01—Abstract
Summary
Summary of the 10-Q filed August 4, 2016. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. (FSLR) reported solid revenue growth in the second quarter of 2016, with net sales increasing by 4% year-over-year to $934.4 milliona.
This growth was primarily driven by an increase in module sales volume to third parties and higher revenue from construction projects. Gross profit also saw a significant improvement, increasing by 2.1 percentage points to 20.5%b due to reductions in module cost per watt and better gross margins. The company announced a strategic shift, ending production of crystalline silicon modules to focus on its core cadmium telluride (CdTe) technology and utility-scale PV solar power systems.
This transition resulted in an $85.5 millionc restructuring and asset impairment charge in the quarter. Despite this one-time charge, the company's operational performance, including 100% capacity utilization in manufacturing, indicates strong underlying business momentum.
02—Key points
Key Highlights
- Net sales increased 4% to $934.4 million in Q2 2016 compared to Q2 2015, driven by higher module sales volume and systems construction revenue.
- Gross profit margin improved to 20.5% from 18.4% year-over-year, reflecting improved module cost efficiencies and margins.
- The company is strategically shifting focus from crystalline silicon modules to its core CdTe technology, ending production of the former.
- A significant restructuring and asset impairment charge of $85.5 million was recognized due to the strategic shift away from crystalline silicon modules.
- Manufacturing facilities operated at 100% capacity utilization in Q2 2016, a 15-percentage point increase from the prior year's quarter.
- Average module conversion efficiency improved to 16.2% in Q2 2016 from 15.4% in Q2 2015.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2016, First Solar, Inc. lost $0.01.
- Revenue$1.02B100.0%
- Cost of revenue−$834.4M82.1%
- Gross profit$182.1M17.9%
- Operating costs−$182.3M17.9%
- Operating income−$243,0000.0%
- Interest, other & tax−$11.2M1.1%
- Net income−$11.4M1.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2016filed August 4, 2016Financial Statements
Q2 FY2016 against Q2 FY2015
| Line item | Q2 FY2016Q2 FY2015 | Change |
|---|---|---|
| Revenue | $1.02B$896.22M | +13.4% |
| Cost of Revenue | $834.37M$731.73M | +14.0% |
| Gross Profit | $182.05M$164.48M | +10.7% |
| R&D Expenses | $32.93M$29.48M | +11.7% |
| SG&A Expenses | $63.78M$70.90M | −10.0% |
| Operating Expenses | $182.29M$107.35M | +69.8% |
| Operating Income | -$243K$57.13M | −100.4% |
| Interest Expense | $7.15M$826K | +765.7% |
| Net Income | -$11.41M$93.89M | −112.2% |
| EPS (Basic) | $-0.11$0.93 | −111.8% |
| EPS (Diluted) | $-0.11$0.92 | −112.0% |
| Shares Outstanding (Basic) | 102.29M100.85M | +1.4% |
| Shares Outstanding (Diluted) | 102.29M101.61M | +0.7% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in net sales in Q2 2016?
The primary drivers for the 4% increase in net sales to $934.4 million were a higher volume of solar modules sold to third parties and increased revenue from the construction of systems projects, such as the Desert Stateline, Astoria, and Butler projects.
What is the impact of the restructuring and asset impairment charges on the company's financial performance?
The company incurred an $85.5 million restructuring and asset impairment charge in Q2 2016 related to the decision to end crystalline silicon module production. This charge negatively impacted operating income but is a strategic move to focus on core CdTe technology. Excluding this one-time charge, the underlying operational performance showed improvement.
How has the company's gross profit margin evolved?
The gross profit margin improved by 2.1 percentage points to 20.5% in Q2 2016 compared to 18.4% in the same period of 2015. This improvement is attributed to reductions in the cost per watt of their solar modules and higher gross margins on both third-party module sales and systems business projects.
What is the company's current manufacturing capacity and utilization?
As of June 30, 2016, First Solar had 30 installed production lines with an annual global manufacturing capacity of approximately 3.2 GW. In Q2 2016, the company achieved 100% capacity utilization, a significant increase from 85% in Q2 2015, indicating strong demand and operational efficiency.
06—Continue