Summary
First Solar, Inc. reported a significant year-over-year decline in net sales for the third quarter of 2016, down 46% to $688 million. This was primarily driven by lower revenue from large construction projects like Desert Stateline and the completion of several key projects in late 2015 and early 2016. Gross profit also saw a substantial decrease, both in absolute terms and as a percentage of sales, falling to 27.1% from 38.1% in the prior year's quarter. This was attributed to a less favorable project mix and the absence of a large beneficial adjustment to the module recycling liability that occurred in the prior year. Despite the revenue and gross profit decline, the company's components business, which sells solar modules, saw a significant increase in revenue due to higher sales volumes, though this was partially offset by lower average selling prices. The company also reported an increase in R&D expenses, signaling continued investment in technology and efficiency improvements. The company's balance sheet remains strong, with a substantial increase in cash and cash equivalents, partly due to borrowings under its revolving credit facility. Management highlighted continued focus on cost reduction and module technology advancements as key strategies moving forward.
Financial Highlights
52 data points| Revenue | $681.28M |
| Cost of Revenue | $510.37M |
| Gross Profit | $170.91M |
| R&D Expenses | $32.17M |
| SG&A Expenses | $60.34M |
| Operating Expenses | $97.58M |
| Operating Income | $73.32M |
| Interest Expense | $5.56M |
| Net Income | $150.46M |
| EPS (Basic) | $1.46 |
| EPS (Diluted) | $1.45 |
| Shares Outstanding (Basic) | 103.34M |
| Shares Outstanding (Diluted) | 103.68M |
Key Highlights
- 1Net sales decreased by 46% to $688 million for Q3 2016 compared to $1.3 billion in Q3 2015, primarily due to project completions and lower revenue from large construction projects.
- 2Gross profit margin declined to 27.1% in Q3 2016 from 38.1% in Q3 2015, impacted by project mix and the absence of a prior year favorable liability adjustment.
- 3Components business revenue increased significantly (250% quarter-over-quarter) due to a 290% increase in module volume sold, though average selling price per watt decreased by 10%.
- 4Restructuring and asset impairment charges of $89.8 million were recognized in the nine months ended September 30, 2016, primarily related to the decision to end crystalline silicon module production.
- 5Cash, cash equivalents, and marketable securities increased to $2.1 billion as of September 30, 2016, up from $1.8 billion at the end of 2015, driven by borrowings under the revolving credit facility.
- 6R&D expenses increased for both the three-month and nine-month periods, reflecting ongoing investment in technology, with average module conversion efficiency improving.