10-KPeriod: FY2018

FIRST SOLAR, INC. Annual Report, Year Ended Dec 31, 2018

Filed February 22, 2019For Securities:FSLR

Summary

First Solar, Inc. (FSLR) in its 2018 10-K filing highlights its position as a leading global provider of PV solar energy solutions, utilizing advanced thin-film semiconductor technology (CdTe). The company emphasizes its vertically integrated business model, from module manufacturing to system development and operations & maintenance (O&M), as a key differentiator. Significant R&D efforts are focused on module and system-level innovations, with particular attention on the Series 6 module technology, which is expected to enhance cost advantages over crystalline silicon competitors. The company reported a decrease in net sales for 2018 compared to 2017, primarily due to project sales in the prior year and a temporary reduction in production capacity during the transition to Series 6 manufacturing. However, module production increased year-over-year. First Solar faces intense competition and pricing pressure within the solar industry, driven by overcapacity and declining average selling prices. Despite these challenges, the company maintains financial viability and is strategically focused on markets where solar energy is a least-cost, best-fit solution, particularly in regions with high solar resources and significant electricity demand.

Financial Highlights

53 data points
Beta

Revenue

$2.24B

17.5% Gross Margin

Net Income

$144.33M

6.4% Net Margin

EPS (Diluted)

$1.36

Total Assets

$7.12B

Cash & Equivalents

$1.40B

Free Cash Flow

-$1.07B

Financial Statements
Beta
Revenue$2.24B
Cost of Revenue$1.85B
Gross Profit$392.18M
R&D Expenses$84.47M
SG&A Expenses$176.86M
Operating Expenses$352.06M
Operating Income$40.11M
Interest Expense$25.92M
Net Income$144.33M
EPS (Basic)$1.38
EPS (Diluted)$1.36
Shares Outstanding (Basic)104.75M
Shares Outstanding (Diluted)106.11M

Key Highlights

  • 1First Solar is a leading global provider of PV solar energy solutions using advanced thin-film CdTe semiconductor technology.
  • 2The company operates a vertically integrated business model, encompassing module manufacturing, system development, EPC services, and O&M.
  • 3A strategic focus is placed on the Series 6 module technology, aimed at improving cost competitiveness against crystalline silicon modules.
  • 4Net sales decreased in 2018 compared to 2017, influenced by project sales in the prior year and a temporary dip in production capacity during the Series 6 transition.
  • 5Module production volume increased in 2018, driven by incremental Series 6 capacity.
  • 6The company operates in a highly competitive market with significant pricing pressure and industry overcapacity.
  • 7The United States represented a substantial portion (66%) of net sales in 2018, highlighting geographic concentration.

Frequently Asked Questions

First Solar's core technology is thin-film cadmium telluride (CdTe) semiconductor technology, which they claim offers advantages over traditional crystalline silicon modules, including higher real-world energy yield and better performance in high-temperature and humid environments. Their vertically integrated business model, encompassing the entire solar value chain, and ongoing R&D efforts are also key competitive advantages.

In 2018, First Solar reported a decrease in net sales to $2.2 billion from $2.9 billion in 2017. This was primarily attributed to the sale of completed projects in 2017 and ongoing construction activities in 2018, as well as a decrease in third-party module sales. Gross profit margin also slightly decreased due to under-utilization during the Series 6 manufacturing ramp-up.

First Solar's key strategic initiative is the transition to its Series 6 module technology, which is expected to improve manufacturing costs and enhance competitiveness. The company is focused on utility-scale PV solar energy solutions in key geographic markets and aims to achieve long-term shareholder value through growth, profitability, and liquidity. The outlook is influenced by ongoing industry pricing pressures and the need to balance manufacturing capacity with market demand.

First Solar faces several risks, including intense competition and pricing pressure in the solar market, potential reductions or expirations of government subsidies and incentives, operational risks related to manufacturing capacity and product quality, and macroeconomic factors such as interest rate fluctuations and capital market conditions. Dependence on a few large customers and geographic concentration in the United States also present risks.