Analysis of Reportable Segments
First Solar Inc. operates in 2 segments: Modules Business and Other.
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- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Total Asset Turnover since 2006
- Price to Earnings (P/E) since 2006
- Price to Sales (P/S) since 2006
- Analysis of Revenues
- Aggregate Accruals
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Segment Profit Margin
First Solar Inc., profit margin by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Modules Business | |||||
| Other |
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 annual reportable segment profit margin data reveals significant fluctuations across the two main segments over the five-year period.
- Modules Business Profit Margin
- The profit margin for the Modules Business demonstrated moderate variability. It started at 19.87% in 2019, increased to a peak of 24.72% in 2020, then declined to 20.29% in 2021. A sharp drop is observed in 2022, where the margin fell drastically to 4.75%, indicating a challenging year for this segment. In 2023, the margin rebounded strongly to 38.75%, the highest level in the observed period, suggesting a significant recovery and improved profitability.
- Other Segment Profit Margin
- The Other segment exhibited more pronounced volatility. Beginning at 16.17% in 2019, it saw steady growth to 25.79% in 2020 and a substantial surge to 43.42% in 2021. However, 2022 was marked by a sharp decline to a negative margin of -23.84%, indicating losses for that year. The segment then experienced an extraordinary recovery in 2023 with a margin soaring to 106.72%, which is notably high and may reflect either exceptional gains or restructuring benefits in that period.
Overall, both segments showed considerable instability in profit margins between 2019 and 2023. The declines observed in 2022 for both segments suggest external or internal factors adversely affecting profitability during that year. The recovery in 2023 was particularly strong, indicating effective corrective actions or favorable market conditions that substantially improved the company's profitability in both segments.
Segment Profit Margin: Modules Business
First Solar Inc.; Modules Business; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Gross profit (loss) | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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
Segment profit margin = 100 × Gross profit (loss) ÷ Net sales
= 100 × ÷ =
- Gross Profit (Loss)
- Over the observed period, gross profit exhibited significant fluctuations. Starting at approximately $290 million in 2019, it increased substantially to about $429 million in 2020 and further to approximately $473 million in 2021. However, a notable decline occurred in 2022, with gross profit dropping sharply to around $115 million. This trend reversed dramatically by 2023, with gross profit reaching a peak of roughly $1.28 billion, representing the highest value in the period.
- Net Sales
- Net sales demonstrated a consistent upward trajectory throughout the period. Beginning at around $1.46 billion in 2019, net sales increased steadily each year, reaching approximately $1.74 billion in 2020, nearly $2.33 billion in 2021, and about $2.43 billion in 2022. The most pronounced growth occurred in 2023, when net sales surged to nearly $3.30 billion, marking the highest sales volume recorded in the data.
- Segment Profit Margin
- The segment profit margin revealed noticeable variability. It started at 19.87% in 2019 and improved to 24.72% in 2020, indicating enhanced profitability relative to sales. However, the margin declined to 20.29% in 2021 and dropped sharply to 4.75% in 2022, showing a temporary deterioration in profitability. In 2023, the margin rebounded strongly to 38.75%, significantly exceeding prior years and indicating a substantial increase in profitability efficiency within the segment.
- Overall Insights
- The data indicates a general growth in sales and profitability over the five-year period, with a notable dip in both gross profit and profit margin in 2022. The sharp recovery in 2023, reflected in all metrics, suggests successful strategic or operational changes that substantially enhanced revenue and margin performance. The variability in profit margins points to potential challenges in cost management or pricing strategies that were addressed effectively by the final year. This pattern highlights a cyclical performance with a strong finish in the latest reporting period.
Segment Profit Margin: Other
First Solar Inc.; Other; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Gross profit (loss) | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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
Segment profit margin = 100 × Gross profit (loss) ÷ Net sales
= 100 × ÷ =
- Net Sales
- Net sales exhibit a significant downward trend from 1,603,001 thousand USD in 2019 to 21,793 thousand USD in 2023. The decline is particularly steep between 2019 and 2021, with net sales decreasing by nearly 63% over two years. Although sales continue to decline after 2021, the rate of decrease slows, showing a reduction to 191,041 thousand USD in 2022 and further to 21,793 thousand USD in 2023.
- Gross Profit (Loss)
- Gross profit follows a somewhat volatile pattern. It remains relatively stable around 250,000 thousand USD for the years 2019 to 2021. However, a sharp reversal occurs in 2022 when the gross profit turns into a loss of 45,539 thousand USD. In 2023, the segment returns to a positive gross profit of 23,258 thousand USD, although this is substantially lower than prior years.
- Segment Profit Margin
- The segment profit margin shows notable fluctuations across the years. Initially, it increases from 16.17% in 2019 to 43.42% in 2021, indicating improved profitability relative to sales despite declining net sales. In 2022, the margin turns sharply negative to -23.84%, reflecting the gross loss experienced that year. Contrarily, 2023 displays an extraordinary increase to 106.72%, suggesting that the segment achieved profit more than its sales for that year, which may indicate significant cost efficiencies or unusual gains despite the very low sales volume.
- Summary of Trends and Insights
- The data highlights a pronounced decline in net sales accompanied by substantial volatility in profitability. The early years demonstrate stable gross profit and increasing profit margins even as sales drop, pointing towards improved operational efficiency or a shift in sales mix. The drastic negative swing in gross profit and margin in 2022 signals operational challenges or adverse market conditions. The remarkable rebound in margin in 2023, despite extremely low sales, suggests exceptional cost control or other non-operational factors influencing profitability. Overall, the segment displays significant instability in top-line revenue and profitability, indicating a period of transition or restructuring.
Net sales
First Solar Inc., net sales by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Modules Business | |||||
| Other | |||||
| Total |
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).
- Modules Business Net Sales
- The net sales in the Modules Business demonstrate a consistent upward trend from 2019 to 2023. Starting at approximately $1.46 billion in 2019, sales increased steadily each year, reaching about $3.30 billion by 2023. This reflects significant growth, with the largest year-over-year increase observed between 2022 and 2023.
- Other Segment Net Sales
- The Other segment experienced a notable decline in net sales over the period analyzed. Beginning at around $1.60 billion in 2019, sales dropped sharply to under $1 billion in 2020 and continued to decrease in subsequent years. By 2023, net sales in this segment fell to approximately $21.8 million, indicating a substantial reduction in revenue from this segment.
- Total Net Sales
- Total net sales showed variability but an overall upward movement by the end of the period. Sales peaked at roughly $3.06 billion in 2019, followed by a decrease in 2020 to $2.71 billion. A moderate recovery occurred in 2021 with sales reaching approximately $2.92 billion, but this was followed by another dip in 2022 to about $2.62 billion. In 2023, total net sales sharply increased to approximately $3.32 billion, surpassing the initial 2019 level and reflecting recovery predominantly driven by the Modules Business.
- Summary
- The analysis highlights a strong and continuous growth trajectory within the Modules Business segment, which appears to be the primary driver of the total net sales growth. Conversely, the Other segment's revenue has significantly diminished, contributing less to overall sales over time. The fluctuations in total net sales primarily reflect the interplay of these two segments, with the Modules Business growth compensating for and exceeding the decline seen in the Other segment by the end of the period.
Gross profit (loss)
First Solar Inc., gross profit (loss) by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Modules Business | |||||
| Other | |||||
| Total |
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).
- Modules Business Gross Profit
- The gross profit from the Modules Business segment showed substantial growth over the five-year period, with figures increasing from approximately $290 million in 2019 to about $1.28 billion in 2023. Notably, there was a significant decline in 2022, where the profit dropped sharply to around $115 million, following steady increases each year prior. However, the segment rebounded strongly in 2023, achieving its highest value in the series.
- Other Segment Gross Profit
- The Other segment exhibited relatively stable gross profit levels from 2019 through 2021, with values ranging roughly between $250 million and $260 million. In 2022, this segment underwent a pronounced shift, recording a negative gross profit of approximately -$46 million, indicating a loss. In 2023, the segment returned to positive territory with a significant recovery, posting a gross profit of about $23 million, though this was still well below the levels seen prior to 2022.
- Total Gross Profit
- Total gross profit followed an upward trend from 2019 through 2021, increasing from about $549 million to nearly $730 million. However, in 2022, the total gross profit experienced a sharp contraction, descending to roughly $70 million. The subsequent year saw a substantial recovery, with gross profit rising to around $1.3 billion, surpassing all previous years by a wide margin.
- Overall Trend and Insights
- Both segments experienced notable volatility in 2022, with the Modules Business showing a dramatic decline and the Other segment moving into negative gross profit. Despite these setbacks, 2023 saw a remarkable rebound in both areas, particularly the Modules Business, which surged to its highest recorded level. The total gross profit values reflect these dynamics, highlighting 2022 as an anomaly followed by strong recovery momentum. The data suggests potential operational or market challenges in 2022 that were effectively addressed by 2023, leading to enhanced profitability.