While First Solar was not an active advocate for the continuation of the U.S. Investment Tax Credit (ITC), there are few companies which will benefit as much from the extension of the policy. The extension of the ITC last December is expected to provide a huge boost to the nations utility-scale solar market, where First Solar is a main player.
However, First Solar was clearly strong before ITC extension, as is evidenced by fourth quarter and full year 2015 results released today. During the year First Solar reported a record $3.58 billion in revenues, a 6% increase over 2014, as well as an enviable 14% operating margin and a net income of $546 million.
This growth is evidenced across the company, particularly in manufacturing. First Solar increased production 36% during the year to 2.5 GW, but shipped 2.9 GW of modules and booked 3.4 GW of sales, largely to its downstream project business. To cap it off, the company reports another 160 MW of bookings already in 2016.
First Solars manufacturing appears to be racing to keep pace with this project business. During the year the company ran its factories at 92% utilization, and reached 100% during the fourth quarter.
First Solar has undeniably made progress with its cadmium telluride thin-film technology. The companys record 22.1% efficient CdTe cell announced this morning is only the tip of the iceberg, as First Solar increased its fleet average efficiency by an absolute 1.6% from 2014 to 2015. By the fourth quarter the company had a fleet average efficiency of 16.1%, within striking distance of the 16.4% its best line offers.
The company provided fewer details on its project business, but in a separate press release revealed that it is installing 30-40 MW-DC per week on 2 GW of "active projects" globally. During the year First Solar launched yieldco 8point3 Energy Partners with rival manufacturer and developer SunPower, and plans to drop down three large projects including its Stateline and Moapa projects to 8point3 during 2016. However, the company alluded to problems in the yieldco space while stating that the timing of these drop-downs during the year would be subject to conditions.
Unlike many companies which have been building long-term value by holding assets at the expense of quarterly profits, First Solar has been more conservative in its approach and remains profitable on a quarterly basis. Additionally, the company was sitting on $1.8 billion in cash at the end of the year, providing ample reserves to build future projects.
Extension of the ITC will provide First Solar with more time to complete current projects, and the company reduced its guidance by $100 million due to project completion timelines being moved back into 2017.
In looking to the future, First Solar has named 20.3 GW of booking opportunities. Nearly half of these are in North America, with a substantial portion in India, Latin America and the Middle East, where the superior temperature coefficients of thin-film PV versus crystalline silicon are an advantage.
We have ample opportunity sets in both (U.S. and international) markets, noted First Solar Chief Financial Officer Mark Widmer on the companys results call. Widmer also noted a general broadening of demand in the United States. We are seeing utilties express a desire to being to participate in solar on a broader basis.
First Solar sees itself as well positioned to capitalize on this demand, despite strong competition. We have clearly been improving the relative value proposition, noted Widmer. We have been doing so at a higher rate of change than our competition.
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