First Solar Q1 2025 Earnings Report

First Solar EPS Results

• Actual EPS: $1.95
• Consensus EPS: $2.50
• Beat/Miss: Missed by -$0.55
• One Year Ago EPS: $2.20

First Solar Revenue Results

• Actual Revenue: $844.57 million
• Expected Revenue: $863.11 million
• Beat/Miss: Missed by -$18.55 million
• YoY Revenue Growth: +6.40%

First Solar Announcement Details

• Quarter: Q1 2025
• Date: 4/29/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, April 29, 2025
• Conference Call Time: 4:30PM ET

First Solar (NASDAQ:FSLR) (NASDAQ:FSLR) is a leading global provider of photovoltaic (PV) solar energy solutions, specializing in the design, development, manufacturing and sale of advanced thin-film solar modules. The company’s proprietary cadmium telluride (CdTe) technology offers a lower carbon footprint and competitive cost per watt compared to conventional silicon-based modules. In addition to module manufacturing, First Solar provides comprehensive project development, engineering, procurement and construction (EPC) services, as well as operations and maintenance (O&M) support to utility-scale solar power plant owners and operators.

Founded in 1999 and headquartered in Tempe, Arizona, First Solar has played a pioneering role in the solar industry’s evolution over more than two decades. The company’s initial public offering in 2006 fueled rapid expansion of its manufacturing footprint and research capabilities. Through ongoing investment in research and development, First Solar has continually improved module efficiency and durability, positioning its products as a benchmark for performance and reliability in challenging environmental conditions.

First Solar serves customers across North America, Europe, Latin America and the Asia-Pacific region, with module assembly facilities and project development offices strategically located to optimize supply chains and respond to regional market demands. Its global installed base spans diverse climates, from desert landscapes in the southwestern United States to sun-drenched fields in Australia and utility-scale arrays in emerging markets, underscoring the adaptability of CdTe technology to a wide range of project specifications and regulatory environments.

Under the leadership of Chief Executive Officer Mark Widmar and a seasoned management team, First Solar continues to pursue growth through technological innovation, operational excellence and strategic partnerships. The company remains focused on expanding its vertically integrated business model, enhancing module production capacity and advancing next-generation solar technologies. First Solar’s commitment to sustainability and cost-effective clean energy solutions positions it to capitalize on the accelerating global transition to renewable power.

First Solar Q1 2025 Earnings Call Transcript

Key Takeaways

• Secured net bookings of 0.6 GW at a base ASP of $0.305/W, bringing contracted backlog to 66.3 GW and maintaining an 81 GW pipeline of potential opportunities.
• New 10% universal tariff and looming 26–46% reciprocal tariffs on modules from India, Malaysia and Vietnam introduce significant gross margin pressure and risk of contract terminations for ~12 GW of international volume.
• Updated full-year 2025 guidance lowered to 15.5–19.3 GW module sales and EPS of $12.5–$17.5, reflecting up to $1/share of direct tariff impact and removal of up to 2.5 GW of international volume.
• Produced 4 GW in Q1 (2 GW Series 6, 2 GW Series 7), completed limited commercial run of CURE-technology modules with strong initial performance, and advanced ramp of U.S. plants in Alabama and Louisiana.
• Reaffirmed long-term confidence in U.S. solar demand and First Solar’s unique fully integrated U.S. manufacturing footprint, proprietary CdTe technology, and support for fair-trade and policy incentives.

Presentation

[Operator]

Good afternoon, everyone, and welcome to First Solar's First Quarter twenty twenty five Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investor.firstsolar.com. All participants are in a listen only mode. And please note that today's call is being recorded. I would now like to turn the conference over to your host, Byron Jeffers, Head of Investor Relations. Please go ahead, sir.

[Byron Jeffers, VP - Finance, Treasury & IR at First Solar]

Good afternoon, and thank you for joining us on today's earnings call. Joining me today are our Chief Executive Officer, Mark Whitmar now Chief Financial Officer, Alex Bradley. During this call, we will review our financial performance for the quarter and discuss our business outlook for 2025. Following our remarks, we will open the call for questions. Before we begin, please note that some statements made today are forward looking and involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.

[Byron Jeffers, VP - Finance, Treasury & IR at First Solar]

We undertake no obligation to update these statements due to new information or future events. For a discussion of factors that could cause these results to differ materially, please refer to today's earnings press release and our most recent annual report on Form 10 ks as supplemented by our other filings with the SEC, including our most recent Form 10 Q. You can find these documents on our website at investor.firstsolar.com. With that, I'm pleased to turn the call over to our CEO, Mark Wittmeier. Mark?

[Mark Widmar, Chief Executive Officer at First Solar]

Good afternoon and thank you for joining us today. Beginning on Slide three, I will share some key highlights from Q1 twenty twenty five. From a commercial perspective, since the previous earnings call, we have secured net bookings of 0.6 gigawatts at a base ASP of zero three zero five dollars per watt. Excluding adjusters and India domestic sales, as a result, our contracted backlog today stands at 66.3 gigawatts. In Q1, we recorded 2.9 gigawatts of module sales, which is in line with what we forecasted on the previous earnings call.

[Mark Widmar, Chief Executive Officer at First Solar]

Our Q1 earnings per diluted share came in below the low end of our guidance range at $1.95 per share, primarily due to a greater portion of our Q1 sales being forecasted to be an international versus U. S. Product. Alex will provide further details regarding our financial results later in the call. From a manufacturing perspective, we produced four point zero gigawatts in Q1 comprised of two gigawatts of Series six and two gigawatts of Series seven modules.

[Mark Widmar, Chief Executive Officer at First Solar]

We completed a limited commercial production run of modules employing our CURE technology from our lead line in Ohio during the quarter and continue to deploy these modules in both commercial and field test sites. Initial data indicates the enhanced energy profile expected from the superior temperature response and improved bifaciality of our CURE technology is being realized. Furthermore, the laboratory accelerated life testing is confirming the industry's leading annual degradation rate. Our domestic capacity expansion has advanced during the quarter as we continue the ramp of our Alabama factory. At our Louisiana facility, construction of the building was completed and equipment installation and commissioning is fully underway.

[Mark Widmar, Chief Executive Officer at First Solar]

The facility remains on track to begin commercial operation in the second half of this year and once ramped is expected to increase our U. S. Nameplate manufacturing capacity to over 15 excuse me, over 14 gigawatts by 2026. Turning to slide four, I would like to focus on recent policy and trade developments. We continue to experience significant near term uncertainty from the budget reconciliation process and its potential impact on the Inflation Reduction Act, clean energy, tax credits, and now from the evolving trade landscape as the administration implements its new tariff initiatives.

[Mark Widmar, Chief Executive Officer at First Solar]

However, despite these near term challenges, we believe on balance, the political and trade environment continues to be an overall long term favorable from a First Solar perspective. While the implementation of certain new trade policies was a possibility with the change in administration, the new tariff regime imposes earlier this month has introduced significant challenges to 2025 that were not known at the start of the year. I will focus on outlining the operational challenges that tariff poses for First Solar, while Alex will later discuss the detailed implications to our full year guidance. We have elected to update our guidance range with an upper end that assumes the current applicable 10% universal tariff structure remains in place throughout the year. The lower end assumes both a range of non tariff related risks to our operations as well as implications from the previously announced but temporarily suspended country specific reciprocal tariff structure.

[Mark Widmar, Chief Executive Officer at First Solar]

We currently operate international manufacturing in India to serve both the India and U. S. Market and in Malaysia and Vietnam, which almost exclusively serve The U. S. Market.

[Mark Widmar, Chief Executive Officer at First Solar]

The President's implementation of reciprocal tariffs earlier this month with rates of 26%, twenty four % and forty six % applicable to India, Malaysia and Vietnam respectively, creates a significant economic headwind for our manufacturing facilities in these countries selling into The U. S. Market. While a subsequent ninety day pause to the effectiveness of these tariffs and the application of a 10% universal tariff partially mitigates the impact, the lower rate would still result in a meaningful adverse gross margin impact to sales into The United States absent the duty being fully passed through to the module buyer. In addition, the uncertainty surrounding whether the reciprocal tariffs will be reinstituted after this ninety day pause or whether the pause will be indefinite or whether a different tariff regime will be put in place has created a challenge to quantifying the precise tariff rate that would be applied to our module shipments into and beyond the second half of this year.

[Mark Widmar, Chief Executive Officer at First Solar]

Our sales contract for international volume shipped to The United States typically include provisions that are intended to mitigate the adverse gross margin impact from changes in law due to the implementation of tariffs on modules. These provisions, which may be invoked at First Solar's discretion, come in a variety of types, including some where First Solar may terminate the contract if it chooses not to absorb the new tariffs, others, either the customers required to absorb or First Solar and the customers required to share up to a certain amount of of the tariff before either party may terminate and others, which represent the majority of these contracts, where a negotiated period is contractually required for First Solar and the customer to discuss the allocation of tariff risk before either party may terminate. To the extent the contract is terminated on the basis of these provisions, the agreement would effectively unwind with neither the customer nor First Solar being responsible for termination payment, resulting in a corresponding reduction to our backlog as well as return to the customer of any related deposits. These provisions are intended to protect First Solar in the event of changes in law related to tariffs that pose significant economic risk to us and that could otherwise force First Solar to transact at a loss.

[Mark Widmar, Chief Executive Officer at First Solar]

With respect to our overall backlog of 66.1 gigawatts as of 03/31/2025, We have approximately 13.9 gigawatts of forward contracts for delivery of international product into The United States. After accounting for the remaining volumes sold in 2025, at the low end of our revised guidance range that Alex will later discuss, there remains a forecasted year end net 12 gigawatts of international product in the backlog that may be terminated based on these tariff related provisions. With an ASP below the backlog average and after accounting for lower production costs but significantly higher sales freight, including port related costs, warehousing and storage associated with the international product, the profitability of this portion of our backlog is below the overall backlog average. Note, if this if this First Solar elects to absorb the tariffs cost beyond its contractual obligation, no termination right exists and the volume will remain in the backlog. Furthermore, with respect to our module contracts for delivery of product from our U.

[Mark Widmar, Chief Executive Officer at First Solar]

S. Facilities, module tariffs are not applicable and therefore it is not impacted to our contracted backlog with respect to this volume. From an allocation standpoint, our ability to optimize our U. S. Production with our international production to support our customers' qualifications of the domestic content ITC bonus may be constrained under the new tariff regime.

[Mark Widmar, Chief Executive Officer at First Solar]

As we may not be in a position to utilize our currently available international production capacity, absent customers' willingness to absorb or meaningfully share the increased tariff exposure. Our customers' willingness to bear some or all of the tariff costs beyond this module contracted obligation must be considered in the contents of the overall project related cost increases from the new tariffs, including not just with respect to the modules, but also tracker, inverters, transformers and other imported equipment. Given the majority of the best components with some dependency on Chinese supply chain, solar plus storage projects in particular may face significantly increased costs. Given these headwinds, we expect to pivot our India facility away from exports to The U. S.

[Mark Widmar, Chief Executive Officer at First Solar]

And towards producing more product for the domestic India market. With regards to the impact of new tariffs on our Malaysia and Vietnam factories, we will continue to evaluate best options to optimize production across these sites in a potentially reduced U. S. Demand environment for non domestic product, but are mindful that we may need to further reduce or idle production at one or both of these locations, especially if the announced reciprocal tariffs are put in place. That said, despite these near term challenges presented by the new tariff regime, we believe the long term outlook for solar demand, particularly in our core U.

[Mark Widmar, Chief Executive Officer at First Solar]

S. Market remains strong and that First Solar remains well positioned to serve this demand. This belief is based on our unique profile of First Solar compared to its peers. We are the only U. S.

[Mark Widmar, Chief Executive Officer at First Solar]

Headquarter PV manufacturer of scale and by the end of this year, we will be the only one with a fully vertically integrated U. S. Solar manufacturing presence across three states, including a large domestic supply chain, not just in Ohio, Alabama and Louisiana, but across states such as Wyoming, Utah, Indiana, Illinois, Michigan, and Pennsylvania among others. As we've mentioned before, by year end, our US presence alone is projected to support over 30,000 direct, indirect and reduced jobs across the country, representing almost $2,800,000,000 in annual payroll. Our powerful contribution to The U.

[Mark Widmar, Chief Executive Officer at First Solar]

S. Economy is due to our differentiated proprietary thin film technology, but is also dependent in part on a level playing field given the unfair and illegal trading practices of so many in the Chinese crystalline silicon supply chain. As we've engaged with political leaders over the course of the year and as recent developments have demonstrated, we believe there is recognition among politicians, policymakers and other authorities of the need to address these unfair practices, as well as the criticality of maintaining an industrial policy that allows high value solar manufacturing to grow and thrive in The United States and contributes to our energy and national security. One example of this recognition is the recent final determination results in the ADCVD case known as Solar three, addressing illegal dumping and subsidization by the Chinese headquarter companies operating in Cambodia, Malaysia, Thailand, and Vietnam. Last week, the commerce department announced generally substantial ADCVD duties across all four of the Southeast Asian countries, which are generally retroactive and stacked on top of the existing section two zero one tariff regime and the 10% universal tariff rate currently being applied.

[Mark Widmar, Chief Executive Officer at First Solar]

These results reflect what we have known, that the unfair practice by Chinese headquartered solar companies put American manufacturers and American jobs at risk. And the enforcement of the rule of law is essential to securing our manufacturing base and our domestic energy security. That said, while we were pleased with the results of Solar three and applaud the professionalism and the tireless work of the commerce department, we're also well aware that the Chinese are shifting production to lower tariff regions in order to take advantage of our trade laws. Trade data published since our previous earnings call further demonstrates a surge trend of imported cells and modules from certain countries, including Laos and Indonesia when compared to the same period a year ago. We have no doubt that these Chinese manufacturers are also seeking to establish production in other regions around the world, such as Saudi Arabia, forcing us into a continued game of whack a mole.

[Mark Widmar, Chief Executive Officer at First Solar]

The American Alliance of Solar Manufacturing Trade Committee, of which we are a member, continues to monitor this data. And as noted on our previous earnings call, all trade remedy options remain on the table, including initiating a new antidumping and countervailing duty case directed towards those countries where the data is supportive. While it's time consuming and resource intensive, Versalar will continue to engage in trade actions as long as it's necessary to support a level playing field and ensure compliance with existing trade laws. And we will not hesitate to pursue a critical circumstances determination that if imposed, any new tariffs are retroactive. In addition, we, together with like minded allies and advocates in Washington across numerous industries, not just solar, continue to encourage legislation such as the Leveling the Playing Field Act two point o, which would combat repeat offenders by making it easier for petitioners to bring new cases where production moves to another country in an effort to evade tariffs but the level playing field is a key aspect of the Chinese unfair practices playbook.

[Mark Widmar, Chief Executive Officer at First Solar]

This legislation, which was reintroduced at the February and which was bipartisan, would also go a long way towards strengthening and monetizing US trade remedy laws and ensuring that remaining effective tools to fight against unfair trade practices and protect Americans. Turning to industrial policy. While ultimately the outcome of the budget reconciliation process will determine the fate of critical supply chain initiatives such as the 45X advanced manufacturing tax credit and demand side incentives such as the investment in production tax credit or ITC and PTC as we continue to engage with the administration and members of Congress on trade industrial policies. We are encouraged by the response we are receiving on our message. Specifically, we continue to advocate for maintaining these key tax policies, particularly with modifications such as the Foreign Entity of Concern or Fiat provision, which will prevent Chinese companies from receiving U.

[Mark Widmar, Chief Executive Officer at First Solar]

S. Taxpayer dollars. We also continue to advocate for strengthening the domestic content provision to make ITC and PTC eligible contingent on the use of high value domestic content product produced in America. We believe these modifications to clean energy tax credits would provide significant US government budgetary savings, support the administration's efforts to make the Tax Cuts and Jobs Act permanent, and would represent major steps forward towards mitigating the risk of America's energy supply chain being contracted, concentrated in adversary foreign countries. We are pleased to see a growing number of Republican policymakers in both the House and the Senate recognize the value of preserving existing tax credits such as 45X and the ITC and PDC.

[Mark Widmar, Chief Executive Officer at First Solar]

We recognize that these incentives help, in their words, spur new manufacturing investment and ensure certainty for businesses that have already made meaningful U. S. Investments. They also recognize that doing so would reduce utility bills for American consumers. The imperative of affordable, reliable electricity for American households and small businesses is top of mind, not just for politicians, but for leaders of American utilities as well.

[Mark Widmar, Chief Executive Officer at First Solar]

Recent analysis released by the National Electrical Manufacturing Association projected The U. Electricity demand will grow 50% by 02/1950 or 2% annually, with data center energy consumption growing by 300% over the next ten years. In our recent discussions with several CEOs of some of the nation's leading utilities, these leaders recognize the reality of the near term significant growth in The US energy demand and share our view that solar has a critical place in all above power generation strategy, where a diversified portfolio of natural gas, nuclear, hydro, solar with energy storage, and other technologies work together to power our nation to prosperity. They have shared with us that they are lending their influential voice to continue to advocate for maintaining clean energy tax credits and the transferability provisions associated with them, as doing so will enable greater solar generation deployment more quickly and a lower cost than traditional forms of generation to help address the immediate power generation need and help mitigate potentially rising ratepayer electricity costs. There's plenty of evidence supporting the case of solar as a prominent component of electricity generation mix.

[Mark Widmar, Chief Executive Officer at First Solar]

Texas, Florida, North Carolina, and Nevada, markets where some of the country's highest level of utility scale solar deployment have consumer electricity bills that were between 824% lower than the national average in January of twenty twenty five. While the new tariff regime has introduced a new source of uncertainty in near term product development timelines, we believe that it is unlikely to significantly impact U. S. Load growth fundamentals. As the country's top grid operators testified during a March hearing by the House Energy and Commerce Subcommittee on Energy, there's still an urgent need to not just maintain, but to add capacity to meet significant demand growth.

[Mark Widmar, Chief Executive Officer at First Solar]

America leadership in AI, cryptocurrency and reshoring manufacturing needs abundant cost competitive electricity generation. As the new generation capacity coming online, there risks not being enough electricity to power these strategically important industries to their full potential before the current administration ends. With 92% of The U. S. Interconnection queue being comprised of renewables, solar is the fastest form of new generation.

[Mark Widmar, Chief Executive Officer at First Solar]

The current ITC and PTC regime, together with domestic content bonus, drives competitive solar PPA pricing and First Solar with its uniquely vertically integrated US manufacturing process that critically features a domestically produced cell supported largely by domestic value chain remains in our view the vendor of choice to enable development partners to qualify for domestic content bonus, especially with the annually escalating domestic content points requirement. Continued policy uncertainty, including with the new announced universal and reciprocal tariffs, may result in delays to some announced domestic wafer and cell manufacturing. Given the multiyear lead time required to build and commission new factories, the uncertain environment gives First Solar the ability to leverage another one of our competitive differentiators, delivering on our commitments to our customers. This differentiation is particularly valued by sophisticated developers seeking to secure module pricing and delivery certainty early in their project timelines through long dated module sale contract. We believe First Solar's established U.

[Mark Widmar, Chief Executive Officer at First Solar]

S. Manufacturing presence provides greater certainty of delivery and pricing when compared to other prospects and speculative sourcing sources of supply. Furthermore, given First Solar's profile as a U. S. Company, any future domestic capacity expansion would be unencumbered by the prospects of FIAC legislation, a concept based on discussions in Washington, D.

[Mark Widmar, Chief Executive Officer at First Solar]

C. And elsewhere has been favorably received by certain members of the administration and Congress, and we believe must be factored into capital commitment decisions by the large majority of our prospective domestic competitors. This consideration is, particularly predominant in the industry where these competitors are overwhelmingly Chinese owned or controlled. Another factor which may further prevent manufacturers and their financing parties from having the clarity necessary to make capital and investment decisions is the fact that public reporting indicates that the reconciliation process and therefore the fate of existing clean energy tax credits under the inflation reduction act may not be known until late twenty twenty five or perhaps not until some point in 2026, particularly if the scenario where addressing tax policy is delayed to a second reconciliation bill. The impact is compounded when you further consider the fact that the Section 45X manufacturing tax credit begin to phase out at the end of the decade, reducing the window of availability for these credits for factories that are not operating.

[Mark Widmar, Chief Executive Officer at First Solar]

Our industry leading established US presence provides further competitive advantages under the current tariff environment. Over the past several years, we have invested heavily in a largely domestic supply chain, particularly as it relates to high value aspects of our bill material such as glass and steel, where we have entered into long term contracts with domestic suppliers. It's our estimation that any new crystalline silicon competition would likely have to import significant aspects of their bill of material to support U. S. Production, particularly with respect to Pattern Glass, which currently does not have any domestic source of supply and aluminum, which is domestically supply constrained and priced at a significant premium to imports.

[Mark Widmar, Chief Executive Officer at First Solar]

In a rational market, these BOM cost increases would be expected to drive higher pricing for domestically produced competitor products. In summary, while we are facing unanticipated near term challenges following the imposition of the April tariff regime, we remain confident in the long term prospects for First Solar in terms of The U. S. Solar energy demand and First Solar's ability to leverage its unique profile and competitive differentiation to serve this demand. Through this confidence, we must be tethered to the continued enforcement and strengthening of The U.

[Mark Widmar, Chief Executive Officer at First Solar]

S. Trade laws in support of industrial policy given the irrational and illegal Chinese trade practices. This confidence is based on our profile as America's largest and most established domestic solar module manufacturer. It's only fully vertically integrated producer, our significant network of domestic supply chain vendors, our proprietary cad tel based semiconductor that is not beholden to the Chinese crystalline silicon industry, and our ability to enable prospects aspects of the administration's platform of reshoring American manufacturing and supporting the powering of the next generation of critical industries. I'll now turn the call over to Alex, who will discuss shipments, bookings, Q1 financials and guidance.

[Alexander Bradley, CFO at First Solar]

Thanks, Mark. Beginning on Slide five, as of 12/31/2024, our contracted backlog totaled 68.5 gigawatts with an aggregate value of $20,500,000,000 or approximately $0.02 $99 per watt. In Q1, we recognized sales of 2.9 gigawatts and contracted an additional 0.5 gigawatts of net bookings, resulting in a quarter end contracted backlog of 66.1 gigawatts with an aggregate value of £19,800,000,000 or approximately $0.30 per watt. Since the end of the first quarter, we've entered into an additional 0.2 gigawatts of contracts, increasing our total backlog to 66.3 gigawatts. Of this total backlog, as Mark previously mentioned, 13.9 gigawatts as of today and forecasted 12 gigawatts by year end twenty twenty five are on the contracts containing provisions that if invoked by First Solar at its discretion, serve as a circuit breaker, prevent meaningful gross margin erosion in a tariff regime scenario such as was announced earlier this month.

[Alexander Bradley, CFO at First Solar]

Given that we're only in the initial stages of engagement with our customers on any tariff related impacts to these contracts, all of these agreements remain in place and are included within our backlog as of today's call. Substantial portion of our overall backlog includes the potential to increase the base ASPs with the application of adjusters, contingent upon achieving milestones within our current technology roadmap by the expected delivery dates of the product. At the end of the first quarter, had approximately 32.5 gigawatts of contracted volume with these adjusters, which if fully realized could generate additional revenue up to approximately $600,000,000 or about $02 per watt, with the majority of this revenue expected to be recognized between 2026 and 2028. Contracted volume associated with these adjustments reduced approximately 4.6 gigawatts since the previous earnings call. Approximately half of this is due to adjusted as being confirmed with the associated change to the contracted backlog.

[Alexander Bradley, CFO at First Solar]

The remainder has been removed as a function of the expiry of contractual notification periods as well as an expected delay in the timing of cure conversion in Vietnam following the new tariff announcements. This figure does not account for potential adjustments that apply to the total contracted backlog, including potential changes to the ASP based on the specific module been delivered to the customer as well as fluctuations in sales rate costs or applicable aluminium and steel commodity prices. As reflected on Slide six, our total pipeline of potential bookings remain strong with bookings opportunities of 81 gigawatts, an increase of approximately 0.7 gigawatts since the previous quarter. Our mid to late stage bookings opportunities have increased by approximately 2.6 gigawatts 2.7 gigawatts to 23.7 gigawatts, including 17.3 gigawatts in North America and 6.1 gigawatts in India. The increase in our mid to late stage bookings opportunity is primarily driven by increased demand in India from the PM Kusum segment, the government funded initiative to add solar to distribution feeders supplying power for agricultural pumps.

[Alexander Bradley, CFO at First Solar]

Launched in 2022, the scheme aims to add approximately 30 gigawatts of solar capacity by March 2026. Recently, several Indian states have allocated substantial capacities to developers under this initiative. The requirement to use modules with India made cells allows First Solar's locally manufactured Series seven modules to qualify for deployment in the scheme. Our mid to late stage pipeline includes 3.8 gigawatts of opportunities that are contracted subject to conditions precedent. As a reminder, signed contracts in India will not be recognized as bookings until we've received full security against the offtake.

[Alexander Bradley, CFO at First Solar]

Beginning on Slide seven, I'll cover our financial results for the first quarter. We had 2.9 gigawatts of module sales in Q1, of which 1.75 gigawatts was domestically produced U. S. Volume. This resulted in net sales of $800,000,000 reflecting a $700,000,000 decrease from the previous quarter.

[Alexander Bradley, CFO at First Solar]

Decrease in net sales was due to an anticipated seasonal reduction in the volume of module sold during Q1. Gross margin was 41% in the first quarter, up from 37% in the prior quarter. This increase was primarily driven by higher mix of modules sold from our U. S. Factories, which qualified the Section 45X tax credits as well as the difference in IRA credit valuation between periods, partially offset by higher module production costs of domestic U.

[Alexander Bradley, CFO at First Solar]

S. Module volume. Despite the quarter over quarter increase, our Q1 gross margin fell below our forecast. Although we met our guided shipment and revenue numbers, our mix of U. S.

[Alexander Bradley, CFO at First Solar]

Made modules sold was approximately two fifty megawatts less than expected at the midpoint of our guidance, with a corresponding reduction in IRA Section 45 X credit recognized. Approximately half of the shortfall is driven by both lower than anticipated U. S. Production in Q1 as well as the timing of sale of Cure products from our limited production run, which concluded in Q1, which is now forecast to sell in the second quarter. The remainder resulted from shipping challenges in the final weeks of the quarter.

[Alexander Bradley, CFO at First Solar]

And note, as we continue to work through both the impact of module shipment schedules from our previously discussed and resolved Series seven manufacturing issues, as well as typical early year seasonality, approximately 70% of our volume sold in the quarter was recognized as revenue in March. We did not incur any additional warranty charges from the sale of Series seven modules affected by manufacturing issues. And as of Q1 quarter end, we continue to hold approximately 0.7 gigawatts of potentially impacted Series seven modules in inventory. In addition, during the quarter, we began reaching agreements in principle and final resolution for some potentially impacted Series seven modules from our initial production run, consistent within our current warranty reserve. Furthermore, as an initial update, an independent analysis and review of the root cause, corrective actions and implementation plan for the manufacturing issues in our initial Series seven production

[Alexander Bradley, CFO at First Solar]

Some of the results of the independent review has been shared with customers and financing parties. SG and A, R and D and production start up expenses totaled £123,000,000 in the first quarter, reflecting an increase of approximately $12,000,000 compared to the fourth quarter. This increase was primarily due to a higher reserve potential credit losses as a function of an increased accounts receivable balance as well as increased production start up expenses for the ramp up of our Louisiana facility. Our first quarter operating income was $221,000,000 which included depreciation, amortization and accretion of $126,000,000 ramp and underutilization cost of $20,000,000 production start up expenses of $18,000,000 and share based compensation expense of 3,000,000 Non operating income netted to an expense of £4,000,000 in Q1, which was favorable relative to the fourth quarter by approximately £6,000,000 This increase was primarily driven by higher interest income from past due payments on accounts receivable from customers. We recorded tax expense of £8,000,000 in the first quarter compared to £53,000,000 in the fourth quarter.

[Alexander Bradley, CFO at First Solar]

This decrease in tax expense is primarily due to a favorable jurisdictional mix and lower pretax income in the current period. Additionally, there were high reserves for state taxes in the comparative period for jurisdictions that do not adhere to the federal tax provisions of the IRA regarding the tax exemption of Section 45 X credit sales. Combination of the aforementioned items led to first quarter earnings per diluted share of $1.95 Next, turn to Slide eight to discuss select balance sheet items and summary cash flow information. Total balance of our cash, cash equivalents, restricted cash, restricted cash equivalents and marketable securities was $900,000,000 at the end of Q1, reflecting a decrease of $900,000,000 from year end. The first quarter saw a decrease in our cash balance accompanied by an increase in accounts receivable and inventory accounts compared to year end 2024.

[Alexander Bradley, CFO at First Solar]

Change was driven by several anticipated factors. Firstly, our 2025 shipment profile with its back ended revenue profile assumes continuous production throughout the year to meet our contracted commitments. This profile results in a transitory working capital imbalance, leading to an increase in our finished goods inventory and warehousing costs, thereby creating near term headwinds to our gross cash. Pending any potential impact to international production as a function of the new tariff regime, which I'll discuss shortly in the guidance section, we expect this trend to continue in the near term, but anticipate it will reverse once our shipments increase from the second half of the year, reducing our inventory build. Secondly, we've seen an increase in our overdue accounts receivable balance of approximately £350,000,000 as of quarter end.

[Alexander Bradley, CFO at First Solar]

Within this is approximately £70,000,000 due from 1.8 gigawatts of terminations, primarily due to default in 2024, we've not received the entitled termination payment and are continuing to pursue litigation or arbitration to enforce our full termination payment rights under the respective contracts. In addition, a negotiated settlement with a customer following a payment default has deferred approximately £100,000,000 of payments until Q4 of this year. While this deferred payment is fully backed by surety bond and carries interest that is accretive to the year, nevertheless creates an additional near term liquidity imbalance. We've also seen a recent increase in overdue AR as a function of ongoing discussions with customers related to the initial Series seven manufacturing issues last year. Thirdly, our capital expenditures totaled $2.00 $6,000,000 in the first quarter.

[Alexander Bradley, CFO at First Solar]

This expenditure is primarily related to our newest facility in Louisiana, which is projected to end the startup in Q3 of twenty twenty five and to ramp production through the second half of this year. Accordingly, our net cash position decreased by approximately £800,000,000 to 400,000,000.0 a result of the aforementioned factors. Before discussing our updated financial outlook, I'd like to comment on the challenges facing us as it relates to providing operational and financial guidance in the current policy and trade environment, particularly within position of the new universal and reciprocal tariffs earlier this month. Please turn to Slide nine. When we provided our initial full year 2025 guidance on our earnings call in February of this year, we provided context, including related to risks in two key areas.

[Alexander Bradley, CFO at First Solar]

Firstly, the risks of policy uncertainty in Europe, India and The United States, especially in The U. S. With regards to tariffs and the ongoing budget reconciliation process and its potential impacts on the IRA. And secondly, our balanced supply demand position where excluding India, we were cumulatively oversold through 2026, but with an undersold position in 2025 for our Series six Malaysia and Vietnam production, driven in large part by 2024 contract terminations, and module delivery shift rights in 2025 utilized by customers facing project delays and policy uncertainty. Policy uncertainty relating to the budget reconciliation process and the IRA remains.

[Alexander Bradley, CFO at First Solar]

Policy impact and uncertainty relating to tariffs have increased significantly. The recently announced tariffs directly and adversely impact First Solar in multiple areas, including by increasing capital expenditure costs for our new U. S. Factories, increasing U. S.

[Alexander Bradley, CFO at First Solar]

Factory production costs, adding significant costs to import finished goods to The U. S. From our Malaysia, Vietnam and India facilities and therefore potentially driving reduced international factory production, which leads to increased underutilization expenses. They also indirectly increase risk of volatility for First Solar through their impacts to our customers. We face increased project costs and project financing and construction delays, which may in turn cause shipment timing delays to First Solar, delays in timing of cash receipts, may reduce new sales opportunities for us in the near term.

[Alexander Bradley, CFO at First Solar]

We've elected to update our financial guidance with ranges based on expected impacts from the new tariff regime. For the upper end of our range, we assume the impacts from the tariff policy in place as of today's call remaining through at least the end of twenty twenty five, including the 10% universal tariff rate, the suspension of individual country reciprocal tariff rates on all countries except China, higher tariff rates applicable to certain products from China, certain tariff exclusions for specific HTS imports codes, Section two thirty two tariffs on steel and aluminum imports and Section three zero one fees on Chinese built vessels. The lower end of our range assumes the above with the addition of including the impacts from the assumption that reciprocal tariffs take effect as of July 9, namely twenty six percent, '20 '4 percent and '40 '6 percent applicable to India, Malaysia and Vietnam respectively. Tariff and cost sharing provisions across our contracts with both customers and suppliers vary. And while currently reflected in our guide, we'll continue to engage with both to assess tariff exposure allocation and ultimate cost and other related impacts.

[Alexander Bradley, CFO at First Solar]

Certain other potential indirect and or unknown costs related to these tariffs, including but not limited to costs associated with any restructuring or asset impairments are excluded from our guidance provided today. Getting the volume sold, our forecast for 9.5 gigawatts to 9.8 gigawatts of sold volume manufactured in The United States remains unchanged. Internationally, as it relates to Series six, our previous guidance included an assumption of approximately 0.7 gigawatts of combined Malaysia and Vietnam product forecast to book and bill within the year. Given the tariff related uncertainty associated with a solar project's overall CapEx and the challenges of booking new volume in the current unsettled policy climate, our updated guidance removes this volume from both the high and low end of the range. In addition, both the high and low end of our guidance range assume a reduction in capacity utilization and throughput at our Malaysia and Vietnam factories beginning in Q2 to align with anticipated reduced demand for these potentially highly tariffed modules.

[Alexander Bradley, CFO at First Solar]

The low end of our range includes an assumption of partial or full idling of these plants continuing through year end. We continue to evaluate how best to optimize production across these sites in a potentially significantly reduced demand environment for internationally produced product, including through ongoing dialogue with customers. Temporary idling of production, despite the near term underutilization cost impact, approximately 40% of which is non cash, provides us with optionality as we await further updates to the tariff regime as it relates to Malaysia and Vietnam as well as the outcome of the budget reconciliation process and any impact to the IRA. So related to International Series seven, we previously forecast approximately two gigawatts of the three to 3.2 gigawatts of India production in 2025 being sold into The U. S.

[Alexander Bradley, CFO at First Solar]

Market. Our revised forecast assumes total production in India is unchanged, but the reallocation of approximately half of this two gigawatts back to domestic India market in the second half of the year to avoid expected tariff impact. This results in an increased domestic India book and bill dependency for the year from approximately 0.7 gigawatts previously to approximately 1.5 gigawatts in our current guidance. Combined, we now forecast full year module sales of 15.5 gigawatts to 19.3 gigawatts. Combined impact of these volume and ASP changes is approximately 100,000,000 to $375,000,000 In terms of import duties on finished goods, we forecast approximately GBP90 million to GBP70 million of tariff expense on module imports.

[Alexander Bradley, CFO at First Solar]

So it relates to production costs, the impacts of the previously announced Section two thirty two tariffs on aluminium and steel imports into The U. S. At a rate of 25% was assumed in our previous guidance range. With the newly announced tariff regime, we forecast a total twenty twenty five tariff impact on raw material imports of approximately £25,000,000 to £55,000,000 primarily related to aluminium frames and substrate glass imports as we continue to ramp available domestic glass supply. Our forecasted fleet average sales rate, warehousing, ramp and utilization, supply chain LDs and other period costs has increased by approximately 65,000,000 to $270,000,000 primarily as a result of underutilization charges from running the Malaysia and Vietnam factories at lower than full production capacity and the associated impact from under absorption of fixed costs, which are accounted for as period expenses.

[Alexander Bradley, CFO at First Solar]

In addition, we expect small incremental freight and logistics charges as a function of accelerating imports ahead of the reciprocal tariff effective date of July 9 as well as due to expect three zero one tonnage fees on Chinese built vessels beginning in Q4 of this year. I'll now cover the full year 2025 guidance ranges on Slide 10. Our net sales guidance is between 4,500,000,000.0 and £5,500,000,000 which includes an unchanged range of U. S. Manufactured volumes sold.

[Alexander Bradley, CFO at First Solar]

The high end of the range, we assume a reduction of GBP 300,000,000 from the removal of 0.7 gigawatts of international Series six volumes sold as well as the lower ASP associated with approximately 0.8 gigawatts of India produced Series seven volume moving from being sold in The U. S. Market back to being sold in the India domestic market. At the lower end, we assume an additional reduction in international volume sold as a function of the reinstatement of reciprocal tariffs. Gross margin is expected to be between 1,960,000,000.00 and £2,470,000,000 or approximately 44%, which includes 1,650,000,000 to £1,700,000,000 of Section 45X tax credits and $95,000,000 to $220,000,000 of ramp and underutilization costs.

[Alexander Bradley, CFO at First Solar]

SG and A expense is expected to total 180,000,000 to $190,000,000 and R and D expense is expected to total $230,000,000 to $250,000,000 SG and A and R and D combined expense is expected to total $410,000,000 to £440,000,000 and total operating expenses, which include 60,000,000 to £70,000,000 of production start up expense, expected to be between $470,000,000 and $510,000,000 Operating income expected to be between GBP 1,450,000,000.00 and GBP 2,000,000,000 implying an operating margin of approximately 35%, that's inclusive of GBP 155,000,000 to GBP $290,000,000 combined ramp and utilization costs, advanced startup expense, 1,650,000,000.00 to £1,700,000,000 of Section 45X credits. This results in a full year 2025 earnings per diluted share guidance range of $12.5 to $17.5 In summary, the upper end of our EPS guidance range is reduced by $2.5 per diluted share, which includes approximately $1 per share of direct tariff cost impact, approximately $1 per share of indirect tariff impact to volume sold in ASPs, approximately $0.50 per share of indirect tariff impact increasing underutilization and logistics costs. The EPS guidance range from high to low of $5 per diluted share, driven by a volume sold impact of approximately $3 per share and incrementally underutilization costs of approximately $2 per share.

[Alexander Bradley, CFO at First Solar]

From an earnings cadence perspective, we anticipate module sales of three to 3.9 gigawatts for the second quarter, '3 '10 million to $350,000,000 in Section 45X credits and expected earnings per diluted share between $2 and $3 Capital expenditures in 2025 expected to range from 1,000,000,000 to £1,500,000,000 including 25,000,000 to £50,000,000 of tariff impact. Our year end 2025 net cash balance is anticipated to be between 400,000,000.0 and 900,000,000.0 As a reminder, our net cash guidance does not account for the sale of our 2025 Section 45X credits, but as in prior years, we will continue to evaluate options and valuations for potential earlier monetization. Turning to slide 11, I'll summarize the key message from today's call. Q1 earnings per diluted share came in below the low end of our guidance range of $1.95 per share, primarily due to a change versus forecast in the mix of U. S.

[Alexander Bradley, CFO at First Solar]

Versus international products sold within the quarter. Our forecast for U. S. Produced volumes sold remains unchanged for the year. The near term, policy uncertainty, especially relating to the newly announced tariff regime, has introduced significant challenges to the year that were not known at the start of the year.

[Alexander Bradley, CFO at First Solar]

We've updated our guidance to reflect a range of universal to reciprocal tariff impacts known as of today. For the full year 2025, we're forecasting earnings per diluted share of $12.5 to $17.5 In the longer term, we remain confident in the long term prospects for both U. S. Solar and energy generation demand broadly and for First Solar specifically through leveraging our unique profile and competitive differentiators, including fully vertically integrated manufacturing, domestic supply chain and manufacturing base and a proprietary CAD cell based semiconductor technology. And with that, we conclude our remarks and open the call for questions. Operator?

[Operator]

Thank you, sir. We'll take the first question from Philip Shen, ROTH Capital Partners.

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Hi, everyone. Thanks for taking my questions. I have a few categories here. First one, on the outlook for bookings. In Q1, you guys, did 600 megawatts since the Q4 call at $0.35 a watt.

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Since the tariffs, what have the conversations been like with customers? Have you been able to do or generate bookings? Or have things slowed down because of the tariffs? Number two, this topic is the recent underperformance of the modules. Can you just share a little bit more about what's going on here?

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

You talked in the prepared remarks about the third party reports on the production line fixes. Can you share a little bit more about the details? And thus far, you've been focused on the Series seven issues. But in our checks, some customers are flagging some underperformance of Series six. So can you help frame the and quantify the Series six issues as well in comparing contrast with Series seven?

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

And then finally, when do you expect customers to start taking more smooth delivery again? Because I recall from the last earnings call, you have a new 200,000,000 to $300,000,000 warehousing expense. And so I was wondering, you know, because you're manufacturing linearly, when do you think that kind of resolves? Do you think it's more '26 and we should expect that to, you know, maybe not resolve in '25? Thanks, guys.

[Mark Widmar, Chief Executive Officer at First Solar]

Okay, Phil. Look, I guess, on the booking side and then the impact since tariffs. Clearly, there's been more momentum and and and customers reaching out. Even some that, you know, we've done some amount of business with in the past, but haven't necessarily, you know, sold meaningful time to them over the last couple of years. You know, again, there's two events that have happened. One is the solar three outcome.

[Mark Widmar, Chief Executive Officer at First Solar]

The other is these, you know, universal tariffs and potential implications that that they're going to have, as well as looking across the horizon, what what what are the reciprocal tariffs look like? And I think everybody's trying to figure out how do they get through this horizon and and try to derisk as much as they can from tariff exposure. So for solar, obviously, given our domestic, capacity is is kind of a partner of choice when it comes to that. So clearly, activity's picked up. I mean, the question we still, you know, have to debate and discuss is what do we think is the appropriate set you know, market ASP for that opportunity?

[Mark Widmar, Chief Executive Officer at First Solar]

And and really, we don't know until we understand to what extent there's any potential impact or changes because of the budget reconciliation on IRA. If if FIAC is implemented and there's less domestic supply, as an example, if if, 45 x is, changed or eliminated, you know, that impacts things. If the PTC ITC has changed or includes a domestic content requirement in order to qualify, it changes. So, you know, we're still in the of a position to be very patient, in that regard. And and and given how strong our bookings have been for our domestic volume, it's not like we have a lot of resiliency either there.

[Mark Widmar, Chief Executive Officer at First Solar]

So to the extent customers are wanting to engage for near term opportunities, it's really difficult to have a meeting of the mind there because it'd be more or less looking at the international production and trying to bring that into The US and then there's a whole damn debate that starts on what are how are we gonna deal with the tariffs and who's taking the risk and everything else. Right? So clearly, strong momentum, but, you know, we're also trying to be very patient because it's not clear yet to what is the pricing dynamic going to look like for domestic modules over the next several years until all the dust settles and there's still a lot that will happen over the next several quarters. As it relates to series seven, comment about the performance, what we said in prepared remarks that, you know, we we have completed as we indicated we would the third party report. Third party report has validated that the root causes were identified appropriately and the appropriate corrective actions have been implemented into our production process effective back last year when we indicated the changes had been made.

[Mark Widmar, Chief Executive Officer at First Solar]

And that information has been, shared with customers who have made inquiries. It's being shared with with, IEs and and banks and others who who need that type of information. You know, as it relates to, you know, we also said in in the prepared remarks that we have reached that we're effectively, you know, in the final documentation of a a settlement agreement with one of, the customers that was impacted by the initial production loss for series seven, and we're in the process of finalizing that agreement with them. There's another customer as well that we're in the final stages of. So that's good news for us.

[Mark Widmar, Chief Executive Officer at First Solar]

We're starting to see the settlement starting to occur and and that that's helpful. Right? Because we wanna get as much of this behind us as quickly as possible. Your comment about around s s seven is still my or s six is my comment. It's the same thing I said last quarter when you when you asked the question.

[Mark Widmar, Chief Executive Officer at First Solar]

We will always stand behind our product to the fullest extent that's required under our warranty, obligation that we mutually agreed to with our customers at the time that we ship the product. It starts with the requirement of sending us the models, and we will test the modules appropriately under the requirements that are consistent with the IEC standards that both parties have agreed to. And to the extent those modules are below warranty thresholds, including measurement error and two other things, then we'll honor the obligation to replace the module. So it's as simple as that. I know you continue to ask this question, but from my standpoint, we will always be there behind our product and our technology.

[Mark Widmar, Chief Executive Officer at First Solar]

And if there are issues that our customers are experiencing in the field, they they full they're fully aware of the requirements and if to the extent they provide the modules, we'll test them appropriately. And if there's a need to remediate, we'll remediate accordingly. As it relates to, you know, customer deliveries and, you know, the cadence and the speed, what I would say is that the it's really also directly associated with uncertainty. And since the the last earnings call, the uncertainty has clearly gotten worse with with the implication at the project level. And and as you know, Phil, the impact on on batteries, in particular, with the tariffs that are most of the cells are coming from battery cells are coming from from China, and the rate of which those tariffs are being applied make those projects potentially, you know, uneconomic.

[Mark Widmar, Chief Executive Officer at First Solar]

So as it relates to our customers having better line of sight and certainty and execution, it's only gotten worse. So I would not expect a meaningful delta in terms of sell through or timing of velocity of of shipments to our customers because of that level of of uncertainty. We'll see how it continues to play out, but that's what's happening right now.

[Operator]

Our next question is Andrew Percoco, Morgan Stanley.

[Andrew Percoco, Analyst at Morgan Stanley]

Thanks so much for taking the question. I wanted to pick up kind of where you left off there. Just a little surprised, I guess, to see the level of volume downside in the guidance this quarter, obviously, understanding that there was going to be some maybe margin headwinds just given your international presence. But the volume piece is, I guess, a little bit surprising here. So just curious, like, can you provide any more details around the conversations you're having with your customers?

[Andrew Percoco, Analyst at Morgan Stanley]

Is it, to your point, mostly because of the battery storage supply chain? Or are there other kind of factors here contributing to that? And I guess as a follow on question is, how much of the remaining volumes that you're delivering this year expected to come from your U. S. Facilities versus international?

[Andrew Percoco, Analyst at Morgan Stanley]

I guess as a way to kind of test the risk there. And then my last question is just around, Alex, you mentioned working capital headwinds in the first half of the year. Have you changed your strategy or thought process around tax credit transfer timing or potential need for third party capital just you know, the uncertain environment that you guys are operating in? Thank you.

[Mark Widmar, Chief Executive Officer at First Solar]

Yeah. I'll take the first one, then I'll let Alex do the, you know, mix of shipments for our guide on international versus domestic. And then, obviously, you can talk about thoughts on working capital headwind strategy associated with that. Let me maybe you wanna step back and and reflect. So what what are we what are we done in terms of our our guide? And and I I would start off with that our guide is very much reflective of realization of tariffs are real and they have consequences. Right? And we're in an environment where we run our factories twenty four seven, three 60 five.

[Mark Widmar, Chief Executive Officer at First Solar]

And I have to be mindful. I'd I you know, and follow basically what has been communicated. Right now, what I'm being told is that there will be a 10% universal tariff in place up until July 9. And at that point in time, the country specific, reciprocal rates would be reestablished. And when you look at the impact of those rates, using Vietnam as an example of 46%, it it becomes uneconomical to ship a product, with a 46% tariff into The US and be able to sell that to an end customer.

[Mark Widmar, Chief Executive Officer at First Solar]

And our contracts with our customers are structured in such a way that the vast majority of them, there is a tariff provision in there, which is largely to protect us from a downside standpoint. Right? It's basically to say we're not wearing that risk, but neither is our customer. And we you know, so we have to negotiate once the impact of the tariffs have been determined. We have to negotiate that rate, in determining if there's an alignment of sharing or who pays for what or if neither party can if if the parties can't agree to a negotiation of sharing that tariff, then the parties have a right to terminate.

[Mark Widmar, Chief Executive Officer at First Solar]

And so we've reflected that in our guide. The high end assumes that the 10% rate is going to carry itself through the end of the year, right, and there is an impact to us. But from a volume standpoint, there's about 700 megawatts that came out of our prior guide. And that was just the open book and build volume that we had. So we had some international volume that we actually were getting pretty good traction on, you know, over the last couple first couple months of of of the year.

[Mark Widmar, Chief Executive Officer at First Solar]

And then the tariffs came in, like, nobody wants to go into that, you know, discussion because nobody knows for certain what the rates are gonna be and what risks they're gonna wear. And neither one of us wanna align to a commitment to that volume knowing that the reciprocal rates go back up for Malaysia and Vietnam that, you know, the product becomes uneconomical. So so we took that volume out of the high end. So that's what happened there. Right?

[Mark Widmar, Chief Executive Officer at First Solar]

The low end of the range assumes that we have the reciprocal excuse me, the universal tariff until July 9, and then the country specific reciprocal rates go up. So once you get into that environment, basically, we're not shipping manufacturing anything in in the second half of the year in Malaysia, Vietnam and selling it into The US. So it's really it's not necessarily a reflection of underlying demand from customers. It's a reflection of the fundamental economics and the headwinds that we would have to deal with. Now having said that, that's our guide.

[Mark Widmar, Chief Executive Officer at First Solar]

We have not engaged yet meaningfully with customers around the impact of tariffs. Some conversations that that I've had with customers at this point in time, for example, in 2026, and I've told them that it's probable with the current proposed reciprocal country specific rates that I will not be manufacturing in Malaysia and Vietnam if those rates were to be imposed. And they're very concerned by that because now they have volumes that they're depending on for next year that they may not have modules that they can build their projects again. So I can't tell you for certainty what the outcome of these tariff conversations are going to be. We've chosen to say, let's let's assume that the fundamental economics, because First Solar is not going to be able to carry a meaningful portion of those tariff rates, you know, which would be called $10.10 cents in in Vietnam and 5 to 6¢ of tariff impact in Malaysia.

[Mark Widmar, Chief Executive Officer at First Solar]

We we just aren't gonna be able to absorb that. It doesn't make fundamentally make sense to do that. Now we could get to a better outcome with our customers. We could also see a better outcome with revised rates on those country specific rates. Don't know.

[Mark Widmar, Chief Executive Officer at First Solar]

That's also why we've chosen to just idle the facilities in the second half of the year to understand what happens with potential change to the current country specific rates. Also, to understand what happens with the provisions underneath the IRA that can be very impactful to how we would view that international volume and potentially bringing it in or potentially doing a finishing line in The US. There's a lot of strategies that we could do once we understand the policy environment and the tariff environment that we're going to be in, but I don't know any of that right now. So our guide is taking the limited information that we have, applying that and it does reflect a meaningful reduction to volume in the low end for sure. Top end, it's relatively small 700 megawatts with the open book and build position that we had. Bottom end, yes, there's a meaningful change just because our view with the reciprocal country specific tariffs, it becomes uneconomical to manufacture in Malaysia, Vietnam and ship into The U. S. I'll let Alex take the other two.

[Alexander Bradley, CFO at First Solar]

Yes. So just on the volume piece, The U. S. Volume or U. S.

[Alexander Bradley, CFO at First Solar]

Manufactured volume sold is unchanged. So that's 9.5 to 9.8 gigawatts, same as it was at the last call. The total India volume sold remains the same, three to about four gigawatts, three to 3.9. What's changed there is the assumption that more of that will now be sold in the India domestic market versus being shipped from India to The U. S.

[Alexander Bradley, CFO at First Solar]

And sold into The U. S. Market. The total volume sold is unchanged. So the big change is around the Southeast Asia production in Malaysia, Vietnam.

[Alexander Bradley, CFO at First Solar]

As Mark said, top end of the range, we're assuming 700 megawatts comes out and that's the book and bill requirement that we had for the year. At the lower end, we're assuming 2.5 gigawatts comes out in total. So an incremental 1.8 on top of that 700. And again, as Mark mentioned, that's really a function of the implication of those tariffs to the cost structure before we've yet engaged with customers around tariff absorption on their behalf. So that's the volume piece.

[Alexander Bradley, CFO at First Solar]

Now on the cash side, so we brought the cash guide down by $300,000,000 at the top and the bottom end. We brought that range of CapEx to be wider. So previously, dollars 1,300,000.0, 1 point 5 million, now 1,000,000 to $1,500,000 This is a reflection of, again, if we are in the lower end scenario of the guidance here, we're going to ratchet back CapEx spend a little bit. The cash numbers are lower than they have been historically. We are managing higher inventory and higher AR balances than I would like at the moment.

[Alexander Bradley, CFO at First Solar]

Those are forecast to reverse out in the second half of the year, again, we continue to sell through in the scenarios we place today and we don't have other shocks to the system such as we saw with the tariff implications. Remember, these are net numbers, gross numbers. On a gross basis, that guide would be 900,000.0 to 1,400,000.0 so $500,000,000 higher. You asked about the credits. We have not sold our twenty twenty five credits.

[Alexander Bradley, CFO at First Solar]

And we said before, we'll continue to engage with the market. If we get a discount that I think is appropriate for the valuation for us, so we can then buy sell those credits, have cash come in quickly, put that cash in the bank, have an interest income on that such that I'm effectively economically neutral to holding those credits and going for refundability, then we will look at potential sales. We've also said before, I think it's a pinhole risk, but in an IRA risk environment, having sold those credits and received cash, even though we would still bear the ultimate risk around any refusal to honor those credits by the IRS, we'll be in a better position with the cash being on our side of the fence versus on the side of the government waiting for a payment to come through. So the credits are still there. We generated $300,000,000 in Q1 and about another 300,000,000 forecast in Q2.

[Alexander Bradley, CFO at First Solar]

That leaves about $1,000,000,000 of credit generation in the second half of the year. And then we also have an untapped revolver. So we've got $1,000,000,000 of revolver capacity. We have used this previously to manage jurisdictional cash. It is easier to move money back from the international regions to The U.

[Alexander Bradley, CFO at First Solar]

S. Than it was prior to the 2017 tax reform, but it still doesn't come without some constraints and costs. So if we need to manage jurisdictional cash, that's something we can draw in the near term as well.

[Operator]

The next question is Kashy Harrison, Piper Sandler.

[Kashy Harrison, Senior Research Analyst at Piper Sandler Companies]

Good afternoon and thank you for taking the questions. So if we find ourselves in a situation where the final tariffs from Malaysia, Vietnam are 30% versus 20% versus 10%. Can you help us think about what you do with those assets? Is there the ability to bring some of that equipment to The U. S.

[Kashy Harrison, Senior Research Analyst at Piper Sandler Companies]

For more U. S. Manufacturing? And then maybe how can we think about the deposits currently are on your balance sheet that relate to the 12 or so gigawatts that you outlined in the prepared remarks? Thank you.

[Mark Widmar, Chief Executive Officer at First Solar]

Alright. I'll let Alex take the positive question. In terms of Akashi, there's there's a lot that we can do with those those assets, and and it's a matter of understanding the environment of which we can optimize against. Right? So look.

[Mark Widmar, Chief Executive Officer at First Solar]

Like I said, there's couple of three key provisions included in the IRA that we're very, you know, obviously interested in and wanting to see what happens with. One is the foreign entity of concern and what what the implications are of that that, could meaningfully adversely impact, the ability of, Chinese owned and controlled companies to operate here in The US, meaningfully, change the domestic supply chain. Right? So that's important. The the other is what happens with the 45 x.

[Mark Widmar, Chief Executive Officer at First Solar]

And is it does it say it's currently envisioned? Does it change? There's lots of ways it could change. It could change to the point of redistributing value to move some of the value of the 17¢ more upstream to minimize the value just on the module assembly, which therefore creates opportunity for a a more robust valuation allocation towards technology. Right?

[Mark Widmar, Chief Executive Officer at First Solar]

You know, the the requirement of a domestic content ITC, PTC, that could change as well. And and what that means, once we know that, we can say, well, how are gonna optimize these assets? Right? And there's one path, as you mentioned, could be bringing them into The US, redeploy them. Maybe a more efficient and and easier to market strategy could be is to do front end processing in Malaysia, Vietnam, and back end finishing in, in The US.

[Mark Widmar, Chief Executive Officer at First Solar]

And therefore, when I'm bringing my module in or my component, at declared value of my component, maybe it's 50% of the value of the module. Therefore, I'm taking the impact of the tariff and and cutting it in half. And and I could put finishing line, for example, on the on the West Coast where I don't have an operation today, And I can bring product into The US more economically because shipping into the West Coast is cheaper than it is shipping to the East Coast, and I don't have a presence here today. Right? And if there's still some value of the 45 x, now I got a 45 x value because I'm doing finishing here in The US as well.

[Mark Widmar, Chief Executive Officer at First Solar]

So there's lots of things that we can do. And also when you when you do a a semi finished product, you actually can reduce your sales rate because you're getting more sheets of glass into a container because you don't have a frame and a junction box and all that kind of stuff. Right? So there's a lot that we can do that can optimize those assets and and obviously the talent of the associates that we have in those facilities. But I don't know the strategy yet until I know what becomes enduring post budget reconciliation.

[Mark Widmar, Chief Executive Officer at First Solar]

So once we know that, we know what game we have to play and we know what levers that we're going to go after. But where we sit today, there's a lot of uncertainty.

[Alexander Bradley, CFO at First Solar]

And Kashy, on the deposit. So we said by year end, we'll have about 12 gigawatts in the backlog that has these tariff provisions that could be theoretically at risk. If you look at that, it's somewhere in the region of $3,000,000,000 of revenue. And if you look at the average deposit we have in the backlog, I think it's $1,900,000,000 against the numbers that we showed is about 10%. So in theory, you've got about $300,000,000 that could be at risk.

[Alexander Bradley, CFO at First Solar]

A couple of things that I was calling on. One is, we've yet to engage with many customers, as Mark mentioned earlier, especially those of projects in the near term. I think many customers are going to want this product. They don't want to cancel. They're trying to work through and find ways to make this tariff situation work for them.

[Alexander Bradley, CFO at First Solar]

The second is although we're near term constrained with domestic product, if the contract further out and we have the ability to supply domestic contract, those can always be flipped over if we wish to do so.

[Operator]

And our next question comes from Brian Lee, Goldman Sachs.

[Brian Lee, Vice President at Goldman Sachs]

Good afternoon. Thanks for taking the questions. I had two a lot's been covered here. But I guess on the guidance, wanted to understand kind of the strategy here. At the high end, Alex, Mark, you mentioned 1.8 gigawatts from Southeast Asia.

[Brian Lee, Vice President at Goldman Sachs]

They're still included even with the 10% universal tariff. So I guess is the approach you're just taking lower margin there for this year? Or are you actually planning to pass some of those costs on and that's why you're keeping it in the high end of the guide? And then just curious as it relates to, I guess, six volumes from Malaysia and Vietnam, if 10% tariffs remain, like, is the plan to adjust contracts? Or is it just going to be a lower margin volume base for you?

[Brian Lee, Vice President at Goldman Sachs]

And then the second question for you, just kind of a follow-up to the earlier question around module finishing capacity. I think you had mentioned, Mark, you're already assuming some volumes for excess finishing capacity in The U. S. Coming from Vietnam and Malaysia. Could you remind us what that is for this year?

[Brian Lee, Vice President at Goldman Sachs]

And then kind of the gating factors policy, but what sort of the timeline and cost to maybe match up finishing capacity in The U. S. With the Southeast Asia capacity, if that's what you ended up deciding to do? Thanks guys.

[Alexander Bradley, CFO at First Solar]

So Brian, on the guidance, so the strategy we've taken is on the high end, we're assuming 10% tariffs. And then right now, the numbers that you're seeing are assuming that those would be all for us in our financials. Now that isn't going to be our approach and strategy with customers. We're going go and have discussions. So we've represented the numbers that way for now until we are going to have those discussions.

[Alexander Bradley, CFO at First Solar]

We do have some inventory that is in The U. S. Prior to the tariff announcements. We have some that was on the water that will come in ahead of the tariff effectiveness given that there's a window to get product in and some that was already made and therefore it is worth bringing in here at the 10% rate versus holding it in Malaysia, Vietnam pending uncertainty in the future. So we will have some products in here.

[Alexander Bradley, CFO at First Solar]

We'll go and have discussions with customers around the tariff implications of that. As it relates to 2026, I think it's too early to say what we would do. As Mark commented, there's a lot of optionality that we have around those plants once we understand what the rest of the policy environment looks like. But right now, there's just too much uncertainty to make a call.

[Mark Widmar, Chief Executive Officer at First Solar]

Yes. And I would say just, Brian, as it relates to the, yeah. We are doing some of it this year. Most of it, two thirds of it has already happened. And so we we don't have a lot yet currently in the second half, but we're evaluating, potentially expanding it depending on how the conversations with customers go.

[Mark Widmar, Chief Executive Officer at First Solar]

And if we get good clarity around the need for the volume, what we would look to, bring more of that into The US as as a semi finished product and then finish it here in The US and then obviously deliver, obviously, better economics. So that's something we're we're we're looking at. But again, we're somewhat constrained in doing that, just because of what capacity we have, but there's still a reasonable amount of volume we can bring in yet, contingent upon demand from customers. In terms of getting that finishing line up and running, it it's somewhat contingent to the having a building. So let's assume we find a building and then for a finishing line, you it's not as challenging or complex of a specification as a as a full length production facility for us.

[Mark Widmar, Chief Executive Officer at First Solar]

And then you gotta obviously move the tools. So you're you're you're probably within, call it, nine to twelve months if everything goes well from the time of making the decision. It's a matter of the timing when you're willing to lean into that decision. And and, you know, it's gonna be contingent upon that reconciliation process of how quickly it gets done. You know, that that's gonna be the the gating factor.

[Mark Widmar, Chief Executive Officer at First Solar]

And, you know, depending on where your scenario is on that, that could be late q three or, you know, into q four.

[Operator]

Everyone, our final question today comes from Julien Dumoulin Smith, JULIEN DUMOULIN SMITH:]

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

Hey, good afternoon. Thank you very much for the time. I appreciate it. Thanks for covering so much. Just following up a little bit on the 12 gigawatts guys.

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

You just relative to the 66 gigawatts of backlog you were talking about, how do you think about the repricing risk on the balance here? I just wanted to kind of go back and make sure that we firmly heard you. With respect to tariff contract reopeners or other change of law considerations here that if you take the sixty six minuteus twelve, if you think about the any other permutations, whether it's tariff, ADCVD or frankly, just changing how you're supplying the mix of U. S. Versus foreign, how you think about, restriking or repricing any of these contracts beyond the 12 gigawatts identified here.

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

And even within the 12 gigawatts, if you can speak a little bit more, if you do the finishing lines, is that a de facto, you know, holding your commitment and contract terms such that they aren't reevaluated? Or is that the 12 gigawatt decision tree here effectively if if is the 12 gigawatts effectively gonna the decision tree on the finishing line effectively gonna be done in partner partnership with your contract your customers?

[Mark Widmar, Chief Executive Officer at First Solar]

Yeah. So as relates to the the remaining, you know, 54 gigawatts or so of of volume, there's no repricing risk on that. That that is either, it's essentially all domestic product for The US. There may be a little bit in there for India, but India mainly falls through as a contract to subject to CP because we don't book it until until we have the security. So if there's any amount of Indian there's de minimis.

[Mark Widmar, Chief Executive Officer at First Solar]

So it's really for all domestic product that will be delivered over the next next several several years, you know, as we increase our capacity up to 14 gigawatts. So so there's no there's no real repricing risk on on the balance. The the 12 gigawatts is it will be a % tied to the conversations that we have with with customers. And and as indicated as the one example, you know, talking with a customer for delivery in in 2026, Yeah. As I told them, I said, look, I as of right now, if these reciprocal tariffs were to be put in place, I will not have product for you.

[Mark Widmar, Chief Executive Officer at First Solar]

And then they immediately, you know, reacted, well, what do I do then? Where you know, and do I do you have domestic supply for me? And the answer is no. I don't. And so and I can't, you know, get quick capacity, you know, that would be able to fold fill that gap other than a finishing line, but I can't make the decision on the finishing line until I have an understanding of what the IRA profile is gonna look like.

[Mark Widmar, Chief Executive Officer at First Solar]

Right? So, what that means is that assuming there's some flexibility to the country specific rates and Vietnam comes down from 46 to some more manageable number, maybe in the the 10 to to 20 range, and then, there's probably gonna be an outcome with a customer on the portion of that volume that would result in a higher ASP and inability and then the requirements to deliver the product. So that's all the stuff that we've gotta work through. And I I don't have answers to it yet, but I also wanna make sure in that, you know, in our discussions with our customers is that I am I am more than willing to take a tough call on this, and that would require us to shut a facility in a in a in a situation where the rates are extremely high. Because I don't wanna walk myself into by keeping that factory open and, you know, now you're you're, you're leveraging against yourself a negotiation.

[Mark Widmar, Chief Executive Officer at First Solar]

And I don't wanna be in that situation. So our position is gonna be what we know of right now. It's it's probable that those factories may not be continue to operate if the reciprocal tariffs go in place. But, you know, we'll know more once we negotiate with customers and how they see it, and we'll know more once we know about the IRA and what what the options we can use to leverage that. But, so a lot of uncertainty as I indicated and, you know, obviously, it's changed significantly from the last earnings call.

[Mark Widmar, Chief Executive Officer at First Solar]

We're trying to be as transparent here with everyone so you guys know what we're thinking about.

[Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group]

Okay?

[Operator]

And everyone

[Mark Widmar, Chief Executive Officer at First Solar]

Go ahead.

[Operator]

Thank thank you, sir. And everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.

Participants

Executives

• Byron Jeffers, VP - Finance, Treasury & IR
• Mark Widmar, Chief Executive Officer
• Alexander Bradley, CFO

Analysts

• Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
• Andrew Percoco, Analyst at Morgan Stanley
• Kashy Harrison, Senior Research Analyst at Piper Sandler Companies
• Brian Lee, Vice President at Goldman Sachs
• Julien Dumoulin-Smith, Research Analyst at Jefferies Financial Group