01—Abstract
Summary
Summary of the 10-K filed February 22, 2010. Cited figures are marked; the original filing is the authoritative source.
FIRST SOLAR, INC. (FSLR) presents a dynamic financial landscape in its February 22, 2010, 10-K filing, showcasing rapid growth fueled by its innovative thin-film solar module technology and expanding integrated systems business.
The company highlights its position as a leading global PV solar module manufacturer, emphasizing its proprietary manufacturing process that delivers cost advantages over traditional crystalline silicon solar modules. First Solar's strategic focus on reducing the cost of solar electricity aims to achieve price parity with conventional energy sources. While the company demonstrates significant revenue growth, driven by strong demand in key European markets and increasing traction in the US systems business, it also faces substantial risks.
These include intense competition, reliance on government subsidies and incentives (which are subject to change or reduction), fluctuations in foreign currency exchange rates (particularly the Euro), and potential supply chain disruptions. Investors should note the company's aggressive expansion plans, significant capital expenditures, and the evolving regulatory environment for renewable energy, particularly the potential impact of feed-in tariff reductions in core markets like Germany.
02—Key points
Key Highlights
- First Solar is the world's largest PV solar module manufacturer, producing over 1.1 GW in 2009, a first for the industry.
- The company emphasizes its advanced thin-film semiconductor technology, achieving the lowest manufacturing costs globally at $0.87 per watt in 2009, significantly below crystalline silicon competitors.
- A fully integrated systems business is being developed to offer complete PV solar power system solutions, including project development, EPC, O&M, and project finance, serving as an enabler for module throughput.
- Revenue grew significantly by 66% to $2.07 billion in 2009, driven by a 114% increase in module volume sold, though average selling prices decreased by approximately 25% due to competitive pressure and a new rebate program.
- Geographic concentration is a key factor, with 86% of net sales in 2009 generated from customers headquartered in the European Union, particularly Germany (65%).
- The company has substantial long-term supply contracts, representing approximately $3.8 billion in potential sales from 2010-2013, though these are subject to amendments and pricing adjustments.
- Significant risks include the reliance on government subsidies (especially feed-in tariffs in Germany), increasing competition, potential currency fluctuations (Euro exposure), and the challenges of managing rapid global expansion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, First Solar, Inc. kept $0.31.
- Revenue$2.07B100.0%
- Cost of revenue−$1.02B49.4%
- Gross profit$1.04B50.6%
- Operating costs−$365.0M17.7%
- Operating income$679.6M32.9%
- Interest, other & tax−$39.5M1.9%
- Net income$640.1M31.0%
Where FY2009 revenue went
$2.07B- Cost of revenue: $1.02B, 49% of revenue
- Net income: $640.1M, 31% of revenue
- SG&A: $272.9M, 13% of revenue
- R&D: $78.2M, 3.8% of revenue
- Other operating costs: $13.9M, 0.7% of revenue
- Interest, other & tax: $39.5M, 1.9% of revenue
Kept 31% as net incomeOther operating costs $13.9M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 22, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $2.07B$1.25B | +65.8% |
| Cost of Revenue | $1.02B$567.91M | +79.9% |
| Gross Profit | $1.04B$678.39M | +54.0% |
| R&D Expenses | $78.16M$33.52M | +133.2% |
| SG&A Expenses | $272.90M$174.04M | +56.8% |
| Operating Expenses | $364.97M$240.05M | +52.0% |
| Operating Income | $679.62M$438.34M | +55.0% |
| Interest Expense | $5.26M$509K | +933.0% |
| Net Income | $640.14M$348.33M | +83.8% |
| EPS (Basic) | $7.67$4.34 | +76.7% |
| EPS (Diluted) | $7.53$4.24 | +77.6% |
| Shares Outstanding (Basic) | 83.50M80.18M | +4.1% |
| Shares Outstanding (Diluted) | 85.04M82.12M | +3.6% |
05—Questions
Frequently Asked Questions
What is First Solar's core competitive advantage in the solar module market?
First Solar's primary competitive advantage lies in its proprietary thin-film semiconductor technology, which enables a highly automated, continuous manufacturing process. This results in significantly lower manufacturing costs per watt compared to traditional crystalline silicon manufacturers, allowing them to offer cost-competitive solar modules and systems.
How reliant is First Solar on government subsidies and incentives, and what are the risks associated with this?
First Solar is highly reliant on government subsidies and economic incentives, such as feed-in tariffs (FiTs) in Europe and Renewable Portfolio Standards (RPS) in the U.S., which have been critical drivers of demand. The primary risk is that reductions, eliminations, or expirations of these programs, particularly the anticipated feed-in tariff reductions in Germany, could significantly decrease demand and price levels for their products, adversely impacting sales and profitability.
What is the company's strategy regarding its integrated systems business, and how does it complement its module manufacturing?
First Solar's integrated systems business is designed to provide complete PV solar power system solutions (project development, EPC, O&M, project finance). This business acts as an enabler for its core module manufacturing by driving module throughput, reducing overall solar electricity costs, and allowing the company to gain direct access to large-scale utility projects, thereby mitigating reliance on module-only sales and competition.
What are the key financial trends and risks highlighted in the filing?
Key financial trends include rapid revenue growth driven by increased volume, but tempered by declining average selling prices due to competition and pricing adjustments. Significant risks highlighted are intense competition, the dependence on government incentives, currency exchange rate volatility (especially the Euro), supply chain management for raw materials, and the capital-intensive nature of expanding manufacturing capacity and project development.
06—Continue