First Solar ((FSLR)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for First Solar revealed a mixed sentiment, with notable achievements in record module sales and increased manufacturing capacity being overshadowed by challenges such as lower-than-expected EPS, manufacturing issues with Series 7 modules, and supply-demand imbalances. The company also faces increased costs due to tariffs and production challenges, painting a complex picture for stakeholders.
Record-Breaking Module Sales
First Solar achieved a significant milestone by selling a record 14.1 gigawatts of modules in 2024, contributing to net sales of $4.2 billion, marking a 27% increase year-on-year. This achievement underscores the company’s strong market presence and demand for its solar modules.
Increased Manufacturing Capacity
The company successfully expanded its global manufacturing capacity by over 4 gigawatts in 2024, thanks to new facilities in Alabama and throughput optimization in Ohio. This expansion positions First Solar to meet growing market demand and enhance its production capabilities.
Technology Advancements
First Solar continued to advance its technology roadmap by commissioning a new R&D innovation center in Ohio. This center includes a high-volume manufacturing scale production pilot line, which is expected to drive future innovations and efficiencies in solar technology.
Strong Balance Sheet
Ending 2024 with a net cash position of $1.2 billion, First Solar maintains a robust balance sheet. This financial strength provides the company with the flexibility to pursue growth opportunities without the need for external financing.
Lower-than-Expected EPS
Despite strong sales, First Solar’s full-year diluted EPS of $12.02 per share fell below the low end of guidance. This shortfall was primarily due to the after-tax impact from the sale of Section 45X tax credits, highlighting a key financial challenge.
Manufacturing Challenges
The company faced warranty charges related to manufacturing issues affecting the initial production of Series 7 modules. These challenges are estimated to result in total charges ranging from $56 million to $100 million, impacting the company’s financial performance.
Supply-Demand Imbalance
First Solar is experiencing an under-allocation position for Series 6 production in Malaysia and Vietnam. This is due to module delivery shift rights and contract terminations, presenting a challenge in balancing supply and demand.
Increased Costs
Higher than anticipated ramp-related charges in its Alabama facility and additional costs from new tariffs on aluminum imports into the US have increased operational expenses for First Solar, affecting its profitability.
Forward-Looking Guidance
Looking ahead to 2025, First Solar projects to produce 18 to 19 gigawatts of solar modules, with net sales expected between $5.3 billion and $5.8 billion. The company anticipates a full-year gross margin of approximately 47% and an operating income range from $1.95 billion to $2.3 billion. The projected diluted EPS for 2025 is between $17 and $20, indicating a significant increase from 2024. First Solar also plans capital expenditures of $1.3 billion to $1.5 billion and forecasts an end-of-year net cash balance of $0.7 billion to $1.2 billion. The guidance reflects strategic focuses on improving CadTel technology and advancing research in perovskite and tandem thin-film technologies.
In conclusion, First Solar’s earnings call presented a mixed bag of achievements and challenges. While the company celebrated record sales and expanded manufacturing capacity, it also faced significant hurdles such as lower-than-expected EPS and manufacturing issues. Looking forward, the company remains optimistic with strong guidance for 2025, focusing on technological advancements and strategic growth initiatives.