First Solar’s Earnings Call: Record Sales Amid Challenges

First Solar ((FSLR)) has held its Q3 earnings call. Read on for the main highlights of the call.

First Solar’s recent earnings call presented a balanced narrative, reflecting both significant achievements and notable challenges. The company celebrated record module sales and earnings, demonstrating resilience and strategic foresight. However, the call also highlighted substantial hurdles, such as contract terminations with BP affiliates and supply chain disruptions, which tempered the overall positive sentiment.

Record Module Sales

First Solar achieved a remarkable milestone by delivering a record 5.3 gigawatts of module sales in the third quarter of 2025. This achievement underscores the company’s strong market position and growing demand for its solar modules, marking a significant step forward in its operational performance.

Earnings and Cash Improvement

The company reported impressive financial results, with earnings reaching $4.24 per diluted share in Q3. Additionally, First Solar’s gross cash position improved significantly, increasing to $2 billion. This financial strength is attributed to enhanced working capital and new bookings, providing a solid foundation for future growth.

Initiation of New U.S. Production Facility

In a strategic move to bolster its production capabilities, First Solar announced the establishment of a new 3.7 gigawatt U.S. production facility. This facility is expected to enhance the company’s gross margin profile and support the onshoring of module finishing, aligning with the company’s long-term growth strategy.

Sustainability Achievements

First Solar’s commitment to sustainability was highlighted by its Ohio facilities achieving a gold rating in the Responsible Business Alliance’s validated assessment program. This accomplishment reflects the company’s dedication to responsible business practices and environmental stewardship.

Termination of Contracts with BP Affiliates

The earnings call revealed significant challenges, including the termination of contracts with BP affiliates. These contracts, totaling 6.6 gigawatts, were terminated due to defaults, leading to expected termination payments of $385 million. This development poses a notable financial impact on the company.

Supply Chain Disruptions

First Solar faced disruptions in its glass supply chain, affecting production at its Alabama facility. This issue resulted in a reduction of 0.2 gigawatts in full-year production, highlighting the vulnerabilities in the supply chain that the company must address.

Underutilization and Production Curtailment

The company experienced increased underutilization costs and production curtailments due to the BP contract termination and supply chain issues. These challenges impacted the financial results, underscoring the need for strategic adjustments to mitigate such risks in the future.

Warranty Liabilities

First Solar addressed potential future warranty losses related to manufacturing issues, estimating liabilities ranging from $50 million to $90 million, with $65 million already recorded. This proactive approach aims to manage potential risks and ensure product reliability.

Forward-Looking Guidance

Looking ahead, First Solar provided forward-looking guidance with key metrics and updates. The company secured gross bookings of approximately 2.7 gigawatts at a base ASP of $0.309 per watt. Despite the termination of 6.6 gigawatts of bookings with BP affiliates, First Solar maintains a robust contracted backlog of 54.5 gigawatts. The company also plans to enhance its production capabilities with a new U.S. facility, reinforcing its commitment to growth and operational excellence.

In summary, First Solar’s earnings call painted a picture of a company navigating both triumphs and trials. While record sales and financial improvements were celebrated, challenges such as contract terminations and supply chain issues were acknowledged. The company’s strategic initiatives and forward-looking guidance indicate a proactive approach to sustaining growth and overcoming obstacles in the solar industry.