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First Solar’s net profit rises in 2014 as its cash flows reduce

Mayur Sontakke, FRM

First Solar shines, trading at a discount to solar power peers (Part 12 of 18)

(Continued from Part 11)

Pre-tax profit

First Solar’s (FSLR) pretax profit increased 14% to $432.0 million in fiscal 2014 from $378.4 million in fiscal 2013. The increase was due to pre-tax losses halving to $107.1 million in the Components division. However, the Systems business saw a drop in pre-tax profit to $539.1 million in fiscal 2014 from $600.8 million in fiscal 2013.

Net profit rises

The rise in pre-tax profit translated to net profit increasing to $396.9 million in fiscal 2014 from $353.0 million in fiscal 2013. On a per-share basis, First Solar’s net income came in at $3.97 in fiscal 2014 compared to $3.77 in fiscal 2013.

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The last quarter contributed more than half—$1.91 a share—to fiscal 2014 net profitability. 4Q14 earnings per share also beat Wall Street analysts’ expectation of 77 cents a share by more than a dollar. As a result, FSLR’s stock gained more than 10% on February 24, 2015, when fiscal 2014 and 4Q14 earnings were announced.

First Solar is part of the S&P 500 (SPY) index as well as the Guggenheim Solar ETF (TAN), with an 8.27% weight in TAN. Other constituents of TAN include SunEdison (SUNE) with an 8.30% weight and SunPower (SPWR) with a 5.28% weight.

Cash flows

Cash from operating activities came in at $681.0 million in fiscal 2014—down from $856.1 million in fiscal 2013 due to lower receipts from customers. First Solar spent $257.5 million on capital expenditure in fiscal 2014, down from $282.6 million in fiscal 2013. Free cash flows came in at $423.5 million in fiscal 2014, down from $573.5 million in fiscal 2013.

In the next part of our series, we’ll take a look at First Solar’s debt and liquidity profile.

Continue to Part 13

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