First Solar, Inc. (NASDAQ: FSLR) Q2 2025 Earnings | 08/01/2025

Summary of First Solar Q2 2025 Earnings Call

Key Highlights:

• Strong Financial Performance:

  • Q2 EPS of $3.18, above guidance.

  • Revenue of $1.1B (up $0.3B QoQ), driven by higher US module sales.

  • Gross margin improved to 46% (vs. 41% in Q1), aided by Section 45X tax credits and contract termination payments.

  • 2025 EPS guidance maintained at $13.50–$16.50, despite tariff headwinds.

• Manufacturing & Capacity Expansion:

  • Produced 4.2 GW in Q2 (2.4 GW US, 1.8 GW international).

  • Louisiana facility on track for full qualification by October 2025, boosting US capacity to 14 GW by 2026.

  • Perovskite development line progressing, with inline production expected in August.

• Policy & Trade Developments:

  • Reconciliation Bill Strengthens Domestic Solar:

    • New FEOC (Foreign Entity of Concern) restrictions limit Chinese competitors’ access to US tax credits.

    • Tech-neutral ITC/PTC incentives expected to drive demand through 2030.

  • Trade Enforcement Actions:

    • New ADCVD petitions filed against Chinese-linked solar imports from Laos, Indonesia, and India.

    • Section 232 investigation into polysilicon imports could disrupt Chinese-dominated supply chains.

    • CBP enforcing ADCVD tariffs on previously duty-free Southeast Asian imports.

• Bookings & Demand Outlook:

  • Contracted backlog at 64 GW ($18.5B, ~29.9c/W).

  • July saw 2.1 GW in new bookings (including re-contracted Series 6 at ~33c/W).

  • Strong US demand, but international Series 6 sales face tariff pressures (25% Malaysia, 20% Vietnam).

• Financial & Operational Adjustments:

  • Increased logistics costs ($400M for 2025) due to tariff-related inventory buildup.

  • Underutilization charges ($95M–$180M) expected as Series 6 production may be curtailed.

  • $373M from Section 45X tax credit sales bolstering liquidity.

Strategic Priorities:

1. Maximize US Manufacturing Advantage:

   • Leverage FEOC-free supply chain and domestic content bonuses.

   • Explore US-based finishing lines for international modules to reduce tariff exposure.

2. Expand Technology Leadership:

   • Advance Perovskite commercialization and Series 7 ramp-up.

3. Navigate Trade Policy Uncertainty:

   • Monitor Section 232 polysilicon probe and ADCVD cases for pricing power.

4. Capital Allocation:

   • Prioritize capacity expansion (potential new US finishing line).

   • Maintain strong liquidity ($1.2B cash) for strategic flexibility.

Market Outlook:

• Utility-scale solar demand remains robust, driven by AI, data centers, and reshoring.

• First Solar well-positioned with vertically integrated, non-China supply chain.

• Pricing power improving (ASP ~32–33c/W), with potential upside from trade enforcement.

Key Takeaways:

• Execution Strong: Beat Q2 EPS, maintained full-year guidance despite tariffs.

• Policy Tailwinds: FEOC rules and tech-neutral credits solidify US competitive edge.

• Demand Resilient: 64 GW backlog, with new bookings accelerating post-reconciliation bill.

• Next Steps: Finalize finishing line decision, advance Perovskite, and monitor tariff impacts.