Revenue for the third quarter was $1.27 billion, up from $889.3 million a year ago. Part of that growth was the sale of a majority stake in the Desert Stateline project, of which First Solar kept a 49% stake in the project’s cash flow. Eventually, even the piece of the project that First Solar still owns will likely be pushed down to 8point3 Energy Partners (NASDAQ:CAFD) to generate even more up front cash. Long-term, look for this 51/49 ownership structure to be more common because it provides enough upfront cash to pay for installation while keeping some long-term cash flows.
The sale helped gross margin reach 38.1% in the quarter and net income of $346 million, which translates to $3.38 per share.
The project sale helped margins, but First Solar also benefited from a $70 million reduction in module collection and recycling obligation estimates. The company has committed to collecting and recycling CdTe modules when they reach the end of their useful life, which means it has to estimate the cost it will incur in the future. A study done during the quarter revealed that First Solar has overestimated how much it would cost to collect and recycle panels in the future, leading to the benefit you see this quarter.