01—Abstract
Summary
Summary of the 10-Q filed August 3, 2009. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. reported strong revenue growth in its second quarter and first half of 2009, with net sales more than doubling year-over-year.
This growth was primarily driven by a significant increase in the volume of solar modules sold, supported by expanded manufacturing capacity in Malaysia and efficiency improvements. Despite increased sales, the company experienced a notable decrease in average selling prices, partly due to contractual reductions, pricing amendments, and currency exchange rate fluctuations, particularly with the Euro. The company also completed the significant acquisition of OptiSolar's project development business, which added a substantial project pipeline.
While revenue and gross profit grew substantially, operating expenses also increased, partly due to acquisition-related costs and R&D investments aimed at improving module efficiency. First Solar maintained a healthy gross profit margin, benefiting from economies of scale and cost reductions in manufacturing, and ended the period with a solid cash position, though cash and equivalents decreased from the previous year-end.
02—Key points
Key Highlights
- Net sales surged by 97% to $525.9 million for the three months ended June 27, 2009, compared to $267.0 million for the same period in 2008.
- Gross profit increased by 106% to $298.1 million, with gross profit margin improving to 56.7% from 54.2% year-over-year.
- Acquired OptiSolar's solar power project development business for approximately $399.4 million, significantly expanding its project pipeline.
- Manufacturing cost per watt continued to decline, reaching $0.87 in Q2 2009, down from $1.18 in Q2 2008, indicating improved operational efficiency and cost management.
- Net income increased to $180.6 million ($2.11 per diluted share) compared to $69.7 million ($0.85 per diluted share) in the prior year period.
- Cash and cash equivalents decreased to $429.2 million from $716.2 million at the end of 2008, reflecting increased investments and operational cash usage.
- Significant increase in Research and Development expenses by 141% year-over-year, reflecting ongoing investment in technology and efficiency improvements.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2009, First Solar, Inc. kept $0.32.
- Revenue$480.9M100.0%
- Cost of revenue−$235.9M49.1%
- Gross profit$245.0M50.9%
- Operating costs−$82.2M17.1%
- Operating income$162.8M33.9%
- Interest, other & tax−$9.4M2.0%
- Net income$153.3M31.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed August 3, 2009Financial Statements
Q3 FY2009 against Q3 FY2008
| Line item | Q3 FY2009Q3 FY2008 | Change |
|---|---|---|
| Revenue | $480.85M$348.69M | +37.9% |
| Cost of Revenue | $235.86M$153.25M | +53.9% |
| Gross Profit | $244.99M$195.44M | +25.4% |
| R&D Expenses | $24.14M$9.95M | +142.5% |
| SG&A Expenses | $53.99M$48.99M | +10.2% |
| Operating Expenses | $82.20M$65.29M | +25.9% |
| Operating Income | $162.79M$130.15M | +25.1% |
| Interest Expense | $89K$127K | −29.9% |
| Net Income | $153.34M$99.27M | +54.5% |
| EPS (Basic) | $1.82$1.23 | +48.0% |
| EPS (Diluted) | $1.79$1.20 | +49.2% |
| Shares Outstanding (Basic) | 84.18M80.43M | +4.7% |
| Shares Outstanding (Diluted) | 85.89M82.44M | +4.2% |
05—Questions
Frequently Asked Questions
How did First Solar's revenue and profitability perform in the second quarter of 2009 compared to the previous year?
First Solar demonstrated substantial growth, with net sales more than doubling to $525.9 million for the three months ended June 27, 2009, up from $267.0 million in the prior year. Gross profit also more than doubled to $298.1 million, and the gross profit margin improved to 56.7% from 54.2%. Net income rose significantly to $180.6 million, or $2.11 per diluted share, from $69.7 million, or $0.85 per diluted share, in the comparable period.
What were the key drivers behind the significant revenue increase?
The primary driver for the substantial revenue increase was a 144% rise in the volume (MW) of solar modules sold. This was enabled by the full production ramp-up of plants in Malaysia and improvements in manufacturing processes. However, this volume increase was partially offset by a 21% decrease in the average selling price per watt, influenced by contractual price reductions, additional pricing amendments, customer mix changes, and unfavorable foreign exchange rates, particularly the weakening of the Euro against the US Dollar.
What is the strategic significance of the OptiSolar acquisition completed in April 2009?
The acquisition of OptiSolar's solar power project development business was a significant strategic move, adding a substantial multi-gigawatt project pipeline to First Solar's portfolio. This integration enhances the company's capabilities in its solar power systems segment, allowing it to offer more comprehensive utility-scale photovoltaic system solutions and exert greater control over the demand and manufacturing throughput of its solar modules.
How is First Solar managing its manufacturing costs and R&D efforts?
First Solar continues to focus on reducing its manufacturing costs, with the cost per watt declining to $0.87 in Q2 2009, down from $1.18 in Q2 2008. This is achieved through economies of scale, optimized production lines, and geographic diversification. Concurrently, the company is increasing its investment in Research and Development by 141% year-over-year, signaling a commitment to further enhance module efficiency and technological leadership.
06—Continue