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First Solar (FSLR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Jul 30, 2026

Source: earnings call transcript

Executive summary

First Solar Q2 FY26 — Record Sales Volume and Strong Adjusted EBITDA

First Solar delivered a strong Q2 FY26 with record sales volume and expanded gross margins, driven by Section 45X tax credits and IEEPA tariff benefits. The company surpassed 100 GW of cumulative module sales and maintains a substantial contracted backlog through 2030, reflecting strong demand for its differentiated technology and domestic manufacturing. Policy uncertainty, particularly around Section 232, continues to influence near-term bookings, but the company remains disciplined and well-positioned for future growth.

Highlights

5

  • Delivered record second quarter and first half sales volume, with net sales over $1 billion.

  • Gross margin expanded to approximately 57%, an increase of 12 percentage points compared to Q2 FY25.

  • Achieved strong adjusted EBITDA of $644 million, above the high end of guidance, with a 61% margin.

  • Surpassed 100 gigawatts of cumulative module sales globally, reflecting technology durability.

  • Ended the quarter with 45.1 gigawatts of contracted backlog, valued at $13.6 billion, extending through 2030.

Concerns

5

  • Net sales decreased approximately 4% year-over-year, primarily due to lower prior-year customer contract terminations.

  • Higher over-the-road freight costs in the U.S. are approaching international shipping economics.

  • Approximately $30 million per quarter in underutilization costs for Southeast Asia manufacturing capacity.

  • Policy uncertainty, including the pending Section 232 investigation and final FEOC regulations, continues to influence near-term customer activity.

  • Rising commodity costs (steel, aluminum, copper, electricity) create a challenging input cost environment for U.S. manufacturing.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 guidance
unchanged
high materiality
High
Net tariff impact
$60 million to $80 million
medium materiality
High
Volumes sold
3.9 and 4.5 gigawatts
medium materiality
High
Adjusted EBITDA
$625 million and $775 million
high materiality
High

FSLR operating KPIs by quarter

FSLR operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25 Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
Contracted backlog
50.1 GW We ended the year with a contracted backlog of 50.1 gigawatts valued at $15 billion. Source: earnings call transcript
47.9 GW As of March 31, 2026, our contracted backlog was 47.9 gigawatts at an aggregate transaction price of $14.4 billion, exclusive of technology adjusters with deliveries through 2030. Source: earnings call transcript
~45.1 GW We ended the quarter with approximately 45.1 gigawatts of contracted backlog. Source: earnings call transcript
—
Contracted backlog value
$15B We ended the year with a contracted backlog of 50.1 gigawatts valued at $15 billion. Source: earnings call transcript
$14.4B As of March 31, 2026, our contracted backlog was 47.9 gigawatts at an aggregate transaction price of $14.4 billion, exclusive of technology adjusters with deliveries through 2030. Source: earnings call transcript
$13.6B As of June 30, 2026, our contracted backlog totaled 45.1 gigawatts with an aggregate transaction value of $13.6 billion, exclusive of technology adjusters, with scheduled deliveries extending through 2030. Source: earnings call transcript
-5.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Contracted backlog 45.1 gigawatts June 30, 2026

Aggregate transaction value of $13.6 billion, exclusive of technology adjusters, with scheduled deliveries extending through 2030. Approximately 41 gigawatts includes some form of domestic content requirements.

U.S. bookings in July almost 2 gigawatts July 2026

Booked at very good prices, outside of the Q2 close and safe harbor date.

Contracted subject to CP about 2 gigawatts July 2026

Volume that sits into a contracted subject to CP, some tethered to posting security.

Active conversations for potential bookings another 2 gigawatts July 2026

With customers that there's a high probability to close through by the end of the year.

Product announcements

ProductTypeDetails
CuRe technologyupdate
Series 6 form factor pilot linemilestone

Deals & partnerships

Cypress Creek Energy Supply of First Solar modules for Steel River Energy Center

Cypress Creek Energy broke ground on the Steel River Energy Center in Arkansas, a project utilizing First Solar modules and previously included in contracted backlog.

Google Energy needs supported by First Solar modules via Cypress Creek Energy project

The Steel River Energy Center project, utilizing First Solar modules, is designed to support Google's growing energy needs.

Terra-Gen Supply of First Solar modules for a large project

One of two other projects recently announced, totaling about 1.4 gigawatts.

Panama Supply of First Solar modules for a large project

One of two other projects recently announced, totaling over 1 gigawatt. Part of this volume was announced last quarter.

Capital programs

South Carolina finishing facility - Phase 1 on track

The first phase of the finishing facility remains on track to begin production in the second half of 2026, with equipment installations progressing as expected.

South Carolina finishing facility - Phase 2 underway

Benefit:up to 3.5 gigawatts of finishing capacity

Expected completion in mid-2027. The revised time reflects optimizing the facility's launch and enables earlier incorporation of CuRe technology. Once completed, the facility is expected to provide up to 3.5 gigawatts of finishing capacity for modules initiated at international manufacturing sites.

Risks & headwinds

Policy Uncertainty (Section 232 & FEOC) Ongoing

Influencing near-term customer activity and long-term operating profile of international capacity.

Mitigation:Management is engaged with USTR and Commerce to ensure a constructive outcome; company prioritizes pricing, contract quality, and long-term value over short-term bookings volume.

Rising Commodity Costs Ongoing

Challenging environment for steel, aluminum, copper, and electricity.

Mitigation:Focus on driving throughput, automation, product redesign, and leveraging CuRe technology to improve cost per watt and ASPs. Exploring use of balance sheet to work with suppliers.

Logistics Costs Ongoing

Higher over-the-road freight costs in the U.S., with domestic freight approaching international shipping economics.

Mitigation:Optimizing domestic transport routes, freight, and ultimate between factories to reduce costs.

Southeast Asia Underutilization Ongoing, pending Section 232 outcome

Approximately $30 million per quarter in underutilization costs.

Mitigation:Holding decision on long-term operating profile for 1.8 GW of international capacity pending policy clarity.

Section 301 Tariffs Ongoing investigation

Risk around Section 301 related to excess capacity.

Mitigation:Outcome will determine total tariff impact on products from Malaysia/Vietnam; company evaluates all tariff provisions.

Potential Section 232 floor prices pending outcome of Section 232

in the $0.40 per watt or higher range

Mitigation:Management is engaged with USTR and Commerce to ensure a constructive outcome; company prioritizes pricing and contract quality. (Note: This is an analyst's view of potential floor prices, not management's stated target or guidance.)

What to watch in Q3 FY26

Section 232 Decision

Next quarter
Current Pending outcome
Target Decision announced and clarity provided

Why it matters

The outcome of the Section 232 investigation is crucial for market certainty, influencing customer bookings and the long-term operating profile of international manufacturing capacity.

I can't give you any level of conviction maybe more than what you have right now. We are still getting signaled that decisions will be made. There are meetings that are being had that would indicate they're close to making a decision.

Find out whether FSLR delivers this. Inve re-checks your case every morning.

Q&A highlights

How does the SEC ruling on inverters impact broader solar installations and the industry's ability to work around it, given the government's push for domestic content?

Mark Widmar views the SEC ruling as a continuation of the U.S. government's efforts to reduce reliance on certain countries (like China) and promote domestic supply chains. He believes the industry is already moving towards localization across all components and that while not a near-term constraint, it signals increased scrutiny and supports domestic manufacturers.

“I think it just sends another great signal to domestic manufacturers that look, we need [ to before ], we need domestic supply chain resiliency to enable not only the solar industry aside, but really all of the industries that as we reindustrialize in the U.S. economy, right?”

asked by Jon Windham · answered by Mark Widmar

2 min read 6 chapters

Detailed narrative

Manufacturing Expansion & CuRe Technology Integration

The first phase of the South Carolina finishing facility is on track to begin production in the second half of 2026, with equipment installations progressing as expected. The second phase is now anticipated to complete in mid-2027, allowing for earlier incorporation of CuRe technology. CuRe has demonstrated strong performance in high-volume manufacturing and field deployments, exceeding expectations. This integration is expected to simplify execution, accelerate value realization, and enhance the facility's long-term financial performance, providing up to 3.5 GW of finishing capacity.

International Capacity and Policy Influence

Production planning and utilization levels in Malaysia and Vietnam are currently influenced by U.S. market demand drivers and economics, including the pending Section 232 polysilicon and derivatives investigation and tariffs. Approximately 1.8 GW of fully finished international capacity remains available after accounting for capacity used for semi-finished products destined for the South Carolina line. The company is incurring about $30 million per quarter in underutilization costs for this capacity, awaiting policy clarity to inform its long-term operating profile.

Strong Backlog and Disciplined Commercial Approach

First Solar ended Q2 FY26 with a contracted backlog of 45.1 GW, representing an aggregate transaction value of $13.6 billion, with deliveries scheduled through 2030. Approximately 41 GW of this backlog includes domestic content requirements. The company continues to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term bookings volume, especially in the evolving policy environment.

Hyperscaler Demand and Strategic Projects

There is strong and continued demand from hyperscalers and the data center community. Recent project announcements, including a 1.6 GW initial phase for Cypress Creek Energy supporting Google and other large projects with Terra-Gen (1.4 GW) and Panama (1 GW+), total approximately 5 GW. These strategic projects highlight the importance of certainty and reliable partners, which First Solar aims to provide with its technology and manufacturing capabilities.

Section 232 Policy Clarity and Market Impact

The company is actively engaged with USTR and Commerce regarding the Section 232 polysilicon and derivatives investigation. While acknowledging potential for waivers or quotas, management advocates for minimal and limited-duration workarounds to avoid disincentivizing domestic supply chain investments. They emphasize that clarity and certainty from this policy decision are crucial for the industry and are expected to catalyze further bookings, as many customers are currently on the sidelines.

Challenging Cost Environment and Optimization Efforts

The U.S. manufacturing environment faces rising commodity costs, including steel, aluminum, copper, and electricity, exacerbated by reshoring and data center build-out. Logistics costs, particularly domestic over-the-road freight, are also challenging, with U.S. cross-country shipping costs now approaching international rates. First Solar is focused on driving throughput, automation, product redesign, and leveraging CuRe technology to improve cost per watt and increase ASPs through higher efficiency.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.