First Solar, Inc. (FSLR)
Q4 2009 Earnings Call Transcript
February 18, 2010 4:30 p.m. ET

Executives

Larry Polizzotto – Vice President, Investor Relations
Rob Gillette – Chief Executive Officer
Jens Meyerhoff – Chief Financial Officer
Bruce Sohn – President

Analysts

Vishal Shah – Barclays Capital
Satya Kumar – Credit Suisse
Sanjay Shrestha – Lazard Capital
Steve O’Rourke – Deutsche Bank
Steve Milunovich – Bank of America
Jesse Pichel – Piper Jaffray
Rob Stone – Cowen and Company
Stephen Chin – UBS
Kelly Dougherty – Macquarie Research Equities
Christopher Blansett – JP Morgan
Josh Baribeau for Jed Dorsheimer – Canaccord Adams

Presentation

Operator

Please standby we are about to begin. Good day, everyone, and welcome to First Solar’s fourth quarter and year end 2009 earnings conference call. This call is being webcast live on the investor section of First Solar’s Web site at www.firstsolar.com. At this time all participants are in a listen only mode. And as a reminder today’s call is being recorded. I would now like to turn the call over to Mr. Larry Polizzotto, Vice President of Investor Relations for First Solar Inc. Mr. Polizzotto, you may begin.

Larry Polizzotto – Vice President of Investor Relations

Thank you. Good day, everyone and thank you for joining us for First Solar Fiscal Fourth Quarter 2009 Conference Call. Today, after the market closed, the Company issued a press release announcing its fourth quarter 2009 financial results. If you did not receive a copy of the press release, you can obtain one from the investor section of First Solar’s Web site at www.firstsolar.com. In addition, First Solar has posted the fourth quarter presentation for this call, key quarterly statistics, historical data on the financial results and operating performance on our IR Web site. We will be discussing the presentation during this call.

An audio replay of the conference call will also be available approximately two hours after the conclusion of this call. The audio replay will remain available until Tuesday, February, the 23rd 2010 at 11:59 P.M. Eastern standard Time and can be accessed by dialing 888-203-1112, if you are calling from the United States, or 719 457 0820, if you are calling from outside of the United States, and entering replay pass code 2240374. A replay of the webcast will be available on the investor section on the Company’s Web site approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days. Investors may access the webcast on the investor section of the Company’s Web site at firstsolar.com. If you are a subscriber of FactSet or Thomson One, you can obtain a written transcript within two hours.

With me today are Rob Gillette, Chief Executive Officer, Jens Meyerhoff, Chief Financial Officer and Bruce Sohn, President of First Solar. Rob will begin with an overview of the Company’s fourth quarter achievements followed by a market and business update. Jens will provide you with the fourth quarter 2009 operational and financial results and provide an update of guidance for 2010. We will then open up the call for questions.

During the Q&A period, as a courtesy to those individuals seeking to ask questions, we asked the participants to limit themselves to one question. The Company has allocated approximately one hour to today’s call. I want to remind you that all numbers discussed in this call are based on U.S. Generally Accepted Accounting Principles unless otherwise noted.

Now, I’d like to make a brief statement regarding forward-looking remarks that you may hear on today’s call. During the course of this call, the Company will make projections, or other comments that are forward-looking statements within the meaning of the Federal Securities Laws. The forward-looking statements in this call are based on the current information and expectations and are subject to uncertainties and changes in circumstances and do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially from those statements, including the risks as described in the Company’s most recent annual report in Form 10 K and other filings with the Securities and Exchange Commission. First Solar assumes no obligation to update any forward-looking information contained in this call with respect to announcements described herein.

Now, I’d like to mention during the first quarter of calendar 2010, the company will meet with investors at the following conferences. First, Piper Jaffray’s Clean Technology Conference in New York City on February 23rd, then CLSA Asia-U.S. Conference in San Francisco on March, the 3rd, next Morgan Stanley’s Technology Conference in San Francisco on March, the 4th, then Canaccord’s Sustainability Forum in Deer Valley, Utah, on March, the 4th to March, the 5th and finally Jefferies Global Clean Technology Conference in New York on March, the 16.

Finally, before I turn the call over to Rob Gillette, we would like investors and analysts to know that we will be limiting our comments and analysis about the currently being discussed changes to the German feed-in-tariff. And that’s in order to allow for the ongoing political debate among all the constituents to take its course. We do not believe that’s beneficial to our shareholders or the industry to judge the impact of any of the proposals at this time, as history has shown that such proposals are inherently unpredictable, and not necessarily indicative of the future outcomes.

It’s now my pleasure to introduce Rob Gillette, Chief Executive Officer of First Solar. Rob?

Rob Gillette – Chief Executive Officer

Great, thank you, Larry. Thanks to everyone for joining us today on our Q4 call and 2009 summary. Starting off here to talk about Q4, we had a strong finish to the year and we achieved our 2009 guidance which we set over a year ago, so despite all the challenges and changes in the market, we did very, very well. Q4 net sales were $641 million, up 33% quarter-over-quarter. We sold Sarnia and Blythe sites and drove $142 million in net income. For the year, $2.1 billion in net sales, up 66%, and Q4 diluted EPS was $1.65, bringing the 2009 EPS to $7.53, which was up 78% year-over-year.

Strong cash positioned us well; we finished the year at $1.1 billion in cash and marketable securities and generated an additional $395 million free cash flow. We continue to execute well in operations and in Q4, produced 311 MW and finished the year with 1.1 GW of production in 2009. We achieved a milestone of over 2 GW cumulative production and sales. So, great finish to the year. Our annualized capacity per line rose to 53.4 MW and our efficiency output was up to 11.1%. Module cost was down to $0.84, was impacted by $0.02 roughly due to the Ohio start-up and $0.02 due to SBC. So, our core costs for the quarter-to-quarter was down $0.03 to $0.80 a watt. Total annual costs were down 19% from $1.8 to $0.87. We also started to expand our capacity in Malaysia, Plant 5 and Plant 6 and adding 8 additional lines.