01—Abstract
Summary
Summary of the 10-Q filed April 30, 2021. Cited figures are marked; the original filing is the authoritative source.
First Solar, Inc. reported a strong first quarter in 2021, with net sales increasing by 51% year-over-year to $803.4 milliona, 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 millionb, 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 billionc 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.
02—Key points
Key Highlights
- Net 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.
- Gross profit margin improved significantly to 23.0% from 17.0% in Q1 2020, reflecting higher-margin project sales and better manufacturing efficiency.
- The company completed the divestiture of its North American O&M operations and U.S. project development business, recognizing substantial gains on these sales.
- Net 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.
- Commercial production of Series 6 modules began at the Kulim, Malaysia facility, boosting total Series 6 production capacity to 7.9 GWDC.
- The company maintained a strong liquidity position with $1.5 billion in cash, cash equivalents, and marketable securities as of March 31, 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2021, First Solar, Inc. kept $0.26.
- Revenue$803.4M100.0%
- Cost of revenue−$618.6M77.0%
- Gross profit$184.8M23.0%
- Operating costs$67.6M8.4%
- Operating income$252.3M31.4%
- Interest, other & tax−$42.7M5.3%
- Net income$209.7M26.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed April 30, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $803.37M$532.12M | +51.0% |
| Cost of Revenue | $618.61M$441.79M | +40.0% |
| Gross Profit | $184.77M$90.34M | +104.5% |
| R&D Expenses | $19.87M$25.61M | −22.4% |
| SG&A Expenses | $52.09M$58.59M | −11.1% |
| Operating Expenses | $83.31M$88.68M | −6.1% |
| Operating Income | $252.35M$1.66M | +15138.4% |
| Interest Expense | $3.00M$6.79M | −55.9% |
| Net Income | $209.67M$90.70M | +131.2% |
| EPS (Basic) | $1.98$0.86 | +130.2% |
| EPS (Diluted) | $1.96$0.85 | +130.6% |
| Shares Outstanding (Basic) | 106.09M105.59M | +0.5% |
| Shares Outstanding (Diluted) | 106.89M106.39M | +0.5% |
05—Questions
Frequently Asked Questions
What were the main drivers for the significant increase in net sales and gross profit in Q1 2021?
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.
What was the impact of the divestitures of the O&M and U.S. project development businesses?
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.
How is First Solar managing its manufacturing capacity and technology advancements?
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.
What is the company's current liquidity and outlook for capital resources?
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.
06—Continue