01—Abstract
Summary
Summary of the 10-Q filed May 4, 2012. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) reported a significant net loss of $(449.4 million) for the first quarter of 2012, a stark contrast to the net income of $116.0 milliona in the prior year's comparable quarter.
This downturn was primarily driven by substantial restructuring charges totaling $401.1 millionb, including asset impairments related to manufacturing capacity adjustments and European operations. Revenue also declined by 12% year-over-year to $497.1 million, impacted by lower module sales volumes and average selling prices, although this was partially offset by a significant increase in the systems business.
Despite the challenging top-line performance and substantial losses, the company maintained a healthy cash position with $610.5 millionc in cash and cash equivalents, supported by new borrowings under its revolving credit facility. The company is actively implementing a long-term strategic plan to focus on sustainable markets and reduce costs, which will involve significant workforce reductions and facility closures.
02—Key points
Key Highlights
- Reported a net loss of $(449.4) million for the quarter, compared to a net income of $116.0 million in Q1 2011.
- Net sales decreased by 12% to $497.1 million, primarily due to lower module volumes and prices, although the systems business saw significant growth.
- Incurred substantial restructuring charges of $401.1 million, largely related to manufacturing footprint adjustments and European operations closures.
- Gross profit margin significantly compressed to 15.4% from 45.8% in the prior year's quarter.
- Company maintained a strong liquidity position with $610.5 million in cash and cash equivalents.
- Announced a long-term strategic plan focused on shifting resources to sustainable geographic markets and improving cost efficiencies.
- The company announced the appointment of James A. Hughes as Chief Executive Officer, effective May 3, 2012.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2012, First Solar, Inc. lost $0.90.
- Revenue$497.1M100.0%
- Cost of revenue−$420.3M84.6%
- Gross profit$76.7M15.4%
- Operating costs−$533.0M107.2%
- Operating income−$456.3M91.8%
- Interest, other & tax$6.9M1.4%
- Net income−$449.4M90.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2012filed May 4, 2012Financial Statements
Q1 FY2012 against Q1 FY2011
| Line item | Q1 FY2012Q1 FY2011 | Change |
|---|---|---|
| Revenue | $497.06M$567.29M | −12.4% |
| Cost of Revenue | $420.31M$307.63M | +36.6% |
| Gross Profit | $76.75M$259.67M | −70.4% |
| R&D Expenses | $36.08M$31.35M | +15.1% |
| SG&A Expenses | $91.82M$87.00M | +5.5% |
| Operating Expenses | $533.03M$130.28M | +309.1% |
| Operating Income | -$456.28M$129.38M | −452.7% |
| Interest Expense | $920K$0 | — |
| Net Income | -$449.42M$115.97M | −487.5% |
| EPS (Basic) | $-5.20$1.36 | −482.4% |
| EPS (Diluted) | $-5.20$1.33 | −491.0% |
| Shares Outstanding (Basic) | 86.51M85.32M | +1.4% |
| Shares Outstanding (Diluted) | 86.51M87.05M | −0.6% |
05—Questions
Frequently Asked Questions
What caused the significant net loss in the first quarter of 2012?
The significant net loss of $(449.4) million was primarily due to substantial restructuring charges totaling $401.1 million. These charges included asset impairments related to decisions to cease manufacturing in Vietnam, adjust manufacturing capacity, and close European operations, as well as severance and related costs.
How did revenue perform in the first quarter of 2012?
Net sales decreased by 12% year-over-year to $497.1 million. This decline was mainly driven by a 55% decrease in the volume of solar modules sold and a 10% decrease in average selling prices for modules. However, net sales from the systems business increased significantly by 453% due to an increase in utility-scale solar power systems under construction.
What is the company's financial outlook and strategic direction?
First Solar is implementing a 'Long Term Strategic Plan' to focus on 'sustainable geographic markets' with a strong need for mass-scale PV electricity, such as in the Americas, Asia, the Middle East, and Africa. This plan includes significant restructuring, workforce reductions, and a focus on competing directly with fossil fuels on a Levelized Cost of Energy (LCOE) basis. The company aims to reduce overall costs and optimize its manufacturing capacity to align with demand.
What is the company's liquidity position?
The company maintained a strong liquidity position, with $610.5 million in cash and cash equivalents as of March 31, 2012. This was supported by borrowings under its revolving credit facility and cash generated from customer payments for systems projects. Despite the net loss and cash used in operating activities, management believes it has sufficient resources for the next 12 months and to execute its strategic plan.
06—Continue