First Solar beats revenue expectations in Q1 earnings, policy tailwinds emerge

First Solar (Nasdaq: FSLR) reported its earnings for the first quarter ended March 31, 2024, exceeding Wall Street consensus expectations on both revenue and earnings per share. The major manufacturer of thin-film cadmium telluride solar panels largely maintained its full-year 2024 guidance outlook for earnings.

In Q1, 2024, the company delivered revenues of $794.11 million, beating Wall Street consensus estimates by about 10%. It also delivered an 8.68% surprise over earnings per share estimates, landing at $2.20 for the quarter.

First Solar also reiterated its guidance for the full year 2024, expecting $4.4 billion to $4.6 billion in net sales, $2 billion to $2.1 billion in gross margin, and about 15.6 GW to 16.3 GW of volume sold. The company lowered its net cash balance expectations by about $300 million to a range of $600 million to $900 million, and expected capital expenditures increased by $100 million to a range of $1.8 billion to $2.0 billion for the year.

“We are pleased with our start to 2024, with good operating performance, selective bookings with a year-to-date ASP (average selling price) over 31 cents per watt excluding adjusters, and solid financial results,” said Mark Widmar, chief executive officer of First Solar. “Our differentiated technology and balanced business model are enabling us to drive growth, navigate industry volatility and deliver enduring shareholder value.”

Year-to-date bookings for First Solar totaled 2.7 GW, and the company has an expected sales backlog of over 78.3 GW. For context, the entire United States cumulatively to-date has installed roughly 180 GW of solar capacity.

First Solar has multiple tailwinds supporting its growth, including a new antidumping and countervailing duty investigation that is putting pressure on its major competitors that import solar modules. Philip Shen, managing director, Roth Capital Partners said in an industry note that major crystalline silicon Tier 1 suppliers of solar panels have increased their pricing at about $0.05 per watt for AD/CVD tariffs and an additional $0.02 per watt for the removal of tariff exemptions for bifacial module. These conditions leave room for First Solar to increase its average sales price, further boosting margins.

Roth said along with AD/CVD, policy tailwinds such as a Marco Rubio sponsored bill to exempt businesses headquartered in foreign nations from Inflation Reduction Act incentives, the Uyghur Forced Labor Prevention Act (UFLPA), guidance related to foreign entity of concern (FEOC) and manufacturing, the No Gotion Act, and others are all expected to push First Solar’s performance higher.

First Solar’s stock is trading relatively flat in the trading session following earnings, rising about 1.5% at the time of publication.

The company reported in the year’s end 2023 earnings report that it plans to double its manufacturing capacity by 2026, suggesting a powerful growth ramp ahead.