01—Abstract
Summary
Summary of the 10-Q filed May 1, 2009. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) demonstrated robust financial performance in the first quarter of 2009, with net sales nearly doubling year-over-year to $418.2 milliona, driven by a significant increase in solar module volume sold.
This strong revenue growth, coupled with improved gross profit margins which rose to 56.3% from 53.0% in the prior year period, indicates effective scaling of operations and cost management. The company's net income also saw a substantial increase, reaching $164.6 millionb, or $1.99 per diluted share, up from $46.6 million, or $0.57 per diluted share, in the first quarter of 2008.
This performance reflects First Solar's successful execution in expanding manufacturing capacity, particularly in Malaysia, and its ability to navigate a competitive market characterized by declining average selling prices and growing demand. The company maintains a strong liquidity position with over $811 millionc in cash and marketable securities, positioning it well to fund its ongoing operations and capital expenditures.
02—Key points
Key Highlights
- Net sales surged by 112% to $418.2 million in Q1 2009 compared to Q1 2008, driven by a 147% increase in MW volume of solar modules sold.
- Gross profit increased significantly by 126% to $235.3 million, with gross profit margin expanding to 56.3% from 53.0% year-over-year.
- Net income more than tripled to $164.6 million ($1.99 per diluted share) from $46.6 million ($0.57 per diluted share) in the same period last year.
- Manufacturing cost per watt decreased by 18% to $0.93, reflecting operational efficiencies and economies of scale, especially from the Malaysian facility.
- The company maintained a strong liquidity position, with cash, cash equivalents, and marketable securities totaling $811.6 million at the end of the quarter.
- Research and development expenses nearly doubled to $11.7 million, indicating continued investment in technology and efficiency improvements.
- Production start-up expenses decreased significantly by 51% to $6.2 million, suggesting a transition towards more stable, scaled operations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2009, First Solar, Inc. kept $0.34.
- Revenue$525.9M100.0%
- Cost of revenue−$227.8M43.3%
- Gross profit$298.1M56.7%
- Operating costs−$94.1M17.9%
- Operating income$204.0M38.8%
- Interest, other & tax−$23.5M4.5%
- Net income$180.6M34.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed May 1, 2009Financial Statements
Q2 FY2009 against Q2 FY2008
| Line item | Q2 FY2009Q2 FY2008 | Change |
|---|---|---|
| Revenue | $525.88M$267.04M | +96.9% |
| Cost of Revenue | $227.78M$122.34M | +86.2% |
| Gross Profit | $298.10M$144.70M | +106.0% |
| R&D Expenses | $18.61M$7.72M | +140.8% |
| SG&A Expenses | $72.93M$43.63M | +67.2% |
| Operating Expenses | $94.06M$55.97M | +68.0% |
| Operating Income | $204.04M$88.73M | +130.0% |
| Interest Expense | $3.83M$0 | — |
| Net Income | $180.58M$69.67M | +159.2% |
| EPS (Basic) | $2.16$0.87 | +148.3% |
| EPS (Diluted) | $2.11$0.85 | +148.2% |
| Shares Outstanding (Basic) | 83.72M79.88M | +4.8% |
| Shares Outstanding (Diluted) | 85.67M82.00M | +4.5% |
05—Questions
Frequently Asked Questions
How did First Solar's revenue grow so significantly in the first quarter of 2009?
First Solar's net sales increased by 112% to $418.2 million in Q1 2009 compared to Q1 2008. This growth was primarily driven by a substantial 147% increase in the volume of solar modules sold (measured in MW), fueled by the full production ramp-up of its Malaysian manufacturing center and continued improvements in manufacturing processes. The average number of sellable watts per solar module also increased.
What is the impact of currency fluctuations on First Solar's financial results?
First Solar is significantly exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the euro, as 93.3% of its net sales in Q1 2009 were denominated in euros. While a 13% decrease in average selling price was partly due to an 8% annual contractual price decline, a 5% adverse impact was also attributed to the unfavorable euro exchange rate. The company uses derivative instruments like foreign exchange forward contracts to hedge these risks, but currency volatility can still impact gross and net profit margins and cash flows.
How is First Solar managing its manufacturing costs and what is the outlook?
First Solar is actively managing its manufacturing costs, as evidenced by a decline in its average manufacturing cost per watt by 18% to $0.93 in Q1 2009. This reduction is attributed to the scalability of its Malaysian manufacturing center, operational efficiencies, and economies of scale. The company expects cost of sales per watt to continue decreasing in the coming years due to increased output, geographic diversification, and more efficient absorption of fixed costs. First Solar's proprietary thin-film technology, which uses less semiconductor material than crystalline silicon modules, also contributes to its cost competitiveness.
What is the company's financial position and outlook regarding liquidity?
First Solar maintains a strong financial position, with $811.6 million in cash, cash equivalents, and marketable securities as of March 28, 2009. The company believes these resources, combined with operating cash flows and debt financings, are sufficient to meet its working capital and capital expenditure needs for at least the next 12 months. The company is monitoring the credit markets but has not experienced material adverse impacts on its liquidity due to the ongoing credit disruption.
06—Continue