01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) in its 2011 10-K filing highlights its position as a leading manufacturer of thin-film photovoltaic (PV) solar modules and a provider of integrated PV solar power systems.
The company emphasizes its commitment to driving down the cost of solar electricity, aiming for parity with conventional fossil-fuel generation through continuous improvements in module manufacturing efficiency and balance-of-system cost reductions. In 2010, First Solar produced nearly 1.4 gigawatts (GW) of solar modules, positioning itself as the world's largest thin-film PV solar module manufacturer. The company operates a fully integrated business model, encompassing project development, EPC services, O&M, and project finance, which it leverages to increase module throughput and reduce overall solar system costs.
Geographically, European markets, particularly Germany, represented a significant portion of net sales, though the company is also expanding its presence in the United States utility-scale market. Key risks identified include the dependence on government subsidies and incentives, which are subject to change, and intense competition within the solar industry.
02—Key points
Key Highlights
- First Solar is the world's largest thin-film PV solar module manufacturer, producing nearly 1.4 GW in 2010.
- The company focuses on cost reduction across the value chain to achieve price parity with conventional energy sources.
- First Solar operates a fully integrated systems business, including project development, EPC, O&M, and project finance services.
- Germany represented a significant market, accounting for approximately 46% of 2010 net sales.
- The company experienced strong growth in its systems business, with net sales increasing 275% in 2010.
- Key risks include potential reductions or expiration of government subsidies and intense competition from crystalline silicon and other thin-film manufacturers.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, First Solar, Inc. kept $0.26.
- Revenue$2.56B100.0%
- Cost of revenue−$1.38B53.8%
- Gross profit$1.18B46.2%
- Operating costs−$435.9M17.0%
- Operating income$748.9M29.2%
- Interest, other & tax−$84.7M3.3%
- Net income$664.2M25.9%
Where FY2010 revenue went
$2.56B- Cost of revenue: $1.38B, 54% of revenue
- Net income: $664.2M, 26% of revenue
- SG&A: $321.7M, 13% of revenue
- R&D: $94.8M, 3.7% of revenue
- Other operating costs: $19.4M, 0.8% of revenue
- Interest, other & tax: $84.7M, 3.3% of revenue
Kept 26% as net incomeOther operating costs $19.4M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $2.56B$2.07B | +24.1% |
| Cost of Revenue | $1.38B$1.02B | +34.9% |
| Gross Profit | $1.18B$1.04B | +13.4% |
| R&D Expenses | $94.80M$78.16M | +21.3% |
| SG&A Expenses | $321.70M$272.90M | +17.9% |
| Operating Expenses | $435.94M$364.97M | +19.4% |
| Operating Income | $748.90M$679.62M | +10.2% |
| Interest Expense | $6K$5.26M | −99.9% |
| Net Income | $664.20M$640.14M | +3.8% |
| EPS (Basic) | $7.82$7.67 | +2.0% |
| EPS (Diluted) | $7.68$7.53 | +2.0% |
| Shares Outstanding (Basic) | 84.89M83.50M | +1.7% |
| Shares Outstanding (Diluted) | 86.49M85.04M | +1.7% |
05—Questions
Frequently Asked Questions
What is First Solar's core technology and business model?
First Solar's core technology is advanced thin-film semiconductor technology for manufacturing solar modules. Their business model is fully integrated, encompassing the design and manufacture of solar modules (Components segment) and providing complete PV solar power systems, including project development, EPC services, O&M, and project finance (Systems segment). The company views its systems segment as an enabler to drive module throughput for its core components business.
What are the main risks highlighted by First Solar in this filing?
The primary risks highlighted include the significant dependence on government subsidies and economic incentives (like Feed-in Tariffs and Renewable Portfolio Standards), which are subject to reduction, elimination, or expiration. Intense competition from other solar module manufacturers, potential fluctuations in raw material costs, and risks associated with international operations (regulatory, currency, and political) are also significant concerns. The company also notes risks related to the long-term performance and warranty of its thin-film technology.
How is First Solar addressing the competitive landscape and cost pressures in the solar market?
First Solar is focused on continuously lowering the cost of solar electricity through four primary areas: module manufacturing cost reduction (achieving the lowest average manufacturing costs globally at $0.77 per watt in 2010), balance-of-system (BoS) cost reductions, project development cost optimization, and lowering the cost of capital. They are also investing heavily in R&D to increase module conversion efficiency and manufacturing process improvements. Additionally, their integrated systems business helps manage demand and ensures module throughput.
What is the significance of government subsidies and incentives for First Solar?
Government subsidies and economic incentives, such as Feed-in Tariffs (FiTs) and Renewable Portfolio Standards (RPS), are critical drivers for the demand of solar modules and systems, especially in their core European markets and the US. The filing explicitly states that the near-term growth of the market depends significantly on these incentives. Reductions or eliminations of these support programs are identified as a major risk that could negatively impact demand and price levels for their products.
06—Continue