First Solar Warns of $40 Million Tax Matter as Profit Soars

  • Third quarter net income almost quadruples on asset sale
  • Company sold majority stake in Desert Stateline to Southern

First Solar Inc. reported an almost fourfold increase in third-quarter profit thanks to an asset sale, but said the final number may be adjusted because of an unresolved tax matter that may trim $40 million from the earnings.

Net income rose to $346.2 million, or $3.38 a share, from $88.4 million, or 87 cents, a year earlier, the Tempe, Arizona-based company said in a statement Thursday. That compares to the $1.53 average of 12 analysts’ estimates compiled by Bloomberg.

First Solar said the results were preliminary, pending the company’s analysis of a "discrete income tax matter related to a foreign jurisdiction" that could potentially trim $40 million from its earnings. A final report will be made by Nov. 9, the company said in its statement. Trading in the stock was halted prior to the release, but rose 10 percent to $56.11 at 5 p.m. in New York when trading resumed after usual market hours.

"We remain confident in our long term strategy and our ability to execute successfully," Chief Executive Officer James Hughes said in the statement.

Asset Sales

Most of the gain in the third quarter came from the September sale of a controlling stake in the 300-megawatt Desert Stateline project in Southern California to Southern Co. Sales rose to $1.3 billion from $889.3 million a year earlier.

"We expect a healthy performance on the back of the sale of the Stateline project," Sven Eenmaa, an analyst at Stifel Nicolaus & Co. in San Francisco, said in an interview before the results were released.

First Solar is positioned to boost sales in the next few quarters by selling more solar farms. The company remains committed to selling assets to 8point3 Energy Partners LP, a holding company that it formed this year with SunPower Corp., Mark Widmar, First Solar’s chief financial officer, said Thursday on an earnings call.

"8point3 can still take more assets," said Ben J. Kallo, an analyst at Robert W. Baird & Co., in an interview Wednesday.

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