First Solar Q2 2026 Earnings Report

First Solar EPS Results

• Actual EPS: $3.92
• Consensus EPS: $2.90
• Beat/Miss: Beat by +$1.02
• One Year Ago EPS: $3.18

First Solar Revenue Results

• Actual Revenue: $1.06 billion
• Expected Revenue: $1.06 billion
• Beat/Miss: Missed by -$6.51 million
• YoY Revenue Growth: -3.40%

First Solar Announcement Details

• Quarter: Q2 2026
• Date: 7/30/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 4:30PM ET

First Solar (NASDAQ:FSLR) (NASDAQ: FSLR) is a United States–based solar technology company best known for designing and manufacturing thin‑film photovoltaic (PV) modules that use cadmium telluride (CdTe) semiconductor technology. The company supplies PV modules and delivers integrated solar power solutions for utility‑scale projects, positioning itself as a provider of both components and complete solar energy systems rather than solely a parts supplier. First Solar was founded in 1999 and is headquartered in Tempe, Arizona.

Beyond module manufacturing, First Solar offers a range of project services including development support, engineering, procurement and construction (EPC) services, and operations and maintenance (O&M) for large-scale solar installations. The company emphasizes lifecycle management for its products, including a take‑back and recycling program for end‑of‑life CdTe modules intended to recover materials and limit environmental impact. First Solar’s business model combines manufacturing scale with downstream project capabilities to participate across the solar value chain.

First Solar serves customers and project developers globally, participating in utility‑scale solar markets across North America, Europe, and other regions where large PV installations are deployed. Its integrated approach targets power producers, independent developers and institutional customers seeking turnkey solar solutions. The company has positioned itself around large-scale deployments and industrialized manufacturing to pursue cost reductions and project delivery at scale while stressing environmental stewardship through recycling and product lifecycle initiatives.

First Solar Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record quarterly performance: First Solar reported more than $1 billion in Q2 sales, approximately 57% gross margin, $423 million in net income, and $644 million in adjusted EBITDA, while cumulative module sales surpassed 100 gigawatts.
• Positive Sentiment: Contracted backlog stood at 45.1 gigawatts worth $13.6 billion, with deliveries extending through 2030; the company also added approximately 1.9 gigawatts of U.S. bookings at about $0.36 per watt and cited strong demand from hyperscaler-related projects.
• Positive Sentiment: First Solar reaffirmed its full-year 2026 guidance and said its South Carolina finishing facility remains on track to begin production in the second half of 2026. CuRe technology is outperforming expectations, with its broader deployment expected to support efficiency, customer value, and margins.
• Negative Sentiment: Trade-policy uncertainty remains a key risk. The company is awaiting decisions on the Section 232 polysilicon and derivatives investigation, FEOC rules, and other tariffs before determining the long-term use of approximately 1.8 gigawatts of Southeast Asian capacity, which is currently generating about $30 million per quarter in underutilization costs.
• Negative Sentiment: First Solar continues to face elevated input and logistics costs, including domestic freight that can approach international shipping economics; management described the commodity-cost environment as challenging despite ongoing efforts to improve throughput, automation, and product efficiency.

Presentation

[Operator]

Good afternoon, welcome to First Solar's second quarter 2026 earnings conference call. This call is being webcast live on the Investors section of firstsolar.com. All participants are in a listen-only mode. 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.

[Byron Jeffers, Head of Investor Relations at First Solar]

Good afternoon, thank you for joining First Solar's second quarter 2026 earnings call. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer. Mark will begin with second quarter highlights, followed by Alex. We'll open the line for questions. Today's discussion contains forward-looking statements. Actual results may differ materially due to risks and uncertainties as described in our earnings press release and other SEC filings and the earnings material available at investor.firstsolar.com. We undertake no obligation to update these statements due to new information or future events. We will also reference certain Non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are in our earnings press release and presentation. This Non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP.

[Byron Jeffers, Head of Investor Relations at First Solar]

With that, I will turn it over to Mark.

[Mark Widmar, CEO at First Solar]

Thank you, good afternoon. Beginning on slide four, we delivered both record second quarter and first-half sales volume and improved financial performance relative to the prior year. During the quarter, we generated over $1 billion in net sales, expanded gross margin to approximately 57%, and delivered strong adjusted EBITDA performance. We also surpassed an important milestone for First Solar, exceeding 100 GW of cumulative module sales globally. We view this as a reflection of the trust customers have placed in First Solar over the more than two and a half decades, and the durability of our technology and manufacturing platform. We entered the quarter with approximately 45.1 MW of contract backlog. With deliveries extending through the end of the decade, demonstrating the demand for our differentiated technology platform, domestic manufacturing footprint, and delivery certainty.

[Mark Widmar, CEO at First Solar]

Turning to manufacturing, our U.S. facilities continued to operate at high utilization rates during the quarter. In South Carolina, the phase I of the finishing facility remains on track to begin production in the second half of 2026, with equipment installations progressing as expected. For the phase II, we now expect completion in mid-2027. While the revised timing reflects a number of factors associated with optimizing the facility's launch, it also enables the earlier incorporation of CuRe technology. We are pleased with the performance of CuRe, with both high-volume manufacturing at our Perrysburg facility and performance data from field deployments across multiple climates exceeding expectations. We believe incorporating the technology closer to the onset of the facility's commercial launch will simplify execution, accelerate value realization, and enhance customer value and the facility's long-term financial performance.

[Mark Widmar, CEO at First Solar]

Once completed, the South Carolina facility is expected to provide up to 3.5 MW of finishing capacity for modules initiated at our international manufacturing sites, giving us greater flexibility to optimize our supply chain flexibility while also optimizing freight, tariff, domestic content, and Section 45X economics. With respect to our international manufacturing fleet, production planning and utilization levels in Malaysia and Vietnam continued to be influenced by U.S. market demand drivers and economics, including the pending Section 232 polysilicon and derivative investigation and tariffs. We expect greater policy clarity will help inform the long-term operating profile for the approximately 1.8 MW of fully finished international capacity that remains available after accounting for capacity being used to produce semi-finished product destined for our new South Carolina finishing line. A note on manufacturing optimization and allocation. Approximately 41 MW of our 45-GW backlog includes some form of domestic content requirement.

[Mark Widmar, CEO at First Solar]

These requirements vary significantly and range from requiring exclusive supply from U.S. fully integrated factories to blending U.S.-made supply with both fully integrated domestic factories as well as product from our upcoming South Carolina finishing line to a domestic content points requirement, which is factory-agnostic, allowing blending of product from across our global fleet. We therefore continually balance and refine our module supply and demand allocation across the fleet to meet customer contractual obligations, optimize factory throughput, and optimize gross margin. This typically means that over a period of time, we will seek to maximize production and sales firstly from our fully integrated U.S. factories. Secondly, from our South Carolina finishing line, and thirdly, from our international facilities. As it relates to perovskites, we continue to advance our development program for this potentially significant technology platform.

[Mark Widmar, CEO at First Solar]

Our previously announced development line continues to progress to process improved efficiency and reliability attributes on smaller form factor modules, while our Series 6 form factor pilot line remains on schedule and is expected to reach operational readiness in the first half of 2027. Our continued progress has given us confidence as we continue to invest substantial capital in our efforts to realize the commercialization of perovskites. Earlier today, we published our latest corporate responsibility report, reinforcing our conviction that how and where solar technology is made matters. The report details how we create enduring value by developing, sourcing, manufacturing, and recycling solar modules domestically, supporting jobs and communities, strengthening industrial capacity, and help ensure the benefits are realized locally. It also highlights our continued focus on responsible manufacturing, supply chain transparency, workforce development, and resource efficiency.

[Mark Widmar, CEO at First Solar]

The report reflects the effectiveness of a business model where corporate responsibility isn't a construct, but the default. Before turning the call over to Alex, I want to briefly address the market and policy environment and how it is informing our commercial approach. The underlying drivers for utility-scale solar remain intact, including load growth, data center development, electrification, aging generation assets, and the need for affordable, scalable new capacity. The policy landscape continues to evolve, particularly as it relates to pending outcome for the Section 232 polysilicon and derivatives investigation, as well as final FEOC regulations. In this environment, we continue to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term booking volume. Relative to the beginning of the year, we are seeing increased customer engagement, and as policy clarity improves, we believe First Solar remains well-positioned to capitalize on these opportunities.

[Mark Widmar, CEO at First Solar]

With that, I'll now turn the call over to Alex to discuss our bookings, financial results, and outlook.

[Alex Bradley, CFO at First Solar]

Thanks, Mark. Beginning on slide five, as of June 30th, 2026, our contracted backlog totals 45.1 GW, with an aggregate transaction value of $13.6 billion, exclusive of technology adjusters, with scheduled deliveries extending through 2030. Early this month, Cypress Creek Energy broke ground on the Steel River Energy Center in Arkansas, a project utilizing First Solar modules and previously included in our contracted backlog. The initial phase is expected to provide approximately 1.6 GW of solar generation capacity and 1.9 GW hours of battery storage to support Google's growing energy needs, with the opportunity for future expansion. Since our last earnings call, we've recorded approximately 1.9 GW of additional U.S. gross bookings at an average selling price of approximately $0.36 per watt, inclusive of applicable technology adjusters.

[Alex Bradley, CFO at First Solar]

While near-term customer activity continues to be influenced by the current policy environment discussed by Mark, our fully integrated domestic manufacturing fleet remains substantially committed through 2028, providing a high degree of volume and pricing visibility. Given the limited amount of uncommitted domestic capacity available over the next several years, we continue to be disciplined in evaluating incremental contracting opportunities. We also initiated our first customer notifications related to contractual Q.O.R adjusters during the quarter, an important milestone in beginning to translate Q.O.R's performance benefits from potential ASP adjusters into backlog value and future revenue realization. We expect the contribution from these adjusters to increase as Q.O.R deployment expands across our contracted portfolio. As a reminder, we expect limited ASP upside from Q.O.R sales in 2026, largely as a function of contractual notification deadlines relative to the timing of decision to recommence Q.O.R production.

[Alex Bradley, CFO at First Solar]

Turning to India, our guidance continues to assume production is largely sold domestically in a short cycle book-and-bill market, with the factory operating at a high utilization rate. India gross bookings during the first half of the year totaled approximately 1.1 GW, an average selling price of approximately $0.20 per watt. Given the shorter contracting cycle of the domestic India market, booking economics generally provide a reasonable indicator of near-term revenue realization, subject to normal foreign currency movements. Turning to slide six. Net sales for the second quarter were approximately $1.06 billion, a decrease of approximately 4% year-over-year. Decrease is primarily driven by lower revenue associated with customer contract terminations recognized in the prior year period, partially offset by higher module volume sold. Gross margin was approximately 57%, an increase of approximately 12 percentage points compared to the second quarter of 2025.

[Alex Bradley, CFO at First Solar]

The increase was primarily driven by an estimated $89 million net IEEPA tariff related benefit, a higher mix of modules qualifying for Section 45X tax credits, and lower logistics costs. The net IEEPA tariff related benefit reflects our current estimate of expected recoveries related to commercial obligations and other tariff related considerations and remains subject to refinement as additional information becomes available. These benefits were partially offset by lower termination-related revenue and higher duties and tariffs. While logistics costs improved year-over-year, the quarter included higher over-the-road freight costs driven by overall capacity tightening and volatility in diesel costs. These impacts were partially offset by higher sales rate recovery. Operating expenses were approximately $155 million, including $76 million of R&D expense.

[Alex Bradley, CFO at First Solar]

R&D increased year-over-year, primarily affecting continued investment in perovskite development and the impairment of certain R&D equipment that is no longer expected to be used as part of our technology roadmap. Net income was $423 million, up approximately 24% year-over-year. Adjusted EBITDA was $644 million, above the high end of our previously communicated Q2 preview range, with an adjusted EBITDA margin of 61%. Moving to slide seven. We ended the quarter with approximately $1.7 billion of net cash, providing substantial balance sheet strength and financial flexibility while remaining within our targeted long-term cash range of $1.5 billion-$2 billion. Operating cash outflows year-to-date were $360 million, reflecting first half working capital dynamics, and improved compared to outflows of $458 million during the first half of 2025. First half capital expenditures were $280 million, primarily supporting our South Carolina finishing facility and technology investments.

[Alex Bradley, CFO at First Solar]

We completed the full prepayment of our India DFC loan during the quarter. Turning to slide eight. Our full-year 2026 guidance remains unchanged. With that said, our guidance now assumes a net tariff impact of $60 million-$80 million, with updates including the previously mentioned net IEEPA recovery and the assumption of Section 301 tariffs in the second half of the year. We also forecast offsetting updates between production startup expense and R&D expense, as well as incremental freight costs due to certain non-recoverable domestic trade expenses above our previously assumed forecast, largely driven by changes in module delivery locations. Note, in some cases, domestic freight costs are now approaching international shipping economics. For the third quarter, we expect volumes sold between 3.9 GW-4.5 GW, and adjusted EBITDA between $625 million-$775 million.

[Alex Bradley, CFO at First Solar]

In summary, our first half performance and reaffirmed outlook reflect the strength of our strategy of reshoring and scaling domestic manufacturing, progressing our technology roadmap, and maintaining a selective approach to new bookings in light of key pending trade and policy determinations. As we look ahead, our priorities remain unchanged. We remain focused on disciplined execution, serving our customers, advancing our technology roadmap, managing capital prudently, and maintaining financial flexibility. With that, operator, please open the line for questions.

[Operator]

We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jon Windham with UBS. Jon, your line is now open. Please go ahead.

[Jon Windham, Head of Alternative Energy & Environmental Services Equity Research at UBS]

Perfect. Thanks. Hey, congratulations on the result, appreciate you taking the questions. Obviously, the FCC had a ruling about solar inverters a couple of days ago. I think on one side, it goes along to show how serious the government is in promoting domestic content within, especially electrical equipment hardware, which is obviously very good for you given your position in domestic solar modules. Just curious if you have any early thoughts on potential impact on broader solar installations and the ability of the industry to work around that provision. Thank you so much.

[Mark Widmar, CEO at First Solar]

Yeah. Thanks, Jon. Look, I think it continues the theme of our U.S. government trying to ensure that we don't have any overreliance on adversarial countries, and obviously China being one of them in particular. I think the good thing about this is that the industry has started to get ahead of trying to find domestic supply chains, comprehensive domestic supply chains. We obviously were an early industry leader in that regard of reshoring manufacturing and creating a supply chain here in the U.S. for our U.S. operations. You're seeing this now really across all components of equipment suppliers, all the way up even to trying to find localizations for the battery supply chain as much as you can. I don't see it being a constraint near term.

[Mark Widmar, CEO at First Solar]

I think the current models that have been shipping into the U.S. will continue to be allowed to be shipped into the U.S. I do think there is a theme or a message there, though, that that scrutiny may be stepped up as we move forward. I think it just sends another great signal to domestic manufacturers of, look, we need to move forward. We need to create domestic supply chains resiliency to enable not only the solar industry to thrive, but really all of the industries, that as we reindustrialize the U.S. economy, right? Again, I think it's a good indicator of a continued theme and message that this administration has, and we fully support it.

[Operator]

Your next question comes from the line of Brian Lee with Goldman Sachs & Co. Brian, your line is now open. Please go ahead.

[Brian Lee, Analyst at Goldman Sachs & Co]

Hey, guys. Thanks for taking the questions. I guess first, on this Google Steel River project, appreciate you guys commenting on that. I might have missed it, but how much of the 1.9 GW in U.S. gross bookings came from that one project in the quarter? How much more bookings potential exists on that project site? Your bigger picture, maybe speak to how you're seeing general interest from that hyperscaler data center community. Second question I have is just the customary latest thoughts, timing, visibility into Section 232, how you're viewing the potential for floor prices in the $0.40 per watt or higher range. How quickly do you move on your booking funnel and Southeast Asia strategy once you get clarity on this, presumably, hopefully, in the next few months? Thanks, guys.

[Mark Widmar, CEO at First Solar]

All right, Brian, I will try to take kind of the first two, and Alex will talk maybe a little bit about the views of Southeast Asia. Just to make sure it is clear, on the project that we announced with our partner, that we supplied modules to for Cypress Creek, that is already in our bookings. That was just to highlight. It is a great project. If you actually look at some of the more recent announcements that have been made over the last several weeks, I think you kind of see a theme there. You have a very large project with Cypress, the one that we referenced that it will be phase one of kind of call it the 1.6 GW. Then it goes to phase two, which will be about two and a half gigs.

[Mark Widmar, CEO at First Solar]

That is a very large project, and I think the battery component of that as well is going to be north of 2 GW of megawatt hours from a battery standpoint. Really important strategic project. It is there to support Google. We have two other projects that have been announced over the last couple of weeks. One with Terra-Gen, which was about 1.4 GW. Then we had another one with Panamint, which was another gig plus. Those three projects that have been announced recently are about five gigawatts of capacity. The Panamint part of the Panamint volume was actually announced last quarter. When we did the announcements last quarter around bookings volumes, which I think we had in totals around 1.4, Panamint was actually included in that volume. I think it is a great message that the demand is there.

[Mark Widmar, CEO at First Solar]

Half of that volume of that 5 GW I referenced is directly communicated and tied to Google as a hyperscaler. The other two and a half gigs, they have not disclosed the counterparties, if you look at the verbiage around the announcements on that, they will reference a very large corporate account, one of the largest companies in the U.S. You can kind of get a sense of the likelihood of who that counterparty is going to be for that project. Strong demand for continued demand for hyperscalers. Really strong relationships and partnerships with First Solar to support those types of strategic projects that really kind of thrive on the importance of certainty. Right? Those projects are strategic. They are important. They obviously include storage as reflected in the Cypress Creek project.

[Mark Widmar, CEO at First Solar]

As I have always said, the first thing you need to do as you are building out your project to de-risking is that you need to make sure that you have a reliable partner who can make sure those photons become electrons. Without that, the whole project is going to be sit at risk, and we can deliver that certainty and that great technology and that reliability. We are seeing that in the marketplace and continued strong interest driven by, as currently still, somewhat insatiable demand from hyperscalers. As it relates to 232, I will take the pricing piece and then Alex can talk to kind of how we thread that into our views around Southeast Asia. Look, there is still a lot of views out there. I think everybody has a view of how the construct may be with minimum import price and maybe with a tariff on top of that.

[Mark Widmar, CEO at First Solar]

There's some views of whether there's quotas or not. All I can say is it's still evolving, and we do believe it'll be constructive. I don't want to give kind of our internal read of what we think it potentially could be, because there's still a lot of moving pieces. I can say that we're still in constant contact with the appropriate parties at USTR and Commerce to continue to bring our voice into the conversation. We're still optimistic that the outcome will be constructive. We've used it as a reason to be disciplined, and we'll see what happens once it's finally announced. There's demand that's still sitting there on the sidelines. If you look at our cadence and our momentum around our bookings, just here in the month of July, we booked almost 2 GW in the U.S. at very good prices, as Alex indicated.

[Mark Widmar, CEO at First Solar]

There's about 2 more GW, north of 2 GW, that's subject to CP. Then I've got another 2 GW of active conversations with customers that there's a high probability we can close through by the end of the year. We'll see how much that gets further catalyzed by a decision around 232.

[Alex Bradley, CFO at First Solar]

Brian, as it relates to Southeast Asia capacity, we talked on the last couple of calls around looking at this a bit like an option. We're running somewhere around $30 million quarter of underutilization. Say we're running Southeast Asia manufacturing well below its theoretical capacity. About half of that's cash, about half non-cash. Given that we've been holding through the first half of the year, making a decision on the long-term future there pending the outcome of the 232, it makes sense to continue to do that. I'd still view this as we're waiting for the outcome of that policy. Just to frame the amount, if you were to go back and look at the slides we put out in our February call, it shows you nameplate capacity of production.

[Alex Bradley, CFO at First Solar]

We originally had about 7 GW of total capacity sitting in Malaysia and Vietnam, about half of that is going to be dedicated to production that will feed our new finishing line in South Carolina. There's about 3.5 GW left of that. We did take out some tools, bring them over to the U.S. to reuse in our broad scope work. Ultimately, it leaves us with about 1.8 GW of end-to-end, fully finished capacity that we could ramp up across Malaysia and Vietnam. It's about that 1.8 that we're talking about. We're holding a decision on pending the outcome of the 232.

[Operator]

Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is now open. Please go ahead.

[Praneeth Satish, Analyst at Wells Fargo]

Thanks. Good evening. Maybe just going back to Section 232, obviously, there's a lot in play and I recognize that. We've heard, and you mentioned the potential for waivers or quotas being allowed for certain domestic cell producers that could exempt them from some of these policy changes. I guess I'm just curious conceptually, from your perspective, if some of these waivers are granted, do you think that could mute some of the price upside from Section 232? Or do you still see a constructive supply-demand setup? Just trying to think conceptually how you think about that.

[Mark Widmar, CEO at First Solar]

Obviously, any modifications versus 100% restriction will create some potential dilutive impact to the strategic intent of the 232. It also depends on if there is a waiver of some type or a quota of some type, how big is it, and does it scale down over time? Is it something that is implemented initially and then we'll walk down to maybe complete elimination of it? It's hard to give you a great insight to the impact. Clearly, we're advocating to try to minimize any of those impacts, and as well as they should only be a limited duration to the extent that they're enabled or allowed at all. We really want to create a domestic supply chain, and any type of workarounds that you get will disincentivize the investments that need to be made here in the U.S. to scale up those capabilities.

[Mark Widmar, CEO at First Solar]

I think it's much easier for people to understand the policy environment with certainty versus creating uncertainty by waivers or quotas and those types of things that they can create. We'll have to wait and see. We're firm in our positions that we don't believe that they should be allowed, we'll have to see how the final outcome is.

[Alex Bradley, CFO at First Solar]

There's some history here, too. If you look back at the Section 201 tariffs, and the exemption was put in place by bifacial technology, it was clear that that exemption effectively gutted that provision. I think the administration has seen how those exemptions can effectively undermine what they're trying to do. If there's a belief that the 232 provides a need around the national security interest, it doesn't make a lot of sense to have a carve-out or a quota piece associated with a national security interest provision.

[Praneeth Satish, Analyst at Wells Fargo]

Got it. That makes sense. If we say that Section 232 goes through, you get some kind of reasonable outcome, a positive outcome. You kind of mentioned that there's four megawatts, it sounds like four megawatts plus of pending deals for the second half. Do you get the sense that there's more demand sitting on the sidelines that's waiting for policy clarity, and once we get clarity, you could see that number move up significantly higher? Just a point of clarification, I guess, again, if Section 232 goes through, you get a good outcome. On the Southeast Asia capacity, would you bring that volume into the U.S. as finished products, or would it come through as unfinished and you would expand your U.S. finishing line?

[Mark Widmar, CEO at First Solar]

I guess on the 232, and I'll let Alex take the other question around how we think through Southeast Asia and whether it comes in as finished or partially finished, or do we expand capacity for finishing here in the U.S. I'll let Alex take that one. There clearly are customers that are sitting on the sidelines. There is absolutely no doubt about that. Even some of the stuff subject to CP is somewhat tethered to posting of security. One of the challenges that, especially as you get longer dated in terms of contracting some of this volume, and we are really trying to enforce having cash liquid security against new bookings. That's been a priority of ours. In some cases, some of the counterparties can't post the required security now.

[Mark Widmar, CEO at First Solar]

They're working towards having that available. To the extent that the security is posted then, it kind of closes out on some of the CPs. That's a piece of it. There's clearly people sitting on the sidelines waiting to see what happens. We have a couple of counterparties that are hedging their weight. They know that the risk is that ASPs may go up. At this point in time, they're trying to wait and see how it plays out. Again, just the conversation last time, are there quotas or not? What are the options they have and so forth. That's all being in the mix right now.

[Mark Widmar, CEO at First Solar]

As we've always said, the best thing for this industry is we just have clarity and certainty and 232, we just really need a decision on that because we can all understand how we move forward.

[Alex Bradley, CFO at First Solar]

As it relates to what we could do with the Southeast Asia facilities, we could bring fully finished product in subject to demand and pricing in the U.S. It's not only a function of where the 232 sits, it's also a function of where other tariff provisions sit. Right now we have a Section 301 that's just gone into effect, replacing the Section 122 tariffs that were in effect for the first half of this year. Those relate to forced labor. There is still risk around a 301 relating to excess capacity, that investigation is ongoing. Pending the outcome of that, obviously, will determine what the total tariff impact could be to product coming in from Malaysia, Vietnam. We could bring some of it in as semi-finished whip share product and finish it in our existing U.S. facilities.

[Alex Bradley, CFO at First Solar]

There's a limited amount, probably in the couple of hundred megawatt range of incremental capacity at our finishing lines across existing fleet in Ohio. We could do a little bit of that, but it's not effective to run Malaysia at low throughput, as you're seeing with the underutilization costs we're having this year. Really what we're looking for is an ability to run that factory at close to full capacity. Either it's selling fully finished international product, subject to where tariffs end up, or there is the potential to build another finishing line in the U.S. That's subject, again, to finding available site with power and the time it would take to build that out. I think that's less likely, but it is still an option.

[Operator]

Your next question comes from the line of Julien Dumoulin-Smith with Jefferies LLC. Julien, your line is now open. Please go ahead.

[Julien Dumoulin-Smith, Analyst at Jefferies LLC]

Thank you, operator. Good afternoon, team. Appreciate the opportunity. Quickly, actually, to follow up on that last line of thinking on bookings, how do you think about the safe harbor having played into the latest quarter here, obviously July 4th being a relevant threshold? Also, again, that being a leading indicator for future sales into the later part of the decade, how are you thinking about that? Obviously, that's a big part of your open book. What are you thinking in terms of having safe harbor to acquire your initial customer conversations? As a follow-up on what you were just alluding to there, can you elaborate a little bit more around the permutations and the timeline for that remaining piece in Southeast Asia?

[Julien Dumoulin-Smith, Analyst at Jefferies LLC]

I know it's a little bit of just an extension of the logic you were just delineating there, but can you expand a little bit on the timeline? It sounds like it's not that far off that you'll make a decision. Let me put it more bluntly.

[Alex Bradley, CFO at First Solar]

Maybe I'll just take that one. On the Southeast Asia, we're really waiting for the outcome of the 232. We would expect to evaluate that and have a view shortly thereafter. It doesn't necessarily mean that we will have an immediate action plan that relates to, say, a shutdown or a full capacity. Once we have a sense of where the policy is, that'll allow us to evaluate it. It will take a little bit of time, though. We want to make sure whatever policy comes through, we understand it, and our customers also have a chance to evaluate it. We can have discussions around whether there's a view of long-term offtake potential from those facilities.

[Mark Widmar, CEO at First Solar]

Yeah, I just want to make sure a couple of things. The bookings that we're reporting, most of the bookings that we reported in 1.9 in U.S. volume, I think almost all of that was outside of the quarter close. Most of that happened in July, which would also have been outside of the safe harbor date. Most everyone has safe harbored with transformers. There's really no safe harbor. I know there was a, I don't know, it was maybe 10 days left in the quarter where there was a ruling that was made that the decision that came out in August of the prior year where it said that you eliminated the ability to use modular 5% CapEx rule to safe harbor. There was a ruling by one of the courts that came out, I think, I don't know, somewhere like June 20th.

[Mark Widmar, CEO at First Solar]

There was hardly any time left in the quarter. That theory you could use, assuming that that wasn't challenged, the theory you could use modules to potentially safe harbor projects. But that was really not an opportunity. It just happened way too late. Most people had already safe harbored with the inverters or transformers, excuse me, anyways. But as you go forward, it is an important component, especially for anything that was safe harbored. If you safe harbored the first half of this year with ability to COD out into 2030, there are stricter requirements from a FEOC standpoint at the project level that have to be met that I think positions us well to serve that demand as you get out into '29 and '30 for when those projects most likely could be commissioned.

[Mark Widmar, CEO at First Solar]

The other thing I would say is we are seeing, there's a lot of rigid interpretations a little bit. There are some people that are interpreting that even if something was safe harbored, let's say in the second half of 2025, that if you do anything with a change order or assuming it was something from a MSA to a PAPO or until a PAPO, First Solar, excuse me, is actually generated, you have to always be mindful of is there a restriction that you could have to comply with from a foreign entity perspective. So there's a lot of very conservative, which is right. People want to be airtight and not taking any risk to jeopardize their either ITC or PTC. I think there's a view towards maybe being overly conservative, advice they're getting from tax counsel and others.

[Mark Widmar, CEO at First Solar]

I think that's, if I was in their situation, I clearly would do that as well. I don't want to put anything at risk. So there's that safe harbor and those requirements under 40AD as it relates to FEOC's restrictions or requirements, I think will continue to play well for us as we look to book out through the end of this decade.

[Operator]

Your next question comes from the line of Philip Shen with ROTH Capital Partners. Phil, your line is now open. Please go ahead.

[Philip Shen, Analyst at ROTH Capital Partners]

Hey, guys. Thanks for taking my questions. Just wanted to follow up on the 232, specifically on timing. We've been thinking it's August, but we've seen a bunch of delays. The issue is, if it slips past August, then we go into September, and then that gets closer to the midterms, then there's a chance that decision could push on that. Are they still August? want to contact who's inside commerce CR has shared that from an authorization standpoint-

[Mark Widmar, CEO at First Solar]

Phil, we're really having a hard time.

[Philip Shen, Analyst at ROTH Capital Partners]

Two minutes.

[Mark Widmar, CEO at First Solar]

We're having a real hard time. You're breaking up.

[Philip Shen, Analyst at ROTH Capital Partners]

How is it? Is this better?

[Mark Widmar, CEO at First Solar]

Try it again, because it was really hard to get that.

[Philip Shen, Analyst at ROTH Capital Partners]

Mark?

[Mark Widmar, CEO at First Solar]

Yes.

[Philip Shen, Analyst at ROTH Capital Partners]

Okay.

[Mark Widmar, CEO at First Solar]

Yeah, I got it.

[Philip Shen, Analyst at ROTH Capital Partners]

Talking about the three, two is all much better. Okay. Anyway, we've been thinking it's August, but there's a stat the 232 come out in September or beyond. [unintelligible], I have the policy 232 front and center. What's your view, based on the folks that you guys are in touch with, that this should be August? Do you think there's a greater probability that this could slip into the fall, or even beyond? Thanks.

[Mark Widmar, CEO at First Solar]

Philip, I think I got your question. Look I know there's a lot that's in the mix and what the administration's trying to evaluate when this is implemented, and we also want to make sure they do, and what is implemented achieves the strategic intent and the spirit of what it was set out to do. We are patient. We continue to be engaged. We are anxious as well as you are and others. As I indicated, the industry really needs the certainty of understanding. I can't give you any level of conviction, maybe more than what you have right now. We are still getting signal that decisions will be made. There are meetings that are being had that would indicate they're close to making a decision. We also want to make sure that this is done right.

[Mark Widmar, CEO at First Solar]

To give you some sense of my level of confidence in August or whether it waits till September, I can't really give you a strong view on that. I can just tell you we want this to be implemented with the achieving the strategic intent and spirit of what it was set out to do. That's the most important thing, and we're going to continue to be engaged with the administration to ensure that that happens.

[Operator]

Your next question comes from the line of Colin Rusch with Oppenheimer & Co. Your line is now open. Please go ahead.

[Colin Rusch, Analyst at Oppenheimer & Co]

Thanks so much. Guys, are there opportunities for you to reduce input costs on the U.S. manufacturing? Can you talk a little bit about the supply chain and how that's evolving? I know you'd had some discussions with glass makers around a capacity expansion and the capital needs that they have, just curious about how you might be able to look at that trend on a multi-year basis.

[Mark Widmar, CEO at First Solar]

Yeah. Colin, it's challenging. We're still in this. Especially in the U.S., as you see more reshoring, pressure on commodities, the data centers are being built out, everything, obviously, as you would expect, steel, aluminum, copper. We don't use silver, but obviously our competitors do. There's just a lot of pressure. You can look at fuel costs, and you can look at what's happened in the Middle East. I see that as more of a transitory nature. In theory, once that's resolved, I think we'll have seen much more competitive fuel prices and what have you. The electricity prices, at some of the locations in which we operate, we're dealing with some of those same adverse impacts that others are. We're in a pretty challenging rising commodity cost environment. Now, are we able to do things like drive more throughput through our operations? Absolutely.

[Mark Widmar, CEO at First Solar]

We're focusing on continuing to do that. Are we finding ways to create further automation and capabilities that can reduce labor costs? There's levers that we're focused on, and there's some redesign of the product that we're looking at on trying to take costs out of the back rails of the frame. We continue to look at glass and thickness and other things that we could do from that standpoint. It's a pretty challenging environment from a commodity cost standpoint. Our ability to get a lot of profit, I think, is probably one of the most challenging times that we've been in. Now, I will say that when you look at it on a cost per watt, not necessarily a cost per module, the great thing about CuRe is that we have the opportunity to drive the efficiency up.

[Mark Widmar, CEO at First Solar]

As we drive the efficiency up, as we go from where we are right now and add another 10 watts, 15 watts, 20 watts, 30 watts, that'll help the CPW numbers, cost per watt numbers, which is important. We need to drive that number down. The ASP, the value uplift, because of the energy attributes and the higher efficiency of CuRe, that drives to an entitlement for higher ASPs and the like. That's what we're focused on, and we're never going to give up on the input costs. We got to do the best we can to get cost out, but it is a pretty challenging environment right now.

[Alex Bradley, CFO at First Solar]

I'd also say that the potential to use the balance sheet to work with suppliers who are looking at expansion or needing funding, there's an option there. We could try and leverage our position of financial strength to get forward pricing that makes more sense. That has to be done at the right risk premium, risk profile. The other thing I'd say is outside of just bill of material costs, obviously, we're having a challenging time around period costs going from cost per watt produced over to cost per watt sold. Again, we're seeing freight challenges as it relates to cost of trucking. I think I mentioned in the prepared remarks that we're seeing costs now to deliver product from Perrysburg over to the West Coast of the U.S. are equivalent of delivering product from Asia to the West Coast of the U.S.

[Alex Bradley, CFO at First Solar]

continue to look how we can optimize our domestic transport routes, freight, and try and optimize between factories so that we can reduce those costs to the greatest extent possible.

[Operator]

Our final question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is now open. Please go ahead.

[Corinne Blanchard, Director at Deutsche Bank]

Hey, good afternoon. Thank you for taking my question. I actually want to come back on the last question regarding M&A. I think you just added a little bit to it, can you expand a little bit, what are you targeting with the current balance sheet that you have? Kind of felt like you were mentioning that you could use M&A to maybe help manage the input cost, where else do you see maybe an option or a possibility for First Solar?

[Alex Bradley, CFO at First Solar]

Look, when we talk about uses of cash, M&A is something that's been on the list for us for a long time. Generally, we focus more on the working capital reserve piece then growing capacity and replicating technology. That's where the company's been if you look over the last decade or so. We've also put more money into R&D. I think when you think about M&A, the obvious area for us to expand into would be, do we spend more on technology, and technology-adjacent things? Which could either be companies, it could be buying teams, it could be buying intellectual property. Anything that could accelerate the technology transition we see going forward as we invest a lot into potential perovskite development. I think there's options there.

[Alex Bradley, CFO at First Solar]

We're also taking a look at things that are adjacent to technology. We want to do it with a disciplined focus around where do we see opportunities where we have a skill set that we can bring. Something where we look at our strengths in high volume, thin film manufacturing, a very high throughput efficiency. How can we leverage that set of skills and take it into an adjacent product, also look at the overall market environment we'll be playing in. We compete in a challenging industry where the vast majority of our competitors are Chinese and tend to play by a different set of rules.

[Alex Bradley, CFO at First Solar]

As we think about how we could move into adjacent areas across M&A, want to evaluate what does the competitive landscape look like, what does the market that we'll be accessing look like, and what does the policy environment look like. We are starting to look through that. Clearly, given our position in the industry, a lot of stuff comes across our desk and has done over the last 10 years or so. We haven't done a lot on the M&A side. I'd say we are more willing to do that. We're more open to it. We want to make sure we do it with a disciplined focus.

[Operator]

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may-

Participants

Executives

• Byron Jeffers, Head of Investor Relations
• Mark Widmar, CEO
• Alex Bradley, CFO

Analysts

• Jon Windham, Head of Alternative Energy & Environmental Services Equity Research at UBS
• Brian Lee, Analyst at Goldman Sachs & Co
• Praneeth Satish, Analyst at Wells Fargo
• Julien Dumoulin-Smith, Analyst at Jefferies LLC
• Philip Shen, Analyst at ROTH Capital Partners
• Colin Rusch, Analyst at Oppenheimer & Co
• Corinne Blanchard, Director at Deutsche Bank