01—Abstract
Summary
Summary of the 10-Q filed August 7, 2013. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) reported a notable decrease in net sales for the three months ended June 30, 2013, down 46% year-over-year to $519.8 milliona, largely driven by a significant decline in its systems business.
Despite lower revenues, the company saw an improvement in its gross profit margin, which rose to 27.0% from 25.5% in the prior year's comparable period. This margin expansion was primarily attributed to a more favorable project mix in the systems segment and reduced remediation costs in the components segment. For the six months ended June 30, 2013, net sales also decreased by 12% to $1.27 billionb.
However, the components business showed a 21%c increase in net sales, driven by higher module volumes sold, though offset by a 22% decrease in average selling prices. The company's financial performance was significantly impacted by restructuring charges, particularly in the prior year, which are now substantially concluded. Looking ahead, First Solar is focused on executing its Long Term Strategic Plan (LTSP) to transition towards sustainable markets and is continuing to invest in research and development to enhance module efficiency.
02—Key points
Key Highlights
- Net sales for the three months ended June 30, 2013, decreased by 46% to $519.8 million compared to the prior year period, largely due to a 51% drop in systems segment sales.
- Gross profit margin improved to 27.0% for the three months ended June 30, 2013, from 25.5% in the prior year, driven by a better project mix and lower remediation costs.
- For the six months ended June 30, 2013, net sales decreased by 12% to $1.27 billion, with a significant 27% decline in the systems segment offset by a 21% increase in the components segment.
- Components segment net sales increased 21% year-over-year for the first six months of 2013, driven by a 56% increase in volume, though tempered by a 22% decrease in average selling prices.
- Restructuring expenses significantly decreased to $2.4 million for the three months and $4.7 million for the six months ended June 30, 2013, compared to $19.0 million and $420.1 million, respectively, in the prior year periods, reflecting the near completion of restructuring initiatives.
- The company raised $428.2 million in net proceeds from an equity offering in June 2013.
- First Solar acquired TetraSun, Inc. in April 2013 for its crystalline silicon technology, and subsequently acquired GE's cadmium telluride PV intellectual property assets in August 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, First Solar, Inc. kept $0.06.
- Revenue$519.8M100.0%
- Cost of revenue−$379.7M73.0%
- Gross profit$140.1M27.0%
- Operating costs−$101.0M19.4%
- Operating income$39.1M7.5%
- Interest, other & tax−$5.5M1.1%
- Net income$33.6M6.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed August 7, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $519.76M$957.33M | −45.7% |
| Cost of Revenue | $379.66M$713.59M | −46.8% |
| Gross Profit | $140.10M$243.74M | −42.5% |
| R&D Expenses | $30.96M$32.37M | −4.3% |
| SG&A Expenses | $66.27M$52.18M | +27.0% |
| Operating Expenses | $101.00M$104.08M | −3.0% |
| Operating Income | $39.10M$139.66M | −72.0% |
| Interest Expense | $875K$7.37M | −88.1% |
| Net Income | $33.60M$110.98M | −69.7% |
| EPS (Basic) | $0.38$1.28 | −70.3% |
| EPS (Diluted) | $0.37$1.27 | −70.9% |
| Shares Outstanding (Basic) | 89.20M86.86M | +2.7% |
| Shares Outstanding (Diluted) | 91.14M87.65M | +4.0% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the significant year-over-year decrease in net sales for the three months ended June 30, 2013?
The primary driver was a 51% decrease in net sales from First Solar's systems segment, which was compounded by a 33% decrease in net sales from its components segment.
How did First Solar's gross profit margin perform in the second quarter of 2013?
First Solar's gross profit margin improved to 27.0% for the three months ended June 30, 2013, from 25.5% in the prior year's comparable period. This improvement was mainly due to a more favorable mix of higher-gross-profit projects in the systems segment and reduced remediation costs in the components segment.
What strategic acquisitions did First Solar make around this reporting period?
First Solar acquired TetraSun, Inc. in April 2013 to enhance its crystalline silicon technology offerings and, subsequent to the reporting period on August 5, 2013, acquired General Electric Company's cadmium telluride PV specific intellectual property assets.
How has First Solar's restructuring activity evolved in the reported periods?
Restructuring expenses have significantly decreased. For the three months ended June 30, 2013, restructuring expenses were $2.4 million, down from $19.0 million in the prior year. For the six months ended June 30, 2013, expenses were $4.7 million, a sharp decline from $420.1 million in the prior year, indicating the near completion of major restructuring initiatives.
06—Continue