Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First Solar Inc FSLR achieved record second-quarter and first-half sales volume, generating over $1 billion in net sales with a gross margin expansion to approximately 57%.
- First Solar Inc (FSLR) surpassed a significant milestone of 100 gigawatts in cumulative module sales globally, reflecting strong customer trust and a durable technology platform.
- First Solar Inc (FSLR) maintains a robust contracted backlog of 45.1 gigawatts with deliveries extending through 2030, providing high volume and pricing visibility.
- First Solar Inc (FSLR) is making progress with its CuRe technology, with performance exceeding expectations and initiating customer notifications for contractual adjusters, which is expected to enhance future revenue.
- First Solar Inc (FSLR) continues to see strong demand from hyperscalers and data center developers, with recent bookings and project announcements supporting this trend.
- First Solar Inc (FSLR) ended the quarter with approximately $1.7 billion in net cash, providing substantial balance sheet strength and financial flexibility.
Negative Points
- First Solar Inc (FSLR) faces uncertainty and potential negative impacts from the pending Section 232 polysilicon investigation and tariffs, which could affect its international manufacturing operations.
- First Solar Inc (FSLR) is experiencing higher over-the-road freight costs due to capacity tightening and diesel price volatility, which are partially offsetting logistics improvements.
- First Solar Inc (FSLR) is incurring underutilization costs of approximately $30 million per quarter for its Southeast Asia manufacturing facilities while awaiting policy clarity on Section 232.
- First Solar Inc (FSLR) is operating in a challenging rising commodity cost environment, with pressures on steel, aluminum, and electricity prices impacting input costs.
- First Solar Inc (FSLR) faces potential delays in the Section 232 decision, which could extend policy uncertainty and keep customers on the sidelines, impacting near-term bookings momentum.
- First Solar Inc (FSLR) is experiencing higher R&D expenses, including an impairment of certain R&D equipment no longer expected to be used in its technology roadmap.
Q & A Highlights
Q: How much of the 1.9 gigawatts in US gross bookings came from the Google-Steel River project, and how are you seeing general interest from the hyperscaler data center community?
A: Mark Widmar, CEO, clarified that the Steel River project was already in the contracted backlog and was highlighted as a strategic win. He noted that recent announcements, including projects with Cypress Creek, Terra-Gen, and Panamint, total about 5 gigawatts of capacity, with half directly tied to hyperscalers like Google. He emphasized that hyperscalers prioritize supply certainty and reliability, which positions First Solar's domestic manufacturing and technology as a key advantage, and demand from this segment remains "insatiable."
Q: What are your latest thoughts on the timing and potential impact of the Section 232 investigation, and how quickly will you move on your Southeast Asia strategy once you get clarity?
A: Mark Widmar, CEO, stated that the policy is still evolving, but the company remains optimistic about a constructive outcome and is in constant contact with USTR and Commerce. He noted that demand is sitting on the sidelines, with ~2 GW booked in July, over 2 GW in contracts subject to CP, and another 2 GW in active conversations. Alex Bradley, CFO, added that the company is holding a decision on the ~1.8 GW of fully finished international capacity in Malaysia and Vietnam pending the 232 outcome, viewing it as an option.
Q: If Section 232 waivers or quotas are granted for certain domestic cell producers, could that mute the price upside from the policy?
A: Mark Widmar, CEO, acknowledged that any modifications versus a 100% restriction could have a dilutive impact on the strategic incentive. He stated the company is advocating to minimize such impacts and believes waivers would disincentivize domestic investment. Alex Bradley, CFO, cited the Section 201 tariff history, where a technology exemption "gutted" the provision, and argued that carve-outs don't make sense for a national security interest provision.
Q: Can you elaborate on the potential permutations and timeline for the remaining Southeast Asia capacity, and would you bring that volume into the US as finished or unfinished products?
A: Alex Bradley, CFO, explained that the company could bring fully finished product in, subject to demand and pricing, but it's also dependent on other tariff provisions like Section 301. He noted there is limited incremental capacity (a couple of hundred megawatts) in existing US finishing lines for semi-finished WIP. The key is finding a way to run the international factories at close to full capacity, which could involve selling fully finished product or potentially building another US finishing line, though that is less likely due to site and power availability.
Q: How should we think about the Safe Harbor having played into the latest quarter, and how are you thinking about it as a leading indicator for future sales?
A: Mark Widmar, CEO, noted that most of the 1.9 GW of US bookings occurred in July, outside the Safe Harbor date. He explained that the recent court ruling on the modular 5% CapEx rule came too late in the quarter to have an impact. He emphasized that Safe Harbor requirements, particularly FEOC restrictions for projects CODing in 2030, position First Solar well to serve demand in '29 and '30, as customers are being conservative to avoid jeopardizing their ITC or PTC.
Q: What is your view on the timing of the Section 232 decision, and do you think it could slip past August into the fall?
A: Mark Widmar, CEO, said he cannot give a strong view on whether it will be August or September, but the company is patient and engaged. He stated that the administration is signaling decisions are close, but the most important thing is that the implementation achieves the strategic intent and spirit of the policy. He reiterated that the industry needs certainty.
Q: Are there opportunities to reduce input costs on US manufacturing, and how is the supply chain evolving on a multiyear basis?
A: Mark Widmar, CEO, acknowledged a challenging rising commodity cost environment, with pressure on steel, aluminum, and fuel. He highlighted levers like driving more throughput, automation, and product redesign (e.g., back rails and glass thickness). He noted that CuRe's efficiency gains will help reduce cost per watt. Alex Bradley, CFO, added that the company could use its balance sheet to work with suppliers on expansion funding for forward pricing, and is optimizing domestic transport routes as freight costs are now approaching international shipping economics.
Q: Can you explain what you are targeting with your current balance sheet regarding M&A, and where do you see possibilities for First Solar?
A: Alex Bradley, CFO, stated that M&A is on the list of uses of cash, but the focus has been on working capital, capacity growth, and R&D. He mentioned the obvious area for expansion is technology-adjacent things, such as companies, teams, or IP that could accelerate the perovskite transition. He emphasized a disciplined focus, leveraging the company's strength in high-volume thin-film manufacturing, while evaluating the competitive landscape, market environment, and policy before moving into adjacent areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
