10-QPeriod: Q2 FY2021

FIRST SOLAR, INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 30, 2021For Securities:FSLR

Summary

First Solar, Inc. reported mixed financial results for the second quarter and first six months of 2021 compared to the prior year. While net sales saw a slight decrease year-over-year for the quarter, they significantly increased for the six-month period, driven by strong module segment performance. Gross profit improved considerably in both periods, largely due to a notable indemnification settlement and ongoing module cost reductions. The company continued its strategic divestiture of non-core assets, completing the sales of its North American O&M operations and U.S. project development business in the first half of 2021, which contributed to significant gains on sales of businesses. Despite a decrease in operating expenses driven by lower SG&A, net income saw a substantial increase for the six-month period, reflecting the positive impact of business sales and improved gross margins, although the prior year benefited from a significant tax benefit related to the CARES Act. Looking ahead, First Solar is focused on expanding its manufacturing capacity with plans for new facilities in Ohio and India, signaling continued investment in growth. The company maintains a positive outlook on its liquidity and capital resources, sufficient to meet its obligations for the next twelve months. Investors should note the ongoing competitive landscape and potential for pricing pressures in the solar industry, balanced by First Solar's technological advantages and strategic expansions.

Financial Highlights

54 data points
Beta

Revenue

$629.18M

27.7% Gross Margin

Net Income

$82.45M

13.1% Net Margin

EPS (Diluted)

$0.77

Total Assets

$7.25B

Cash & Equivalents

$1.63B

Free Cash Flow

$86.62M

Financial Statements
Beta
Revenue$629.18M
Cost of Revenue$455.06M
Gross Profit$174.12M
R&D Expenses$23.93M
SG&A Expenses$36.35M
Operating Expenses$62.00M
Operating Income$110.38M
Interest Expense$4.62M
Net Income$82.45M
EPS (Basic)$0.78
EPS (Diluted)$0.77
Shares Outstanding (Basic)106.31M
Shares Outstanding (Diluted)106.84M

Key Highlights

  • 1Net sales increased by 22% for the first six months of 2021 compared to the same period in 2020, reaching $1.43 billion, primarily driven by a 41% increase in the modules segment.
  • 2Gross profit margin improved significantly, rising to 27.7% in Q2 2021 (from 21.4% in Q2 2020) and 25.1% for the first six months of 2021 (from 19.4% in H1 2020), boosted by an indemnification settlement and module cost reductions.
  • 3The company recognized a substantial $149.2 million gain on sales of businesses in the first six months of 2021, stemming from the divestitures of its North American O&M operations and U.S. project development business.
  • 4Selling, general, and administrative expenses decreased by 30% year-over-year for the second quarter and 20% for the first six months, attributed to reduced headcount and lower project development expenses.
  • 5Net income for the first six months of 2021 more than doubled to $292.1 million, compared to $127.6 million in the prior year period.
  • 6First Solar is investing in future growth, announcing plans for new manufacturing facilities in Ohio (USA) and India, expected to commence operations in 2023.
  • 7The company ended the period with a strong liquidity position, with $1.63 billion in cash, cash equivalents, and restricted cash, and projects sufficient resources to meet its obligations for the next 12 months.

Frequently Asked Questions

Net sales increased by 22% to $1.43 billion for the first six months of 2021. This growth was primarily driven by a 41% increase in net sales from the modules segment, due to a 55% rise in the volume of watts sold, partially offset by an 11% decrease in the average selling price per watt. The systems segment saw a decrease in net sales.

First Solar experienced a significant improvement in its gross profit margin. For the second quarter of 2021, the margin was 27.7% compared to 21.4% in the same period of 2020. For the first six months of 2021, the margin was 25.1% versus 19.4% in the prior year. This improvement was largely due to a $65.1 million indemnification settlement and ongoing module cost reductions.

The divestitures of the North American O&M operations and U.S. project development business, completed in the first half of 2021, resulted in a significant gain on sales of businesses, net of $149.2 million for the six-month period. These transactions are part of First Solar's strategy to focus on its core module and utility-scale systems business.

First Solar expects its current cash, cash equivalents, and marketable securities, along with operating cash flows and future contracts, to be sufficient for its needs over the next 12 months. The company maintains a strong liquidity position and is actively investing in future growth, notably with plans to expand manufacturing capacity through new facilities in Ohio, USA, and India.