First Solar, Inc (FSLR) has reported a 55.87 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $154.15 million, or $1.49 a share in the quarter, compared with $349.32 million, or $3.41 a share for the same period last year. On an adjusted basis, the company has earned $126.60 million, or $1.22 a share for the quarter. Revenue during the quarter plunged 45.88 percent to $688.03 million from $1,271.24 million in the previous year period. Gross margin for the quarter contracted 1103 basis points over the previous year period to 27.07 percent. Total expenses were 87.11 percent of quarterly revenues, up from 68.71 percent for the same period last year. That has resulted in a contraction of 1840 basis points in operating margin to 12.89 percent.
Operating income for the quarter was $88.70 million, compared with $397.82 million in the previous year period.
"In the third quarter our operational and financial results were solid," said Mark Widmar, chief executive officer of First Solar. "Our entire fleet module efficiency for the past quarter was 16.5% and our lead line efficiency exited the quarter at 16.9%, demonstrating continued execution on our technology roadmap. We are pleased with our current year financial performance; however, current market conditions are extremely challenging and require us to carefully assess our short and long-term strategic response."
For fiscal year 2016, First Solar projects revenue to be in the range of $2,800 million to $2,900 million. The company projects operating income to be in the range of $235 million to $255 million and adjusted operating income to be in the range of $340 million to $370 million. It forecasts diluted earnings per share to be in the range of $3.75 to $3.90 and diluted earnings per share to be in the range of $4.30 to $4.50 on adjusted basis.
Working capital declines
First Solar, Inc has witnessed a decline in the working capital over the last year. It stood at $2,058.09 million as at Sep. 30, 2016, down 12.61 percent or $296.95 million from $2,355.04 million on Sep. 30, 2015. Current ratio was at 2.46 as on Sep. 30, 2016, down from 3.63 on Sep. 30, 2015. Cash conversion cycle (CCC) has decreased to 54 days for the quarter from 63 days for the last year period. Days sales outstanding went up to 64 days for the quarter compared with 35 days for the same period last year.
Days inventory outstanding has decreased to 34 days for the quarter compared with 62 days for the previous year period. At the same time, days payable outstanding went up to 44 days for the quarter from 34 for the same period last year.
Debt increases substantially
First Solar, Inc has witnessed an increase in total debt over the last one year. It stood at $787.16 million as on Sep. 30, 2016, up 175.73 percent or $501.68 million from $285.48 million on Sep. 30, 2015. Total debt was 9.73 percent of total assets as on Sep. 30, 2016, compared with 4.04 percent on Sep. 30, 2015. Debt to equity ratio was at 0.13 as on Sep. 30, 2016, up from 0.05 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 15.94 for the quarter from 224.12 for the same period last year.
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