Summary
First Solar, Inc. reported a significant decrease in net sales for the third quarter and the first nine months of 2014 compared to the prior year, primarily driven by lower systems business project revenue and reduced third-party module sales. Gross profit margins also declined due to a less favorable project mix and lower average selling prices. Despite the revenue challenges, the company maintained operational capacity with module production increasing slightly year-over-year, and average module efficiency improving. The company's balance sheet shows a substantial reduction in cash and cash equivalents, largely due to operating activities and investments, while long-term debt remained relatively stable. The company's ongoing strategic focus remains on utility-scale PV generation solutions in sustainable geographic markets, with a substantial advanced-stage project pipeline. While the solar industry faces intense pricing competition, First Solar continues to emphasize its vertically integrated business model, cost competitiveness through proprietary technology, and efforts to reduce Balance of Systems (BoS) costs. The company is confident in its liquidity for the next 12 months, supported by existing cash, operational cash flows, and its revolving credit facility.
Financial Highlights
55 data points| Revenue | $890.29M |
| Cost of Revenue | $700.89M |
| Gross Profit | $189.40M |
| R&D Expenses | $37.59M |
| SG&A Expenses | $66.53M |
| Operating Expenses | $105.53M |
| Operating Income | $83.88M |
| Interest Expense | $89K |
| Net Income | $89.83M |
| EPS (Basic) | $0.90 |
| EPS (Diluted) | $0.89 |
| Shares Outstanding (Basic) | 100.20M |
| Shares Outstanding (Diluted) | 101.42M |
Key Highlights
- 1Net sales decreased 30% year-over-year for the third quarter of 2014 to $889.3 million, and decreased 6% for the first nine months to $2.38 billion.
- 2Gross profit margin declined to 21.3% for the third quarter of 2014 from 28.8% in the prior year, impacted by lower systems project revenue and reduced average selling prices.
- 3Cash and cash equivalents decreased significantly to $622.5 million as of September 30, 2014, from $1.32 billion at the end of 2013, primarily due to negative cash flow from operations.
- 4Research and development expenses increased 7% for the quarter and 14% for the nine months, reflecting ongoing investment in next-generation CdTe solar modules and technology.
- 5The company's advanced-stage project pipeline remains robust, totaling approximately 2.8 GW of projects sold/under contract and 1.4 GW of projects with executed PPAs but not yet sold/contracted.
- 6Despite revenue pressures, module production increased by 5% year-over-year in the third quarter, with average module conversion efficiency improving to 14.2%.
- 7Restructuring and asset impairment charges were minimal in the current period, a significant decrease from $57.3 million and $62.0 million recorded in the comparable periods of 2013.