First Solar’s 1Q result released on Friday (1st May) was a solid one, with earnings ahead of expectations as stronger margins helped offset some of the tariff-related pressure hitting the sector. While the stock remains highly exposed to policy settings, tariffs and the broader solar demand backdrop, the result reinforced why we think FSLR is one of the better-positioned US solar manufacturers, with differentiated thin-film technology, strong domestic manufacturing exposure, a large contracted backlog and meaningful support from US tax credits. The near-term booking environment remains muted, but operationally, this was a strong start to the year.
1Q Highlights:
- Adjusted EPS came in at US$3.22, ahead of consensus expectations for US$2.82
- Net sales were US$1.04bn, in line with consensus, but up 24% YoY, representing a record first-quarter revenue result for the company.
- Net profit increased to US$347m, up from US$210m a year earlier.
- Adjusted EBITDA rose to US$520m, up from US$379m last year and above the top end of the company’s prior 1Q preview range.
- R&D expenses were US$66.9m, broadly in line with expectations for US$68.2m.
The margin performance was helped by higher volumes of modules eligible for Section 45X US tax credits, lower sales freight charges and lower warehousing costs. Tariffs remain a headwind, with higher tariff costs and under-utilisation charges in Malaysia and Vietnam continuing to weigh on the business. Management reiterated its expectation for US$115m–US$135m of under-utilisation costs this year, with Malaysia and Vietnam capacity still operating at low utilisation due to tariffs.
The company maintained FY26 guidance for net sales of US$4.9bn–US$5.2bn, broadly in line with the consensus of US$5.1bn. and adjusted EBITDA of US$2.6bn–US$2.8bn. The contracted sales backlog stood at 47.9GW at quarter-end, down from 50.1GW at the end of 2025, representing around US$14.4bn of contracted backlog through 2030.
Overall, this was a strong operational result in a difficult environment. The solar sector remains complicated, with tariffs, policy risk, Section 232 uncertainty, muted bookings and rising domestic supply all creating noise. However, First Solar is not a generic solar business. Its thin-film technology, US manufacturing footprint and ability to benefit from domestic supply-chain incentives give it a stronger strategic position than most peers.
- While the result was soft in patches, particularly with the backlog stepping down and bookings subdued, earnings quality was better than feared, margins were strong, and guidance was reaffirmed. We remain comfortable holding FSLR in the International Equities Portfolio.
MM remains long & bullish First Solar ~$US220.
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