First Solar 2010 Results and 2011 Guidance

2010 sales of $2.564 billion; 11.6% efficiency at $0.75 per-watt cost; 2 gigawatts of production guidance for 2011.

Eric Wesoff February 24, 2011

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Rob Gillette, the CEO of First Solar, just announced the following in their Q4 earnings call.

Q4 net sales of $610M
2010 net sales $2.564 billion, up 24 percent year-on-year
Net income of $664 million for 2010
Q4 production was 395 megawatts and 1.4 gigawatts in 2010
Module manufacturing cost of $0.75 per watt in Q4
Fourth quarter gross margin was 48.7 percent
11.6 percent conversion efficiency, up half a percentage point versus a year ago
"2010 was a good year."

Q4 Performance Summary -- completed 138 megawatts AC of projects

80-megawatt Sarnia
48-megawatt Copper Mountain
30-megawatt Cimarron

2011 Guidance

Net sales: $3.7 billion to $3.9 billion
2.0 gigawatts of module production
Consensus analyst market forecast of 17.6 gigawatts in 2011 with 2.4 gigawatts in North America
2.9 gigawatts of capacity by end of 2012
Expects to grow efficiency 0.5 percent per year

Market overview

Europe: Active discussions by several governments on accelerated FIT digression and potential caps
US: ITC extended 1 year and DOE project funding beginning
US: PPA prices declining toward peak grid parity
Canada: local content requirements eliminate future market viability
China: 20-gigawatt goal by 2020 but challenging economics impact project realization
India: 22-gigawatt goal by 2022 -- high cost of capital constrains growth and drives price pressure

Questions on the minds of equity analysts

Can the growing North American market offset the slowdown in European growth? What will be the impact of fading European policy support for large ground mount project? What about the impact of local content requirements in new growth markets such as Canada and India.
Is the profitability level of the systems business sustainable in the longer term? (U.S. utility economics are currently better than European economics because of attractive PPAs and low-cost DOE financing.)
Can project economics remain attractive in a low PPA/high financing cost environment?
What is the likelihood of EDF Energies Nouvelles getting approval to build a 261-megawatt project in France (near Beaucaire in the Provence region) using FSLR modules. This would be a module sale (rather than a system sale) for First Solar and could translate into $260 million to $400 million in revenue between 4Q11 and 2013.

First Solar stock is currently trading at $165.42, up 1.5 percent. The firm has a market cap of $14.18 billion.

Representatives of First Solar will be speaking at Greentech Media's Solar Summit next month. More details here.