First Solar, Inc. announces Fourth Quarter and Full-Year 2012 Financial Results

Record net sales of $1.1 billion for the fourth quarter and $3.4 billion for 2012

GAAP earnings per fully diluted share of $1.74 for the fourth quarter and loss of $1.11 for 2012

Non-GAAP earnings per fully diluted share of $2.04 for the fourth quarter and $4.90 for 2012

Cash and marketable securities of $1 billion

Guidance of $0.70 to $0.90 per fully diluted share for first quarter 2013

First Solar, Inc. (Nasdaq: FSLR) today announced financial results for the quarter and year ended Dec. 31, 2012. Net sales were a record $1.1 billion in the quarter, an increase of $236 million from the third quarter of 2012 and $415 million from the fourth quarter of 2011. The increase in net sales from the third quarter of 2012 was primarily due to increased revenue recognition for the Topaz project, and an increase in third-party module sales. Net sales for 2012 were $3.4 billion, up 22% from 2011.

The Company reported fourth quarter GAAP net income per fully diluted share of $1.74, compared to $1.00 in the third quarter of 2012 and a loss of $4.78 in the fourth quarter of 2011, which included $454 million in pre-tax goodwill impairment and restructuring charges. The fourth quarter of 2012 was impacted by pre-tax charges of $25 million (reducing EPS by $0.30), relating to previously announced restructuring actions. The Company reported a full-year GAAP loss of $1.11 per share for 2012, including the impact of pre-tax charges of $529 million (reducing EPS by $5.99), relating to previously announced restructuring actions and costs in excess of normal warranty. Non-GAAP net income per fully diluted share was $2.04 for the fourth quarter and $4.90 for full-year 2012.

Cash and Marketable Securities at the end of 2012 were $1 billion, up from $717 million at the end of the third quarter of 2012. Cash flows from operations were $328 million in the fourth quarter, and $762 million for the full-year 2012.

The Company also provided guidance for the first quarter of 2013 as follows:

- Net Sales of $650 to $750 million
- Gross Margin of 25-27%
- OPEX of $90 to $100 million
- Operating income of $70 to $100 million
- Tax rate between 11% and 13%
- EPS of $0.70 to $0.90 per fully diluted share
- Cash flow from Operations of $0 to $100 million
- CAPEX of $80 to $100 million

“Despite a very challenging market environment, we continued to make meaningful progress in all critical value drivers for the Company,” said Jim Hughes, CEO of First Solar. “We exceeded our module and balance-of-systems cost reduction targets for 2012, as announced in December 2011, further increased module efficiency and field performance, and achieved several key objectives in our strategy to develop and service new sustainable energy markets. We expect the market will remain turbulent for some time to come, but we have seen some evidence of improvement and believe we have the right strategy in place to retain our industry leadership by providing the best value for our customers.”

First Solar achieved several milestones over the past year:

Acquired Solar Chile and established subsidiaries in India, the Middle East, South Africa and Thailand.
Set new world record for CdTe cell efficiency at 18.7%.
Increased average module efficiency to 12.9% for the fourth quarter of 2012, up 0.7 percentage points from the fourth quarter of 2011.
Reduced the average module manufacturing costs on its best lines to $0.64 per watt (excluding underutilization), down from $0.69 in the fourth quarter of 2011.
Surpassed 250 MWAC of grid-connected power at Agua Caliente, making it the world’s largest operational solar power plant.
Surpassed 7 GWDC of cumulative production, enough to provide clean electricity for approximately 3.5 million homes and displace 4.7 million metric tons of CO₂ annually.
For a reconciliation of non-GAAP measures to measures presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”), see the tables below.

First Solar has scheduled a conference call today, Feb. 26, 2013 at 4:30 p.m. EST to discuss this announcement. Investors may access a live webcast of this conference call by visiting http://investor.firstsolar.com/events.cfm.

An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Monday, March 4, 2013 at 11:59 p.m. EST and can be accessed by dialing 888-203-1112 if you are calling from within the United States or 719-457-0820 if you are calling from outside the United States and entering the replay pass code 4625647. A replay of the webcast will be available on the Investors section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.

First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems which use its advanced thin-film modules. The Company’s integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today. From raw material sourcing through end-of-life module collection and recycling, First Solar’s renewable energy systems protect and enhance the environment. For more information about First Solar, please visit www.firstsolar.com.

For First Solar Investors

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially, including risks associated with the Company’s business involving the Company’s products, their development and distribution, economic and competitive factors and the Company’s key strategic relationships and other risks detailed in the Company’s filings with the Securities and Exchange Commission. First Solar assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

December 31,
2012

December 31,
2011

ASSETS

Current assets:

Cash and cash equivalents

$

901,294

$

605,619

Marketable securities

102,578

66,146

Accounts receivable trade, net

553,567

310,568

Accounts receivable, unbilled

400,987

533,399

Inventories

434,921

475,867

Balance of systems parts

98,903

53,784

Deferred project costs

21,390

197,702

Deferred tax assets, net

44,070

41,144

Assets held for sale

49,521

Note receivable, affiliate

17,725

Prepaid expenses and other current assets

207,368

329,032

Total current assets

2,832,324

2,613,261

Property, plant and equipment, net

1,525,382

1,815,958

Project assets

358,824

374,881

Deferred project costs

486,654

122,688

Deferred tax assets, net

317,473

340,274

Marketable securities

116,192

Restricted cash and investments

301,400

200,550

Goodwill

65,444

65,444

Inventories

134,375

60,751

Other assets

326,816

67,615

Total assets

$

6,348,692

$

5,777,614

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

350,230

$

176,448

Income taxes payable

5,474

9,541

Accrued expenses

554,433

406,659

Current portion of long-term debt

62,349

44,505

Deferred revenue

2,056

41,925

Other current liabilities

126,832

294,646

Total current liabilities

1,101,374

973,724

Accrued solar module collection and recycling liability

212,835

167,378

Long-term debt

500,223

619,143

Payments and billings for deferred project costs

636,518

167,374

Other liabilities

292,216

206,132

Total liabilities

2,743,166

2,133,751

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.001 par value per share; 500,000,000 shares

authorized; 87,145,323 and 86,467,873 shares issued and outstanding

at December 31, 2012 and December 31, 2011, respectively

87

86

Additional paid-in capital

2,065,527

2,022,743

Accumulated earnings

1,529,733

1,626,071

Accumulated other comprehensive income (loss)

10,179

(5,037

)

Total stockholders’ equity

3,605,526

3,643,863

Total liabilities and stockholders’ equity

$

6,348,692

$

5,777,614

FIRST SOLAR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Year Ended

December 31,
2012

December 31,
2011

December 31,
2012

December 31,
2011

Net sales

$

1,075,011

$

660,352

$

3,368,545

$

2,766,207

Cost of sales

781,464

522,228

2,515,796

1,794,456

Gross profit

293,547

138,124

852,749

971,751

Operating expenses:

Research and development

31,639

37,906

132,460

140,523

Selling, general and administrative

63,417

125,926

280,928

412,541

Production start-up

1,637

5,881

7,823

33,620

Goodwill impairment

393,365

393,365

Restructuring

24,839

60,366

469,101

60,366

Total operating expenses

121,532

623,444

890,312

1,040,415

Operating income (loss)

172,015

(485,320

)

(37,563

)

(68,664

)

Foreign currency (loss) gain

(2,156

)

243

(2,122

)

995

Interest income

3,129

3,726

12,824

13,391

Interest expense, net

(2,694

)

(100

)

(13,888

)

(100

)

Other income, net

280

9

945

665

Income (loss) before income taxes

170,574

(481,442

)

(39,804

)

(53,713

)

Income tax expense (benefit)

16,396

(68,329

)

56,534

(14,220

)

Net income (loss)

$

154,178

$

(413,113

)

$

(96,338

)

$

(39,493

)

Net income (loss) per share:

Basic

$

1.77

$

(4.78

)

$

(1.11

)

$

(0.46

)

Diluted

$

1.74

$

(4.78

)

$

(1.11

)

$

(0.46

)

Weighted-average number of shares used in per share calculations:

Basic

87,084

86,428

86,860

86,067

Diluted

88,549

86,428

86,860

86,067

Non-GAAP Financial Measures

The non-GAAP financial measures included in the tables below are

non-GAAP net income and non-GAAP net income per share, which adjust for

the following items: Costs in Excess of Normal Warranty Expense and

Restructuring. We believe the presentation of these non-GAAP financial

measures, when taken together with the corresponding GAAP financial

measures, provides meaningful supplemental information regarding the

Company’s operating performance. Our management uses these non-GAAP

financial measures in assessing the Company’s performance to prior

periods and investors benefit from an understanding of these non-GAAP

financial measures. The use of non-GAAP financial measures has

limitations and you should not consider these performance measures in

isolation from or as an alternative to measures presented in accordance

with GAAP such as net income and net income per share.

Costs in Excess of Normal Warranty Expense: Included in our GAAP

presentation of cost of sales and operating expense, costs in excess of

normal warranty expense reflect estimated costs related to our

remediation of a manufacturing excursion that occurred between June 2008

and June 2009. We exclude this expense from our non-GAAP measures

because we do not believe they reflect expected long-term future costs.

Restructuring: Included in our GAAP presentation of operating

expenses, restructuring costs represent asset impairment and related

costs and severance and termination related costs primarily due to a

series of restructuring initiatives intended to align the organization

with our long-term strategic plan including expected sustainable market

opportunities and to reduce costs. We exclude restructuring costs from

our non-GAAP measures because the asset impairment portion of the

charges does not reflect our cash position or our cash flows from

operating activities, and the restructuring charges overall do not

reflect future operating expenses, are not indicative of our core

operating performance, and are not meaningful in comparing to our past

operating performance.

Three Months Ended December 31, 2012 (In thousands except per

share data)

GAAP

Restructuring

Non-GAAP

Net income before income taxes

$

170,574

$

24,839

$

195,413

Income tax expense (benefit)

16,396

(1,357

)

(1

)

15,039

Net income

$

154,178

$

26,196

$

180,374

Net income per fully diluted share (2)

$

1.74

$

0.30

$

2.04

Weighted-average shares outstanding

88,549

88,549

88,549

(1)

Amount adjusts the provision for income taxes to reflect the effect

of the non-GAAP adjustments on non-GAAP net income.

(2)

Amount is calculated based upon Net income divided by

Weighted-average shares outstanding. The sum of Net income per fully

diluted share across the table may not equal the calculated amount

due to rounding.

Year Ended December 31, 2012 (In thousands except per share data)

GAAP

Restructuring

Costs in Excess of
Normal Warranty Cost

Non-GAAP

Net (loss) income before income taxes

$

(39,804

)

$

473,785

(1

)

$

55,443

(2

)

$

489,424

Income tax expense

56,534

1,142

(3

)

1,687

(3

)

59,363

Net (loss) income

$

(96,338

)

$

472,643

$

53,756

$

430,061

Net (loss) income per fully diluted share (4)

$

(1.11

)

$

5.38

$

0.61

$

4.90

Weighted-average shares outstanding

86,860

87,844

87,844

87,844

(1)

Balance includes $469.1 million of restructuring expense and $4.7

million of costs associated with the repayment of debt for our

German manufacturing center.

(2)

Balance includes (i) $35.1 million related to estimated expenses

associated with certain remediation efforts related to the

manufacturing excursion that occurred between June 2008 and June

2009. The remaining increase was primarily related to a change in

estimate for the market value of the modules that we estimate will

be returned to us under the voluntary remediation efforts that meet

the required performance standards to be re-sold as refurbished

modules, (ii) $15.9 million in estimated compensation payments to

customers, under certain circumstances, for power lost prior to

remediation of the customer’s system under our remediation program,

and (iii) $4.4 million in estimated expenses for remediation efforts

related to module removal, replacement and logistical services

committed to and undertaken by us beyond the normal product warranty.

(3)

Amount adjusts the provision for income taxes to reflect the effect

of non-GAAP adjustments on non-GAAP net income.

(4)

Amount is calculated based upon Net (loss) income divided by

Weighted-average shares outstanding. The sum of Net (loss) income

per fully diluted share across the table may not equal the

calculated amount due to rounding and differences in the

Weighted-average shares outstanding.

Source: First Solar

For more information on: First Solar