01—Abstract
Summary
Summary of the 10-K filed February 23, 2018. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) in its February 23, 2018, 10-K filing, detailed its position as a global leader in comprehensive PV solar energy solutions.
The company highlighted its advanced thin-film semiconductor technology, specifically Cadmium Telluride (CdTe) modules, which offer competitive efficiency and higher real-world energy yield compared to crystalline silicon. The report emphasized First Solar's vertically integrated business model, encompassing module manufacturing, project development, EPC services, and operations and maintenance (O&M). The company is in the process of transitioning its manufacturing to the next-generation Series 6 module technology, expected to enhance its competitive advantage.
Geographically, the United States represented a significant portion of net sales (77% in 2017), with substantial operations and development also in key international markets. Financially, the company reported net sales of $2.9 billiona in 2017, consistent with the prior year.
However, gross profit margin declined due to a mix of lower-margin projects and reduced average selling prices for modules, partially offset by lower warranty and recycling liabilities. The company also noted investments in R&D and capacity expansion, funded by operational cash flows, positioning it for long-term competitiveness.
02—Key points
Key Highlights
- First Solar is a leading global provider of PV solar energy solutions, specializing in CdTe thin-film technology.
- The company is vertically integrated across the solar value chain, from module manufacturing to project development and O&M services.
- Transitioning to the new Series 6 module technology in 2018, aiming to enhance efficiency and reduce manufacturing costs.
- The United States was the dominant market in 2017, accounting for 77% of net sales.
- Net sales for 2017 were $2.9 billion, relatively flat compared to 2016.
- Gross profit margin decreased to 18.7% in 2017 from 22.0% in 2016 due to pricing pressures and project mix.
- Significant R&D investment is a key differentiator, with a focus on improving module efficiency and manufacturing processes.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2017, First Solar, Inc. lost $0.06.
- Revenue$2.94B100.0%
- Cost of revenue−$2.39B81.3%
- Gross profit$548.9M18.7%
- Operating costs−$371.1M12.6%
- Operating income$177.9M6.0%
- Interest, other & tax−$343.5M11.7%
- Net income−$165.6M5.6%
Where FY2017 revenue went
$2.94B- Cost of revenue: $2.39B, 81% of revenue
- Operating income: $177.9M, 6.0% of revenue
- R&D: $88.6M, 3.0% of revenue
- SG&A: $202.7M, 6.9% of revenue
- Other operating costs: $79.8M, 2.7% of revenue
Kept 6.0% as operating incomeOperating income $177.9M · 6.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 23, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $2.94B$2.90B | +1.3% |
| Cost of Revenue | $2.39B$2.27B | +5.6% |
| Gross Profit | $548.95M$638.42M | −14.0% |
| R&D Expenses | $88.57M$124.76M | −29.0% |
| SG&A Expenses | $202.70M$261.99M | −22.6% |
| Operating Expenses | $371.10M$1.21B | −69.2% |
| Operating Income | $177.85M-$568.15M | +131.3% |
| Interest Expense | $25.77M$20.54M | +25.5% |
| Net Income | -$165.62M-$416.11M | +60.2% |
| EPS (Basic) | $-1.59$-4.05 | +60.7% |
| EPS (Diluted) | $-1.59$-4.05 | +60.7% |
| Shares Outstanding (Basic) | 104.33M102.87M | +1.4% |
| Shares Outstanding (Diluted) | 104.33M102.87M | +1.4% |
05—Questions
Frequently Asked Questions
What is First Solar's core technology and competitive advantage?
First Solar's core technology is Cadmium Telluride (CdTe) thin-film semiconductor technology. Its competitive advantages stem from this technology, offering higher real-world energy yield, superior performance in varying temperature and shading conditions, and a more cost-effective, high-throughput manufacturing process compared to traditional crystalline silicon modules. The company's vertical integration across the solar value chain further strengthens its competitive position.
What is the significance of the Series 6 module transition?
The transition to Series 6 module technology is a key strategic initiative for First Solar. These modules are larger, expected to offer higher average rated power per module (over 420 watts), and are designed with improved efficiency and lower manufacturing costs. This transition is intended to further enhance First Solar's cost advantage over crystalline silicon technology and improve its long-term competitiveness.
How diversified is First Solar's revenue by geography?
First Solar's revenue is not highly diversified geographically, with the United States being the dominant market. In 2017, the United States accounted for 77% of the company's net sales. While First Solar has operations and sales in various other regions such as Asia-Pacific (Australia, Japan, India), Europe, the Middle East, and Africa, the significant concentration in the U.S. market exposes the company to specific regulatory and economic risks within that region.
What were the key financial performance indicators for 2017?
For the year ended December 31, 2017, First Solar reported net sales of $2.9 billion, which was largely consistent with 2016. However, gross profit decreased by 14% to $549 million, and the gross profit margin declined to 18.7% from 22.0% in the prior year. This decline was attributed to a combination of lower gross profit from projects and reduced average selling prices for modules, partly offset by lower warranty and recycling liabilities. The company also reported a net loss of $165.6 million for 2017.
06—Continue