01—Abstract
Summary
Summary of the 10-K filed February 25, 2015. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) reported for the fiscal year ending December 31, 2014, demonstrating resilience in a competitive solar market.
The company's net sales saw a modest increase to $3.4 billiona, driven primarily by its integrated systems business, which includes project development, EPC services, and O&M. While third-party module sales declined due to lower volumes and pricing, the systems segment's growth, fueled by large-scale projects in North America and Australia, helped offset this. First Solar highlighted its vertically integrated business model as a key competitive strength, enabling cost reductions and differentiated solutions across the value chain.
The company continues to invest heavily in research and development to improve module efficiency and reduce Balance of System (BoS) costs, aiming to compete on a Levelized Cost of Energy (LCOE) basis with traditional energy sources. The company's focus on expanding into 'sustainable geographic markets' in the Americas, Asia, the Middle East, and Africa underscores its long-term growth strategy.
02—Key points
Key Highlights
- Net sales increased by 3% to $3.4 billion, driven by the systems business, partially offset by lower third-party module sales.
- Gross profit margin slightly decreased to 24.4%, attributed to a less favorable project mix and a prior year adjustment for recycling costs.
- The company maintained robust manufacturing capacity, operating at 81% utilization with 2.7 GW of annual capacity, and produced 1.8 GW DC of modules.
- Average module conversion efficiency improved to 14.0%, an increase from 13.2% in the prior year, reflecting ongoing R&D efforts.
- First Solar is actively developing a significant advanced-stage project pipeline, with approximately 1.5 GW AC of projects sold or under contract, expected to generate substantial future revenue.
- The company's balance sheet remained strong, with cash, cash equivalents, and marketable securities totaling $2.0 billion as of December 31, 2014.
- First Solar is expanding its global presence, with developing markets in Latin America, Asia, the Middle East, and Africa being key to its Long Term Strategic Plan.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, First Solar, Inc. kept $0.12.
- Revenue$3.39B100.0%
- Cost of revenue−$2.57B75.7%
- Gross profit$824.9M24.3%
- Operating costs−$402.9M11.9%
- Operating income$422.0M12.4%
- Interest, other & tax−$26.0M0.8%
- Net income$396.0M11.7%
Where FY2014 revenue went
$3.39B- Cost of revenue: $2.57B, 76% of revenue
- Net income: $396.0M, 12% of revenue
- R&D: $144.0M, 4.2% of revenue
- SG&A: $253.8M, 7.5% of revenue
- Interest, other & tax: $26.0M, 0.8% of revenue
Kept 12% as net incomeNet income $396.0M · 12%Interest, other & tax $26.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 25, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $3.39B$3.31B | +2.5% |
| Cost of Revenue | $2.57B$2.44B | +5.0% |
| Gross Profit | $824.94M$864.63M | −4.6% |
| R&D Expenses | $143.97M$134.30M | +7.2% |
| SG&A Expenses | $253.83M$270.26M | −6.1% |
| Operating Expenses | $402.94M$494.23M | −18.5% |
| Operating Income | $422.00M$370.41M | +13.9% |
| Interest Expense | $1.98M$1.88M | +5.2% |
| Net Income | $395.96M$350.72M | +12.9% |
| EPS (Basic) | $3.96$3.74 | +5.9% |
| EPS (Diluted) | $3.90$3.67 | +6.3% |
| Shares Outstanding (Basic) | 100.05M93.70M | +6.8% |
| Shares Outstanding (Diluted) | 101.64M95.47M | +6.5% |
05—Questions
Frequently Asked Questions
What was First Solar's financial performance in 2014?
In 2014, First Solar reported a 3% increase in net sales to $3.4 billion. This growth was primarily driven by its integrated systems business, which saw higher project revenue. The company's gross profit margin was 24.4%, and it ended the year with $2.0 billion in cash, cash equivalents, and marketable securities.
What is First Solar's strategy for future growth?
First Solar's strategy centers on its vertically integrated business model, focusing on providing utility-scale PV generation solutions in 'sustainable geographic markets' globally. Key elements include continued investment in R&D to improve module efficiency and reduce costs, expanding into new markets in the Americas, Asia, the Middle East, and Africa, and optimizing its systems business which includes project development, EPC services, and O&M.
What are the main risks facing First Solar?
Key risks include intense competition in the solar industry leading to pricing pressure, potential imbalances in global supply and demand for PV modules, reliance on government subsidies and incentives which may change, and the successful execution of its Long Term Strategic Plan, particularly in new international markets. The company also faces risks related to technology development, supply chain management, intellectual property protection, and environmental regulations.
How is First Solar investing in technology and innovation?
First Solar is significantly investing in research and development to enhance its thin-film (CdTe) and crystalline silicon module technologies. This includes efforts to increase module conversion efficiency, improve energy density, reduce manufacturing costs, and develop advanced Balance of System (BoS) components and grid integration solutions. The company aims to lower the Levelized Cost of Energy (LCOE) for solar power systems.
06—Continue