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    First Solar Inc (FSLR)

    Business Description

    First Solar, Inc. (FSLR) is a leading American solar technology company and global provider of photovoltaic (PV) solar energy solutions. The company specializes in the design, manufacture, and sale of cadmium telluride (CdTe) solar modules, which convert sunlight into electricity . These modules are produced using advanced thin film semiconductor technology, offering a high-performance, lower-carbon alternative to conventional crystalline silicon PV solar modules . First Solar's business activities are centered around providing eco-efficient solar energy solutions, with a strong focus on reducing environmental impacts and enhancing the social and economic benefits of their products across their life cycle .

    1. Modules Business - Sells solar modules to system developers, independent power producers, utilities, commercial and industrial companies, and other system owners and operators, driving the majority of the company's consolidated operating results.
    2. Residual Business Operations - Engages in project development activities, provides operations and maintenance (O&M) services, and sells PV solar power systems, contributing a smaller portion to the overall revenue.

    Q2 2024 Summary

    Initial Price$169.72April 1, 2024
    Final Price$222.71July 1, 2024
    Price Change$52.99
    % Change+31.22%

    What went well

    • First Solar's backlog is strong and underpinned by secure fixed-price agreements, ensuring stability even amid political and economic uncertainties.
    • Potential policy changes, such as increased tariffs on Chinese solar products under a Republican administration, could favor First Solar due to its strong domestic manufacturing footprint.
    • Both First Solar and its customers are strategically timing bookings, which may lead to accelerated demand in the future once policy uncertainties are resolved, enhancing First Solar's market position.

    What went wrong

    • Uncertainty in U.S. policy due to upcoming elections may slow bookings and impact demand for First Solar's products. Customers might be "reluctant potentially... for booking into '27 and '28 with less certainty on policy environment."
    • Contract terminations from major customers could impact First Solar's backlog and near-term revenues. For example, a European utility company terminated about 400 megawatts of volume because they decided to exit the U.S. market.
    • Policy uncertainty may delay First Solar's capacity expansion plans, potentially limiting future growth. Management stated that decisions on new capital expenditures are "tethered back to the same policy conversation" and they need "understanding what that policy environment is going to be like" to proceed.

    Q&A Summary

    1. Political Uncertainty Impact
      Q: Will policy changes slow or accelerate bookings?
      A: The CEO indicated that political uncertainty may initially slow momentum as customers assess the environment, but could later accelerate bookings once the policy landscape is clearer ( ). Geopolitical tensions with China and potential tariffs could advantage First Solar's domestic footprint, but an initial pause is expected as the market digests potential changes.

    2. Future Capacity Expansion Plans
      Q: What are the plans for new CapEx and capacity expansion?
      A: Decisions on new capital expenditures and capacity expansion are tied to the policy environment ( ). Once there is clarity on policies, they will decide how to proceed with technologies like Tandem or Series 7.

    3. Bookings and Pricing Trends
      Q: How are bookings and ASPs trending amid market uncertainty?
      A: Recent bookings include both U.S. and international volumes, with average selling prices around $0.33 per watt with adjusters ( , ). While pricing softened in March, it has since firmed up, and the company finds current ASPs attractive even under the present policy construct.

    4. Impact of Customer Cancellation
      Q: What's the effect of the 400 MW customer cancellation?
      A: A European utility exited the U.S. market, resulting in a 400 MW cancellation ( , ). However, another long-term customer acquiring their portfolio is expected to benefit First Solar in the long term.

    5. Exposure to Policy Risks
      Q: How secure is the backlog amid policy uncertainties?
      A: The company believes their backlog is secure from a contractual standpoint ( ). Significant policy shifts could impact project viability, but they have strong contracts and will enforce termination payments if necessary.

    6. Progress on Louisiana Project
      Q: What are the milestones for the Louisiana project?
      A: Building construction is expected to complete by early next year, with equipment move-in around Q1/Q2 ( ). An integrated run is anticipated by early Q3, aiming to ramp in the second half of 2025.

    7. ASP Details and Delivery Timing
      Q: Are bookings from U.S. or Asia fabs, and how does this affect ASPs?
      A: There was some India domestic volume booked, including shipments from India sold into the U.S. market ( ). The mix of domestic and international bookings affects ASPs. Recent bookings with adjusters averaged around $0.33 per watt, and the company is comfortable with pricing in the mid-$0.30s range.

    8. Backfilling Canceled Volume
      Q: Do you have a customer to backfill the 400 MW cancellation?
      A: The company is actively negotiating to sell a portion of that volume ( ). They aim to sell through the canceled volume as quickly as possible, though it may not happen this year due to timing and project design considerations.

    9. Impact of Chevron Ruling
      Q: Do you see risks from challenges to policy interpretations, like the Chevron ruling?
      A: They do not see significant exposure from such rulings on their operations ( ). Tax regulations and guidance are not expected to be impacted in a way that would affect First Solar materially.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Modules536.59802.237800.3931,157.583,296.8793.4341,008.8886.655
    Other11.708.4360.6970.9721.80.6741.71.013
    - Solar Power Systems11.267.9960.2170.5320.0---
    - O&M Services0.450.4410.4810.531.9---
    - Energy Generation-0.02-0.001-0.001--0.019---
    - EPC Services--------
    - Module Plus--------
    Components Segment--------
    Systems Segment--------
    Total Revenue548.29810.673801.0901,158.553,318.6794.1081,010.5887.668
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    United States----3,187.603---
    Germany--------
    France----68.302---
    Canada--------
    United Arab Emirates--------
    All other foreign countries----55.739---
    Japan----6.949---
    Chile----0.009---
    India--------
    Australia--------
    Turkey--------
    Jordan--------
    Spain--------
    Honduras--------
    Total Revenue548.3---3,318.602---
    KPIs - Metric / QuarterFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Advanced Manufacturing Production Credit ($M)-$155M$205M$229M-$194M$240M$60.4M
    Module Collection and Recycling Liability ($M)$130.3$132.1$130.1$135.1-$134.3$134.8$139.0
    Warranty Coverage Degradation Factor Min (%)0.3%0.3%0.3%0.3%-0.3%0.3%0.3%
    Warranty Coverage Degradation Factor Max (%)0.5%0.5%0.5%0.5%-0.5%0.5%0.5%

    Executive Team

    NamePositionStart DateShort Bio
    Mark R. WidmarChief Executive OfficerJuly 2016Mark R. Widmar has been serving as the CEO of First Solar since July 2016. He joined First Solar in April 2011 as CFO and also served as the company's Chief Accounting Officer from February 2012 through June 2015. Prior to his role as CEO, he was the CFO from March 2015 to June 2016 .
    Alexander R. BradleyChief Financial OfficerOctober 2016Alexander R. Bradley was appointed as the CFO of First Solar in October 2016. He joined the company in May 2008 and previously served as Vice President of both Treasury and Project Finance .
    Georges AntounChief Commercial OfficerJuly 2016Georges Antoun was appointed as the Chief Commercial Officer of First Solar in July 2016. He initially joined First Solar in July 2012 as the Chief Operating Officer and was later appointed as President, U.S. in July 2015 .
    Michael KoralewskiChief Supply Chain OfficerNovember 2022Michael Koralewski was appointed as the Chief Supply Chain Officer at First Solar in November 2022. He joined First Solar in 2006 and has held several senior roles in operations and quality management .
    Kuntal Kumar VermaChief Manufacturing OfficerNovember 2022Kuntal Kumar Verma was appointed as the Chief Manufacturing Officer at First Solar in November 2022. He joined First Solar in 2002 and has served in progressively more senior roles in engineering and manufacturing .
    Patrick BuehlerChief Product OfficerDecember 2022Patrick Buehler was appointed as the Chief Product Officer at First Solar in December 2022. He has over 20 years of operational and technical experience and joined First Solar in 2006 .
    Markus GloecklerChief Technology OfficerNovember 2020Markus Gloeckler was appointed as the Chief Technology Officer of First Solar in November 2020, after serving as Co-Chief Technology Officer starting in July 2020. He joined First Solar in 2005 .
    Caroline StockdaleChief People and Communications OfficerOctober 2020Caroline Stockdale joined First Solar in October 2019 as Executive Vice President, Human Resources and Communications, and was appointed Chief People and Communications Officer in October 2020 .
    Jason DymbortGeneral Counsel and SecretaryJuly 2020Jason Dymbort joined First Solar in March 2008 and was appointed as General Counsel and Secretary in July 2020. He oversees the company's legal department globally .

    Questions to Ask Management

    1. Given the uncertainties surrounding the upcoming November elections and the potential for policy reversals affecting the Inflation Reduction Act, how is First Solar adjusting its business strategy to mitigate risks associated with possible changes in U.S. trade and renewable energy policies?
    2. With the projected U.S. oversupply position of approximately 40 gigawatts by the end of 2024 due to China's continued overcapacity and dumping practices, how does First Solar plan to maintain its market share and profitability in this challenging environment?
    3. You mentioned that some multinational oil and gas and utility companies are reconsidering their strategic direction by potentially pivoting back to fossil projects; how might this shift impact First Solar's future bookings and growth projections, especially in relation to demand from these customers?
    4. Can you elaborate on the significance of your recent acquisition of TOPCon technology patents and how you plan to leverage them to strengthen your competitive position, particularly regarding enforcement actions against potential infringers?
    5. Considering the potential for new tariffs on imports and the threat of critical circumstances determinations imposing retroactive cash deposit requirements, what contingency plans does First Solar have to address possible adverse impacts on gross margins from your Malaysia, Vietnam, and India production sold into the U.S. market?

    Past Guidance

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      • Net Sales: $4.4 billion to $4.6 billion .
      • Gross Margin: $2 billion to $2.1 billion, approximately 46% .
      • SG&A Expenses: $170 million to $180 million .
      • R&D Expenses: $200 million to $210 million .
      • Total Operating Expenses: $455 million to $485 million .
      • Operating Income: $1.5 billion to $1.6 billion .
      • Interest Income, Interest Expense, and Other Income: $35 million to $50 million .
      • Full Year Tax Expense: $135 million to $150 million .
      • Earnings Per Diluted Share: $13 to $14 .
      • Capital Expenditures: $1.7 billion to $1.9 billion .
      • Net Cash Balance at Year-End 2024: $0.9 billion to $1.2 billion .
      • Module Production: 15.6 to 16 gigawatts .
      • Module Sales: 15.6 to 16.3 gigawatts .
      • Fleet ASP Sold: $0.282 per watt .
      • Cost Per Watt Produced: $0.187 to $0.189 per watt .
      • Cost Per Watt Sold: Reduction of approximately 7% versus the prior year .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      • Volumes Sold: 15.6 to 16.3 gigawatts .
      • Earnings Per Share: $13 to $14 .
      • Net Cash Balance: $600 million to $900 million .
      • Capital Expenditures (CapEx): Increased by $0.1 billion .
      • Section 45X Tax Credits: $400 million in the first half, $620 million in the second half .
      • Earnings Cadence: 35% to 40% in the first half, 60% to 65% in the second half .
      • Net Sales and Cost-of-Sale Profile: 35% to 40% in the first half, 60% to 65% in the second half .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      • Full Year Earnings Per Diluted Share: $13 to $14 .
      • Volumes Sold, Revenue, and Net Cash: Toward the bottom of the guidance range .
      • Net Sales and Cost of Sales Profile: 40% in the third quarter, 60% in the fourth quarter .
      • Section 45X Tax Credits: $240 million in the third quarter, $335 million in the fourth quarter .
      • Operating Expense Profile: Evenly spread across the remainder of the year .
      • Earnings Per Diluted Share Profile: 40% in the third quarter, 60% in the fourth quarter .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: N/A
    • Guidance: The documents do not provide information about the Q3 2024 earnings call for First Solar (FSLR). Therefore, I cannot provide the guidance metrics from that specific earnings call.

    Latest news

    Recent developments and announcements about FSLR.

    Corporate Leadership

      Leadership Change

      ·
      4 days ago

      Who is leaving? Byron Jeffers is transitioning from his role as Vice President, Global Controller and Chief Accounting Officer to become Vice President, Treasurer, and Head of Investor Relations at First Solar.

      Why? The company has appointed Nathan Theurer as the new Vice President, Global Controller, and Chief Accounting Officer, effective January 6, 2025, as part of an internal restructuring.

      Who is stepping up? Nathan Theurer, who has been with First Solar since 2014 and previously served as Corporate Controller, is stepping into the role of Vice President, Global Controller, and Chief Accounting Officer.