Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First Solar Inc (FSLR, Financial) secured net bookings of 0.6 gigawatts at a base ASP of $0.305 per watt, increasing their contracted backlog to 66.3 gigawatts.
• The company produced 4.0 gigawatts in Q1, including 2 gigawatts of Series 6 and 2 gigawatts of Series 7 modules, meeting their production forecasts.
• Initial data from the CuRe technology modules indicates enhanced energy profiles and industry-leading annual degradation rates.
• First Solar Inc (FSLR) is expanding its domestic capacity, with the Alabama factory ramping up and the Louisiana facility on track to begin commercial operations in the second half of the year.
• The company maintains a strong long-term outlook for solar demand, particularly in the US market, and is well-positioned due to its unique profile as a US-headquartered PV manufacturer with a vertically integrated presence.

Negative Points

• Q1 earnings per diluted share were below the low end of guidance at $1.95 per share, primarily due to a greater portion of international sales versus US product.
• The new tariff regime, including potential reciprocal tariffs, poses significant economic challenges for First Solar Inc (FSLR), particularly affecting their manufacturing facilities in India, Malaysia, and Vietnam.
• There is uncertainty surrounding the potential reinstatement of reciprocal tariffs after a 90-day pause, creating challenges in quantifying precise tariff rates for module shipments.
• The company faces increased project costs and potential shipment delays due to the new tariffs, impacting their financial guidance for the year.
• First Solar Inc (FSLR) may need to reduce or idle production at their Malaysia and Vietnam factories if the announced reciprocal tariffs are implemented, affecting their international production capacity.

Q & A Highlights

Q: What impact have the recent tariffs had on First Solar's bookings and customer conversations? A: According to CEO Mark Widmar, the tariffs have increased customer interest, particularly from those looking to mitigate tariff exposure. However, the uncertainty around tariffs and potential changes to the Inflation Reduction Act (IRA) has made it difficult to finalize agreements. First Solar is being patient, as the pricing dynamics for domestic modules remain unclear until policy details are settled.

Q: Can you provide more details on the recent underperformance of modules and the third-party report on production line fixes? A: Widmar stated that a third-party report confirmed the root causes of the Series 7 module issues and validated the corrective actions taken. The company is in the final stages of settlement agreements with affected customers. Regarding Series 6, First Solar will honor warranty obligations if modules are returned and tested below warranty thresholds.

Q: Why is there a significant volume downside in the guidance, and how are customer conversations influencing this? A: Widmar explained that the volume reduction is due to the economic impact of tariffs, particularly the potential 46% tariff on Vietnam-produced modules. The guidance reflects the assumption that these tariffs will make it uneconomical to ship from Malaysia and Vietnam to the US. Conversations with customers are ongoing, and the company is exploring options like idling production or reallocating volumes.

Q: How does First Solar plan to manage working capital headwinds and the timing of tax credit transfers? A: CFO Alex Bradley noted that the company has not yet sold its 2025 tax credits but is open to doing so if the terms are favorable. First Solar is managing higher inventory and IRA balances, which are expected to reverse in the second half of the year. The company also has an untapped $1 billion revolver for managing jurisdictional cash.

Q: What are the potential strategies for First Solar's assets in Malaysia and Vietnam if tariffs remain high? A: Widmar mentioned several options, including bringing equipment to the US for more domestic manufacturing or setting up finishing lines in the US to reduce tariff impacts. The decision will depend on the final policy environment and IRA provisions. The company is also considering semi-finished products to optimize shipping and tariff costs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.