website at firstsolar.com. In addition, First Solar has posted a presentation for this call, key quarterly statistics and historical data on financial and operating performance on our IR website. We will be discussing the presentation during the call and webcast. I want to remind you that an audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Tuesday, November 2, 2010, at 7:30 Eastern Daylight Time and can be accessed by dialing (888) 203-1112 if you're calling from the United States, or (719) 457-0820 if you're calling from outside the United States and entering replay pass code 8458462. A replay of the webcast will be available on the Investors section of our website approximately two hours after the conclusion of the call and remain available for 90 calendar days. Investors may access the webcast on the Investors section of the company's website. If you are a subscriber of FactSet or Thomson One, you can obtain a written transcript as well.

With me today are Rob Gillette, Chief Executive Officer; Jens Meyerhoff, Chief Financial Officer and President of Utility Systems Business Group; and Bruce Sohn, President of First Solar. Rob will present an overview of the company's third quarter and give an update on the market and business. Jens will review the third quarter operational and financial results and update guidance for 2010. We will then open up the call for questions. During the Q&A period, as a courtesy of those individuals seeking to ask questions, we ask that all participants limit themself to one question. First Solar has allocated approximately one hour for today's call.

I want to remind you that all the financial numbers reported and discussed on today's call are based on U.S. Generally Accepted Accounting Principles, except of free cash flow because it's a non-GAAP measure which is reconciled to operating cash flow in the back of our presentation.

Now I'd like to make a brief statement regarding forward-looking remarks that you may hear on today's call. During the course of the call, the company will make projections and other comments that are forward-looking statements within the meaning of the Federal Securities Laws. The forward-looking statements in this call are based on current information and expectations, are subject to uncertainties and changes in circumstance and do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially from those statements, including the risks as described in the company's most recent annual report on Form 10-K and other filings within the Securities and Exchange Commission. First Solar assumes no obligation to update any forward-looking information contained in the call with respect to the announcements described herein.

Now during the fourth quarter of 2010, the company will be attending the following conferences: Goldman Sachs Clean Energy Conference in New York City on November 10; Credit Suisse Technology Conference in Scottsdale, Arizona, November 30; Barclays Technology Conference in San Francisco on December 8. And I also want to mention today that we intend to provide guidance for 2011 for analysts and investors on December 14 by a call. It's now my pleasure to introduce Rob Gillette, Chief Executive Officer of First Solar. Rob?

Robert Gillette

Great. Thanks, Larry, and welcome to our Q3 earnings call. We had strong quarter with net sales of $798 million, which is a 66% increase over Q3 of 2009. The quarter includes revenue recognition of the 60 megawatt Sarnia project. The net income was $177 million or 22.2% of net sales, and our diluted EPS was $2.04 a share. Earnings per share was negatively impacted by $0.17 due to a $14.7 million charge onetime tax expense to repatriate $300 million in foreign earnings. Jens will describe the transaction during the financial portion of today's presentation.

The return on net assets was 20.4% on a four quarter rolling basis, representing an EBA of 8% or 300 basis points above our target. Our cash and marketable securities balance of $997 million is an increase by $37 million sequentially. We drew down $100 million of our revolver and paid for the NextLight acquisition in the quarter.

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