First Solar Changes CEO as Shift to Selling Panels Gathers Paceby
Jim Hughes to be replaced by CFO Mark Widmar on July 1
Revenue missed analyst estimates in the first quarter
First Solar Inc. said Chief Executive Officer Jim Hughes will step down as falling costs help the company accelerate its shift to selling panels rather than developing plants for them.
Hughes will be replaced by Chief Financial Officer Mark Widmar from July 1, the Tempe, Arizona-based company said Wednesday in statement. Shares slid in after-market trading after first-quarter revenue missed analyst estimates.
Hughes said he and the board have been working on a succession plan for about a year, taking advantage of a period when the company began to sell panels to other developers for growth instead of just using them in their own projects. He plans to remain on the board and act as an adviser.
“The board and I thought it was the right time,” Hughes said on a conference call. “Everyone is very comfortable with it.”
Net income of $170.6 million, or $1.66 per share, in the three months through March compared with a year-earlier loss of $60.9 million, or 61 cents, according to a separate statement Wednesday. That beat the 90-cent average of 18 analysts’ estimates compiled by Bloomberg. Sales rose to $848 million from $469 million. Analysts had expected sales of $973 million.
“We expect the stock to come under pressure on largely unchanged estimates and the unexpected management transition,” Michael Morosi, an analyst at Avondale Partners, said in a research note.
During the quarter, First Solar sold a 14 percent stake in its 300-megawatt Desert Stateline project in California to Southern Co. A 35 percent stake may be purchased by its yieldco partnership 8point3 Energy Partners LP when it’s completed later this year or early in 2017.
Uncertainty about the timing of completion of projects and sales to 8point3, as well as the amount it plans to sell to other developers, prevented management from providing guidance for 2017, something analysts had been asking about. The bankruptcy filing of competitor SunEdison Inc. last week also creates some uncertainty, Hughes said.
“Everyone’s going to get an education in the bankruptcy process over the next six to nine months,” Hughes said. “I don’t expect any sudden change in the market. We all feel remarkably positive about the North American market.”
The company also raised the lower end of its 2016 guidance to $4.10 a share from $4 and raised gross margin by a percentage point to as much as 19 percent.