First Solar Posts Revenue Miss, Announces CEO Replacement

First Solar Inc. (NASDAQ: FSLR) reported first-quarter 2016 results after markets closed Wednesday afternoon. For the quarter, the solar energy company posted diluted earnings per share (EPS) of $1.66 on revenues of $848.48 million. In the same period a year ago, the company reported a net loss of $0.61 on revenues of $889.31 million. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.93 on revenues of $966.6 million.

The solid earnings growth was more than offset by the shortfall in revenues and by the announcement that CEO Jim Hughes is being replaced by the company’s current CFO, Mark Widmar, effective July 1st. According to the announcement the leadership succession planning was a joint effort between Hughes and First Solar’s board

The company attributed the rise in net income to higher revenue from the Desert Stateline project, cost cutting, and a one -time gain on the sale of certain restricted investments.

First Solar raised fiscal 2016 EPS guidance from a range of $4.00 to $4.50 to a new range of $4.10 to $4.50 per share and confirmed full-year revenues of $3.8 to $4 billion. The consensus estimates called for EPS of $4.30 on revenues of $3.96 billion.

The company also raised its estimates for operating income from a range of $260 to $330 million to a new range of $300 to $370 million. The estimate for operating cash flow rose from a range of $400 to $600 million to a new range of $500 to $700 million.

CEO Jim Hughes said:

Our first quarter results represent a very strong start to 2016. The sale of additional economic interests in our Stateline project further strengthens our relationship with a strategic business partner, and the transaction provides greater flexibility for future dropdowns to 8point3. We continue to operate our business with a disciplined approach and are focused on achieving our 2016 objectives communicated at our recent Analyst Day.

Investors took shares down about 9% immediately on the revenue miss. Cooler heads prevailed and shares traded down about half that at $58.80 after closing at $62.03. The stock’s 52-week range is $40.25 to $74.29. The consensus price target is $77.15.