First Solar, Inc. Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

First Solar reported Q2 2021 net sales of $629 million, a decrease of $174 million from the previous quarter, primarily due to the sale of projects. Net income per diluted share dropped to $0.77, down from $1.96. The company is expanding manufacturing with a new 3.3 GWDC factory in Ohio and an additional facility in India, contingent upon approvals. The guidance for 2021 net sales has been updated to $2.875B to $3.1B, while earnings per share guidance is revised to $4.00 to $4.60. Cash reserves increased to $2.1 billion.

Positive

• New manufacturing expansion plans for a 3.3 GWDC factory in Ohio and a facility in India.
• Year-to-date net bookings of 9.0 GWDC, indicating strong demand.
• Cash, cash equivalents, and marketable securities increased to $2.1 billion.

Negative

• Q2 net sales decreased by $174 million from the previous quarter.
• Net income per diluted share fell to $0.77 from $1.96 in the prior quarter.
• Guidance for 2021 earnings per share lowered to $4.00 to $4.60 from $4.05 to $4.75.

• Net sales of $629 million
• Net income per share of $0.77
• Cash, cash equivalents, restricted cash, and marketable securities of $2.1 billion
• YTD net bookings of 9.0 GW_DC; 4.1 GW_DC since prior earnings call
• Started site preparation for previously announced 3.3 GW_DC factory in Ohio
• Announced additional 3.3 GW_DC manufacturing expansion in India, contingent upon permitting and pending approval of governmental incentives that are satisfactory to First Solar
• Nameplate manufacturing capacity expected to increase to 16 GW_DC in 2024
• World record CdTe module efficiency validated
• Earnings guidance lowered primarily due to freight costs
  

TEMPE, Ariz., July 29, 2021 (GLOBE NEWSWIRE) -- First Solar, Inc. (Nasdaq: FSLR) today announced financial results for the second quarter ended June 30, 2021.

“I would like to thank our associates for their passion, continued excellence, and their many achievements in the second quarter.” said Mark Widmar, CEO of First Solar. “Operationally, we started site preparation for the new factory in Ohio and today announced additional capacity expansion in India. These factories of the future are expected to produce our next-generation module with a fleet-leading highest efficiency and wattage, at a lower cost per watt produced and environmental footprint. Commercially, market demand for our cadmium telluride, or CdTe, technology is at a record level, with year-to-date bookings of 9 GW_DC. From a technology standpoint, we recently validated a world record CdTe module. This momentum we have cultivated, paired with an increasingly favorable policy environment, presents a compelling growth opportunity in the near-to mid-term.”

Net sales for the second quarter were $629 million, a decrease of $174 million from the prior quarter, primarily due to the sale of the Sun Streams 2, 4, and 5 projects in the prior quarter, which were partially offset by an increase in module segment revenue and revenue related to a settlement agreement for a legacy systems project.

Operating income for the second quarter was $110 million, compared to $252 million in the prior quarter. Second quarter operating income included depreciation and amortization of $66 million, revenue and gross margin related to the aforementioned settlement agreement of $65 million, $9 million related to underutilization and production start-up, and share-based compensation of $5 million.

Net income per diluted share for the second quarter was $0.77, compared to $1.96 in the prior quarter.

Cash, cash equivalents, restricted cash, and marketable securities at the end of the second quarter totaled $2.1 billion, an increase of $255 million from the prior quarter. This increase was primarily due to proceeds from the sale of our U.S. project development business and operating cash flows during the second quarter, which were partially offset by capital expenditures and operating expenses.

2021 guidance has been updated as follows:

	Prior	Current
Net Sales	$2.85B to $3.025B	$2.875B to $3.1B
Gross Margin ($) (1)	$695M to $775M	$695M to $760M
Operating Expenses (2)	$285M to $300M	Unchanged
Operating Income (3)(4)	$545M to $640M	$545M to $625M
Earnings per Share	$4.05 to $4.75	$4.00 to $4.60
Net Cash Balance (5)	$1.8B to $1.9B	$1.35B to $1.45B
Capital Expenditures	$425M to $475M	$825M to $875M
Shipments	7.8GW to 8.0GW	7.6GW to 8.0GW

	(1)	Includes $1 million of related ramp expense (unchanged) and $40 million of impact due to underutilization and reduced throughput (unchanged)
	(2)	Includes $20 million to $25 million of production start-up expense (unchanged)
	(3)	Includes $61 million to $66 million of related ramp expense, production start-up expense, underutilization and reduced throughput impact (unchanged)
	(4)	Includes a $149 million pre-tax gain related to the sales of the North American O&M and U.S. project development businesses ($151 million previously)
	(5)	Defined as cash, cash equivalents, marketable securities, and restricted cash less expected debt at the end of 2021

Conference Call Details

First Solar has scheduled a conference call for today, July 29, 2021 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.

Investors are encouraged to listen to the conference call and to review the accompanying materials, which contain more information about First Solar’s second quarter financial results and financial outlook.

An audio replay of the conference call will be available through Thursday, August 12, 2021 and can be accessed by dialing +1 (800) 585-8367 if you are calling from within the United States or +1 (416) 621-4642 if you are calling from outside the United States and entering the replay passcode 4994223. A replay of the webcast will also be available on the Investors section of First Solar’s website approximately five hours after the conclusion of the call and remain available for 90 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 R&D 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: the potential construction of our third factory in Ohio and first factory in India, including the estimated manufacturing capacity of the factories; the company’s anticipated nameplate manufacturing capacity in 2024; our financial guidance for 2021, net sales, gross margin, operating expenses, operating income, net income per share, earnings per share, net cash balance, capital expenditures, shipments, bookings, products and our business and financial objectives for 2021. 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 market for renewable energy, including solar energy; 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; interest rate fluctuations and both our and our customers’ ability to secure financing; 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; the creditworthiness of our offtake counterparties and the ability of our offtake counterparties to fulfill their contractual obligations to us; 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; our ability to successfully develop and complete our systems business projects; our ability to convert existing production facilities to support new product lines, such as Series 6 module manufacturing; general economic and business conditions, including those influenced by U.S., international, and geopolitical events; environmental responsibility, including with respect to 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 resulting from litigation; future collection and recycling costs for solar modules covered by our module collection and recycling program; 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 convert existing or construct production facilities to support new product lines; our ability to attract and retain key executive officers and associates; the severity and duration of the COVID-19 pandemic, including its 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 Conditions and Results of Operations” of our most recent Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q, as supplemented by our other filings with the Securities and Exchange Commission.

Contacts

First Solar Investors
investor@firstsolar.com

First Solar Media
media@firstsolar.com

FIRST SOLAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

	June 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	1,346,888			$	1,227,002
Marketable securities (amortized cost of $418,450 and $519,844 and allowance for credit losses of $87 and $121 at June 30, 2021 and December 31, 2020, respectively)	418,505				520,066
Accounts receivable trade	585,507				269,095
Less: allowance for credit losses	(2,479		)		(3,009		)
Accounts receivable trade, net	583,028				266,086
Accounts receivable, unbilled	14,633				26,673
Less: allowance for credit losses	(37		)		(303		)
Accounts receivable, unbilled, net	14,596				26,370
Inventories	603,057				567,587
Assets held for sale	—				155,685
Prepaid expenses and other current assets	189,402				251,739
Total current assets	3,155,476				3,014,535
Property, plant and equipment, net	2,396,641				2,402,285
PV solar power systems, net	233,370				243,396
Project assets	310,816				373,377
Deferred tax assets, net	107,450				104,099
Restricted marketable securities (amortized cost of $247,628 and allowance for credit losses of $13 at December 31, 2020)	—				265,280
Goodwill	14,462				14,462
Intangible assets, net	50,669				56,138
Inventories	226,719				201,229
Other assets	752,870				434,130
Total assets	$	7,248,473			$	7,108,931
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	148,326			$	183,349
Income taxes payable	21,671				14,571
Accrued expenses	216,556				310,467
Current portion of long-term debt	3,239				41,540
Deferred revenue	237,244				188,813
Liabilities held for sale	—				25,621
Other current liabilities	33,887				83,037
Total current liabilities	660,923				847,398
Accrued solar module collection and recycling liability	129,726				130,688
Long-term debt	276,084				237,691
Other liabilities	398,105				372,226
Total liabilities	1,464,838				1,588,003
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 106,318,905 and 105,980,466 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	106				106
Additional paid-in capital	2,859,108				2,866,786
Accumulated earnings	3,007,882				2,715,762
Accumulated other comprehensive loss	(83,461		)		(61,726		)
Total stockholders’ equity	5,783,635				5,520,928
Total liabilities and stockholders’ equity	$	7,248,473			$	7,108,931

FIRST SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended												Six Months Ended
	June 30, 2021				March 31, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Net sales	$	629,180			$	803,374			$	642,411			$	1,432,554			$	1,174,535
Cost of sales	455,062				618,607				504,951				1,073,669				946,737
Gross profit	174,118				184,767				137,460				358,885				227,798
Operating expenses:
Selling, general and administrative	36,346				52,087				51,770				88,433				110,357
Research and development	23,935				19,873				22,483				43,808				48,096
Production start-up	1,715				11,354				6,311				13,069				10,793
Litigation loss	—				—				6,000				—				6,000
Total operating expenses	61,996				83,314				86,564				145,310				175,246
Gain on sales of businesses, net	(1,745		)		150,895				—				149,150				—
Operating income	110,377				252,348				50,896				362,725				52,552
Foreign currency loss, net	(1,000		)		(2,595		)		(1,299		)		(3,595		)		(1,697		)
Interest income	1,288				956				3,674				2,244				13,004
Interest expense, net	(4,623		)		(2,996		)		(3,254		)		(7,619		)		(10,043		)
Other (expense) income, net	(3,247		)		8,448				(3,195		)		5,201				(5,417		)
Income before taxes and equity in earnings	102,795				256,161				46,822				358,956				48,399
Income tax (expense) benefit	(20,346		)		(46,490		)		(10,214		)		(66,836		)		79,001
Equity in earnings, net of tax	—				—				303				—				215
Net income	$	82,449			$	209,671			$	36,911			$	292,120			$	127,615
Net income per share:
Basic	$	0.78			$	1.98			$	0.35			$	2.75			$	1.21
Diluted	$	0.77			$	1.96			$	0.35			$	2.73			$	1.20
Weighted-average number of shares used in per share calculations:
Basic	106,313				106,088				105,927				106,201				105,761
Diluted	106,836				106,890				106,473				106,866				106,429

FAQ

What were the Q2 2021 earnings for FSLR?

First Solar reported a net income per diluted share of $0.77 for Q2 2021.

How much did First Solar's net sales decline in Q2 2021?

Net sales for Q2 2021 fell by $174 million from the prior quarter, totaling $629 million.

What is the updated net sales guidance for FSLR in 2021?

The updated guidance for net sales in 2021 is between $2.875 billion and $3.1 billion.

What expansions did First Solar announce recently?

First Solar announced the expansion of manufacturing with a new 3.3 GWDC factory in Ohio and an additional facility in India.

What are the cash reserves for First Solar as of Q2 2021?

As of Q2 2021, First Solar's cash, cash equivalents, and marketable securities totaled $2.1 billion.