10-QPeriod: Q3 FY2008

FIRST SOLAR, INC. Quarterly Report for Q3 Ended Sep 27, 2008

Filed October 31, 2008For Securities:FSLR

Summary

First Solar, Inc. reported strong financial performance for the quarter ended September 27, 2008, demonstrating significant growth and an expanding market presence. Net sales surged by 119.3% year-over-year to $348.7 million, driven by a 114% increase in the volume of solar modules sold, supported by expanded production capacity in Malaysia and Germany. This growth, coupled with improved gross margins to 56.1% (up from 51.6%), reflects increased operational efficiency and favorable foreign exchange rates. The company's investment in research and development and operational expansion continues, with a notable increase in R&D expenses by 158.2% to $10.0 million. Despite increased operating expenses related to growth and infrastructure, First Solar maintained robust profitability, with net income growing substantially. The company also reported a healthy cash position and strong operating cash flow, positioning it well for continued expansion and investment in the burgeoning solar energy market.

Financial Highlights

28 data points
Beta

Revenue

$348.69M

56.1% Gross Margin

Net Income

$99.27M

28.5% Net Margin

EPS (Diluted)

$1.20

Cash & Equivalents

$581.78M

Free Cash Flow

$41.62M

Financial Statements
Beta
Revenue$348.69M
Cost of Revenue$153.25M
Gross Profit$195.44M
R&D Expenses$9.95M
SG&A Expenses$48.99M
Operating Expenses$65.29M
Operating Income$130.15M
Interest Expense$127K
Net Income$99.27M
EPS (Basic)$1.23
EPS (Diluted)$1.20
Shares Outstanding (Basic)80.43M
Shares Outstanding (Diluted)82.44M

Key Highlights

  • 1Net sales increased significantly by 119.3% to $348.7 million for the three months ended September 27, 2008, compared to $159.0 million in the prior year period.
  • 2Gross profit margin improved to 56.1% from 51.6% year-over-year, driven by increased sales volume and manufacturing efficiencies.
  • 3Research and development expenses nearly tripled, increasing by 158.2% to $10.0 million, reflecting investment in future growth and technology.
  • 4Net income for the quarter rose to $99.3 million from $46.0 million in the same period last year, a substantial increase of 115.6%.
  • 5The company's cash, cash equivalents, and marketable securities totaled $729.4 million as of September 27, 2008, indicating a strong liquidity position.
  • 6Operating cash flow remained strong, providing $259.8 million for the nine months ended September 27, 2008.

Frequently Asked Questions

The primary driver of First Solar's significant revenue growth is a substantial increase in the volume of solar modules sold, up 114% year-over-year for the quarter. This increase is attributed to the ramp-up of production at its Malaysian factory, full production at its German factory, and overall improvements in production throughput.

First Solar's gross profit margin improved to 56.1% in the current quarter, up from 51.6% in the same period last year. This improvement is due to increased sales volume leading to better absorption of fixed manufacturing costs and improved scalability from plant expansions. Favorable foreign exchange rates also contributed positively to the gross margin.

First Solar is significantly increasing its investment in research and development, with R&D expenses rising by 158.2% to $10.0 million for the quarter. This reflects a commitment to future growth and technology advancement. The company is also expanding its manufacturing capacity, particularly in Malaysia, which contributes to increased operational expenses and capital expenditures but is expected to drive future revenue.

As of September 27, 2008, First Solar held $729.4 million in cash, cash equivalents, and marketable securities. The company is actively investing in its growth through capital expenditures, primarily for new plant construction in Malaysia. Despite market disruptions, the company's liquidity position has not been materially adversely impacted, and it continues to monitor the credit markets closely.