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First Solar: Leading the Solar Revolution

|Includes: First Solar, Inc. (FSLR), HQCL, SPWR, STP, YGE

First Solar (NASDAQ:FSLR), the leading Thin-film player is all set to announce its Mar-09 results today at 4:30 p.m. ET. We take a quick look at its past performance, and the impact of its recent acquisition of OptiSolar assets.

On the revenue front, FSLR has enjoyed superior growth due to the excess demand for its low priced cadmium telluride modules. While other players have experienced a significant drop in 2008, FSLR managed to register a satisfactory growth rate. SPWRA which announced its results for the Mar-09 quarter last week, saw a 21% decline in its revenues on a year-on-year basis.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Successful capacity ramp, and continued throughput gains have contributed majorly to FSLR’s performance. FSLR had 19 lines operating at the end of 2008 and expects to have 24 lines and an annual global manufacturing capacity of approx. 1,145MW by the end of 2010.
 
 
 
 
 

 

 

 

 

 

 

 Source: Gridstone Research

These factors in turn have helped FSLR to drive down its manufacturing cost per watt, which broke the dollar per watt cost benchmark in Dec-08 quarter. Manufacturing cost has declined by two-thirds, from $3 per watt at the end of 2004 to $0.98 in 2008. Cost is expected to decline further as the company ramps its remaining plants in Malaysia and drives throughput improvements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On 2nd March’09, FSLR announced an agreement with OptiSolar to acquire its solar project pipeline which includes 1) A 550 MW solar development project, Topaz Solar Farm, under a PPE with Pacific Gas & Electric (PG&E); 2) A project pipeline of an additional 1.3 GW, which is under negotiation with Western U.S. regional utilities for solar development projects, and 3) Strategic land rights of approx. 136,000 acres with the potential to deploy up to 19 GW of utility-scale solar power projects
 
In addition, the core development team responsible for assembling and executing on the solar project pipeline will join the FSLR development team.
 
This agreement assumes significance as it would enable FSLR to reduce its dependence on the European markets, and also attain leadership position in the U.S. Utility market. In 2008, Germany accounted for approx. 74% of total revenues, while the contribution from U.S. stood at 5%. Other countries accounted for the remaining 21%.
 
It will be interesting to see how FSLR has fared amid credit crisis, lower demand and declining ASPs.
More on FSLR after its earnings call.
 
Disclosure: No positions