First Solar, Inc. (FSLR) Earnings

Management highlights

### Overall Financial and Milestone Achievements - Delivered record Q2 and first-half 2026 module sales volume, with improved year-over-year financial performance. Generated over $1 billion in net sales, expanded gross margin to ~57%, and delivered strong adjusted EBITDA. - Surpassed the 100 gigawatt mark for cumulative global module sales, highlighting long-term customer trust in the company's technology and manufacturing platform. Total contracted backlog stands at 45.1 gigawatts with an aggregate value of $13.6 billion, extending through 2030. ### Manufacturing Updates - U.S. facilities operate at high utilization rates. Phase 1 of the South Carolina finishing facility remains on track to start production in H2 2026, with Phase 1 completion now expected in mid-2027. The revised timeline enables earlier integration of the company's CURE technology, simplifying execution and accelerating value realization. - The South Carolina facility will add up to 3.5 gigawatts of finishing capacity for semi-finished modules from First Solar's international sites, improving supply chain flexibility and optimizing freight, tariff, domestic content, and Section 45X economics. - CURE technology performance at the Perrysburg high-volume manufacturing facility and across multiple field deployments has exceeded expectations. The company began notifying customers of contractual cure ASP adjusters in Q2, starting to convert CURE performance benefits into backlog value. - Production and utilization at the Malaysia and Vietnam facilities are currently driven by U.S. demand and policy dynamics, particularly the pending Section 232 polysilicon investigation. ~1.8 gigawatts of fully finished international capacity is held pending policy clarity, with ~3.5 gigawatts dedicated to feeding the South Carolina finishing line. - The company prioritizes production allocation: 1) maximize output from fully integrated U.S. factories first, 2) use the South Carolina finishing line second, 3) allocate output from international facilities third, to meet contractual obligations and optimize margins. ### Technology Development - The perovskite development program continues to advance. A small-form-factor development line is improving efficiency and reliability, while the Series 6 form factor pilot line remains on track to be operational in H1 2027. The company continues to invest substantial capital in commercializing perovskite technology. ### Market and Policy Positioning - Underlying demand drivers for utility-scale solar remain intact, including data center development, electrification, and replacement of aging generation assets. First Solar prioritizes pricing discipline, contract quality, and long-term value over short-term booking volume amid ongoing policy uncertainty. - Increased customer engagement is being seen year-to-date, and the company is well-positioned to capitalize on opportunities once policy clarity is achieved.

Guidance

• Full-year 2026 guidance remains unchanged from prior communication, with an updated assumption of a net tariff impact of $60 million to $80 million, reflecting IEPA tariff recovery and expected Section 301 tariffs in H2 2026. • Offseting adjustments to guidance include higher production startup expenses and R&D expenses, as well as incremental non-recoverable domestic freight costs above prior forecasts, driven by shifts in module delivery locations. • For Q3 2026, management guides for 3.9 to 4.5 gigawatts of volume sold, and adjusted EBITDA between $625 million and $775 million. • The company maintained its long-term target cash range of $1.5 billion to $2 billion, ending Q2 2026 with $1.7 billion in net cash within this target range.

Segment performance

First Solar reports results across two primary geographic operating segments: the U.S. segment and the India segment. U.S. Segment: - Q2 2026 net sales contributed the vast majority of First Solar's total $1.06 billion in consolidated net sales. Since the end of the prior quarter, the U.S. segment added 1.9 gigawatts of new gross bookings, at an average selling price of approximately 36 cents per watt. As of Q2 end, 41 gigawatts of the company's total 45.1 gigawatt consolidated backlog includes domestic content requirements, which are served primarily by the U.S. segment's fully integrated manufacturing capacity. India Segment: - The India segment booked 1.1 gigawatts of new growth bookings in the first half of 2026, at an average selling price of approximately 20 cents per watt. The company's guidance assumes the India factory operates at high utilization, with most production sold domestically in the short-cycle book-and-bill Indian market. There are no disclosed absolute revenue figures specific to the India segment for Q2 2026.

Risks & headwinds

• Uncertainty around the outcome and timing of the Section 232 polysilicon and derivatives investigation creates near-term booking volatility and makes long-term capacity planning for international manufacturing facilities difficult. • Proposed waivers or quotas for certain domestic cell producers under Section 232 could undermine the policy's intended market impact and disincentivize domestic supply chain investment. • Rising input and commodity costs (including steel, copper, electricity, and freight) in the U.S. market create cost pressures, with domestic over-the-road freight costs now approaching the cost of international shipping to U.S. coasts. • Tight over-the-road freight capacity and volatile diesel prices increase domestic logistics costs. • New FEOC and domestic content requirements create regulatory uncertainty for customer projects, with customers taking overly conservative positions to avoid risking tax credits that could delay project development. • Uncertainty around ongoing Section 301 forced labor and excess capacity investigations creates additional tariff risk for modules imported from Southeast Asia. • Any delays to the Section 232 ruling prolong market uncertainty for both First Solar and its customers, keeping demand on the sidelines.

Analyst Q&A

• Q: What is First Solar's early assessment of the recent FCC ruling on domestic content requirements for solar inverters, and its potential impact on broader solar installations? /

  A: The ruling continues the U.S. government's theme of reducing over-reliance on adversarial nations for clean energy supply chains. First Solar, as an early reshored manufacturer, supports this policy direction. The company does not see the ruling as a near-term constraint on installations, as already shipped inverters will remain allowed, and the industry is already building out domestic supply chains. The ruling reinforces the policy tailwind for domestic manufacturing. (219 characters)

• Q: How large is the hyperscaler data center demand trend, and what is the status of pending bookings waiting for Section 232 clarity? /

  A: Three recently announced projects (including the Google-backed Steel River project) total ~5 gigawatts of hyperscaler-driven demand, showing strong, stable interest from this segment. Hyperscalers prioritize delivery certainty, which aligns with First Solar's strengths. Management notes ~2 gigawatts of U.S. bookings were closed in July 2026 at strong prices, with over 2 gigawatts more pending contract execution and another 2 gigawatts of high-probability active conversations expected to close by year-end, with additional demand waiting on the sidelines for Section 232 clarity. (389 characters)

• Q: What is First Solar's position on potential waivers under Section 232, and what would it do with its Southeast Asia capacity after a Section 232 ruling? /

  A: First Solar advocates for minimizing or eliminating waivers, as widespread waivers would undermine the policy's intent and disincentivize needed domestic supply chain investment, citing precedent where exemptions gutted the prior Section 201 tariffs. After the ruling, the company will evaluate the 1.8 gigawatts of idle fully finished Southeast Asia capacity: it can ramp for fully finished imports if tariffs allow, bring in semi-finished product for limited U.S. finishing (a few hundred megawatts), or keep capacity idle. Building a new U.S. finishing line for this capacity is an option but seen as less likely. (408 characters)

• Q: How does First Santa see M&A opportunities given its current strong balance sheet? /

  A: M&A has long been an option for the company, which has historically prioritized organic capacity expansion and R&D. First Solar is currently most open to disciplined M&A focused on accelerating technology development: this could include acquiring companies, teams, or intellectual property to advance its product roadmap. The company is also open to adjacent products that leverage its core strength in high-volume thin film manufacturing, but will remain disciplined and evaluate competitive and policy dynamics before pursuing any deal. (326 characters)

• Q: What is the current outlook for the timing of the Section 232 ruling, and how is First Solar approaching input cost reduction? /

  A: Management cannot confirm an August vs. September timing, noting signals that a decision is close, but that policymakers are prioritizing getting the policy right to achieve its strategic intent over fast action. Input costs are pressured by rising commodity and energy costs amid broad U.S. reshoring, but the company is driving efficiency gains, automation, product redesign, and higher module efficiency to reduce cost per watt, and may use its balance sheet to support supplier expansion for more favorable long-term pricing. (344 characters)