Tapfheim, Germany (770 kw); Gehrlicher Solar AG Corporate Overview Q4 2008
Forward Looking Statement This presentation contains forward looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. The forward looking statements in this presentation do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially, including risks associated with the company's business involving the company's products, their development and distribution, economic and competitive factors and the company's key strategic relationships, and other risks detailed in the company's filings with the Securities and Exchange Commission. First Solar assumes no obligation to update any forward looking information contained in this presentation or with respect to the announcements described herein. First Solar, Inc. 2
Our Mission To create enduring value by enabling a world powered by clean, affordable solar electricity. First Solar, Inc. 3
Introduction Frankfurt (Oder), Germany Manufacturing (191 MW) 2007 Mainz,Germany European Sales Hayward, CA 1 Project Development Tempe, Arizona Corporate Headquarters Perrysburg, Ohio Manufacturing (191 MW) 2006 Bridgewater, NJ Project.Dev. & Engr. Kulim, Malaysia Manufacturing (763 MW) 2008 2009 Oneof the largest solar manufacturer world wide Shipped >1GW cumulative volumes Global Footprint 1 After the acquisition of OptiSolar is completed Approximately 1.2 GW production capacity operating or announced 1 st PV maker to produce modules $1/watt First Solar, Inc. 4
The First Solar Solution Module Manufacturing: Glass In < 2.5 Hours Module Out Semiconductor Cell Final Assembly Deposition Definition & Test Breakthrough thin film process technology 99% reduction in high cost semiconductor material Fully integrated, continuous process vs. batch process Cost reduction trajectory driven by productivity and technology improvements Large (2'x4') substrate vs. 6" wafers System Solutions: Utility scale PV systems Engineering, procurement and construction capabilities provide turnkey solution Monitoring & Maintenance Program predictable lifetime expenses First Solar, Inc. 5
PV Module Technology & Manufacturing Fully Integrated, Automated and Continuous Thin Film Process Glass In < 2.5 Hours Module Out Semiconductor Deposition Cell Definition Final Assembly & Test 98 99% reduction in high cost semiconductor material Fully integrated, continuous process vs. batch processing Large 60 x 120cm (2' x 4') 4) substrate vs. 6" wafers Conventional Crystalline Silicon Batch Technology Polysilicon Ingot Wafer Solar Cell Solar Module First Solar, Inc. 6
Capacity Expansion Plan Copy Smart Process 716MW 1,097MW 191 191 191 191 1,145MW 191 191 191 191 191 191 308MW 191 176 191 191 100MW 48 25MW 66 88 143 143 143 33 44 2005 2006 2007 2008 2009 2010 Malaysia 4 Malaysia 3 Malaysia 2 Malaysia 1 German Facility Ohio Expansion Ohio Base 2005 and 2006 based on Q4 06 run rate 2007 based on Q4 07 run rate 2008 2010 based on Q4 08 run rate First Solar, Inc. 7
Environmental Responsibility First Solar's Environmental Plan 1 Convert mining byproducts to clean, renewable energy 2 Procure, produce, use and recyclesolar modules in a perpetual, environmentally safe life cycle 3 Reduce emissions by substituting solar energy for fossil fuels First Solar, Inc. 8
Life Cycle Analysis Benefits Global Warming Potential CO2 eq (g/kwh h) 1000 800 600 400 200 0 900 850 400 Coal Oil Gas CC Biomass CHP PV mc Si (13.2%)* 45 37 24 18 11 Nuclear USA PV CdTe (9%)* Wind Source: ExternE project, 2003; Kim and Dale, 2005; Fthenakis and Kim, 2006: Fthenakis and Alsema, 2006; Fthenakis and Kim, in press. * Assumptions: PV mc-si based on 13.2% efficiency and PV CdTe based on 9% efficiency both at insolation of 1700 kwh/m 2 First Solar, Inc. 9
First Solar Marketing Introduction Module Supply 800MW installed through h 2008 60% ground from 1 to 40 MW 40% roof from 30KW to 4.5 MW System designs evaluated by First Solar engineers System Solutions Provider Acquired dturner Renewable Energy 11/07 Engineering, procurement and construction, and monitoring & maintenance Completed 2 U.S. utility pilot projects in 2008 Announced OptiSolar acquisition 3/09 for project pipeline and development team First Solar, Inc. 10
Sales Channels Sell modules to developers and IPPs under multi year agreements Project developers design and develop turnkey commercial solar power plants Develop solar PV project sites in U.S. and Canada Sell EPC and monitoring to create PV electricity plants for U.S. utilities Europe U.S./Canada First Solar, Inc. 11
Representative Projects PV Modules Site: Althegnenberg, Germany Site: Ramstein, Germany Site: Bullas, Spain System Size: 2MW (DC) System Size: 2 MW (DC) System Size: 5 MW (DC) Developer: Phoenix Solar Developer: COLEXON Energy AG Developer: Gehrlicher Solar AG Site: Brandis, Germany System Size: 40 MW (DC) Developer: Juwi First Solar, Inc. 12
Representative Projects Solar Plant Solutions Engineered by FSLR System Size: Completed: System Purchaser: Site: El Dorado, NV Site: Fontana, CA 10 MW (AC) 12/08 in about 5 months Sempra Generation System Size: 2 MW (AC) Completed: 9/2008 System Purchaser: Southern California Edison First Solar, Inc. 13
U.S. Market Development Update Accomplished 2008 goals to establish utility scale pilot projects and create relationships with U.S. utilities and residential systems integrator Project MW(AC) Type Customer Roof/Ground Status Fontana, California 2 EP SCE Roof Completed 9/08 Boulder City, Nevada 10 EPC Sempra Ground Completed 12/08 U.S. Residential 100 Modules only SolarCity Roof Began Q4 08 Blythe, California 7.5 21 EPC, PPA SCE Ground Permitting Edison Mission Energy Framework Agreement EPC Began Q4 08 First Solar, Inc. 14
Acquiring OptiSolar Project Pipeline and Development Team Transaction: Consideration: Price: 550MW AC Topaz project with PG&E 1,300MW AC of projects in negotiations with utilities in the Western U.S. Strategiclandrightsof rights ~136,000 acres (upto 19,000 MW) Significant interconnection queue Core development team All stock transaction: 40% available immediately, 35% restricted for 6 months and25% to be heldinescrow escrow (generally12 24 24 months) $400 million Conditions to Closing: Customary closing conditions, i including Hart Scott Rodino ( HSR ) antitrust approval Expected Closing: Q2 2009 First Solar, Inc. 15
Why We Are Purchasing OptiSolar Combine lowest cost PV, EPC and multi GW U.S. pipeline Lead in U.S. US utility markets Accelerate throughput and cost reduction Increase long term visibility Shorten development lead time to utility scale generation First Solar, Inc. 16
First Solar U.S. Utility Model First Solar Hardware/Installed Systems Hardware: Revenue recognized upon shipment Installed System: Revenue recognized based on % completion Regulated IPP Regulated Entities Utility Affiliates IPP - Other SCE EME Sempra Blythe Own and Operate PPA Regulated Entities First Solar, Inc. 17
OptiSolar Financials Estimated 2009 Impact ~$70 million of incremental revenues EPS impact of ~$(0.35) (0.40)/share Expect to be modestly earnings accretive in 2010 Dilution impact Approximately 5% Expected incremental volumes of 600 700 MW from 2010 2013 *Numbers are subject to final purchase accounting. First Solar, Inc. 18
Module Roadmap to Grid Parity Module MFG Cost Reduction Roadmap $1.29/W 100% 16 18% 15 17% 7 8% 4% 3% $0.65.70/W 50 55% Q1 07 Cost/Watt Efficiency Low Cost Location Spending Throughput Plant Scale 2010 12 Cost/Watt Target First Solar, Inc. 19
Module Cost Per Watt Trend First Solar, Inc. 20
Sustainable Competitive Cost Advantage FSLR cost 1 substantially below competitors FSLR cost adding BOS 2 differences below competitors Module Cost $/Watt 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 100 1.00 0.80 0.60 0.40 Poly impact depends on: - Timing and speed of decline - Price vs volume availability - FSLR cost reduction rate FSLR Target 10 12 Range Cost down 20 35% Avg Competitor Best of Breed FSLR Q4'08 200 175 150 125 100 75 50 25 Poly Si Cost $/Kg 1 FSLR cost excludes stock based compensation and Malaysia ramp costs $/Watt Module Cost 2 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 100 1.00 0.80 0.60 0.40 FSLR Target 10 12 Range 2 Avg Competitor Best of Breed Cost down 25 35% FSLR Q4'08 200 175 150 125 100 75 50 25 Poly Si Cost $/Kg 2 FSLR module cost + added balance of system for lower efficiency modules First Solar, Inc. 21
Roadmap to Grid Parity Balance of System* Cost Reduction Roadmap ~$1.59 /W 100% 9% 12% 16% of balance of system cost savings are driven by roadmap to achieve 12% efficiency 7% 1% 11% 60% 5% ~$1.05/W Target 65% 91% 80% 73% 72% 60% 60% 2008 BoS (excl OH) (Excl. Overhead) Engineering & Project Mngt Mounting Hardware Inverter & Transformer Other Electrical Material Installation 2012 BoS (excl OH) (Excl. Overhead) Overhead 2012 BoS (incl OH) (Incl. Overhead) * Excludes sales tax, finance costs, ramp overhead and IPP project development/connection costs First Solar, Inc. 22
First Solar long term business model philosopy Superior long term revenue growth & volumes drive throughput $ vs margins % Price to enable PV solutions competiitve with conventional electricity Maximize long term earnings and cash flow dollars Earn 5% over WACC or >20% RONA to be in top 25% percent of Russell 3000 Maintain strong balance sheet profile and efficiently use capital Scale costs and expenses Mitigate risks First Solar, Inc. 23
Historical Financial Profile Revenue Operating Margin 12.5% 17.2% 7.2% 7.5% 30.4% 39.0% $433.7 29.5% 29.5% 37.3% $348.7 37.2% $267.0 $159.0 $200.8 $196.9 $40.8 $52.7 $66.9 $77.2 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 First Solar, Inc. 24
Financial Model 20% RONA 2005 2006 2007 2008 Target Gross Margin 34.5% 40.2% 49.9% 9% 54.4% 4% 35 40% Operating Expense 37.9% 29.4% 19.4% 16.7% 8 12% Production Start up 6.6% 8.7% 3.8% 2.6% 2 3% Operating Margin (10.0%) 0%) 21% 2.1% 27.2% 2% 35.2% 25% Stock Based Comp 10.2% 8.8% 7.8% 4.7% 2 4% First Solar, Inc. 25
Superior Capital Structure $ m 1,800 1,600 1,400 FSLR has strong cash vs debt position 1,626 1,200 1,000 800 600 400 200 822 198 508 436 478 Cash Debt 179 579 Note: Cash and Debt positions taken from each company s latest financial reports FSLR STP SPWR YGE First Solar, Inc. 26
2009 Guidance 1 Revenue Start up Expense Stock Based Compensation $1.8 $1.9 B $13 14 M $75 80 M Operating Margin 33% 34% Annual On going Tax Rate 9 11% Share Count t(year End) 84 M Capex $270 300 M 1 Excludes impact of OptiSolar acquisition that is pending First Solar, Inc. 27
Summary: First Solar Competitive Advantages FSLR has a sustainable winning growth platform in electricity industry Proprietary technology provides low levelized cost of energy Proven performance and reliability >1GW shipped ~ 1.2GW of capacity, proven production scaling. >12M modules produced European system integrators and IPP partners and growing U.S utility relationships EPC experience One of the largest U.S. US and Canadian utility scale project development pipelines 1 Industry s only pre funded and insured life cycle program Strong balance sheet and cash flow Superior growth, business/financial model, RONA, cash flow and cash balance 1 After the OptiSolar acquisition is completed First Solar, Inc. 28
Back up First Solar, Inc. 29
Key Quarterly Financial Data Key Quarterly Financial i Data Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q4'08 Y/Y Q4'08 '08Q/Q ($ in millions, except gross profit and net income per share data) (Unaudited) Net sales $ 66.9 $ 77.2 $ 159.0 $ 200.8 $ 196.9 $ 267.0 $ 348.7 $ 433.7 116% 24% Gross profit % 44.9% 36.7% 51.6% 55.3% 53.0% 54.2% 56.1% 53.9% 1% 2% Research and development 3.1 3.8 3.9 4.4 4.8 7.7 10.0 11.0 150% 10% Selling, general and administrative 13.7 17.3 27.1 24.2 28.7 43.6 49.0 52.7 118% 8% Production start up 8.5 1.5 2.8 4.1 12.8 4.6 6.3 8.8 114% 39% Operating income 4.8 5.8 48.3 78.3 58.1 88.7 130.2 161.3 106% 24% Income tax expense (benefit) 3.3 (36.6) 7.6 23.3 18.6 24.2 33.8 38.8 67% 15% Net income $ 5.0 $ 44.4 $ 46.0 $ 62.9 $ 46.6 $ 69.7 $ 99.3 $ 132.8 111% 34% Weighted average number of shares used in diluted share calculation 75.4 76.1 79.1 81.3 81.6 82.0 82.4 82.5 1% 0% Net income per share Diluted $ 0.07 $ 0.58 $ 0.58 $ 0.77 $ 0.57 $ 0.85 $ 1.20 $ 1.61 109% 34% Stock based compensation expense 5.78 7.00 16.43 9.86 10.86 15.46 17.31 15.31 55% 12% Capital expenditures (cash basis) 40.7 39.6 65.2 96.7 74.6 160.3 95.7 128.7 33% 34% Cash and marketable securities $ 325.3 $ 315.0 $ 681.8 $ 669.7 $ 709.0 $ 661.2 $ 729.4 $ 821.8 23% 13% (1) Income tax expense (benefit) for Q2 07 includes an income tax benefit of $39.2 million that resulted from the reversal of valuation allowances against previously established U.S. deferred income tax assets. (2) Income tax expense (benefit) for Q3 07 includes an income tax benefit of $7.5 million that resulted from the reversal of valuation allowances against previously established German deferred income tax assets. See also Notes to our Consolidated Financial Statements Supplemental Data (Unaudited) Average foreign spot exchange rate ( /USD) 1.31 1.35 1.37 1.45 1.50 1.56 1.51 1.32 9% 13% Free cash flow (1.8) (53.2) 15.7 3.0 (11.3) (101.1) 41.6 74.6 2387% 79% + Purchases of property, plant and equipment 40.7 39.6 65.2 96.7 74.6 160.3 95.7 128.7 = Net cash provided (used) by operating activities 38.9 (13.6) 80.9 99.7 63.3 59.2 137.3 203.3 MW Produced 26.1 33.7 69.4 77.1 79.4 114.1 136.5 173.6 125% 27% Line run rate 34.8 36.9 39.6 44.0 45.0 48.0 49.3 47.77 8% 3% Conversion efficiency 9.9% 10.2% 10.5% 10.6% 10.6% 10.7% 10.7% 10.8% 2% 1% Cost per watt produced $ 1.29 $ 1.45 $ 1.19 $ 1.12 $ 1.14 $ 1.18 $ 1.08 $ 0.98 13% 9% Stock based payment cost per watt (manufacturing) (3) $ 0.06 $ 0.06 $ 0.04 $ 0.03 $ 0.02 $ 0.03 $ 0.03 $ 0.02 33% 33% Ramp penalty (cost per watt) (4) $ $ 0.20 $ $ $ $ 0.06 $ 0.04 $ 0.03 0% 25% (3) Represents stock based payment costs associated with factory labor. (4) Ramp penalty start up costs consist primarily of fixed production labor and overhead spending associated with production below normal capacity utilization in a new production facility. First Solar, Inc. 30
Strong growth and execution to < $1/watt cost Revenue $M EPS $1.60 $1.50 PV Module Cost/Watt Down 39% in 3 years GAAP $1,400 $5.00 $1.40 Core* $1,200 $1,000 $800 $600 $400 $200 $4.00 $3.00 $2.00 $1.00 $1.30 $1.20 $1.10 $1.00 $0.90 $0 2006 2007 2008 $0.00 $0.80 2006 2007 2008 * Core excludes plant start-up costs and stock based compensation First Solar, Inc. 31