FIRST SOLAR, INC. Q3 FY2024 earnings call

• Commercial: Employed a selective contracting approach, with net 0.4 gigawatts new bookings in Q3, year-to-date net bookings at 4 gigawatts, and a total backlog of 73.3 gigawatts.
• Manufacturing: Achieved a record 3.8 gigawatts production in Q3, faced a $50 million product warranty charge due to Series 7 manufacturing glitches, inaugurated the $1.1 billion Alabama facility, and the Louisiana facility is on schedule to start in H2 2025.
• Technology: CuRe production to commence in Q4 2024, perovskite development line advancing, and recognition from MIT and TIME.
• Sustainability: Annual sustainability report highlighted progress in environmental, social, and governance areas, including PV recycling and ultra-low carbon solar efforts.
• Intellectual Property: Sent notification letters to Tier 1 solar manufacturers infringing on TOPCon patent portfolio and upheld validity of Chinese TOPCon patents.

From a commercial standpoint, since the last earnings call, there was a net 0.4 gigawatts of new bookings, bringing year-to-date net bookings to 4 gigawatts and total contracted backlog to 73.3 gigawatts with orders extending through 2030. In manufacturing, the quarter saw a record production of 3.8 gigawatts, but financial results were hit by a $50 million product warranty charge related to Series 7 manufacturing issues. The Alabama facility was inaugurated, and the Louisiana facility is on track to start operations in the second half of 2025. Technologically, CuRe production is set to begin in Q4 2024, the perovskite development line is making progress, and the company was recognized by MIT Technology Review and TIME’s magazine.

• Volumes sold are projected to be between 14.2 and 14.6 gigawatts, with net sales expected to be in the range of $4.1 billion to $4.25 billion.
• Gross margin is anticipated to be between $1.95 billion and $2 billion, incorporating Section 45X tax credits and ramp costs.
• SG&A expenses are forecasted to be between $445 million and $475 million.
• Operating income is expected to lie between $1.48 billion and $1.54 billion.
• Full-year 2024 earnings per diluted share guidance is $13 to $13.50.
• Capital expenditures are forecasted to be between $1.55 billion and $1.65 billion, and the year-end 2024 net cash balance is anticipated to be between $0.5 billion and $0.7 billion.

• Operational setbacks such as the CrowdStrike IT outage, hurricanes, International Longshoreman Association strike, and external security alert, which impacted production and financial performance.
• Chinese dumping in the Indian market affecting the ASP environment in India.
• Project development delays in the U.S. market.

Q: Regarding the chips ITC and whether First Solar's facilities could qualify, and on bookings price and India facility utilization.

A: Mark Widmar discussed evaluating the applicability of the ITC to their facilities, Alex Bradley commented on the bookings ASP being a result of the disciplined selective approach, and Mark Widmar talked about the transition of the India facility from fixed to tracker product and its current full utilization.

Q: Follow-up on India mix, Q4 volume sold derisking, and CuRe plan.

A: Mark Widmar spoke about the flexibility in transitioning India product, Alex Bradley mentioned risks associated with the CuRe ramp and operational events affecting Q4 volume, and Alex Bradley explained the CuRe launch timeline and upside revenue potential.

Q: On S7 manufacturing warranty remediation and India safe harbor.

A: Mark Widmar provided details on remediating the S7 manufacturing issues and explained the safe harbor dialogue and potential panel swapping in India.

Q: On U.S. market demand and CuRe gigawatts.

A: Mark Widmar discussed the strong potential of the U.S. market demand, and Alex Bradley explained the CuRe launch timeline and upside revenue potential.

Q: On guidance and U.S. project delays.

A: Alex Bradley discussed the guidance reduction due to India and operational challenges, and explained customer project delay requests and mitigation efforts