01—Abstract
Summary
Summary of the 10-K filed February 26, 2014. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc.'s (FSLR) 2013 10-K filing highlights a year of strategic repositioning and operational adjustments within the competitive solar energy market.
The company continued its focus on a vertically integrated business model, aiming to lower the cost of solar electricity through innovations in module manufacturing and balance-of-system components. Despite a challenging market with intense pricing pressure and periods of supply/demand imbalance, First Solar reported a net income of $353 milliona for 2013, a significant turnaround from the prior year's net loss. This performance was driven by the strong execution of its Long Term Strategic Plan (LTSP), which emphasizes expansion into sustainable geographic markets and a focus on utility-scale PV solutions.
The company's strategy includes investing in advanced research and development to improve module efficiency and reduce overall system costs. First Solar also noted progress in developing crystalline silicon modules alongside its established thin-film technology. The report details significant project development activities, particularly in the United States, and highlights the company's ongoing efforts to diversify its geographic presence.
Key financial indicators show a healthy liquidity position and a reduction in long-term debt. Investors should note the company's emphasis on reducing its reliance on government subsidies, a key aspect of its LTSP, as it seeks to compete purely on economic merit. While the industry faces ongoing pricing pressures, First Solar's integrated model and technological advancements position it to navigate these challenges and capitalize on the growing global demand for solar energy.
02—Key points
Key Highlights
- First Solar reported a net income of $353 million in 2013, a significant improvement from a net loss in 2012, signaling a positive financial turnaround.
- The company continued to execute its Long Term Strategic Plan (LTSP), focusing on sustainable geographic markets and utility-scale PV solutions to drive growth.
- First Solar emphasized its vertically integrated business model as a key competitive strength, enabling cost reductions across the value chain and delivery of integrated PV energy solutions.
- The company made strategic investments in research and development, including the acquisition of GE's CdTe solar intellectual property and TetraSun's crystalline silicon technology, to enhance module performance and efficiency.
- Despite industry-wide pricing pressures and overcapacity, First Solar maintained a strong liquidity position with $1.3 billion in cash, cash equivalents, and marketable securities at the end of 2013.
- Geographically, the United States remained the dominant market (86% of net sales in 2013), but the company is actively expanding its presence in other regions as part of its LTSP.
- Significant restructuring and asset impairment charges were incurred in 2012 due to strategic adjustments, which were substantially reduced in 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, First Solar, Inc. kept $0.11.
- Revenue$3.31B100.0%
- Cost of revenue−$2.44B73.9%
- Gross profit$864.6M26.1%
- Operating costs−$494.2M14.9%
- Operating income$370.4M11.2%
- Interest, other & tax−$19.7M0.6%
- Net income$350.7M10.6%
Where FY2013 revenue went
$3.31B- Cost of revenue: $2.44B, 74% of revenue
- Net income: $350.7M, 11% of revenue
- R&D: $134.3M, 4.1% of revenue
- SG&A: $270.3M, 8.2% of revenue
- Other operating costs: $89.7M, 2.7% of revenue
- Interest, other & tax: $19.7M, 0.6% of revenue
Kept 11% as net incomeNet income $350.7M · 11%Interest, other & tax $19.7M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 26, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $3.31B$3.37B | −1.7% |
| Cost of Revenue | $2.44B$2.52B | −2.8% |
| Gross Profit | $864.63M$852.75M | +1.4% |
| R&D Expenses | $134.30M$132.46M | +1.4% |
| SG&A Expenses | $270.26M$280.93M | −3.8% |
| Operating Expenses | $494.23M$890.31M | −44.5% |
| Operating Income | $370.41M-$37.56M | +1086.1% |
| Interest Expense | $1.88M$13.89M | −86.4% |
| Net Income | $350.72M-$96.34M | +464.0% |
| EPS (Basic) | $3.74$-1.11 | +436.9% |
| EPS (Diluted) | $3.67$-1.11 | +430.6% |
| Shares Outstanding (Basic) | 93.70M86.86M | +7.9% |
| Shares Outstanding (Diluted) | 95.47M86.86M | +9.9% |
05—Questions
Frequently Asked Questions
What was First Solar's financial performance in 2013?
In 2013, First Solar reported a net income of $353 million, a substantial recovery from a net loss in 2012. This improvement was driven by strategic execution, cost management, and an increase in module efficiency and volume, despite ongoing industry pricing pressures.
What is First Solar's long-term strategy?
First Solar's Long Term Strategic Plan (LTSP) focuses on transitioning to and expanding within sustainable geographic markets where solar power can compete economically with traditional energy sources. This involves investing in R&D for technological advancements, optimizing manufacturing processes, and developing integrated PV solar power systems.
How is First Solar differentiating itself in a competitive market?
First Solar differentiates itself through its vertically integrated business model, which spans project development, module manufacturing, and O&M services. The company also emphasizes its proprietary thin-film CdTe technology, ongoing R&D for efficiency improvements, development of crystalline silicon modules, and its bankable, system-level solutions that offer grid integration and performance guarantees.
What are the key risks facing First Solar?
Key risks include intense pricing competition in the solar module and system markets, potential structural imbalances between supply and demand, the impact of changes in government subsidies and support programs (especially the impending expiration of the U.S. federal investment tax credit), the reliance on key suppliers for raw materials, and potential product warranty costs.
06—Continue