Summary
First Solar, Inc.'s February 25, 2009 10-K filing reveals a company experiencing significant growth, driven by its proprietary thin-film semiconductor technology and a strong backlog of long-term supply contracts. The company's cost advantage over traditional crystalline silicon solar module manufacturers, with average costs of $1.08 per watt in 2008, is a key differentiator. Despite strong sales growth, driven largely by European demand and substantial manufacturing capacity expansion in Malaysia and Germany, the company faces risks related to customer concentration, as five customers accounted for nearly all its net sales in 2008. Furthermore, the report highlights the company's significant investment in research and development aimed at improving conversion efficiency and reducing per-watt manufacturing costs. However, investors should be aware of the inherent risks in the rapidly evolving solar industry, including intense competition, dependence on government subsidies, potential supply chain disruptions for critical raw materials like cadmium telluride, and the limited operating history of thin-film technology. The company's substantial international operations also expose it to currency exchange rate fluctuations and geopolitical risks.
Financial Highlights
53 data points| Revenue | $1.25B |
| Cost of Revenue | $567.91M |
| Gross Profit | $678.39M |
| R&D Expenses | $33.52M |
| SG&A Expenses | $174.04M |
| Operating Expenses | $240.05M |
| Operating Income | $438.34M |
| Interest Expense | $509K |
| Net Income | $348.33M |
| EPS (Basic) | $4.34 |
| EPS (Diluted) | $4.24 |
| Shares Outstanding (Basic) | 80.18M |
| Shares Outstanding (Diluted) | 82.12M |
Key Highlights
- 1First Solar utilizes a proprietary thin-film semiconductor technology, achieving significantly lower manufacturing costs ($1.08/watt in 2008) compared to crystalline silicon manufacturers.
- 2The company has secured long-term supply contracts valued at approximately $5.8 billion (from 2009-2013), providing a substantial sales backlog.
- 3Net sales experienced substantial growth, increasing by 147% from $504 million in 2007 to $1.25 billion in 2008, primarily due to increased module volume sold.
- 4Manufacturing capacity has been significantly expanded with 19 production lines operational by the end of 2008 and plans for 24 lines by the end of 2010, increasing global manufacturing capacity to approximately 1145MW.
- 5The company acquired Turner Renewable Energy, LLC in November 2007, expanding its capabilities into solar power systems and project development in the United States.
- 6Key risks identified include a high concentration of customers, with five customers accounting for substantially all net sales in 2008, and a significant dependence on government subsidies and economic incentives, particularly in European markets.
- 7Research and development expenses increased by 122% year-over-year to $33.5 million in 2008, signaling continued investment in technological advancement.