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FIRST SOLAR, INC. (FSLR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered strong top-line and EPS step-up: revenue $1.51B and diluted EPS $3.65, up from $0.89B and $2.91 in Q3; gross margin fell to 37% from 50% driven by 45X credit sale discount, warranty/logistics costs, and ramp/underutilization charges .
  • 2025 guide introduced: net sales $5.3B–$5.8B, EPS $17.00–$20.00, volume sold 18–20GW; Q1 EPS view $2.20–$2.70 with GM similar to full-year average .
  • Mix and policy headwinds: international under-allocation led to a 1GW output reduction in Malaysia/Vietnam and elevated warehousing/logistics; 2024 backlog exited at 68.5GW with pricing near $0.30/watt .
  • Warranty issue (Series 7) contained within $56–$100M range (Q4 recognized $6M; $50M taken in Q3) and remediation ongoing; ~0.7GW of potentially impacted modules held in inventory at year-end .
  • S&P Global consensus estimates were unavailable at retrieval time; result vs. Street can’t be benchmarked in this recap. We will update once accessible (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

  • Record operational scale and bookings discipline: 2024 net sales $4.2B (+27% YoY), 14.1GW sold, 4.4GW net bookings at $0.305/watt base, and year-end backlog of 68.5GW at ~$0.30/watt .
  • Clear 2025 roadmap and capacity expansion: guide calls for 18–19GW produced (9.2–9.7GW U.S.), with Louisiana starting up and Alabama exiting ramp in Q1; R&D center and perovskite line support longer-term tech pillars (CuRe, perovskite, tandem) .
  • Balance sheet strength via 45X monetization: sold $857M of 2024 Section 45X credits (at $0.955/$1.00), boosting Q4 net cash; acknowledged $39M discount hit to GM to secure liquidity .

Quotes:

  • “In 2024, we continued building the foundations required for our long-term growth strategy… and produced and shipped a historic volume of modules.” – CEO Mark Widmar .
  • “Gross margin was 37% in the fourth quarter… impacted [by] $39M [45X discount], warranty charges, shipment delays… and ramp/underutilization costs.” – CFO Alex Bradley .

What Went Wrong

  • Margin pressure and costs: GM compressed to 37% (from 50% in Q3) due to Section 45X discounting, Series 7 warranty/logistics ($36M demurrage/warehousing in Q4), and U.S. ramp/underutilization ($18M Ohio; $4M Alabama) .
  • International allocation headwinds: policy and demand dynamics drove a 1GW curtailment in Malaysia/Vietnam and EU sales operation shutdown; shipment timing increasingly back-half weighted .
  • Contract terminations and deferrals: 2024 terminations totaled 2.4GW; ~250MW of Q4 modules slipped into 2025; ~0.7GW of potentially impacted Series 7 inventory at year-end .

Financial Results

Headline P&L Comparison (YoY, QoQ, and context)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$1.159 $0.888 $1.514
Diluted EPS ($)$3.25 $2.91 $3.65
Gross Margin (%)—50% 37%
Net Income ($USD Millions)$349.2 $313.0 $393.1

Notes:

  • Q4 GM decline primarily from: $39M 45X discount (3ppts), $6M additional warranty expense (range $56–$100M), delays ($36M logistics), and ramp/underutilization costs .

Bookings/Backlog/ASP and Volume Trends

KPIQ2 2024 (as of)Q3 2024 (as of)FY 2024
YTD Net Bookings (GW)3.6 4.0 4.4
ASP on Bookings (c/W)31.6 (ex adj/India) 30.9 (U.S. gross bookings; ex adj) 30.5 (base; ex adj/India/terms)
Expected/Contracted Backlog (GW)75.9 73.3 68.5
Modules Sold (GW)——14.1

Drivers and Non-GAAP-Related Items

  • 45X tax credits: $857M sold for 2024 (cash proceeds ~$819M; $39M Q4 GM discount; ~$0.42/share EPS impact for FY24) .
  • Warranty/Series 7: $56–$100M total reserve estimate; $50M in Q3 and $6M in Q4; remediation underway; ~0.7GW in inventory held at year-end .
  • Logistics timing: ~$36M Q4 demurrage/warehousing due to delayed shipments and remediation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025—$5.3B–$5.8B New
Gross MarginFY 2025—$2.45B–$2.75B (incl. $1.65–$1.7B 45X; $50–$60M ramp/underutil.) New
Operating ExpensesFY 2025—$470M–$510M (incl. $60–$70M start-up) New
Operating IncomeFY 2025—$1.95B–$2.30B (incl. $110–$130M ramp/start-up; 45X) New
EPS (Diluted)FY 2025—$17.00–$20.00 New
Net Cash BalanceYE 2025—$0.7B–$1.2B New
Capital ExpendituresFY 2025—$1.3B–$1.5B New
Volume SoldFY 2025—18–20GW New
EPS (Diluted)Q1 2025—$2.20–$2.70; GM ~full-year avg New

Key operational assumptions (Management commentary):

  • 2025 production: 18–19GW (U.S. 9.2–9.7GW; Malaysia/Vietnam reduced by 1GW; India 3–3.2GW with ~70% to the U.S.) .
  • Cost per watt produced ~ $0.20 in 2025; period costs add ~ $0.04, yielding $0.24 per watt sold; elevated warehousing ($250M est.) back-half shipping profile .

Earnings Call Themes & Trends

TopicQ2 2024 MentionsQ3 2024 MentionsQ4 2024 MentionsTrend
AI/Technology initiativesNot highlighted in PR Not highlighted in PR CuRe pilot, perovskite line (OH), tandem thin-film roadmap R&D acceleration
Supply chain/logisticsNot highlighted in PR Termination payments offsetting volume decline ~$36M Q4 demurrage/warehousing; back-end weighted shipments in 2025 Elevated logistics/storage costs near term
Tariffs/macro/regulatoryNot highlighted in PR “Industry volatility” context 25% aluminum tariff headwind; AD/CVD progress vs SE Asia; domestic content points guidance supportive Policy-sensitive allocation/pricing
Product performance—$50M Series 7 warranty reserve Remediation; $56–$100M range; $6M Q4 charge; ~0.7GW impacted inventory Contained, improving
Regional trendsBacklog 75.9GW Backlog 73.3GW International under-allocation; 1GW SEA cut; 70% of India to U.S. U.S.-heavy mix
R&D execution——New R&D center (OH) and perovskite line ramping by Q2 2025 Capability build-out

Management Commentary

  • Strategy and scale: “We… expanded manufacturing capacity… established the infrastructure… with a new R&D center in Ohio, and produced and shipped a historic volume of modules.” – CEO Mark Widmar .
  • Technology pillars: “Three core pillars… improve core CadTel via CuRe; develop perovskite at scale; pursue thin-film tandem for high efficiency.” – CEO .
  • Policy/trade stance: “The threat from China is existential… we advocate FEOC laws… AD/CVD progress shows high cash deposit rates in SE Asia.” – CEO .
  • IP enforcement: Filed lawsuit against JinkoSolar over TOPCon patents; first U.S. TOPCon licensing agreement announced (Talend PV) .
  • Costs and logistics: “Warehousing number is going to be close to $250M… driven by back-end loading, delays, and shift rights.” – CFO .

Q&A Highlights

  • Shipment/revenue guidance risk: ~1.4GW of international “book-and-bill” dependency in 2025; year is back-end loaded, increasing timing risk; India sell-through viewed as low risk given mechanics and payment security; customers cautious amid policy uncertainty and safe harbor dynamics .
  • Warranty scope and remediation: Total reserve estimated at $56–$100M; causes identified and corrected; third-party validation underway; obligation limited to contractual warranty terms (not consequential damages) .
  • Tariff assumptions: No module import tariffs assumed in guide; aluminum Section 232 (25%) included as cost headwind; some freight carrier charges contemplated .
  • Cost per watt outlook: Produced ~ $0.20 in 2025 vs prior Analyst Day “high-19s”; period costs up due to warehousing and ramp/underutilization; 1GW SEA curtailment raises fixed cost per watt; aluminum tariffs add ~$30M to core costs .

Estimates Context

  • We attempted to retrieve S&P Global consensus (EPS and revenue) for Q4 2024 and FY 2025; the request hit a daily rate limit and could not be completed at this time. As a result, vs-consensus comparisons are not included in this recap. Upon access restoration, we will update this section and tables with consensus benchmarks and beats/misses. Values retrieved from S&P Global (when available) will be marked with an asterisk and footnoted accordingly.

Key Takeaways for Investors

  • 2025 earnings power pivots higher (EPS $17–$20) despite near-term logistics and international allocation headwinds; cadence is back-half weighted with Q1 EPS $2.20–$2.70 .
  • Margin quality in 2024 was diluted by 45X monetization discounting and discrete warranty/logistics costs; 2025 GM guided ~47% including $1.65–$1.7B 45X—credit visibility remains a structural earnings driver .
  • Allocation asymmetry favors U.S. production; SEA output reduced by 1GW in 2025; India capacity increasingly serves U.S. demand (70% to U.S.), underpinning domestic content optionality and pricing .
  • Watch policy tape: aluminum tariffs already embedded; AD/CVD outcomes and IRA reconciliation could impact mix, tariffs, and warehousing needs; contracts provide freight/commodity/tariff protections in many cases .
  • Series 7 remediation narrows operational risk; warranty range bounded; third-party validation expected; shipment timing normalization should reduce warehousing/demurrage burden over time .
  • Strategic moat extends beyond manufacturing: active IP enforcement on TOPCon underscores differentiation and could influence competitor behavior and customer procurement risk assessments .
  • Near-term trading: stock may react to 2025 EPS guide and backlog/mix commentary; catalysts include tariff/IRA clarity, pace of Louisiana ramp, and updates on international book-and-bill conversion and warehousing normalization .
All figures and statements are sourced from First Solar’s Q4 2024 8‑K/press release, Q4 2024 earnings call transcript, Q2/Q3 2024 8‑K releases, and related press releases. Citations are included inline.