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FIRST SOLAR, INC. (FSLR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $0.845B and diluted EPS $1.95, with EPS coming in below S&P consensus primarily on a lower-than-expected mix of U.S.-produced modules (fewer 45X credits recognized) and late-quarter shipping mix/timing; revenue was essentially in line with consensus while gross margin benefited from U.S. mix but missed internal forecast due to mix shortfall of ~250 MW of U.S. modules .
  • Management cut full-year 2025 guidance across revenue, EPS, gross margin and volume to reflect the new April tariff regime (10% universal tariff assumed at the high end; potential reciprocal tariffs of 26%/24%/46% for India/Malaysia/Vietnam at the low end), now guiding revenue $4.5–$5.5B and EPS $12.50–$17.50 versus prior $5.3–$5.8B and $17.00–$20.00 .
  • Backlog remains large but portions are at risk under tariff change-in-law clauses: ~13.9 GW of forward contracts for international product into the U.S. (forecast ~12 GW by YE25) may be terminated if First Solar does not absorb tariffs; management may idle Malaysia/Vietnam under high reciprocal tariff scenarios while pivoting India output to domestic sales .
  • Balance sheet/cash: net cash fell to $0.4B from $1.2B at year-end on capex for Louisiana, working capital build (inventory, receivables), and back-end loaded shipments; Q2 cadence guide: 3.0–3.9 GW module sales, $310–$350M 45X credits, EPS $2.00–$3.00 .
  • Stock reaction catalysts: policy clarity on reciprocal tariffs (post July timing), customer tariff cost-sharing outcomes, potential idling of SE Asia lines vs U.S. finishing strategy, and execution on 45X monetization cadence and Louisiana ramp .

What Went Well and What Went Wrong

  • What Went Well

    • U.S. mix drove higher gross margin vs Q4 (41% vs 37%) despite lower revenue; benefit tied to U.S. 45X credits, albeit below plan due to mix .
    • Commercial traction sustained: YTD net bookings of 0.7 GW (0.6 GW since the Q4 call) at a base ASP of $0.305/W ex-adjusters and India; backlog stands ~66.3 GW .
    • Technology and capacity progress: 4.0 GW produced (2 GW Series 6, 2 GW Series 7) and limited commercial CuRe run completed; Louisiana build complete with tool install/commissioning underway for 2H25 commercial ops .

  • What Went Wrong

    • EPS below both internal guidance and S&P consensus on mix shortfall of ~250 MW U.S. modules (lower 45X recognition), shipping challenges late in quarter, and timing of CuRe sales .
    • Working capital headwinds (inventory build, higher AR including overdue balances) drove net cash down to $0.4B; warehousing/logistics costs elevated amid back-end loaded profile .
    • Tariff overhang forced lower full-year guidance and introduced execution risk: up to ~12 GW international-to-U.S. backlog at YE25 could be unwound if tariff cost-sharing isn’t reached; potential idling of Malaysia/Vietnam .

Financial Results

Actuals vs prior periods (oldest to newest)

MetricQ1 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$794.1 $1,514.0 $844.6
Gross Profit ($USD Millions)$346.0 $567.7 $344.4
Gross Margin %43.6% (calc) 37% 41%
Operating Income ($USD Millions)$243.1 $456.8 $221.2
Diluted EPS ($)$2.20 $3.65 $1.95

Q1 results vs S&P Global consensus

MetricActual Q1 2025S&P Global Consensus Q1 2025
Revenue ($USD Millions)$844.6 $843.7*
Diluted EPS ($)$1.95 $2.55*

Values with asterisk retrieved from S&P Global.

Key KPIs and balance items (trend)

KPIQ3 2024Q4 2024Q1 2025
Contracted Backlog (GW)73.3 68.5 66.1 (Q1-end); 66.3 incl. post-Q1 adds
Net Cash Balance ($B)0.7 1.2 0.4
Module Sales (GW)——2.9 (1.75 GW U.S.-produced)

Notes: Gross margin % in Q1/Q4 from call remarks; Q1 2024 % calculated from reported Net Sales and Gross Profit . Backlog at Q1-end was 66.1 GW; management cited 66.3 GW including post-quarter adds .

Guidance Changes

MetricPeriodPrevious Guidance (2/25/25)Current Guidance (4/29/25)Change
Net SalesFY 2025$5.3B–$5.8B $4.5B–$5.5B Lowered
Gross MarginFY 2025$2.45B–$2.75B $1.96B–$2.47B Lowered
Operating ExpensesFY 2025$470M–$510M Unchanged Maintained
Operating IncomeFY 2025$1.95B–$2.30B $1.45B–$2.00B Lowered
Diluted EPSFY 2025$17.00–$20.00 $12.50–$17.50 Lowered
Net Cash BalanceYE 2025$0.7B–$1.2B $0.4B–$0.9B Lowered
Capital ExpendituresFY 2025$1.3B–$1.5B $1.0B–$1.5B Lower top/broadened
Volume SoldFY 202518.0–20.0 GW 15.5–19.3 GW Lowered

Additional cadence guidance: Q2 2025 module sales 3.0–3.9 GW; 45X credits $310–$350M; EPS $2.00–$3.00 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/Trade policyQ3: Tariff exposure and guidance updates; warranty charge backdrop . Q4: Strong AD/CVD preliminary outcomes (Solar 3), monitoring shifts to other countries .New universal 10% tariff; potential reciprocal 26%/24%/46% for India/Malaysia/Vietnam; updating guidance to reflect tariff scenarios; contract change-in-law provisions and potential terminations .Rising policy risk; bigger P&L/volume impact
IRA/45X and domestic contentQ4: 45X monetization ($857M sold for 2024), points-based domestic content framework supportive .Q2 45X forecast $310–$350M; FY 45X $1.65–$1.7B; emphasizes FEOC, domestic content strengthening, and preserving credits .Continued centrality; cadence clarified
Supply chain, warehousing/logisticsQ3: Elevated logistics and working capital . Q4: Elevated warehousing/logistics linked to S7 remediation and back-end shipments .Working capital headwinds (inventory, AR); warehousing remains elevated given back-end load; potential port/tonnage fee impacts .Persistent headwinds near term
Product performance and warranty (S7)Q3: $50M warranty reserve recorded . Q4: $56–$100M total estimate; remediation actions; some shipments delayed .Third-party validation of root cause/corrective actions; progressing settlements; no additional warranty charges in Q1; ~0.7 GW of potentially impacted S7 remains in inventory .Stabilizing/remediating
Technology roadmap (CuRe, perovskite)Q4: CuRe pilot and R&D center; perovskite line underway .Limited commercial CuRe run completed; initial data positive; Ohio lead line conversion timing adjusted to prioritize validation .Steady progress, measured timing
Capacity expansionQ4: Alabama ramp; Louisiana construction on track .Louisiana building complete; tools installing; target 2H25 ops; U.S. nameplate >14 GW by 2026 .On track
Regional allocation (India vs U.S.)Q4: India volume planned; Europe less attractive; closed EU sales office .Reallocating India production to domestic India market due to tariffs; evaluate idling MY/VN if reciprocal tariffs imposed .Tactical pivot to India domestic
Bookings/backlog qualityQ4: 68.5 GW backlog at ~$0.30/W; adjusters potential; terminations framework .Q1 net bookings +0.5 GW; backlog 66.1 GW (66.3 GW post-quarter); ~12 GW international-to-U.S. backlog at risk under change-in-law clauses .Backlog remains large but tariff-sensitive
Regulatory/legal (IP)Q4: TOPCon patent enforcement; Jinko lawsuit; licensing .Continued stance on trade/IP; advocacy for FEOC and Leveling the Playing Field Act 2.0 .Ongoing defensive posture

Management Commentary

  • “Despite the near-term challenges presented by the new tariff regime, we believe that the long-term outlook for solar demand, particularly in our core U.S. market, remains strong, and that First Solar remains well-positioned to serve this demand.” — CEO Mark Widmar .
  • “Our Q1 earnings per diluted share came in below the low end of our guidance range… primarily due to a greater portion of our Q1 sales being forecasted to be in international versus U.S. product.” — CEO Mark Widmar .
  • “We have elected to update our guidance range with an upper end that assumes the current applicable 10% universal tariff structure remains in place… [and] a lower end… including… reciprocal tariff structure.” — CEO Mark Widmar .
  • “We… may need to further reduce or idle production at [Malaysia/Vietnam], especially if the announced reciprocal tariffs are put in place.” — CEO Mark Widmar .
  • “Our first quarter operating income was $221 million… Gross margin was 41%… our mix of U.S.-based modules sold was ~250 MW less than expected… resulting in a corresponding reduction in IRA section 45X credit recognized.” — CFO Alex Bradley .

Q&A Highlights

  • Bookings outlook under tariffs: Customer engagement increased as developers seek to de-risk tariff exposure; pricing/value still being negotiated amid IRA/tariff uncertainty; management remains patient given strong domestic bookings position .
  • Guidance volume downside mechanics: High-end removes ~0.7 GW of SE Asia book-and-bill; low-end removes ~2.5 GW total as reciprocal tariffs render MY/VN uneconomic to sell into U.S. without cost-sharing; U.S.-produced sold volume (9.5–9.8 GW) unchanged .
  • Optionality on SE Asia assets: Considering U.S. finishing lines (9–12 months to stand up), semi-finished import strategies, or redeploying equipment depending on policy outcome; India pivot underway .
  • Backlog repricing risk: ~12 GW of international-to-U.S. deliveries subject to tariff reopeners; remaining ~54 GW largely domestic and not subject to repricing .
  • Working capital/credit monetization: Elevated inventory/AR expected to reverse in 2H with shipment cadence; 2025 45X credits not yet sold (monitoring market/pricing); capex flexed to $1.0–$1.5B .

Estimates Context

  • Q1 2025: Revenue essentially in line with S&P Global consensus ($844.6M vs $843.7M*), while EPS missed ($1.95 vs $2.55*) due to U.S. mix shortfall reducing recognized 45X credits and shipping/timing issues late in quarter .
  • Forward considerations: Management’s Q2 cadence (EPS $2.00–$3.00; modules 3.0–3.9 GW; 45X $310–$350M) provides near-term markers for estimate revisions tied to tariff-sharing outcomes, SE Asia run-rates, and U.S. finishing strategy .

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Tariff regime is the dominant variable for 2025: First Solar cut FY revenue/EPS/volume guidance and may idle SE Asia capacity if reciprocal tariffs take effect; outcomes of customer cost-sharing talks and policy updates are key near-term catalysts .
  • Mix drives earnings power: U.S.-produced sales and 45X recognition support margins; Q1 miss illustrates sensitivity to U.S. mix shortfalls; watch U.S. production throughput, Louisiana ramp, and CuRe sell-through .
  • Backlog is large but partially tariff-sensitive: ~12 GW international-to-U.S. backlog by YE25 could be unwound under change-in-law clauses; most remaining backlog is domestic and not exposed to repricing .
  • Strategic pivot options: India domestic allocation rising; potential U.S. finishing lines could mitigate tariff impacts and preserve economics (9–12 month timeline from decision) .
  • Working capital should improve on 2H shipment cadence, but warehousing/logistics costs remain a headwind near term; monitor AR collections and any 2025 45X monetization timing .
  • Policy is a double-edged sword: FEOC, strengthened domestic content, and enforcement of trade remedies are tailwinds; adverse reciprocal tariff outcomes could temporarily reduce international utilization and earnings .
  • Trading lens: Near-term sentiment hinges on reciprocal tariff decision, customer cost-sharing visibility, and pace of U.S. finishing optionality; medium-term thesis rests on domestic scale, 45X, large backlog, and differentiated CdTe tech .

Appendix: Additional Data Points

  • Income statement details: Q1 2025 net income $209.5M; operating expenses $123.2M; tax expense $7.5M .
  • Cash flow: Q1 operating cash flow $(608)M (inventory/AR build; grant timing); capex $206M tied to Louisiana; net cash down to $0.4B .
  • Q2 markers: Module sales 3.0–3.9 GW; 45X $310–$350M; EPS $2.00–$3.00 .
  • 2024 45X sale context: $857M of 2024 45X credits sold at $0.955 per $1.00; $819M gross proceeds; Q4 2024 EPS impact ($0.42) previously disclosed .