Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First Solar Inc (FSLR, Financial) reported strong financial performance with second-quarter earnings per diluted share of $3.25.
- The company secured a net 0.9 gigawatts of bookings since the last earnings call, bringing the year-to-date net bookings to 3.6 gigawatts.
- First Solar Inc (FSLR) established a new world record CdTe research cell with a conversion efficiency of 23.1%.
- The expansion of the Ohio manufacturing footprint has been completed, increasing the manufacturing capacity to nearly 7 gigawatts.
- The company maintains a robust contracted backlog of 75.9 gigawatts, with orders stretching through 2030.
Negative Points
- A 0.4 gigawatt de-booking occurred due to a termination for convenience by a European customer.
- The solar industry faces increasing external uncertainties, particularly related to policy, supply conditions, and strategic direction evaluations by large multinational companies.
- There are concerns about the potential impact of the upcoming US election on the policy environment, which could affect investment decisions and project returns.
- The global solar market is experiencing irrational oversupply driven by China's ambitions, leading to unsustainable market conditions.
- Some multinational oil and gas and power utility companies are considering pivots from renewable project development back to fossil projects, which could impact First Solar Inc (FSLR)'s future bookings.
Q & A Highlights
Q: The slides say you booked 1.3 gigawatts in July, but the press release says 900 megawatts were booked since the last call. What was the ASP on the full 1.3 gigawatts gross bookings in July? Also, can you provide additional detail on the 4.1 gigawatts of opportunities confirmed but not yet booked?
A: The ASPs reported net of the cancellation are in line with the gross ASPs. The actual cancellation was slightly lower, but not materially different. Regarding bookings momentum, we are being patient to allow the market to digest all the information coming out. We believe there is more to come, including potential announcements of critical circumstances and other trade policy updates. We expect more momentum in bookings as the year progresses, but the upcoming election may cause some reluctance.
Q: As you move forward on Alabama, the focus will turn to Louisiana. Any key milestones over the next six to nine months? When will we get more specific visibility on the ramp beyond just saying the second half of 2025?
A: The first milestone will be the completion of the building's construction, expected by early next year. Tool move-in is planned for Q1/Q2 of next year, followed by the energization process and an integrated run by Q3. We are making good progress and are confident in our ability to deliver.
Q: Do you think the upcoming election will slow momentum because developers are on pause, or could it accelerate momentum given your domestic footprint?
A: Initially, there may be a pause as everyone assesses the policy environment. However, if there is a Republican control, it could lead to more protectionist policies that would benefit our domestic footprint. There could also be an acceleration of projects to monetize benefits before any potential legislative changes.
Q: Comparing the ASPs of bookings in July versus the last earnings call, despite all the news, is there any other color on timing of those deliveries? Also, do you have a customer to backfill the 400 megawatt cancellation?
A: The bookings include some India domestic volume, but most are for the US market. The ASPs with adjusters are around $0.33 per watt. Regarding the 400 megawatt cancellation, we are actively negotiating to backfill that volume, but it is best to assume it will not happen this year.
Q: Are all the bookings from US fabs in the quarter, or is there some from Asia? Also, any big-picture thoughts on new CapEx and timing of any new manufacturing capacity expansion?
A: There is some India volume being sold into the US market included in the bookings. Regarding new CapEx, we are waiting to understand the policy environment before making any decisions. We are doing the necessary work to be ready once we have clarity.
Q: Are you indicating that the backlog is secure and uncertainties only impact forward bookings, or are there discussions about more cancellations? Also, do you see any risks from challenges to government agency interpretations?
A: The uncertainties highlighted do not call into question the risk of our backlog from a contractual standpoint. However, a significant policy change could impact project fundamentals. We are not seeing significant exposure from the Chevron ruling on our current operations.
Q: Can you provide more detail on the impact of the recent defective software update issued by CrowdStrike?
A: The defective software update briefly impacted our corporate and manufacturing operations, including the temporary idling of our fleet. However, this incident did not impact our full-year 2024 guidance.
Q: What are the key factors driving the increase in your contracted backlog and pipeline of potential bookings?
A: The increase is driven by strong demand, particularly from data centers and other large-scale projects. We are also seeing increased interest due to our technological advancements and the potential for higher ASPs with adjusters.
Q: How are you addressing the challenges posed by irrational oversupply from China?
A: We are actively engaging in trade policy initiatives to address the overcapacity and unfair trade practices. We are also focusing on our technological differentiation and strong execution to maintain our competitive position.
Q: What are your thoughts on the potential impact of the upcoming US election on the solar industry?
A: The election introduces uncertainty, but we believe that regardless of the outcome, the demand for renewables will continue to grow. We are preparing for various scenarios and believe that our strong domestic manufacturing base positions us well for the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
