First Solar, Inc. 2026 Q3 Earnings Call

Good afternoon, and thank you for joining us. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer. Mark will begin with an update on the business, followed by Alex with our financial results and outlook. Before we begin, today's discussion will include forward-looking statements that are subject to risks and uncertainties. Additional information regarding these risks and uncertainties can be found in our earnings press release, other SEC filings, and the earnings material available on our investor relations website at investor.firstsolar.com. We undertake no obligation to update any of these forward-looking statements as a result of new information or future events. During today's call, we will also discuss certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP measures are provided in our earnings press release and accompanying presentation.

We encourage investors to review those reconciliations, as non-GAAP measures should not be considered in isolation or a substitute for financial information prepared in accordance with U.S. GAAP. With that, I'll turn it over to Mark.

Thank you and good afternoon. Getting on slide 4. We continued to execute with discipline this past quarter, advancing our U.S. manufacturing expansion, CuRe deployment, and perovskite R&D program, while delivering strong financial results. We generated approximately $1.2 billion in net sales, expanded gross margin to approximately 58%, and delivered adjusted EBITDA of $744 million. Operationally, our continued CuRe deployment across the fleet is being executed through a disciplined learnings-based approach that began with our Perrysburg Series 6 conversion in Q1 of this year. That approach now extends to our first Series 7 conversion at our India facility, expected to begin in the first quarter of 2027, which marks the start of Series 7 CuRe replication across the fleet. Beginning in India allows us to first refine the deployment process in a low earnings impact environment before replicating across our U.S. Series 7 fleet. During the subsequent U.S. conversions, assuming a supportive trade environment, India front-end output is planned to be flexed to supply U.S. facilities, supporting U.S. back-end throughput and preserving partial domestic content and Section 45X eligibility production during the transition.

Accordingly, India's finished good production in 2027 is expected to range from 2.2 gigawatt to 2.6 gigawatt. The pace in sequencing our subsequent Series 7 U.S. conversions will be informed by learnings from the India launch, consistent with the disciplined learnings-based approach we have taken across all periods of technology transition. In South Carolina, our Series 6 finishing facility is being brought online in two phases as part of an integrated manufacturing flow from Vietnam. The first phase started production in Q3. Second phase is expected to reach commercial launch in mid-2027.

As we previously shared, we delayed the second phase by approximately one quarter so that the CuRe could be incorporated at commercial launch. Together, these two phases are expected to result in 2027 South Carolina production of 2.2 to 2.5 gigawatt. Beyond CuRe, we continue to advance our next-generation technology roadmap. Our Ohio pilot line, designed to produce Series 6 size perovskite modules, remains on track to reach operational readiness in the first half of 2027. We expect this line will enable field deployment of modules to further capture learnings and validate the manufacturing, performance, and durability profile of this next-generation thin film technology before we undertake broader scaling decisions. Our licensing agreement with CubicPV, announced earlier today, together with our previously announced intellectual property agreement with Oxford PV, continues to support the development roadmap, providing access to foundational perovskite IP as we advance our technology roadmap.

Turning to the market environment on slide 5. The Section 232 Proclamation issued in August represents a meaningful shift for U.S. solar manufacturing, and we believe First Solar is well positioned to benefit as this shift takes effect. Combined with fundamentals such as continued demand strength from load growth and data center expansions, we see a long-term opportunity to translate this position into earnings growth. Section 232 represents a structural change in how the United States approaches solar manufacturing. As the U.S. competes for global leadership in artificial intelligence and the emerging low Earth orbit economy, secure and affordable power will be foundational to both. The country cannot afford to depend on adversarial nations for technologies and supply chains increasingly central to our long-term economic prosperity and national security.

As a technology company and the only fully integrated utility-scale solar manufacturer without dependency on a Chinese crystalline silicon supply chain, we believe we are structurally positioned to benefit from this environment. Note, by 2027, nearly 80% of our global module manufacturing footprint will be located in the U.S. Long-term demand fundamentals also remain strong. AI-related infrastructure, electrification, and the onshoring of U.S. manufacturing are driving significant load growth. These customers need large-scale power quickly, and solar plus storage remains one of the fastest and lowest-cost solutions. They are increasingly focused on availability, delivery certainty, bankable warranties, and supply chain security, attributes we have built our business around. As it relates to bookings, we believe the market is working through a transition following the Section 232 announcement, with significant influence from other key factors.

As a reminder, a substantial portion of our existing backlog is comprised of multi-year framework agreements that are intended to supply customers with projects in various stages of development. While entering into these types of agreements has historically driven significant additions to our backlog, they can also be more challenging for us to plan for and allocate against because the inherent delivery timing uncertainty associated with projects in early stages of development. Over the course of this year, while not closing the door on framework agreements with appropriate contractual protections, our customer engagements have shifted more towards project-specific contracting with defined projects and delivery schedules. From our perspective, the enhanced certainty surrounding project-specific contracts allows us to optimize module allocation and delivery with a potential trade-off of slowing the pace of an extended multi-year contracted backlog.

At the same time, customers are focused on advancing mid- and late-stage projects where modules have already been secured, while deferring procurement on early-stage projects requiring delivery later in the decade. We see several factors driving this behavior, including increased NIMBYism among community residents and growing state and local government opposition. In addition, the overall inflationary environment, together with the continuously evolving tariff landscape, have challenged near-term project economics and require greater strategic planning on behalf of our development customers to address system cost increases unrelated to module pricing. As one example, in certain cases, surging battery prices is challenging both projects in construction as well as projects at the PPA bid stage.

Lastly, an incomplete regulatory picture with regards to the final FEOC guidance, as well as the potential for Section 232 tariffs to continue to evolve, particularly as it relates to minimum import prices and the effectiveness of anti-stockpiling measures, has generated volatility in the module procurement market and inhibited customer clarity as it relates to module pricing discovery. The impact of these current dynamics on recent bookings is most pronounced from our Malaysia facility. While Vietnam is expected to supply the semi-finished product for our South Carolina finishing facility, Malaysia retains the capacity to produce fully finished international modules. We continue to evaluate demand for this product based on core unit economics, tariffs and trade conditions, and customer contracting terms.

We expect the operating decision regarding our Malaysia facility to be binary, resulting in either operations at full or near full capacity of 120 gigawatt annually, or a shutdown of production, with that decision expected in the first half of 2027. Given Malaysia's relatively small contribution to our manufacturing footprint, limited Series 6 blending opportunity in the U.S., absence of Section 45X credits, and freight and tariff burdens, we do not expect either outcome to materially impact our run rate earnings profile. Against this backdrop, we remain deliberate on bookings and we are pleased with the results of this approach. Through today in the U.S., our largest market, we have booked approximately 4.9 gigawatts at approximately $0.35-$0.36 per watt inclusive of adjusters. Moreover, our 44-gigawatt backlog gives us the ability to focus on contracting approaches on two strategic initiatives.

First, we seek to improve pricing on new module sales relative to our current backlog ASP. Note, pricing will continue to vary by product, Series 6 and Series 7, and by U.S. versus internationally made. Second, we seek to improve contract structures to further mitigate the risk of cost increases beyond our control, strengthening credit support and payment terms, and firm up product delivery schedules. Our objective is to optimize across both upfront ASPs as well as long-term earnings profile through disciplined pricing, appropriate contractual protections, strong counterparties, and alignment with our manufacturing and delivery strategy. In summary, our focus on project-specific versus framework agreements, customer focus on near-term project execution versus late-dated procurement, evolving market price discovery, and our contracting discipline have moderated recent bookings on a volume basis. But on an economic basis, has generated improved pricing relative to our overall backlog.

In addition, we remain focused on our ability to affect our contracting strategic initiatives and are confident in demand for our domestically produced product, particularly for 2029 and beyond, when we have available supply. With that, I turn the call over to Alex to discuss our bookings, financial results, and outlook.