First Solar Q1 earnings drop, while bookings remain strong

First Solar announced financial results for the first quarter that ended March 31, 2022, noting a drop in net sales of $540 million and a loss per share of $0.41.

Net sales for the first quarter were $367 million, and the company attributed the $540 million decrease from the prior quarter to a decrease in volume of modules sold, a decrease in the module average selling price, and lower project revenue in Japan.

The first quarter loss per share was $0.41, compared to earnings per diluted share of $1.23 in the fourth quarter of 2021. On the earnings call, Mark Widmar, CEO of First Solar, noted that the $0.41 loss per share was within their internal expectations, and “is reflective of what is projected to be a challenging 2022 from an earnings standpoint”.

Cash, restricted cash, and marketable securities also saw a drop from $1.8 billion at the end of the prior quarter to $1.6 billion in Q1 2022. The company attributes this decrease to capital expenditures related to expansion in India and Ohio and operating expenses.

“We are encouraged by our strong bookings progress, as we booked 11.9 GW_DC in less than 60 days since the prior earnings call, bringing our year-to-date bookings total to 16.7 GW_DC, further setting ourselves up for 2023 and beyond,” said Widmar. “Our agile approach to contracting continues to attract customers looking for long-term certainty and value.”

Widmar noted that recent bookings are mostly with long-term repeat customers, but that there is a “significant volume” with new customers, which points to their trust in the company, the value of the cadmium telluride technology, and the company’s adherence to “principles of responsible solar but also the risk of pursuing a ‘solar at any cost’ strategy”.

The technology roadmap includes development of bi-facial cadmium telluride technology as well as plans to scale into the residential market–likely with the technology under development in partnership with SunPower.

On the earnings call, Widmar expressed the company’s view of trade policy and the Forced Labor Act, saying that trade and industrial policy decisions “play a role in impacting market dynamics”.  He pointed out that First Solar was the first US solar manufacturer to join the Responsible Business Alliance, which he said offers the leading standard, adding that “the transition to sustainable energy future must not come at the price of human rights”.

As for the petition by Auxin, Widmar highlighted the company’s stance. He said that First Solar sees the anti-circumvention inquiry as a positive step toward addressing the issue of modules being completed in Southeast Asia in an attempt to avoid tariffs. “For too long the American solar manufacturing industry has been under siege from Chinese headquartered and subsidize companies that have been violating the rules of free and fair trade.”

We’ve heard the ‘sky is falling’ narrative pushed by lobbyists advocating for China to have free reign in the US market. Their doom and gloom is telling. It suggests that they are afraid that the Dept of Commerce will find that the Chinese solar manufacturers in fact engaged in circumvention and will hold them accountable for their unfair and unlawful trade practices. While the lobbyists characterize Auxin as a single company seeking to inappropriately exploit the law it is precisely cases like this that the laws are designed for.

Widmar called for a “combination of durable industrial policy, smart trade policy and enforcement of the rule of law in order to build back American solar manufacturing and innovation”.