First Solar, Inc. (FSLR) Earnings & Analysis

Latest quarter

First Solar reported Q2 FY2026 revenue of $1.1 billion, missing the consensus by 0.44%, even though both figures round to $1.1 billion. Adjusted earnings per share of $3.92 exceeded the $2.74 consensus by 43.1%.

Revenue was $1.1 billion a year earlier; the reported year-over-year change was −3.73%. CFO Alex Bradley said the decline was primarily due to lower revenue from customer contract terminations than in the prior-year quarter, partly offset by higher module sales volume.

First Solar’s gross margin rose to 57.3% from 45.6%. Bradley attributed the improvement principally to an estimated $89 million net tariff-related benefit, a higher mix of modules qualifying for Section 45X manufacturing tax credits and lower logistics costs. He said lower termination revenue and higher duties and tariffs partly offset those benefits.

The company reported an operating margin of 42.6%, compared with 33.0% a year earlier. Diluted earnings per share increased to $3.92 from $3.18, while free cash flow was −$306.2 million, compared with −$138.6 million in the prior-year quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Alex Bradley said First Solar had 45.1 gigawatts of contracted backlog worth $13.6 billion at June 30, excluding technology adjustments, with deliveries scheduled through 2030. Since the prior call, he said, the company had recorded approximately 1.9 gigawatts of additional U.S. gross bookings at an average selling price of approximately 36 cents per watt, including applicable technology adjustments.

CEO Mark Widmar said First Solar was prioritizing pricing, contract quality and risk allocation over short-term bookings while customers awaited policy decisions. In response to questions, he said some customers were on the sidelines awaiting the Section 232 investigation’s outcome, while the company was seeking cash security against new bookings. Widmar declined to detail the company’s internal view of the investigation’s potential outcome, saying “there’s still a lot of moving pieces.”

Widmar said approximately 41 gigawatts of the company’s 45 gigawatt backlog had some form of domestic-content requirement. He said First Solar generally sought to prioritize production and sales from fully integrated U.S. factories, followed by its South Carolina finishing line and international facilities.

On the call, Widmar said the South Carolina facility’s first phase remained on track for production in the second half of 2026, while the second phase was expected to be completed in mid-2027. He said the revised timing would permit earlier incorporation of CURE technology. First Solar’s later quarterly filing says the first phase commenced commercial production in September 2026.

Asked about Southeast Asian capacity, Bradley said First Solar could import finished modules, subject to demand, pricing and tariffs, or finish a limited amount of semi-finished product in existing U.S. facilities. He said another U.S. finishing line was a less likely option, and that the company would assess policy and discuss long-term customer demand before deciding on the overseas facilities’ operating profile.

Widmar described pressure from commodity and energy costs and said the company was pursuing throughput improvements, automation and product redesign. Bradley said domestic freight costs were also difficult, adding that First Solar was examining transport routes and factory allocation to reduce them.

Guidance

Bradley said First Solar’s full-year 2026 guidance remained unchanged, but its assumptions now included a net tariff impact of $60 to $80 million, incorporating the estimated tariff recovery and assumed Section 301 tariffs in the second half. He also cited offsetting updates to production startup and R&D expenses, along with incremental non-recoverable domestic freight costs above the prior forecast.