FSLR First Solar Inc

First Solar, Inc. (Nasdaq: FSLR) today announced financial results for the fourth quarter and year ended December 31, 2019. Net sales for the fourth quarter were $1.4 billion, an increase of $0.9 billion from the prior quarter. The increase was primarily a result of project sales in the United States and increased module shipments.

The Company reported a fourth quarter GAAP loss per share of $(0.56), compared to GAAP earnings per share (“EPS”) of $0.29 in the prior quarter, and full year GAAP loss per share of $(1.09).  On a non-GAAP basis, adjusting for litigation losses and the associated tax effect, the Company reported full year EPS of $1.48.

Cash, restricted cash and marketable securities at the end of the fourth quarter increased to $2.3 billion from $1.6 billion at the end of the prior quarter. The increase was primarily a result of cash received from project sales in the United States, module sales and advance payments received for sales of modules prior to the step down of the investment tax credit in the United States.

“Despite our reported loss, I am pleased with the continued execution of our Series 6 roadmap,” said Mark Widmar, CEO of First Solar. “With ongoing improvements in throughput and efficiency across our fleet, strong demand for Series 6, and our pipeline of contracted shipments as far out as 2023, we are well positioned for the future.”

For a reconciliation of the non-GAAP measure presented above to the most directly comparable measure presented in accordance with generally accepted accounting principles in the United States (“GAAP”), see the table below.

First Solar has scheduled a conference call for today, February 20, 2020 at 4:30 p.m. ET to discuss this announcement. A live webcast of this conference call and accompanying materials are available at investor.firstsolar.com.

An audio replay of the conference call will be available through Thursday, February 27, 2020 and can be accessed by dialing +1 (800) 585-8367 if you are calling from within the United States or +1 (416) 621-4642 if you are calling from outside the United States and entering the replay pass code 5717879. A replay of the webcast will also be available on the Investors section of the Company’s website approximately five hours after the conclusion of the call and remain available for 90 days.

About First Solar, Inc.

First Solar is a leading global provider of comprehensive photovoltaic (“PV”) solar solutions which use its advanced module and system technology. 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 recycling, First Solar’s renewable energy solutions 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 safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical fact, are forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning: the transition to Series 6 module manufacturing in 2020; net sales, gross margin, operating expenses, operating income, earnings per share, loss per share, net cash balance, capital expenditures, shipments, bookings, products and our business and financial objectives for 2020. These forward-looking statements are often characterized by the use of words such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “seek,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” “continue” and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events and therefore speak only as of the date of this release. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason, whether as a result of new information, future developments or otherwise. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to: structural imbalances in global supply and demand for PV solar modules; the market for renewable energy, including solar energy; our competitive position and other key competitive factors; reduction, elimination, or expiration of government subsidies, policies, and support programs for solar energy projects; the impact of public policies, such as tariffs or other trade remedies imposed on solar cells and modules; our ability to execute on our long-term strategic plans; our ability to execute on our solar module technology and cost reduction roadmaps; our ability to improve the wattage of our solar modules; interest rate fluctuations and both our and our customers’ ability to secure financing; the creditworthiness of our offtake counterparties and the ability of our offtake counterparties to fulfill their contractual obligations to us; the ability of our customers and counterparties to perform under their contracts with us; the satisfaction of conditions precedent in our project sales agreements; our ability to attract new customers and to develop and maintain existing customer and supplier relationships; our ability to successfully develop and complete our systems business projects; our ability to convert existing production facilities to support new product lines, such as Series 6 module manufacturing; general economic and business conditions, including those influenced by U.S., international, and geopolitical events; environmental responsibility, including with respect to cadmium telluride (“CdTe”) and other semiconductor materials; claims under our limited warranty obligations; changes in, or the failure to comply with, government regulations and environmental, health, and safety requirements; effects resulting from pending litigation, including the opt-out action against us; future collection and recycling costs for solar modules covered by our module collection and recycling program; our ability to protect our intellectual property; our ability to prevent and/or minimize the impact of cyber-attacks or other breaches of our information systems; our continued investment in research and development; the supply and price of components and raw materials, including CdTe; our ability to attract and retain key executive officers and associates; and the matters discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our most recent Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q, as supplemented by our other filings with the Securities and Exchange Commission.

Contacts

First Solar Investorsinvestor@firstsolar.com

First Solar Mediamedia@firstsolar.com

FIRST SOLAR, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share data)(Unaudited)

		December 31,
		2019				2018
ASSETS
Current assets:
Cash and cash equivalents		$	1,352,741			$	1,403,562
Marketable securities		811,506				1,143,704
Accounts receivable trade, net		475,039				128,282
Accounts receivable, unbilled and retainage		183,473				458,166
Inventories		443,513				387,912
Balance of systems parts		53,583				56,906
Project assets		3,524				37,930
Prepaid expenses and other current assets		276,455				243,061
Total current assets		3,599,834				3,859,523
Property, plant and equipment, net		2,181,149				1,756,211
PV solar power systems, net		476,977				308,640
Project assets		333,596				460,499
Deferred tax assets, net		130,771				77,682
Restricted cash and investments		303,857				318,390
Goodwill		14,462				14,462
Intangible assets, net		64,543				74,162
Inventories		160,646				130,083
Notes receivable, affiliate		—				22,832
Other assets		249,854				98,878
Total assets		$	7,515,689			$	7,121,362
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	218,081			$	233,287
Income taxes payable		17,010				20,885
Accrued expenses		351,260				441,580
Current portion of long-term debt		17,510				5,570
Deferred revenue		323,217				129,755
Accrued litigation		363,000				—
Other current liabilities		28,130				14,380
Total current liabilities		1,318,208				845,457
Accrued solar module collection and recycling liability		137,761				134,442
Long-term debt		454,187				461,221
Other liabilities		508,766				467,839
Total liabilities		2,418,922				1,908,959
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value per share; 500,000,000 shares authorized; 105,448,921 and 104,885,261 shares issued and outstanding at December 31, 2019 and 2018, respectively		105				105
Additional paid-in capital		2,849,376				2,825,211
Accumulated earnings		2,326,620				2,441,553
Accumulated other comprehensive loss		(79,334		)		(54,466		)
Total stockholders’ equity		5,096,767				5,212,403
Total liabilities and stockholders’ equity		$	7,515,689			$	7,121,362

FIRST SOLAR, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts)(Unaudited)

		Three Months Ended												Year Ended
		December 31,  2019				September 30,  2019				December 31,  2018				December 31,  2019				December 31,  2018
Net sales		$	1,399,377			$	546,806			$	691,241			$	3,063,117			$	2,244,044
Cost of sales		1,065,822				408,443				592,931				2,513,905				1,851,867
Gross profit		333,555				138,363				98,310				549,212				392,177
Operating expenses:
Selling, general and administrative		55,643				53,542				51,338				205,471				176,857
Research and development		25,427				24,912				21,388				96,611				84,472
Production start-up		7,351				18,605				14,576				45,915				90,735
Litigation loss		363,000				—				—				363,000				—
Total operating expenses		451,421				97,059				87,302				710,997				352,064
Operating (loss) income		(117,866		)		41,304				11,008				(161,785		)		40,113
Foreign currency (loss) income, net		(816		)		1,209				1,908				2,291				(570		)
Interest income		9,663				11,454				14,643				48,886				59,788
Interest expense, net		(3,048		)		(4,976		)		(11,476		)		(27,066		)		(25,921		)
Other income (expense), net		21,873				(3,399		)		32,102				17,545				39,737
(Loss) income before taxes and equity in earnings		(90,194		)		45,592				48,185				(120,129		)		113,147
Income tax benefit (expense)		30,865				(15,035		)		4,416				5,480				(3,441		)
Equity in earnings, net of tax		(79		)		65				(485		)		(284		)		34,620
Net (loss) income		$	(59,408	)		$	30,622			$	52,116			$	(114,933	)		$	144,326
Net (loss) income per share:
Basic		$	(0.56	)		$	0.29			$	0.50			$	(1.09	)		$	1.38
Diluted		$	(0.56	)		$	0.29			$	0.49			$	(1.09	)		$	1.36
Weighted-average number of shares used in per share calculations:
Basic		105,425				105,397				104,845				105,310				104,745
Diluted		105,425				106,227				105,819				105,310				106,113

Non-GAAP Financial Measure

In this release, we provide non-GAAP earnings per share for the year ended December 31, 2019. We have included this non-GAAP financial measure to adjust for losses associated with our class action and opt-out legal proceedings and the associated tax effects. We believe non-GAAP earnings per share, when taken together with the corresponding GAAP financial measure, is relevant and useful information to our investors because it provides them with additional information in assessing our financial operating results independent of the litigation loss described below. Our management uses this non-GAAP financial measure in evaluating our operating performance. However, this measure has limitations, including that it excludes the effect of the $350 million that, subject to court approval, we will pay in cash pursuant to the class action settlement and the amount of costs that we may ultimately have to pay in cash to resolve the opt-out action.  As of December 31, 2019, we accrued $13 million of estimated losses for the opt-out action, which represents our best estimate of the lower bound of the costs to resolve this case. The ultimate amount of loss may be materially higher. Accordingly, this non-GAAP financial measure should be considered in addition to, and not as a substitute for, or superior to earnings per share prepared in accordance with GAAP. The following is the reconciliation of earnings per share prepared in accordance with GAAP to non-GAAP earnings per share for the year ended December 31, 2019 (in millions, except per share amounts):

		Year EndedDecember 31, 2019
Net loss		$	(114.9	)
Litigation loss		363.0
Tax effect of litigation loss		(90.9		)
Non-GAAP net income		$	157.2
Weighted-average number of shares used for diluted earnings per share		105.3
GAAP loss per share		$	(1.09	)
Weighted-average number of shares used for diluted earnings per share		106.1
Non-GAAP earnings per share		$	1.48