10-QPeriod: Q2 FY2015

FIRST SOLAR, INC. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:FSLR

Summary

First Solar, Inc. (FSLR) reported strong top-line growth in the second quarter of 2015, with net sales increasing by 65% year-over-year to $896.2 million, primarily driven by higher systems project revenue. However, net sales for the first six months of 2015 saw a slight decrease of 9% to $1.37 billion, impacted by lower systems project revenue despite an increase in third-party module sales. The company demonstrated improved gross profit margin in the second quarter, reaching 18.4% compared to 17.0% in the prior year, attributed to better manufacturing asset utilization. For the first six months, the gross profit margin declined to 14.9% from 22.0% due to a less favorable mix of systems projects and lower gross profit on third-party module sales, though manufacturing utilization improved. Financially, First Solar maintained a solid cash position with $1.08 billion in cash and cash equivalents as of June 30, 2015. The company continues to invest in research and development to enhance module efficiencies, which are showing positive results. Strategic initiatives, including the formation of the 8point3 Energy Partners LP YieldCo and continued development of large-scale solar projects, are central to its long-term strategy.

Financial Highlights

53 data points
Beta

Revenue

$896.22M

18.4% Gross Margin

Net Income

$93.89M

10.5% Net Margin

EPS (Diluted)

$0.92

Total Assets

$6.80B

Cash & Equivalents

$1.08B

Free Cash Flow

-$49.17M

Financial Statements
Beta
Revenue$896.22M
Cost of Revenue$731.73M
Gross Profit$164.48M
R&D Expenses$29.48M
SG&A Expenses$70.90M
Operating Expenses$107.35M
Operating Income$57.13M
Interest Expense$826K
Net Income$93.89M
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)100.85M
Shares Outstanding (Diluted)101.61M

Key Highlights

  • 1Q2 2015 net sales surged 65% YoY to $896.2 million, driven by systems project revenue.
  • 2First six months of 2015 net sales decreased 9% YoY to $1.37 billion.
  • 3Q2 2015 gross profit margin improved to 18.4% from 17.0% YoY, reflecting better manufacturing asset utilization.
  • 4First six months of 2015 gross profit margin decreased to 14.9% from 22.0% YoY, impacted by project mix and third-party module sales.
  • 5Average module conversion efficiency increased to 15.4% in Q2 2015.
  • 6The company's cash and cash equivalents stood at $1.08 billion as of June 30, 2015.
  • 7Formation of the 8point3 Energy Partners LP YieldCo in June 2015 is a key strategic development.

Frequently Asked Questions

The substantial 65% year-over-year increase in net sales for the second quarter of 2015 to $896.2 million was primarily driven by higher systems project revenue. This was bolstered by the partial sale of projects like North Star and Lost Hills, along with increased revenue from projects such as Silver State South, Imperial Energy Center West, and McCoy Solar. This growth was partially offset by a decrease in third-party module sales due to lower volumes and average selling prices.

For the first six months of 2015, First Solar experienced a decline in profitability. The gross profit margin decreased to 14.9% from 22.0% in the same period of 2014. This was attributed to a less favorable mix of systems projects and lower gross profit on third-party module sales, although improved utilization of manufacturing assets provided some offset. The net income also decreased significantly to $32.2 million from $116.5 million in the prior year's comparable period.

The formation and initial public offering of 8point3 Energy Partners LP in June 2015 represents a significant strategic move. This YieldCo, formed in partnership with SunPower, is designed to own, operate, and acquire solar energy generation projects. For First Solar, it is expected to provide a lower cost of capital and greater predictability in the project sales process for a portion of its future project sales, while also allowing the company to monetize its project development efforts.

As of June 30, 2015, First Solar maintained a strong liquidity position with $1.08 billion in cash and cash equivalents, and $700 million in marketable securities, totaling $1.78 billion in cash, cash equivalents, and marketable securities. The company believes its current cash reserves, anticipated cash flows from operations, and availability under its revolving credit facility will be sufficient to meet its working capital, project investment, and capital expenditure needs for at least the next 12 months.