First Solar’s Q1/2021 Annual Revenues Up By Over 50%

• First Solar has claimed to have increased its annual revenues in Q1/2020 to $803 million, with net income growing to $210 million
• It shipped 1.8 GW solar modules in the reporting quarter, and claims to be largely sold out in 2021
• Increase in shipping costs and aluminium prices is putting pressure on the company's margins, but it plans to deal with its by reducing use of aluminium by 10%, and building inventory
• First Solar upped its annual net sales guidance for 2021 slightly to between $2.85 billion and $3.025 billion

Solar thin-film module maker First Solar, Inc. said it is largely sold out for 2021, with 6.4 GW of potential deliveries in 2022, and 3 GW across 2023 and 2024. Since the last earning calls for Q4/2020, the US company has managed to secure 2.9 GW of bookings. Its management is confident of reaching 10 GW nameplate capacity for its Series 6 panels.

First Solar touts mid-to-late stage bookings of 7.8 GW while its early to late phase opportunities through 2024 now totals 16.5 GW. It is on track to achieve 11% cost per W produced reduction between Q4/2020 and Q4/2021.

India or US?

It confirmed manufacturing capacity expansion plans are now at an advanced stage and the company expects to announce a decision with regard to capacity and location by July 2021. While management hinted at India as a strong contender for its newest and most advanced fab to come, investment bank Cowen's research analyst Thomas Boyes believes it could expand both in the US and India.

He explained that in the US there is extra glass capacity with First Solar's existing supplier Pilkington of Nippon Sheet Glass (NSG Group), and tellurium supplier Rio Tinto is expanding its US production capacity, a news welcomed by First Solar (see Rio Tinto To Construct New Tellurium Plant). However, in India, First Solar will have to ensure access to extra clear low-iron float glass which Boyes believes the American company will have to source from existing suppliers in Southeast Asia.

Whatever the location, Philip Shen of Roth Capital Partners believe the incremental capacity will have a lower and better cost structure.

Boyes also pointed out the stress on ocean shipping logistics since the Suez Canal incident that has made it a challenge to secure containers or even book ships. Issues like these, along with the price rise for aluminium, which First Solar uses in its frames, are putting pressure on the company's margins, but the management is trying to circumvent these challenges by reducing the use of aluminium in its frames profile by 10%. As for logistical challenges, First Solar is trying to increase the inventory to further reduce its exposure to spot shipping rates.

"Implementation of these initiatives is important in order to help mitigate the effects of the challenging shipping market and achieve our 2021 cost for watt reduction objective," explained CEO Mark Widmar.

Q1/2021 financials

First Solar's net sales in Q1/2021 added up to $803 million, growing by over 50% over previous year, and also increasing by $194 million compared to Q4/2020, thanks to increase in systems revenues driven by the sales to Sun Streams 2, 4 and 5 projects (see 900 MW DC Solar & Storage Capacity Changes Hands in US).

Its operating income for the quarter at $252 million, was a huge jump over $2 million it reported back in Q1/2020 (see First Solar Changes Full Year 2020 Guidance). The company's gross profit in the reporting quarter was 23%, compared to 17% a year back, while company's net income grew to $210 million, up from $91 million on YoY basis.

First Solar shipped 1.8 GW of solar modules in Q1/2021, comprising around 200 MW of Series 4.

Guidance

The management offered an updated guidance for 2021, now expecting its annual net sales to grow to $2.85 billion and $3.025 billion, with a gross margin of $695 million to $775 million, while continuing to expect shipments in the range of 7.8 GW to 8.0 GW.