First Solar Inc. (NASDAQ:FSLR)

The financial data reflects notable changes over the five-year period, highlighting significant trends in profitability, capital structure, and economic value creation.

Net Operating Profit After Taxes (NOPAT)

There is a marked improvement in NOPAT, starting with a negative figure of approximately -94.5 million in 2019, shifting to positive territory from 2020 onwards. The value increased substantially each year, reaching over 1.54 billion by the end of 2023. This trend indicates effective operational improvements and growing profitability over the period.

Cost of Capital

The cost of capital shows minor fluctuations but remains relatively stable between approximately 17.7% and 19.2%. It peaked in 2022 at 19.2% before slightly declining to 18.85% in 2023. This stability suggests consistent risk expectations and capital expense conditions throughout the years.

Invested Capital

Invested capital increased from about 4.89 billion in 2019 to 7.84 billion by 2023. The upward movement reflects expansion and possibly increased investment in assets or operations. Notably, there was a dip in invested capital in 2022 compared to 2021, indicating potential divestments or asset reallocation before the substantial increase in 2023.

Economic Profit

Economic profit remained negative from 2019 through 2022, though the magnitude of the loss consistently decreased, moving from approximately -961 million to -143 million. In 2023, economic profit turned positive to about 64 million, indicating that the company has started generating returns above its cost of capital, creating shareholder value after a multi-year recovery.

Overall, the data suggests a strong positive trajectory in profitability and economic value added, supported by increasing invested capital and a relatively stable cost of capital. The transition to positive economic profit in 2023 marks a significant milestone indicating enhanced operational efficiency and value generation.

Net Income (Loss)

The net income data over the five-year period exhibits notable volatility and a marked improvement towards the end of the timeline. In 2019, the company recorded a significant net loss of approximately $114.9 million. This was followed by a substantial turnaround in 2020 with net income reaching nearly $398.4 million, indicating a strong recovery. The positive trend continued in 2021, with net income increasing modestly to about $468.7 million. However, 2022 saw a reversal, with net income again falling into a loss of approximately $44.2 million. Importantly, 2023 demonstrated a dramatic rebound, achieving a peak net income of about $830.8 million, the highest in the observed period.

Net Operating Profit After Taxes (NOPAT)

The Net Operating Profit After Taxes shows a consistent upward trend throughout the period under review, reflecting improving operating efficiency. Starting from a negative value of roughly $94.5 million in 2019, NOPAT turned positive by 2020 at approximately $214.3 million. It continued to grow significantly, reaching around $568.0 million in 2021, demonstrating effective operational performance. The growth accelerated in 2022, with NOPAT rising to about $826.9 million. The most substantial increase occurred in 2023 where NOPAT almost doubled from the previous year to approximately $1.54 billion, indicating strong underlying profitability and likely improvements in operational control or revenue generation capabilities.

Overall Trends and Insights

The financial performance shows a notable improvement in operational profitability (NOPAT) across the entire time span, suggesting enhanced core business efficiency. Meanwhile, net income figures indicate more volatility, particularly with losses in 2019 and 2022 interrupting an otherwise positive trend. The drastic increase in net income and NOPAT in 2023 points to a possible significant positive development impacting profitability, such as operational expansions, cost reductions, or favorable market conditions. The divergence between the smoother upward trend in NOPAT and the fluctuations in net income implies that non-operating items or extraordinary events may be influencing the net income results in certain years.

Income Tax Expense (Benefit)

The income tax expense shows significant fluctuations over the analyzed period. In 2019 and 2020, the company recorded negative values indicating income tax benefits of -5,480 and -107,294 thousand US dollars respectively. However, beginning in 2021, there was a reversal to positive income tax expenses, with the company incurring 103,469 thousand US dollars in 2021, followed by slightly reduced expenses of 52,764 and 60,513 thousand US dollars in 2022 and 2023 respectively. This pattern indicates a shift from benefiting from tax credits or other tax advantages to a tax expense liability, stabilizing somewhat in the last two years but remaining significantly above the 2019 figure.

Cash Operating Taxes

Cash operating taxes also exhibited considerable volatility during the period. In 2019, the company paid 42,935 thousand US dollars in cash taxes. In 2020, this figure dropped sharply to a negative 119,248 thousand US dollars, indicating possible tax refunds or credits realized in that year. From 2021 onwards, cash operating taxes returned to positive figures, with 23,041 thousand US dollars in 2021, rising to 54,928 and 56,472 thousand US dollars in 2022 and 2023 respectively. The upward trend in cash taxes paid in the latter years suggests increasing taxable income or reduced available tax credits.

Total reported debt & leases

The total reported debt and leases exhibited a fluctuating trend over the five-year period. It decreased steadily from approximately 595 million US dollars at the end of 2019 to around 234 million US dollars by the end of 2022. However, there was a significant increase in 2023, with this figure rising sharply to about 624 million US dollars, exceeding the initial level recorded in 2019.

Stockholders’ equity

Stockholders’ equity showed a consistent upward trend throughout the period under review. Starting at roughly 5.1 billion US dollars in 2019, it increased gradually each year, reaching approximately 6.7 billion US dollars by the end of 2023. Despite a slight dip between 2021 and 2022, the overall movement indicates strengthening equity and possibly retained earnings or capital injections over time.

Invested capital

Invested capital also displayed variability across the years. From about 4.9 billion US dollars in 2019, it rose modestly to approximately 5.7 billion US dollars in 2021, followed by a decrease to roughly 5.05 billion US dollars in 2022. Notably, there was a marked surge in 2023, with invested capital reaching nearly 7.84 billion US dollars, representing the highest level in the observed period and suggesting increased resource deployment or asset acquisition during that year.

Economic Profit

The economic profit has shown a consistent improvement over the five-year period. It started at a significant negative value of -960,551 thousand US dollars in 2019 and improved steadily each year to reach a positive figure of 64,141 thousand US dollars in 2023. This indicates a gradual shift from economic losses toward economic value creation, suggesting enhanced profitability and operational efficiency over time.

Invested Capital

The invested capital exhibited a generally increasing trend, starting at 4,894,577 thousand US dollars in 2019 and reaching 7,840,426 thousand US dollars in 2023. A slight dip is observable in 2022 to 5,054,301 thousand US dollars, possibly indicating divestments or asset revaluation during that period. The overall upward trend reflects ongoing investments or acquisitions, which might underpin the company's growth strategies or capacity expansions.

Economic Spread Ratio

The economic spread ratio shows a steady improvement, moving from a negative -19.62% in 2019 to a positive 0.82% in 2023. This progression indicates that the company has been increasingly generating returns that exceed its cost of capital, transitioning from a state of economic value destruction to value generation. The narrowing negative spread over the years also aligns with the improving economic profit figures, demonstrating better capital allocation effectiveness.

Economic Profit

The economic profit showed a significant upward trend over the analyzed period. Starting from a substantial negative value of approximately -960 million US dollars at the end of 2019, the negative loss gradually narrowed each year. By the end of 2022, the figure nearly approached break-even at around -143 million US dollars and turned positive by the end of 2023, reaching approximately 64 million US dollars. This progression indicates improved profitability and efficiency in generating returns above the cost of capital.

Adjusted Net Sales

Adjusted net sales experienced some fluctuations but generally maintained a positive growth trajectory. Sales declined from about 3.28 billion US dollars in 2019 to roughly 2.55 billion in 2020, which may reflect external market or operational pressures during that year. Following this dip, sales recovered and increased consistently over the next three years, reaching nearly 4.12 billion US dollars by the end of 2023. This recovery and subsequent growth suggest strengthening market demand or improved sales performance.

Economic Profit Margin

The economic profit margin mirrored the pattern observed in economic profit. It increased steadily from a negative margin of approximately -29.29% in 2019 to a positive margin of about 1.56% in 2023. This upward movement indicates a transition from operating at a significant loss relative to sales to achieving a modest surplus, reflecting improved cost management or enhanced value creation relative to sales revenue.