Yahoo Finance First Solar Inc (FSLR) Q1 2024 Earnings Call Transcript Highlights: Strategic Growth and Market ...
Bookings: Year-to-date net bookings of 2.7 gigawatts, ASP of $0.313 per watt excluding adjusters.
Contracted Backlog: Stands at 78.3 gigawatts, aggregate value of $23.4 billion.
Q1 Production: Record 3.6 gigawatts of modules produced.
Net Sales: $794 million in Q1, down from previous quarter.
Gross Margin: Increased to 44% in Q1 from 43% in Q4 2023.
Operating Income: $243 million in Q1.
Earnings Per Share: $2.20 per diluted share in Q1.
Net Cash Balance: Ended Q1 with $1.4 billion.
Capital Expenditures: $413 million in Q1.
Full Year Guidance: Maintains full year 2024 EPS guidance of $13 to $14.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
First Solar Inc (NASDAQ:FSLR) reported strong operating performance with a record production of 3.6 gigawatts of modules in Q1 2024.
The company has a robust contracted backlog of 78.3 gigawatts stretching through 2030, ensuring long-term revenue visibility.
First Solar Inc (NASDAQ:FSLR) is advancing its technology with the upcoming launch of the CuRe module and investments in R&D innovation centers and perovskite development lines.
The company maintains a healthy financial position with a net cash balance of $1.4 billion at the end of Q1 2024.
First Solar Inc (NASDAQ:FSLR) is strategically expanding its manufacturing footprint, with new facilities in Ohio, Alabama, and Louisiana, and is on track to increase global nameplate capacity to over 25 gigawatts by 2026.
Negative Points
First Solar Inc (NASDAQ:FSLR) faces challenges from the volatile solar manufacturing industry, particularly due to overcapacity and aggressive pricing strategies by competitors, mainly from China.
The company's Q1 2024 net sales of $794 million represented a decrease from the previous quarter, influenced by seasonal reductions in module sales volume.
First Solar Inc (NASDAQ:FSLR) is experiencing pressure from international trade disputes and potential quality issues as competitors may cut corners to sustain in an oversupplied market.
There are uncertainties related to policy environment and upcoming U.S. election cycle, which could impact the company's strategic decisions and market conditions.
Despite a strong backlog, the company is adopting a highly selective approach to new bookings due to diminished available supply and long-dated time frames, which could limit near-term growth opportunities.
Q & A Highlights
Q: What are you seeing as far as pricing in the Indian market since the ALMM went back into effect, and how are you weighing shipments to that market versus potentially shipping back to the U.S.? A: (Mark R. Widmar, CEO & Director) - Since the ALMM has been reinstated, pricing in India has increased by about 5% to 10%. The ASPs in India are generally lower than in the U.S., but they are moving in the right direction. This year, about 2.6 gigawatts of product will be produced in India, with approximately 1 gigawatt shipped to the U.S. market. The pricing dynamics in India are improving, and there is potential for even firmer pricing as the year progresses.
Q: With the potential removal of the bifacial exemption and new AD/CVD petition, along with Yellen's commentary on China, shouldn't this be an accelerant for bookings? A: (Mark R. Widmar, CEO & Director) - The market pricing has indeed changed, increasing by about $0.03 to $0.04 since early April. There is more engagement and activity, and the sentiment has shifted positively in the last few weeks. Although bookings assumptions have been conservatively adjusted, the momentum is moving in a more constructive direction.
Q: Can you discuss the termination for convenience clauses and how they might impact your guidance? A: (Alexander R. Bradley, CFO) - The guidance assumes potential terminations for convenience but maintains the volume sold guide at 15.6 to 16.3 gigawatts. Discussions with a customer indicate they might terminate a portion of their backlog due to a likely sale of their portfolio. If this occurs, First Solar will seek to reallocate or resell the volume, which could impact the timing of cash flows but is manageable within the provided range.
Q: Have you seen benefits in pricing for future bookings from the recently filed Southeast Asia AD/CVD petitions? A: (Mark R. Widmar, CEO & Director) - The market pricing has firmed up since the petitions, although the bookings reported in the last quarter occurred before these developments. Moving forward, the environment is more favorable, and there is an opportunity to secure bookings at attractive ASPs.
Q: What would be the biggest considerations for adding another factory, especially given the industry's growth expectations? A: (Mark R. Widmar, CEO & Director) - The decision to add another factory would be demand-driven, supported by a stable policy environment. First Solar is preparing to be ready quickly if these conditions are met, focusing on supply chain readiness and site selection. The company has a proven track record of efficient project execution and will continue to monitor demand and policy developments closely.
Q: Can you provide an update on your tandem technology research and when you might make a decision on the next-gen technology? A: (Mark R. Widmar, CEO & Director) - First Solar is progressing with its thin-film CIGS tandem product and other technologies. The upcoming R&D innovation center and perovskite pilot line are significant investments that will provide insights into commercialization timelines. The focus remains on ensuring that any new technology can be produced at scale and meet long-term reliability standards.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
