10-KPeriod: FY2009

FIRST SOLAR, INC. Annual Report, Year Ended Dec 26, 2009

Filed February 22, 2010For Securities:FSLR

Summary

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.

Financial Highlights

56 data points
Beta

Revenue

$2.07B

50.6% Gross Margin

Net Income

$640.14M

31.0% Net Margin

EPS (Diluted)

$7.53

Total Assets

$3.35B

Cash & Equivalents

$664.50M

Free Cash Flow

$395.25M

Financial Statements
Beta
Revenue$2.07B
Cost of Revenue$1.02B
Gross Profit$1.04B
R&D Expenses$78.16M
SG&A Expenses$272.90M
Operating Expenses$364.97M
Operating Income$679.62M
Interest Expense$5.26M
Net Income$640.14M
EPS (Basic)$7.67
EPS (Diluted)$7.53
Shares Outstanding (Basic)83.50M
Shares Outstanding (Diluted)85.04M

Key Highlights

  • 1First Solar is the world's largest PV solar module manufacturer, producing over 1.1 GW in 2009, a first for the industry.
  • 2The 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.
  • 3A 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.
  • 4Revenue 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.
  • 5Geographic concentration is a key factor, with 86% of net sales in 2009 generated from customers headquartered in the European Union, particularly Germany (65%).
  • 6The 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.
  • 7Significant 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.

Frequently Asked Questions

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.

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.

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.

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.