First Solar, Inc. Announces Fourth Quarter and Full Year 2023 Financial Results and 2024 Guidance

Rhea-AI Summary

First Solar, Inc. (FSLR) reports strong financial results for 2023 with net sales of $3.3 billion and $1.2 billion for the fourth quarter. The company achieved net income per diluted share of $7.74 for 2023 and $3.25 for the fourth quarter. First Solar forecasts 2024 net sales of $4.4 billion to $4.6 billion, with an EPS guidance of $13.00 to $14.00 per diluted share.

Positive

• Strong net sales of $3.3 billion for 2023 and $1.2 billion for the fourth quarter.
• Net income per diluted share of $7.74 for 2023 and $3.25 for the fourth quarter.
• 2023 year-end net cash balance of $1.6 billion.
• 2024 net sales guidance of $4.4 billion to $4.6 billion.
• 2024 EPS guidance of $13.00 to $14.00 per diluted share.
• Significant increase in module sales contributing to the rise in net sales.
• Forecasted net cash balance for 2024 in the range of $0.9 billion to $1.2 billion.
• Expansion of manufacturing capacity and technology development to support long-term growth strategy.
• Historic levels of contracted backlog and increased R&D investment.
• Operating income forecasted to be $1.5 billion to $1.6 billion for 2024.

Negative

• None.

Insights

Financial Analyst

The reported net sales of $3.3 billion for 2023, with a significant quarter-over-quarter increase in the fourth quarter, indicate a robust demand for First Solar's modules. This is further evidenced by the net bookings of 28.3 GW, which demonstrates a strong order pipeline. The reported net income per diluted share of $7.74 for 2023 and $3.25 for the fourth quarter suggests that the company is not only growing its top line but also effectively managing its profitability. The projected net sales for 2024, ranging from $4.4 billion to $4.6 billion and the EPS guidance of $13.00 to $14.00 per diluted share, reflect management's confidence in continued growth and operational efficiency. It is crucial to note the forecasted operating income includes significant Section 45X tax credits, which are federal incentives for clean energy production and can be substantial for companies like First Solar.

Investors should consider the capital expenditures of $1.7 billion to $1.9 billion, which are aimed at manufacturing capacity expansions. While this indicates an aggressive growth strategy, it is essential to monitor how these expenditures will impact the company's net cash balance, projected to be between $0.9 billion to $1.2 billion by the end of 2024. A lower cash balance could potentially reduce financial flexibility, but it may be offset by the increased manufacturing capacity leading to higher future sales.

Market Research Analyst

First Solar's expansion in manufacturing capacity, particularly in regions like Alabama, Ohio, Louisiana and India, positions the company to capitalize on global demand for renewable energy solutions. The renewable energy market is expected to continue growing, driven by government policies and societal shifts toward sustainable energy sources. First Solar's strategic investments in technology and product development, as mentioned by CEO Mark Widmar, are aligned with the industry's trajectory towards higher efficiency and lower cost solar solutions.

The company's contracted backlog reaching historic levels is a testament to its competitive position in the market. However, it is important to assess the competitive landscape, including emerging technologies and market entrants that could affect First Solar's market share and pricing power. The guidance on volume sold, ranging from 15.6 GW to 16.3 GW, will be a key metric to watch as it directly correlates with market demand and the company's ability to deliver on its production capabilities.

Economist

The inclusion of Section 45X tax credits in First Solar's financials highlights the impact of government incentives on the renewable energy sector's economics. Such incentives can significantly alter a company's profitability and provide a competitive edge over international competitors who may not benefit from similar subsidies. The anticipation of these credits indicates that First Solar's fiscal strategy is closely tied to the current regulatory environment, which can be subject to change and may introduce risks or opportunities depending on policy shifts.

Furthermore, the global economic outlook, including trade policies, currency fluctuations and supply chain dynamics, will influence First Solar's operational costs and sales revenue. The company's international expansion efforts must navigate these economic factors to maintain its growth trajectory. The provided guidance suggests that First Solar is projecting strong performance; however, external economic factors could impact these projections and should be monitored closely by stakeholders.

• Net sales of $3.3 billion for 2023 and $1.2 billion for the fourth quarter
• Net income per diluted share of $7.74 for 2023 and $3.25 for the fourth quarter
• 2023 year-end net cash balance of $1.6 billion
• 2023 net bookings of 28.3 GW; 2.3 GW since third quarter earnings call at a base ASP of 31.8 c/w
• 2024 net sales guidance of $4.4 billion to $4.6 billion
• 2024 EPS guidance of $13.00 to $14.00 per diluted share
• 2024 year-end net cash balance guidance of $0.9 billion to $1.2 billion

TEMPE, Ariz.--(BUSINESS WIRE)-- First Solar, Inc. (Nasdaq: FSLR) (the “Company”) today announced financial results for the fourth quarter and year ended December 31, 2023.

Net sales for the fourth quarter were $1.2 billion, an increase of $0.4 billion from the prior quarter. The increase was primarily a result of increased module sales in the fourth quarter. Net sales for the full year 2023 were $3.3 billion compared to $2.6 billion in the prior year. This increase was driven by higher module volumes sold and average selling prices (“ASPs”).

The Company reported fourth quarter net income per diluted share of $3.25 and full year net income per diluted share of $7.74.

Cash, cash equivalents, restricted cash, restricted cash equivalents, and marketable securities, less debt at the end of the fourth quarter increased to $1.6 billion from $1.3 billion at the end of the prior quarter. The increase was primarily a result of operating cash flows, offset by capital expenditures related to manufacturing capacity expansions in Alabama, Ohio, Louisiana, and India.

“Few years have been as consequential to our long-term growth strategy as 2023,” said Mark Widmar, CEO of First Solar. “Over the past year, we scaled manufacturing capacity, mobilized at our latest announced facility in Louisiana, produced and shipped a record volume of modules, expanded our contracted backlog to historic levels, increased R&D investment, and continued to evolve our technology and product roadmap.”

Forecasted net sales for 2024 are $4.4 billion to $4.6 billion. Operating income is forecasted to be $1.5 billion to $1.6 billion, which includes production start-up expense of $85 million to $95 million, underutilization costs associated with factory ramp of $40 million to $60 million, and Section 45X tax credits of $1.0 billion to $1.05 billion. Forecasted net income per diluted share is $13.00 to $14.00. The year-end 2024 net cash balance is projected to be in the range of $0.9 billion to $1.2 billion. The complete 2024 guidance is as follows:

	2024 Guidance
Net Sales	$4.4B to $4.6B
Gross Margin (1)	$2.0B to $2.1B
Operating Expenses (2)	$455M to $485M
Operating Income (3)	$1.5B to $1.6B
Earnings per Diluted Share	$13.00 to $14.00
Net Cash Balance (4)	$0.9B to $1.2B
Capital Expenditures	$1.7B to $1.9B
Volume Sold	15.6GW to 16.3GW

——————————
(1)		Includes $40 million to $60 million of ramp costs and $1.0 billion to $1.05 billion of Section 45X tax credits
(2)		Includes $85 million to $95 million of production start-up expense
(3)		Includes $125 million to $155 million of production start-up expense and ramp costs, and $1.0 billion to $1.05 billion of Section 45X tax credits
(4)		Defined as cash, cash equivalents, restricted cash, restricted cash equivalents, and marketable securities, less expected debt at the end of 2024

The guidance figures presented above are forward-looking statements that are subject to a variety of assumptions and estimates, including with respect to certain factors related to the Inflation Reduction Act of 2022 (the “IRA”). Among other things, such factors include (i) the total advanced manufacturing production credit available to us under Section 45X of the Internal Revenue Code and (ii) the timing and ability to monetize such credit. Investors are encouraged to listen to the conference call and to review the accompanying materials, which contain more information about First Solar’s fourth quarter and full year 2023 financial results, 2024 guidance, and financial outlook.

Conference Call Details

First Solar has scheduled a conference call for today, February 27, 2024 at 4:30 p.m. ET, to discuss this announcement. A live webcast of this conference call and accompanying materials are available at investor.firstsolar.com. An audio replay of the conference call will be available through Thursday, March 28, 2024 and can be accessed by dialing +1 (800) 770-2030 if you are calling from within the United States or +1 (647) 362-9199 if you are calling from outside the United States and entering the replay passcode 92259. A replay of the webcast will also be available on the Investors section of the Company’s website approximately two hours after the conclusion of the call and remain available for 30 days.

About First Solar, Inc.

First Solar is a leading American solar technology company and global provider of responsibly-produced eco-efficient solar modules advancing the fight against climate change. Developed at research and development labs in California and Ohio, the Company’s advanced thin film photovoltaic (“PV”) modules represent the next generation of solar technologies, providing a competitive, high-performance, lower-carbon alternative to conventional crystalline silicon PV panels. From raw material sourcing and manufacturing through end-of-life module recycling, First Solar’s approach to technology embodies sustainability and a responsibility towards people and the planet. For more information, please visit www.firstsolar.com.

For First Solar Investors

This release contains forward-looking statements which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical fact, are forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning: demand for our technology; increased research and development investment; new domestic and international capacity coming online; production and delivery of our new Series 7 modules; our financial guidance for 2024, including future financial results, net sales, gross margin, operating expenses, operating income, earnings per diluted share, net cash balance, capital expenditures, volume sold, shipments, bookings, products and our business and financial objectives for 2024; the availability of benefits under certain production linked incentive programs, and the impact of the IRA including the total advanced manufacturing production credit available to us under Section 45X of the Internal Revenue Code. These forward-looking statements are often characterized by the use of words such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “seek,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” “continue,” “contingent” and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events and therefore speak only as of the date of this release. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason, whether as a result of new information, future developments or otherwise. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. These factors include, but are not limited to: structural imbalances in global supply and demand for PV solar modules; our competitive position and other key competitive factors; the reduction, elimination, expiration or introduction of government subsidies, policies, and support programs for solar energy projects; the impact of public policies, such as tariffs or other trade remedies imposed on solar cells and modules; the passage of legislation intended to encourage renewable energy investments through tax credits, such as the IRA; the impact of the IRA on our expected results of operations in future periods, which may be affected by technical guidance, regulations, subsequent amendments or interpretations of the law; interest rate fluctuations and both our and our customers’ ability to secure financing; changes in the exchange rates between the functional currencies of our subsidiaries and other currencies in which assets and liabilities are denominated; our ability to execute on our long-term strategic plans; the loss of any of our large customers, or the ability of our customers and counterparties to perform under their contracts with us; our ability to execute on our solar module technology and cost reduction roadmaps; our ability to improve the wattage of our solar modules; our ability to incorporate technology improvements into our manufacturing process, including the production of bifacial solar modules and the implementation of our Copper Replacement (“CuRe”) program; the satisfaction of conditions precedent in our sales agreements; our ability to attract new customers and to develop and maintain existing customer and supplier relationships; general economic and business conditions, including those influenced by U.S., international, and geopolitical events; environmental responsibility, including with respect to cadmium telluride (“CdTe”) and other semiconductor materials; claims under our limited warranty obligations; changes in, or the failure to comply with, government regulations and environmental, health, and safety requirements; effects arising from and results of pending litigation; future collection and recycling costs for solar modules covered by our module collection and recycling program; supply chain disruptions, including demurrage and detention charges; our ability to protect our intellectual property; our ability to prevent and/or minimize the impact of cyber-attacks or other breaches of our information systems; our continued investment in research and development; the supply and price of components and raw materials, including CdTe; our ability to construct new production facilities to support new product lines; evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters; our ability to avoid manufacturing interruptions, including during the ramp of our Series 7 modules manufacturing facilities; our ability to attract and retain key executive officers and associates; the severity and duration of public health threats, including the potential impact on our business, financial condition, and results of operations; and the matters discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our most recent Annual Report on Form 10-K, as supplemented by our other filings with the Securities and Exchange Commission.

FIRST SOLAR, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
		December 31,
			2023				2022
ASSETS
Current assets:
Cash and cash equivalents		$	1,946,994			$	1,481,269
Marketable securities			155,495				1,096,712
Accounts receivable trade, net			660,776				324,337
Government grants receivable, net			659,745				—
Inventories			819,899				621,376
Other current assets			391,900				267,727
Total current assets			4,634,809				3,791,421
Property, plant and equipment, net			4,397,285				3,536,902
Deferred tax assets, net			142,819				78,680
Restricted marketable securities			198,310				182,070
Government grants receivable			152,208				—
Goodwill			29,687				14,462
Intangible assets, net			64,511				31,106
Inventories			266,899				260,395
Other assets			478,604				356,192
Total assets		$	10,365,132			$	8,251,228
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	207,178			$	341,409
Income taxes payable			22,134				29,397
Accrued expenses			524,829				382,782
Current portion of debt			96,238				—
Deferred revenue			413,579				263,215
Other current liabilities			42,200				21,245
Total current liabilities			1,306,158				1,038,048
Accrued solar module collection and recycling liability			135,123				128,114
Long-term debt			464,068				184,349
Deferred revenue			1,591,604				944,725
Other liabilities			180,710				119,937
Total liabilities			3,677,663				2,415,173
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 106,847,475 and 106,609,094 shares issued and outstanding at December 31, 2023 and 2022, respectively			107				107
Additional paid-in capital			2,890,427				2,887,476
Accumulated earnings			3,971,066				3,140,289
Accumulated other comprehensive loss			(174,131	)			(191,817	)
Total stockholders’ equity			6,687,469				5,836,055
Total liabilities and stockholders’ equity		$	10,365,132			$	8,251,228

FIRST SOLAR, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
		Three Months Ended												Year Ended
		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Net sales		$	1,158,553			$	801,090			$	1,002,391			$	3,318,602			$	2,619,319
Cost of sales			656,520				424,915				941,778				2,017,923				2,549,461
Gross profit			502,033				376,175				60,613				1,300,679				69,858
Operating expenses:
Selling, general and administrative			57,094				50,172				42,734				197,622				164,724
Research and development			43,862				41,190				31,284				152,307				112,804
Production start-up			9,847				12,059				32,740				64,777				73,077
Litigation loss			—				—				—				35,590				—
Total operating expenses			110,803				103,421				106,758				450,296				350,605
Gain on sales of businesses, net			6,554				211				239				6,883				253,511
Operating income (loss)			397,784				272,965				(45,906	)			857,266				(27,236	)
Foreign currency loss, net			(9,947	)			(987	)			(4,373	)			(21,533	)			(16,414	)
Interest income			23,565				23,254				18,330				97,667				33,284
Interest expense, net			(7,068	)			(3,734	)			(3,133	)			(12,965	)			(12,225	)
Other (expense) income, net			(27,653	)			(1,033	)			28,510				(29,145	)			31,189
Income (loss) before taxes			376,681				290,465				(6,572	)			891,290				8,598
Income tax expense			(27,442	)			(22,067	)			(976	)			(60,513	)			(52,764	)
Net income (loss)		$	349,239			$	268,398			$	(7,548	)		$	830,777			$	(44,166	)
Net income (loss) per share:
Basic		$	3.27			$	2.51			$	(0.07	)		$	7.78			$	(0.41	)
Diluted		$	3.25			$	2.50			$	(0.07	)		$	7.74			$	(0.41	)
Weighted-average number of shares used in per share calculations:
Basic			106,844				106,834				106,606				106,795				106,551
Diluted			107,558				107,498				106,606				107,372				106,551

FIRST SOLAR, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
		Years Ended December 31,
			2023				2022				2021
Cash flows from operating activities:
Net income (loss)		$	830,777			$	(44,166	)		$	468,693
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation, amortization and accretion			307,994				269,724				259,900
Impairments and net losses on disposal of long-lived assets			1,568				63,338				22,876
Share-based compensation			34,219				28,656				20,902
Deferred income taxes			(60,813	)			(12,799	)			49,847
Gain on sales of businesses, net			(6,883	)			(253,511	)			(147,284	)
Loss (gain) on sales of marketable securities and restricted marketable securities			9				—				(11,696	)
Liabilities assumed by customers for the sale of systems			—				(145,281	)			(85,490	)
Gain on debt forgiveness			—				(30,201	)			—
Other, net			22,053				(1,029	)			(3,484	)
Changes in operating assets and liabilities:
Accounts receivable, trade and unbilled			(304,183	)			118,724				(96,951	)
Inventories			(205,106	)			16,693				(136,365	)
Project assets and PV solar power systems			8,626				(14,336	)			23,402
Government grants receivable			(659,745	)			—				—
Other assets			(224,333	)			(72,602	)			(69,942	)
Income tax receivable and payable			8,656				43,592				(13,062	)
Accounts payable and accrued expenses			79,328				5,569				48,968
Deferred revenue			783,207				912,946				47,062
Other liabilities			(13,114	)			(11,948	)			(139,817	)
Net cash provided by operating activities			602,260				873,369				237,559
Cash flows from investing activities:
Purchases of property, plant and equipment			(1,386,775	)			(903,605	)			(540,291	)
Purchases of marketable securities and restricted marketable securities			(3,612,801	)			(3,375,008	)			(2,147,136	)
Proceeds from sales and maturities of marketable securities and restricted marketable securities			4,563,890				2,646,787				2,294,595
Proceeds from sales of businesses, net of cash and restricted cash sold			7,680				442,302				300,499
Acquisitions, net of cash acquired			(35,739	)			—				—
Other investing activities			(9,046	)			(3,050	)			(6,707	)
Net cash used in investing activities			(472,791	)			(1,192,574	)			(99,040	)
Cash flows from financing activities:
Proceeds from borrowings under debt arrangements, net of issuance costs			367,983				397,380				129,215
Repayment of debt			—				(75,896	)			(72,676	)
Payments of tax withholdings for restricted shares			(31,130	)			(12,092	)			(15,989	)
Net cash provided by financing activities			336,853				309,392				40,550
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents			5,285				47,438				3,174
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents			471,607				37,625				182,243
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of the period			1,493,462				1,455,837				1,273,594
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of the period		$	1,965,069			$	1,493,462			$	1,455,837
Supplemental disclosure of noncash investing and financing activities:
Property, plant and equipment acquisitions funded by liabilities		$	249,455			$	315,961			$	61,598
Proceeds to be received from asset-based government grants		$	152,208			$	—			$	—
Acquisitions funded by contingent consideration		$	18,500			$	—			$	—

 

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Source: First Solar, Inc.

FAQ

What were First Solar's net sales for 2023 and the fourth quarter?

First Solar reported net sales of $3.3 billion for 2023 and $1.2 billion for the fourth quarter.

What is First Solar's EPS guidance for 2024?

First Solar's EPS guidance for 2024 is $13.00 to $14.00 per diluted share.

What is the forecasted net cash balance for First Solar for the year 2024?

First Solar's projected net cash balance for 2024 is in the range of $0.9 billion to $1.2 billion.

What factors contributed to the increase in net sales for First Solar in 2023?

The increase in net sales for First Solar in 2023 was primarily driven by higher module volumes sold and average selling prices.

What is the operating income forecast for First Solar for 2024?

First Solar's operating income is forecasted to be $1.5 billion to $1.6 billion for 2024.