First Solar meets profit target, but operating income misses expectations
First Solar Inc. reported its Q3 2023 earnings, with revenue coming in below expectations but EPS beating estimates.
The CdTe thin-film solar module maker reported revenues of $801 million, missing estimates of $892 million.
The company posted earnings per share of $2.50, beating estimates by 22.5%. Compared with the same quarter last
year, when First Solar reported a loss of $0.46 per share on sales of just $629 million, the company has shown strong
profitability and continued revenue growth expectations this year.
The company delivered a total of 2.7 GW of solar module orders in the third quarter, with a backlog of 82 GW and a
year-to-date order book of 28 GW.
First Solar's gross margins were significantly higher than Wall Street's expectations. The company's gross margin was
47%, higher than the widely expected 39%. The improvement in gross margin was primarily due to lower freight costs
on sales, higher average module sales prices, and an increase in the number of U.S.-made modules qualifying the
company for the 45x tax credit under the American Inflation Reduction Act.
"We believe the future belongs to thin-film modules," said CEO Mark Widmar on the company's financial reporting
conference call.
First Solar continues to build additional capacity in the U.S. and overseas to address a growing backlog of orders in
the near and medium term. The company produced 2.5 GW of Series 6 modules in the third quarter, and is currently
operating a Series 7 module line at a third facility in Ohio that is producing 15,000 modules per day, bringing the
cumulative total of Series 7 modules produced in the U.S. to more than 1 GW.
First Solar, which is aiming for a global capacity of 25 GW by 2026, has also begun production of bifacial thin-film
modules, which it says is an industry first.
The technology, pioneered by First Solar's research and development team, features an innovative transparent back
contact that, in addition to enabling bifacial energy gain, allows infrared wavelengths of light to pass through instead
of being absorbed as heat, which is expected to lower the operating temperature of the bifacial module and produce
higher specific energy," Widmar said. "
The company's average selling price per watt for the third quarter was $0.296.
"We expect to receive an IRA tax credit of approximately $0.17 per watt for each module the company produces in
the U.S. and sells to a third party, which reduces our cost of goods sold during the sales period," said Alexander
Bradley, First Solar's chief financial officer. "In the third quarter, we recognized $205 million in such tax credits,
compared to $155 million in the second quarter."