FSLR Q2 2025: 2GW+ Bookings at $0.32-$0.33/W Amid Tariff Uncertainty
- Strong bookings momentum: During Q&A, management noted robust near-term demand—with over 2+ gigawatts of safe harbor‐driven bookings in July and several near-term deals in the pipeline—supporting a bullish view that demand remains healthy and could drive future revenue growth.
- Favorable pricing environment: The discussion highlighted that safe harbor provisions and improved price discovery are enabling transactions in the $0.32–$0.33 per watt range, with a possibility of capturing further pricing improvements as domestic content advantages and ADCVD cost mitigations come into play.
- Operational flexibility for capacity expansion: Management’s comments underscored plans to leverage domestic finishing capabilities—including repurposing international production tools and advancing the perovskite line—to mitigate tariff impacts and enhance manufacturing efficiency, creating a strategic advantage to support long‐term growth.
- Tariff and Policy Uncertainty: The call highlighted evolving executive orders and tariff scenarios (e.g., a move from a 10% to higher reciprocal tariffs and potential penalty rates) which could lead to increased costs and margin erosion if tariff recovery isn’t achieved.
- Uncertain Pricing Environment: Concerns were raised over an ongoing price discovery process for international modules priced around $0.32–$0.33 per watt. This uncertainty, paired with reliance on safe harbor mechanisms, may signal difficulties in sustaining pricing power and protecting margins.
- Execution Risks in Capacity Expansion: The discussion pointed to challenges in transitioning international production with excess inventory into domestic finishing lines. The accompanying operational risks—including potential costs from repurposing equipment and managing supply chain disruptions—could adversely affect profitability.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Sales ($USD Billions) | FY 2025 | $4.5 to $5.5 | $4.9 to $5.7 | raised |
Gross Margin ($USD Billions) | FY 2025 | $1.96 to $2.47 (44%) | $2.05 to $2.35 (42%) | lowered |
Section 45X Tax Credits ($USD Billions) | FY 2025 | $1.65 to $1.7 | $1.58 to $1.63 | lowered |
Ramp and Underutilization Costs ($USD Millions) | FY 2025 | $95 to $220 | $95 to $180 | lowered |
SG&A Expense ($USD Millions) | FY 2025 | $180 to $190 | $185 to $195 | raised |
R&D Expense ($USD Millions) | FY 2025 | $230 to $250 | $230 to $250 | no change |
Total Operating Expenses ($USD Millions) | FY 2025 | $470 to $510 (includes $60 to $70 of production start-up expense) | $480 to $520 (includes SG&A, R&D, and $65 to $75 of production start-up expense) | raised |
Operating Income ($USD Billions) | FY 2025 | $1.45 to $2 (35% margin) | $1.53 to $1.87 (32% operating margin) | lowered |
Earnings Per Diluted Share ($USD) | FY 2025 | $12.50 to $17.50 | $13.50 to $16.50 (midpoint unchanged from previous guidance) | no change |
Capital Expenditures/Expenses ($USD Billions) | FY 2025 | $1 to $1.5 (includes $25 to $50 of tariff effect) | $1.0 to $1.5 | no change |
Year-End Net Cash Balance ($USD Billions) | FY 2025 | $0.4 to $0.9 | $1.3 to $2.0 | raised |
Module Sales (Gigawatts) | Q3 2025 | no prior guidance | 5 to 6 | no prior guidance |
Section 45X Tax Credits ($USD Millions) | Q3 2025 | no prior guidance | $390 to $425 | no prior guidance |
Earnings Per Diluted Share ($USD) | Q3 2025 | no prior guidance | $3.30 to $4.70 | no prior guidance |
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Bookings & Pricing
Q: What drove the 2+GW July bookings and $0.32–$0.33 pricing?
A: Management explained that the strong inflow of bookings was due to customers seeking safe harbor contracts amid policy changes, and the pricing reflects both recontracted Series six volumes and recovery from supply chain disruptions, emphasizing a balanced and strategic price discovery process. -
Backlog Stability
Q: What safe harbor changes risk backlog cancellations?
A: Management stressed that existing legacy contracts under Section 48 and Section 45 remain intact through 2028, with the executive order focusing on tech neutral credits rather than impacting the established backlog, ensuring stability in their contracted pipeline. -
Capacity & Price Discovery
Q: Why avoid Series seven capacity at current pricing?
A: Management indicated that the current $0.32–$0.33 level doesn’t justify near-term Series seven commitments; instead, they prefer to secure adequate safe harbor volumes first and later use the resulting insights for improved pricing, while closely monitoring tariff impacts and the polysilicon probe developments. -
Inventory & Expansion
Q: How do inventory levels and tariffs affect expansion?
A: They highlighted that reducing costs from warehousing and tariffs is critical, and expanding domestic finishing lines would lower import values and tariffs, thereby enhancing margins and supporting new capacity decisions once clearer tariff guidance is received. -
Market Pipeline Clarity
Q: Does the large North America pipeline signal excess or latent demand?
A: Management noted that while the seemingly vast pipeline may reflect a reallocation of disrupted supply chain commitments, it is too early to confirm if it adds new market demand or merely reshuffles existing commitments. -
Cash & R&D Allocation
Q: How will cash be used regarding perovskite development, and shareholder returns?
A: They assured that the strengthened liquidity position will support ongoing CapEx cycle needs, including the perovskite line and potential domestic finishing, with further clarity and guidance on cash deployment expected as tariffs and policy issues settle.
Research analysts covering FIRST SOLAR.