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First Solar’s outlook: A game changer on the horizon

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Orderbook position

Orderbook is a key metric for companies operating in contracting and construction businesses. Since First Solar (FSLR) earns the majority of its revenue through EPC[1. Engineering, procurement, and construction] contracts as well as the operation and maintenance of operational plants, it’s a key metric for predicting future revenues.

As of February 24, 2015, the company had a project pipeline of about 3.2 GW (gigawatts), including its own projects as well as third-party contracts (sold projects or under-contract projects). The 1.5 GW third-party contract pipeline is expected to generate $3 billion in revenue in fiscal 2015 and fiscal 2016. NextEra Energy (NEE) and Southern Company (SO) are some of the key customers for the projects in First Solar’s pipeline.

Plus, the company expects 13.5 GW of potential booking opportunities across the world. Note that most of the potential bookings are at early stage of bidding.

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Yieldco may be a game changer

As we discussed in Part 9 of this series, First Solar (FSLR) and SunPower (SPWR) have announced plans to form a joint yieldco. Both First Solar (FSLR) and SunPower (SPWR) are part of the Guggenheim Solar ETF (TAN), at 8.27% and 5.28% of the ETF’s portfolio, respectively.

Since the terms of the yieldco are still under negotiation, it’s difficult to predict the quantum of its impact on the company’s fiscal 2015 revenue. As a result, the company has refrained from giving guidance for the whole year. The company expects to generate net sales of $550 million to $600 million in 1Q15. However, the company expects to take losses of 25 cents to 35 cents per share during the quarter.

Entry into community solar

Utility-scale solar power plants have been a forte of First Solar (FSLR). To expand its footprint in other avenues, First Solar (FSLR) has recently tied up with Clean Energy Collective, a provider of community solar solutions.

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