Analysis of Geographic Areas
First Solar Inc. operates in 2 regions: United States and All other foreign countries.
Area Asset Turnover
First Solar Inc., asset turnover by geographic area
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States | 1.17 | 1.17 | 2.21 | 1.77 | 2.47 |
| All other foreign countries | 0.07 | 0.24 | 0.20 | 0.39 | 0.20 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of asset turnover by geographic area reveals a general decline in asset efficiency over the five-year period ending December 31, 2023, characterized by a significant performance gap between domestic and international operations.
- United States Asset Turnover
- Domestic operations exhibited a long-term downward trajectory in asset efficiency. A peak ratio of 2.47 was recorded in 2019, followed by a decline to 1.77 in 2020. Although a recovery to 2.21 was observed in 2021, the ratio decreased sharply to 1.17 in 2022 and remained stagnant at that level through 2023. This represents a reduction of approximately 52.6% in the ability of domestic assets to generate revenue over the analyzed period.
- Foreign Country Asset Turnover
- Asset turnover for all other foreign countries remained consistently low and volatile. The ratio peaked at 0.39 in 2020 but returned to 0.20 in 2021. After a marginal increase to 0.24 in 2022, a substantial contraction occurred in 2023, with the ratio falling to 0.07. This indicates a severe decline in the efficiency of foreign asset utilization toward the end of the period.
- Comparative Regional Analysis
- A persistent disparity in asset productivity is evident, as the United States consistently maintains a higher turnover ratio than foreign markets. However, the convergence toward lower ratios in both segments suggests a broader systemic trend of decreasing asset efficiency. While the domestic market remains the primary driver of revenue relative to assets, the sharp decline in foreign turnover by 2023 highlights a significant underutilization of international assets.
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Area Asset Turnover: United States
First Solar Inc.; United States; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net sales | 3,187,603) | 2,193,619) | 2,456,597) | 1,843,433) | 2,659,940) |
| Long-lived assets | 2,734,952) | 1,876,218) | 1,112,369) | 1,043,954) | 1,077,593) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 1.17 | 1.17 | 2.21 | 1.77 | 2.47 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 3,187,603 ÷ 2,734,952 = 1.17
The financial performance in the United States region reflects a period of significant capital expansion and fluctuating revenue streams between 2019 and 2023. While net sales reached a five-year peak in the final year of the period, the efficiency of long-lived asset utilization has seen a marked decline, primarily driven by a substantial increase in the asset base.
- Net Sales Trends
- Revenue exhibited volatility throughout the period, starting at 2,659,940 thousand USD in 2019 and dropping to 1,843,433 thousand USD in 2020. Following a partial recovery in 2021 and a subsequent dip in 2022, net sales grew sharply to 3,187,603 thousand USD by December 31, 2023, marking the highest sales volume in the analyzed timeframe.
- Long-lived Asset Growth
- The investment in long-lived assets remained relatively stable from 2019 through 2021, hovering around 1.1 billion USD. However, a significant upward shift occurred starting in 2022, with assets increasing to 1,876,218 thousand USD and further climbing to 2,734,952 thousand USD in 2023. This represents a total increase of approximately 153% from the 2019 baseline.
- Area Asset Turnover Analysis
- The asset turnover ratio has followed a generally downward trajectory, declining from 2.47 in 2019 to 1.17 in both 2022 and 2023. The reduction in this ratio indicates that the growth in the asset base has outpaced the growth in net sales. The stabilization of the ratio at 1.17 over the last two years suggests a period of adjustment as the company integrates its expanded capacity to drive future revenue.
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Area Asset Turnover: All other foreign countries
First Solar Inc.; All other foreign countries; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net sales | 130,999) | 425,700) | 466,780) | 867,899) | 403,177) |
| Long-lived assets | 1,792,231) | 1,790,219) | 2,277,543) | 2,201,768) | 2,063,364) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 0.07 | 0.24 | 0.20 | 0.39 | 0.20 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 130,999 ÷ 1,792,231 = 0.07
The asset utilization efficiency within foreign markets outside of primary designated regions exhibits significant volatility over the five-year period from 2019 to 2023. The overall trend is characterized by a sharp peak in revenue generation and asset productivity in 2020, followed by a progressive decline that culminated in a substantial drop in efficiency by the end of 2023.
- Net Sales Volatility
- Net sales showed an aggressive increase in 2020, rising to 867,899 thousand US dollars from 403,177 thousand US dollars in 2019. This peak was followed by a sustained contraction, with sales falling to 466,780 thousand US dollars in 2021 and 425,700 thousand US dollars in 2022. The decline accelerated sharply in 2023, reaching a period low of 130,999 thousand US dollars.
- Long-lived Asset Trends
- The investment in long-lived assets remained relatively stable in comparison to the volatility of sales. Assets increased gradually from 2,063,364 thousand US dollars in 2019 to a peak of 2,277,543 thousand US dollars in 2021. A downward adjustment occurred in 2022, after which the asset base stabilized at approximately 1,792,231 thousand US dollars in 2023.
- Area Asset Turnover Analysis
- The asset turnover ratio, which measures the efficiency of assets in generating revenue, mirrored the fluctuations in net sales. The ratio reached its maximum of 0.39 in 2020, indicating optimal utilization of the asset base for that period. Efficiency returned to 0.20 in 2021 and saw a marginal improvement to 0.24 in 2022. However, the ratio plummeted to 0.07 in 2023, reflecting a severe decrease in productivity and a growing disparity between the cost of long-lived assets and the revenue generated in these foreign territories.
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Net sales
First Solar Inc., net sales by geographic area
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States | 3,187,603) | 2,193,619) | 2,456,597) | 1,843,433) | 2,659,940) |
| All other foreign countries | 130,999) | 425,700) | 466,780) | 867,899) | 403,177) |
| Total | 3,318,602) | 2,619,319) | 2,923,377) | 2,711,332) | 3,063,117) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total net sales exhibited significant volatility between 2019 and 2023, characterized by fluctuating annual returns followed by a substantial peak in the final year of the period. After a decline in 2020 and a subsequent recovery in 2021, total revenue dipped again in 2022 before reaching a five-year high of US$ 3,318,602 thousand in 2023.
- United States Market Performance
- Domestic sales serve as the primary driver of total revenue, though they experienced marked instability. A notable contraction occurred in 2020, where sales fell to US$ 1,843,433 thousand. Following this, the market showed a recovery pattern, culminating in a significant surge in 2023 to US$ 3,187,603 thousand, representing the highest domestic revenue recorded during the analyzed timeframe.
- Foreign Market Performance
- Net sales from all other foreign countries demonstrated a divergent trend compared to the domestic market. A sharp increase was observed in 2020, with revenue peaking at US$ 867,899 thousand. However, this growth was not sustained; foreign sales entered a period of steady decline, falling sharply to US$ 130,999 thousand by 2023, the lowest level observed in the five-year period.
- Geographic Revenue Concentration
- There is a clear shift toward an almost exclusive reliance on the United States market. While foreign sales constituted approximately 13% of total revenue in 2019 and peaked at roughly 32% in 2020, this contribution diminished drastically over time. By 2023, the United States accounted for approximately 96% of total net sales, indicating a high level of geographic concentration and a significant reduction in international market penetration.
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Long-lived assets
First Solar Inc., long-lived assets by geographic area
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States | 2,734,952) | 1,876,218) | 1,112,369) | 1,043,954) | 1,077,593) |
| All other foreign countries | 1,792,231) | 1,790,219) | 2,277,543) | 2,201,768) | 2,063,364) |
| Total | 4,527,183) | 3,666,437) | 3,389,912) | 3,245,722) | 3,140,957) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total long-lived assets exhibited a consistent upward trajectory over the five-year period, increasing from $3.14 billion in 2019 to $4.53 billion by the end of 2023. The growth rate accelerated significantly in the final two years, with a notable surge in asset value observed between 2022 and 2023.
- United States Asset Growth
- A substantial increase in domestic long-lived assets is evident, rising from $1.08 billion in 2019 to $2.73 billion in 2023. While growth remained relatively flat between 2019 and 2021, a sharp acceleration occurred starting in 2022, with assets increasing by approximately 69% in 2022 and further expanding by 46% in 2023.
- Foreign Asset Trends
- Long-lived assets in foreign countries followed a divergent path, peaking at $2.28 billion in 2021 before experiencing a significant decline to $1.79 billion in 2022. Following this contraction, foreign asset values stabilized, remaining nearly constant through the end of 2023.
- Geographic Distribution Shift
- A fundamental shift in the geographic concentration of assets occurred over the period. In 2019, assets located in foreign countries represented approximately 66% of the total long-lived asset base. By the end of 2023, the distribution inverted, with United States assets comprising approximately 60% of the total, signaling a strategic pivot toward domestic asset accumulation.
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