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    FSLR
    Earnings call· Jun 2026(Q2 FY26)

    FIRST SOLAR Q2 FY26 earnings call FSLR

    Jul 30, 2026 Source

    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

    4
    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

    Operational metrics

    13
    Net sales
    $1.06 billiondecrease of approximately 4% year-over-year
    Q2 FY26

    Captured per explicit instruction, though typically skipped as a GAAP statement line. Decrease primarily driven by lower revenue associated with customer contract terminations recognized in the prior year period, partially offset by higher module volumes sold.

    Gross margin
    57%increase of approximately 12 percentage points compared to Q2 FY25
    Q2 FY26

    Primarily driven by an estimated $89 million net IEEPA tariff-related benefit, a higher mix of modules qualifying for Section 45X tax credits and lower logistics costs.

    Operating expenses
    $155 million
    Q2 FY26

    Captured per explicit instruction, though typically skipped as a GAAP statement line. Includes $76 million of R&D expense.

    R&D expense
    $76 millionincreased year-over-year
    Q2 FY26

    Primarily reflecting continued investment in Propco development and impairment of certain R&D equipment.

    Net income
    $423 millionup approximately 24% year-over-year
    Q2 FY26

    Captured per explicit instruction, though typically skipped as a GAAP statement line.

    Adjusted EBITDA
    $644 millionabove the high end of our previously communicated Q2 preview range
    Q2 FY26

    With an adjusted EBITDA margin of 61%.

    Adjusted EBITDA margin
    61%
    Q2 FY26

    Associated with Adjusted EBITDA of $644 million.

    Net cash
    $1.7 billion
    Q2 FY26

    Providing substantial balance sheet strength and financial flexibility while remaining within targeted long-term cash range of $1.5 billion to $2 billion.

    Operating cash outflows
    $360 millionimproved compared to outflows of $458 million during the first half of 2025
    YTD FY26

    Reflecting first half working capital dynamics.

    Capital expenditures
    $280 million
    H1 FY26

    Primarily supporting South Carolina finishing facility and technology investments.

    India gross bookings
    1.1 gigawatts
    H1 FY26

    Production is largely sold domestically in a short-cycle book-and-bill market.

    U.S. gross bookings
    1.9 gigawatts
    since last earnings call

    Inclusive of applicable technology adjusters. Most of this volume happened in July.

    Underutilization cost
    $30 million
    per quarter

    Associated with running Southeast Asia manufacturing well below its theoretical capacity, pending outcome of Section 232.

    Industry KPIs

    4
    MetricValueDetails
    Backlog order book45.1 gigawattsgigawatts
    Fab capacity utilizationhigh utilization rates (U.S.); influenced by U.S. market demand (Malaysia and Vietnam)
    Bookings net order intake1.9 gigawatts (U.S. since last call); 1.1 gigawatts (India H1); almost 2 gigawatts (U.S. in July); 2 gigawatts (contracted subject to CP); 2 gigawatts (active conversations)gigawatts
    Node platform ramp scheduleSeries 6 form factor pilot line

    Orderbook & backlog

    4
    Contracted backlog45.1 gigawattsJune 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 Julyalmost 2 gigawattsJuly 2026

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

    Contracted subject to CPabout 2 gigawattsJuly 2026

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

    Active conversations for potential bookingsanother 2 gigawattsJuly 2026

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

    Product announcements

    2
    ProductTypeDetails
    CuRe technologyupdate
    Series 6 form factor pilot linemilestone

    Deals & partnerships

    4
    Cypress Creek EnergySupply 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.

    GoogleEnergy 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-GenSupply of First Solar modules for a large project

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

    PanamaSupply 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

    2
    South Carolina finishing facility - Phase 1on 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 2underway

    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

    6
    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 CostsOngoing

    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 CostsOngoing

    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 UnderutilizationOngoing, 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 TariffsOngoing 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 pricespending 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

    5

    Section 232 Decision

    Next quarter
    CurrentPending outcome
    TargetDecision 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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.