01—Abstract
Summary
Summary of the 10-K filed February 22, 2017. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) presented its 2016 annual report (10-K) on February 22, 2017, detailing its position as a global leader in comprehensive PV solar energy solutions.
The company leverages its advanced thin-film semiconductor technology to design, manufacture, and sell PV solar modules, while also developing, constructing, and selling integrated PV solar power systems. A significant portion of the company's strategy revolves around continuous cost reduction across its value chain, aiming to compete directly with conventional fossil-fuel-based power generation on an economic basis. The report highlights the company's vertical integration and ongoing R&D efforts as key competitive strengths, positioning First Solar to deliver reliable and cost-effective solar energy solutions globally.
Financially, 2016 saw a decrease in net sales to $3.0 billiona from $3.6 billion in 2015, largely due to project completions and lower "module plus" transactions, though this was partially offset by increased module sales to third parties. Gross profit saw a slight decline in margin to 23.9% due to project mix and inventory write-downs. The company is navigating a challenging market characterized by intense pricing competition and oversupply, while investing in its next-generation Series 6 module technology, expected to enhance cost structure and competitiveness.
02—Key points
Key Highlights
- First Solar is a leading global provider of PV solar energy solutions, specializing in thin-film CdTe technology and offering integrated systems and O&M services.
- The company's strategy emphasizes continuous cost reduction across its value chain to remain competitive with conventional energy sources.
- Net sales for 2016 decreased to $3.0 billion, primarily due to project sales and lower 'module plus' transactions, partially offset by increased third-party module sales.
- Gross profit margin decreased slightly to 23.9% in 2016, impacted by project mix and inventory write-downs.
- First Solar is transitioning to its next-generation Series 6 module technology, aiming for lower manufacturing costs and improved product attributes.
- The company reported increased module production in 2016 (3.1 GW) and maintained high manufacturing capacity utilization (97%).
- The U.S. market, particularly California, accounted for a significant portion (83%) of 2016 net sales.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2016, First Solar, Inc. lost $0.14.
- Revenue$2.90B100.0%
- Cost of revenue−$2.27B78.0%
- Gross profit$638.4M22.0%
- Operating costs−$1.21B41.5%
- Operating income−$568.2M19.6%
- Interest, other & tax$152.0M5.2%
- Net income−$416.1M14.3%
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 22, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $2.90B$4.11B | −29.4% |
| Cost of Revenue | $2.27B$2.98B | −24.0% |
| Gross Profit | $638.42M$1.13B | −43.6% |
| R&D Expenses | $124.76M$130.59M | −4.5% |
| SG&A Expenses | $261.99M$255.19M | +2.7% |
| Operating Expenses | $1.21B$402.60M | +199.7% |
| Operating Income | -$568.15M$730.16M | −177.8% |
| Interest Expense | $20.54M$6.97M | +194.5% |
| Net Income | -$416.11M$593.41M | −170.1% |
| EPS (Basic) | $-4.05$5.88 | −168.9% |
| EPS (Diluted) | $-4.05$5.83 | −169.5% |
| Shares Outstanding (Basic) | 102.87M100.89M | +2.0% |
| Shares Outstanding (Diluted) | 102.87M101.81M | +1.0% |
05—Questions
Frequently Asked Questions
What is First Solar's core technology and business strategy?
First Solar's core technology is its advanced thin-film CdTe semiconductor technology used to manufacture PV solar modules. Its strategy focuses on cost reduction, vertical integration across the solar value chain, and delivering comprehensive PV solar energy solutions (modules, systems, O&M) to utility-scale markets globally. The company aims to be economically competitive with traditional fossil-fuel-based power generation.
How did First Solar perform financially in 2016?
In 2016, First Solar reported a decrease in net sales to $3.0 billion from $3.6 billion in 2015, mainly due to the completion of major projects and lower 'module plus' sales, partially offset by higher third-party module sales. Gross profit margin also saw a slight decline to 23.9% from 25.7% in 2015 due to factors like project mix and inventory write-downs.
What is the significance of the Series 6 module technology?
The Series 6 module represents First Solar's next generation of thin-film CdTe technology. It is designed to offer larger form factor, improved product attributes, and a lower manufacturing cost structure, which the company expects will enhance its long-term competitiveness and cost advantage against other solar technologies.
What are the key risks facing First Solar according to this report?
Key risks highlighted include intense competition and pricing pressure in the global solar market, leading to potential oversupply. Other significant risks involve reliance on government subsidies and incentives (which can change), the potential for product quality issues leading to warranty expenses, foreign currency fluctuations, and the ability to effectively manage its long-term strategic plan, especially concerning international expansion and new technology transitions.
06—Continue