01—Abstract
Summary
Summary of the 10-K filed February 26, 2021. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) filed its 2020 10-K on February 26, 2021, reporting on its financial and operational performance for the year ended December 31, 2020.
The company is a leading global provider of photovoltaic (PV) solar energy solutions, focusing on thin-film semiconductor technology. The report highlights a strategic shift in its business, with planned sales of its North American O&M operations and U.S. project development business, aimed at focusing on its core module manufacturing capabilities and optimizing its business structure. Financially, net sales decreased by 11% to $2.7 billiona compared to 2019, primarily due to the completion of large projects in the prior year.
However, gross profit margin significantly improved to 25.1% from 17.9% in 2019, driven by higher gross profit on third-party module sales and improved manufacturing throughput from the ramp-up of its Series 6 module technology. The company also reported a net income of $398.4 millionb for 2020, a substantial turnaround from a net loss in 2019, largely influenced by a significant litigation settlement recorded in 2019.
02—Key points
Key Highlights
- Net sales decreased by 11% to $2.7 billion in 2020 from $3.1 billion in 2019, attributed to project completions in the prior year.
- Gross profit margin improved significantly to 25.1% in 2020, up from 17.9% in 2019, driven by higher module sales profitability and manufacturing efficiencies.
- The company achieved net income of $398.4 million in 2020, a significant recovery from a net loss of $114.9 million in 2019, partly due to litigation settlements.
- First Solar is strategically divesting its North American O&M operations and U.S. project development business to focus on its core module manufacturing and technology.
- Manufacturing capacity for Series 6 modules expanded, with 6.3 GWDC of installed nameplate production capacity by year-end 2020, a 59% increase in Series 6 module production from 2019.
- The company continues to invest in R&D to improve module efficiency, lower costs, and maintain its technological edge against competitors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, First Solar, Inc. kept $0.15.
- Revenue$2.71B100.0%
- Cost of revenue−$2.03B74.9%
- Gross profit$680.7M25.1%
- Operating costs−$363.2M13.4%
- Operating income$317.5M11.7%
- Interest, other & tax$80.9M3.0%
- Net income$398.4M14.7%
Where FY2020 revenue went
$2.71B- Cost of revenue: $2.03B, 75% of revenue
- Operating income: $317.5M, 12% of revenue
- R&D: $93.7M, 3.5% of revenue
- SG&A: $222.9M, 8.2% of revenue
- Other operating costs: $46.5M, 1.7% of revenue
Kept 12% as operating incomeOperating income $317.5M · 12%Other operating costs $46.5M · 1.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 26, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $2.71B$3.06B | −11.5% |
| Cost of Revenue | $2.03B$2.51B | −19.2% |
| Gross Profit | $680.67M$549.21M | +23.9% |
| R&D Expenses | $93.74M$96.61M | −3.0% |
| SG&A Expenses | $222.92M$205.47M | +8.5% |
| Operating Expenses | $363.18M$711.00M | −48.9% |
| Operating Income | $317.49M-$161.78M | +296.2% |
| Interest Expense | $24.04M$27.07M | −11.2% |
| Net Income | $398.36M-$114.93M | +446.6% |
| EPS (Basic) | $3.76$-1.09 | +445.0% |
| EPS (Diluted) | $3.73$-1.09 | +442.2% |
| Shares Outstanding (Basic) | 105.87M105.31M | +0.5% |
| Shares Outstanding (Diluted) | 106.69M105.31M | +1.3% |
05—Questions
Frequently Asked Questions
What is the company's strategy regarding its O&M and project development businesses?
First Solar is strategically selling its North American Operations & Maintenance (O&M) operations and its U.S. project development business. This move is intended to allow the company to focus on its core competency in designing and manufacturing advanced thin-film PV solar modules.
How did First Solar's financial performance in 2020 compare to 2019?
Net sales decreased by 11% to $2.7 billion in 2020 compared to $3.1 billion in 2019. However, profitability improved significantly, with gross profit margin increasing to 25.1% from 17.9%. The company also reported a net income of $398.4 million in 2020, a substantial improvement from a net loss in 2019, partly due to a large litigation settlement in the prior year.
What is the significance of the Series 6 module technology for First Solar?
The Series 6 module technology represents First Solar's latest generation of flagship modules. The company has significantly ramped up production and capacity for these modules, which offer competitive efficiency, lower manufacturing costs, and improved real-world energy yield compared to crystalline silicon modules. The successful ramp-up of Series 6 production contributed to improved manufacturing throughput and gross profit margin.
What are the key risks facing First Solar, as highlighted in the filing?
Key risks include intense competition in the solar market leading to pricing pressure, potential reduction or expiration of government subsidies and incentives, reliance on a limited number of suppliers for key raw materials, product quality or performance issues, and the inherent uncertainties of global market dynamics and technological advancements.
06—Continue