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FIRST SOLAR, INC. (FSLR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat: revenue $1.10B and diluted EPS $3.18, both above SPGI consensus; gross margin expanded to 46% on higher U.S.-made mix and $63M contract termination payments . Actuals vs consensus: Revenue $1.10B vs $1.04B*, EPS $3.18 vs $2.68*; prior quarter EPS was $1.95 (miss vs $2.55*) .
  • Guidance was tightened but constructive: net sales $4.9B–$5.7B, operating income $1.53B–$1.87B, EPS $13.50–$16.50 (midpoint unchanged), net cash $1.3B–$2.0B; Q3 cadence implies EPS $3.30–$4.70 and 5–6 GW shipments .
  • Bookings momentum re-accelerated post policy developments: 2.1 GW booked in July (incl. 0.9 GW recontracting at ~$0.33/W), backlog now ~64 GW through 2030; pricing discovery trending up to ~$0.32–$0.33/W per recent deals .
  • Strategic narrative strengthened by U.S. policy/trade tailwinds and IP enforcement; management sees First Solar in “a position of strength” given utility-scale cost/time-to-power advantages and FIAC restrictions limiting Chinese eligibility for credits .
  • Key stock catalysts: sustained backlog/booking/pricing strength, execution on finishing-line strategy to mitigate tariffs, and clean Q3 cadence; watch tariff recovery negotiations and logistics cost normalization .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 46% (from 41% in Q1) on stronger U.S.-made mix and termination revenues; EPS printed above the high-end of intra-quarter guide ($3.18) .
  • Bookings inflected post-reconciliation bill: 2.1 GW in July, with recontracted volumes at ~$0.33/W and new at ~$0.32/W, lifting price realization vs prior run-rate .
  • Policy backdrop improving: FIAC restrictions and AD/CVD enforcement likely constrain Chinese supply, supporting domestic pricing and First Solar’s relative position; CEO: “the case for utility-scale solar…is compelling regardless of the policy environment” .

What Went Wrong

  • International Series 6 demand/tariff uncertainty triggered 1.1 GW terminations in Q2 and $70M of overdue termination receivables; underutilization charges and elevated logistics costs pressured full-year outlook .
  • Elevated logistics/detention/demurrage and non-standard freight add $100M–$400M full-year; finished goods tariffs forecast $80M–$130M and BoM tariffs ~$70M .
  • Backlog mix risk: ~10.1 GW of international Series 6 planned for U.S. faces tariff exposure, requiring recovery negotiations; potential temporary idling if recovery inadequate .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,010.5 $844.6 $1,097.2
Gross Profit ($USD Millions)$498.9 $344.4 $499.9
Gross Margin (%)—41% 46%
Operating Income ($USD Millions)$372.5 $221.2 $361.6
Diluted EPS ($USD)$3.25 $1.95 $3.18

Results vs SPGI consensus:

MetricQ2 2024Q1 2025Q2 2025FY 2025
Revenue – Actual ($USD)$1,010.5 $844.6 $1,097.2 —
Revenue – Consensus Mean ($USD)$933.9*$843.7*$1,035.2*$5,103.6*
EPS – Actual ($USD)$3.25 $1.95 $3.18 —
EPS – Consensus Mean ($USD)$2.66*$2.55*$2.68*$14.62*

Note: Values with asterisk retrieved from S&P Global.

Module volumes and backlog KPIs:

KPIQ2 2024Q1 2025Q2 2025
Module Sales (GW)—2.9 3.6
Modules Produced (GW)—4.0 4.2 (2.4 US / 1.8 Int’l)
U.S.-made Sales (GW)—1.75 2.3
Contracted Backlog (GW)68.5 (YE 2024 baseline) 66.1–66.3 61.9 at Q2-end; 64.0 incl. July

Select mix and cash metrics:

MetricQ1 2025Q2 2025
Contract Termination Revenue ($USD Millions)—$63
45X Credits Sold ($USD Millions)—$296 proceeds on $312 credits (loss $16)
Net Cash Balance ($USD Billions)$0.4 $0.6

Segment/volume mix (Q2 2025):

ItemQ2 2025
Modules Produced – U.S. (GW)2.4
Modules Produced – International (GW)1.8
Modules Sold – U.S.-made (GW)2.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025$4.5B–$5.5B $4.9B–$5.7B Raised
Gross MarginFY 2025$1.96B–$2.47B $2.05B–$2.35B Narrowed/Lower Top-End
Operating ExpensesFY 2025$470M–$510M $480M–$520M Raised
Operating IncomeFY 2025$1.45B–$2.00B $1.53B–$1.87B Narrowed/Lower Top-End
EPS (Diluted)FY 2025$12.50–$17.50 $13.50–$16.50 Raised Low-End
Net Cash BalanceYE 2025$0.4B–$0.9B $1.3B–$2.0B Raised
Capital ExpendituresFY 2025$1.0B–$1.5B Unchanged Maintained
Volume SoldFY 202515.5GW–19.3GW 16.7GW–19.3GW Raised Low-End
Q3 Module SalesQ3 2025—5.0–6.0 GW New Detail
Q3 45X CreditsQ3 2025—$390M–$425M New Detail
Q3 EPSQ3 2025—$3.30–$4.70 New Detail

Assumptions embedded include $95M–$180M ramp/underutilization costs, $1.58B–$1.63B 45X credits, and tariff impacts on BoM ($70M) and finished goods ($80M–$130M) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Policy/trade (tariffs, AD/CVD, FIAC)Initial 2025 guide contemplated IRA/45X; domestic expansion and bookings base . Q1: Universal vs reciprocal tariffs; risk to SE Asia production; potential idling; domestic content strategy FIAC restrictions and AD/CVD actions seen as favorable; reciprocal tariff expectations (India 26%, Malaysia/Vietnam revised to ~25%/20%); plan for tariff recovery and optional idling; Section 232 on polysilicon self-initiated Improving strategic position; operational headwinds persist
Bookings/pricingQ1: 0.6 GW since Q4 at ~$0.305/W; backlog 66.3 GW 2.1 GW in July; reprice to ~$0.32–$0.33/W incl. 0.9 GW recontracted; backlog ~64 GW Improving
Supply chain/logisticsQ1: Warehousing/detention costs; back-end revenue profile Non-standard freight/detention/demurrage +$100M–$400M full-year; mitigation via semi-finished imports/finishing lines Deteriorating near-term; mitigation actions
Technology/R&D (CuRe, perovskite, QD)Q1: CuRe field/lab validation; domestic capacity ramp CuRe performance progress; perovskite dev line targeting inline runs; expanded QD supply agreement with UbiQD Improving
Backlog risk & terminationsQ1: 12 GW at risk under tariff clauses; deposits context 1.1 GW terminations in Q2; $63M termination revenue; debookings/recontracts; circuit breaker provisions Mixed
Legal/IPQ1: Manufacturing issue remediation, settlements progressing IP enforcement (TOPCon suits vs Jinko/Canadian Solar); SEC inquiry concluded with no enforcement action Improving governance/IP posture

Management Commentary

  • “In our view, the recent policy and trade developments have, on balance, strengthened First Solar’s relative position… the case for utility-scale solar…is compelling regardless of the policy environment” — CEO Mark Widmar .
  • Post-reconciliation FIAC restrictions “severely limit 45X eligibility” for Chinese-controlled entities; expect limited Chinese manufacturing in U.S., supporting domestic pricing and bookings runway through 2030 — CEO .
  • Strategy to mitigate tariffs: consider U.S. finishing lines using semi-finished imports to lower declared value and qualify for assembly credits — CEO .
  • “Our Q2 EPS came in above the high end…primarily due to contract termination payments and a favorable mix of U.S. versus international products” — CFO Alex Bradley .
  • Liquidity strengthened via tax credit transfers; working capital expected to normalize as inventories decline and receivables collected — CFO .

Q&A Highlights

  • Bookings/pricing momentum: 2+ GW in July with price discovery up to ~$0.32–$0.33/W; drivers include safe harbor to 2030, AD/CVD actions, FIAC restrictions, and Chinese reneging on supply commitments .
  • Finishing-line strategy: 9–12 month timeline once decision made; semi-finished imports reduce tariff base and improve economics; site selection and tool transfer planning underway .
  • Tariff recovery and production planning: finished goods tariffs $80M–$130M and BoM tariffs ~$70M; underutilization $95M–$180M full-year; potential international production curtailment if recovery inadequate .
  • Backlog/deposits: ~11 GW international Series 6, ~10.1 GW targeting U.S.; circuit breaker provisions mitigate margin erosion; ~$300M deposits theoretically at risk but customers prefer not to cancel; flip to domestic possible where capacity allows .
  • Use of cash: prioritize finishing lines, perovskite expansion, and R&D/M&A; credit transfers bolster liquidity; capital returns only after accretive investments assessed .

Estimates Context

  • Q2 2025: Revenue beat ($1.10B vs $1.04B*) and EPS beat ($3.18 vs $2.68*) .
  • Q1 2025: Revenue in line ($844.6M vs $843.7M*), EPS miss ($1.95 vs $2.55*) .
  • Q2 2024: Revenue beat ($1.01B vs $0.93B*), EPS beat ($3.25 vs $2.66*) .
  • FY 2025: Company EPS guidance $13.50–$16.50 (midpoint $15.00) vs consensus $14.62*; net sales guide $4.9B–$5.7B vs consensus $5.10B* .

Note: Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 operational beat with margin expansion was driven by U.S.-made mix and termination revenues; this supports near-term cash and validates pricing power into H2 .
  • Guidance midpoints intact despite tariff/logistics headwinds; Q3 cadence (5–6 GW, EPS $3.30–$4.70) sets a clear trading setup around shipment execution and 45X monetization .
  • Policy tailwinds (FIAC, AD/CVD, potential polysilicon Section 232 impacts) improve First Solar’s competitive moat vs crystalline silicon imports; expect bookings/pricing resilience .
  • Watch tariff recovery negotiations on international volumes; inability to recover could trigger idling and add underutilization costs, but circuit breaker clauses limit negative margin outcomes .
  • Finishing-line decision is a material medium-term catalyst: reduces tariff burden, enables assembly credits, and improves logistics; 9–12 month build once greenlit .
  • Technology optionality advancing (CuRe/perovskite/QD), supporting medium-term performance and ASP adjusters embedded in backlog .
  • Liquidity improved via tax credit sales; overdue receivables concentrated in terminations and settlements with litigation/arbitration underway; working capital expected to normalize as shipments accelerate .