Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First Solar Inc (FSLR, Financial) achieved record net sales of $4.2 billion in 2024, representing a 27% increase year-on-year.
- The company sold a record 14.1 gigawatts of modules in 2024.
- First Solar Inc (FSLR) exited 2024 with approximately 21 gigawatts of global nameplate manufacturing capacity, an increase of over 4 gigawatts from 2023.
- The company is on track to begin commercial operations at its new $1.1 billion Louisiana manufacturing facility in the second half of 2025.
- First Solar Inc (FSLR) has a significant contracted backlog totaling 68.5 gigawatts with an average ASP of $0.30 per watt.
Negative Points
- Full year diluted EPS came in below the low end of guidance at $12.02 per share.
- Warranty charges related to Series 7 manufacturing issues are estimated to result in total charges ranging from $56 million to $100 million.
- The company experienced higher-than-anticipated ramp-related charges at its new Alabama facility.
- First Solar Inc (FSLR) is facing near-term headwinds for its international production due to policy environment uncertainties in key markets.
- The company has reduced output of Series 6 international product from its Malaysia and Vietnam factories by a combined total of 1 gigawatt in 2025.
Q & A Highlights
Q: The guidance range seems wider than usual. How much is tied to selling the 1 gigawatt of India volume left over from last year? Also, are you seeing any safe harbor potential?
A: The guidance includes a 2-gigawatt range with 1.4 gigawatts of unsold dependency, split between domestic India and International Series 6. The year is expected to be back-end loaded, adding risk of delays. Regarding safe harbor, many customers have already safe harbored using transformers and high-voltage equipment. The industry needs certainty to move forward, and once achieved, optimization can be considered.
Q: Can you confirm if the Series 7 modules' production issues have been resolved? What is the risk that the overall warranty expense could be higher than $100 million?
A: The production issues have been addressed, and current Series 7 modules are expected to perform as specified. The warranty expense is estimated between $56 million and $100 million, based on current information. A third-party assessment is ongoing to validate corrective actions.
Q: To what degree are tariffs included in the guidance?
A: The guidance does not assume tariffs on modules imported into the US from Malaysia, Vietnam, or India. However, it includes adverse impacts from tariffs on aluminum imports, which are assumed at a 25% rate.
Q: How do you address concerns about underperforming projects due to warranty issues?
A: First Solar stands behind its products within the warranty framework agreed upon with customers. The company views its relationships with customers as partnerships and aims to address any shortfalls within contractual obligations.
Q: How does the cost per watt produced and sold compare to previous expectations?
A: The cost per watt produced is close to previous expectations, with some challenges like increased tariffs and glass costs. The cost per watt sold includes significant warehousing expenses, which may be transitory due to back-end loading and shipment delays.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
