10-QPeriod: Q1 FY2021

FIRST SOLAR, INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 30, 2021For Securities:FSLR

Summary

First Solar, Inc. reported a strong first quarter in 2021, with net sales increasing by 51% year-over-year to $803.4 million, driven by higher module sales volume and the sale of project assets. The company also saw a significant improvement in gross profit margin, which expanded to 23.0% from 17.0% in the prior year, attributed to the sale of higher-margin projects and improved manufacturing throughput. A key event during the quarter was the completion of two significant business divestitures: the North American O&M operations and the U.S. project development business, which resulted in substantial gains on sales. Despite these strategic sales, the company generated positive net income of $209.7 million, translating to diluted earnings per share of $1.96. Operationally, First Solar commenced commercial production of its Series 6 modules at its Malaysian facility, increasing its total installed Series 6 production capacity to 7.9 GWDC. The company maintained a solid financial position with $1.5 billion in cash, cash equivalents, and marketable securities as of March 31, 2021. While net cash used in operating activities was negative, this was largely due to timing differences and the prior year's settlement of a class action lawsuit, with investing activities providing a strong net positive cash flow largely from the business sales.

Financial Highlights

54 data points
Beta

Revenue

$803.37M

23.0% Gross Margin

Net Income

$209.67M

26.1% Net Margin

EPS (Diluted)

$1.96

Total Assets

$7.11B

Cash & Equivalents

$1.23B

Free Cash Flow

-$369.63M

Financial Statements
Beta
Revenue$803.37M
Cost of Revenue$618.61M
Gross Profit$184.77M
R&D Expenses$19.87M
SG&A Expenses$52.09M
Operating Expenses$83.31M
Operating Income$252.35M
Interest Expense$3.00M
Net Income$209.67M
EPS (Basic)$1.98
EPS (Diluted)$1.96
Shares Outstanding (Basic)106.09M
Shares Outstanding (Diluted)106.89M

Key Highlights

  • 1Net sales surged 51% year-over-year to $803.4 million in Q1 2021, driven by increased module sales volume and the divestiture of project assets.
  • 2Gross profit margin improved significantly to 23.0% from 17.0% in Q1 2020, reflecting higher-margin project sales and better manufacturing efficiency.
  • 3The company completed the divestiture of its North American O&M operations and U.S. project development business, recognizing substantial gains on these sales.
  • 4Net income for the quarter was $209.7 million, with diluted earnings per share of $1.96, a significant increase from $0.85 in the prior year's quarter.
  • 5Commercial production of Series 6 modules began at the Kulim, Malaysia facility, boosting total Series 6 production capacity to 7.9 GWDC.
  • 6The company maintained a strong liquidity position with $1.5 billion in cash, cash equivalents, and marketable securities as of March 31, 2021.

Frequently Asked Questions

The significant increase in net sales was primarily driven by a 46% increase in the volume of watts sold for modules and the sale of project assets, notably the Sun Streams 2, Sun Streams 4, and Sun Streams 5 projects. The improvement in gross profit margin to 23.0% was due to the sale of higher gross profit projects and improved throughput at manufacturing facilities, partially offset by increased manufacturing-related charges due to the COVID-19 pandemic.

The divestitures of the North American O&M operations and the U.S. project development business were completed on March 31, 2021. These transactions resulted in significant gains on sales of businesses, totaling $150.9 million, which positively impacted net income. The sale of the U.S. project development business also included the sale of solar modules and advance payments for future module deliveries.

First Solar commenced commercial production of its Series 6 modules at its second facility in Kulim, Malaysia, increasing its total installed Series 6 nameplate production capacity to 7.9 GWDC. The company is focused on improving module wattage, expanding capacity and throughput at its manufacturing facilities, and expects to produce between 7.4 GWDC and 7.6 GWDC of Series 6 modules in 2021.

As of March 31, 2021, First Solar had $1.5 billion in cash, cash equivalents, and marketable securities. The company believes this, along with expected operating cash flows and contracts with customers, will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months. They also have availability under their Revolving Credit Facility. Capital expenditures for 2021 are projected to be between $425 million and $475 million.