Q2 2025 First Solar Inc Earnings Call
Good afternoon and welcome to First Solar second quarter 2025 earnings call. Today's call is being webcast live on the investors section of first solar's website. And at investor for solar.com, all participants are in a listen-only mode. And please note that today's call is being recorded, I would now like to turn the conference over to your host Byron Jeffers head of investor relations. Please go ahead sir.
Good afternoon. Thank you for joining us on today's earnings call. Joining me today are our Chief Executive Officer, Mark Widmar, and our Chief Financial Officer, Alexander Bradley.
During this call, we will review our financial performance for the quarter and discuss our business outlook for the remainder of 2025.
Following our remarks, we will open the call for questions.
Before we begin, please note that some statements made today are forward-looking and involve written uncertainties that could cause actual results to differ materially from management's current expectations.
We undertake no obligation to update these statements, to the new information, or future events.
For discussion of factors that could cause these results to different materially. Please refer to today's earnings, press release, and our most recent annual report on form 10K as supplemented by our other filings with the SEC, including our most recent quarterly report on form 10q.
You can find these documents on our website at investor.firstsolar.com.
With that, I'm pleased to turn the call over to our CEO, Mark Widmar.
Good afternoon, thank you for joining us today. Getting on slide 3, I will share some key highlights from Q2 2025. We recorded 3.6 gigawatts of module sales during the quarter, about the midpoint of what we forecasted on the previous earnings call.
Our Q2 earnings per diluted share came in above the high end of our guidance range at $3.18 per share.
From a manufacturing standpoint. We produce 4.2 gigawatts in Q2 with 2.4, gigawatts produced from our us facilities and 1.8 gigawatts from our International facilities.
We progressed our domestic capacity expansion during the quarter, continuing to ramp up at our Alabama facility.
As of today, equipment, installation, and commissioning at our Louisiana site is complete. We have begun the integrated production run and expect to complete plant qualification in October.
Once fully ramped this facility is projected to boost our us name plate manufacturing capacity to over 14, gigawatts by 2026.
As it relates to technology.
We have seen further improvements regarding our cure technology platform from both a performance and a manufacturability standpoint over the course of the quarter.
recent field data from deployed, cure modules continues to validate the enhanced energy profile expected from the improved temperature response and by visuality of cure
The seal data is consistent with the superior degradation rate that we have seen through laboratory accelerated life testing.
In addition.
Progress continued during the quarter.
At our new parasite development line located at a purrysburg campus.
Line on track for full inline runs in August is expected to produce.
Small form factor modules, featuring a prosight semiconductor.
We have continued to timely meet our internal metrics for our ProSight development program.
Including the achievement of initial stage, efficiency, stability and manufacturability objectives.
We are pleased with the progress. We are making towards commercializing our Prospect technology over the next several years.
Annual corporate responsibility report yesterday.
This report highlights First Solar's efforts to lead the way in strengthening support for solar by leveraging and extending our differentiation.
As noted in the report, our vertical integration drives resource efficiency.
Enabling our products to deliver up to 5 times greater energy return on investment in crystalline silicon panels made from components manufactured in China.
This not only supports our nation's energy independence, it helps unleash American energy dominance.
We also continue to achieve and surface key metrics. For example, 2024 marked the second straight year that we have nearly doubled, the volume of water. We recycle conserving resources in water scarce regions.
We continue our focus on reducing waste.
Diverting 88% of waste from disposal.
At increasing recycling recovery, the global average of 95% of materials from recycled panels.
These are among just a few of the highlights of our approach to responsible corporate stewardship that can be found in the report, which is available through our website.
Turning to slide 4. I would like to focus on the current US policy and trade environment.
From an industrial policy standpoint, earlier this month, the President signed the new reconciliation legislation.
We believe places for solar are in a greater position of strength than they were following the passage of the Inflation Reduction Act of 2022.
As it relates to section 45x Advanced manufacturing tax credits. Under this new law key Provisions for solar were maintained and new restrictions severely limit 45x eligibility for products manufactured by, or with material assistance, from foreign control, foreign entities of control or fiio.
Such as Chinese solar manufacturers.
These restrictions address one of the biggest loopholes under the IRA.
And we expect these Fiat provisions.
Will factor into Capital commitment decisions for us, manufacturing by our Chinese competitors.
In our view, it is not unreasonable to expect that there will be limited Chinese solar manufacturing in the U.S. in the foreseeable future.
Which together with other recent industrial policy and trade developments that I will discuss momentarily May reduce the supply of domestic content.
Turning to the investment tax credit.
The Legacy PTC and ITC which support Project, Safe Harbor by the end of 2024 and require placing servers by year, end 2028 remains unchanged by the new legislation.
We expect that these projects will proceed as scheduled. Thereby strengthening the resiliency of our existing contracted backlog.
We have a strong contracted position for our U.S. production through 2028.
Which we believe coupled with the current policy environment, create the Strategic foothold to integrate our International Supply with us.
And potentially create a US Finishing Line to leverage. Our Series 6 and Series 7, International assets.
in addition, the provisions in the reconciliation legislation,
Relating to the new technology, neutral investment and production tax credits potentially incentivize near-term demand for new bookings with deliveries through the end of this decade.
There are 3 reasons for this potential, demand catalyst.
Firstly, under the new tech-neutral credits, projects that commenced construction prior to July of 2026.
We'll have a required place-in-service deadline.
By the end of 2030, thereby potentially incentivizing new procurement to Safe Harbor projects through 2030.
Secondly.
Projects that commenced construction starting January 1, 2026, are subject to the new Fiak material assistance restrictions in order to be eligible for the tech-neutral credits.
And thirdly projects that have not commenced construction before June 16th of 2025 will be required to meet increasing domestic content thresholds.
Should they seek to qualify for the related bonus?
While there remains uncertainty around the structure and scope of the fourth con forthcoming to begin construction. Guidance, pursuant to a recent executive order, we expect this guidance will be consistent with long-standing rules.
Note, the same executive order also mandates the development of Fiat guidance.
Making the United States dependent on supply chains controlled by foreign adversaries.
As indicated earlier, these new demand drivers also potentially support a business case.
To establish one or more lines in the United States.
To finish front-end production initiated within our international fleet.
Leveraging existing overseas capital assets and our skilled workforce for front-end production, combined with new back-end factories in the U.S., could enable additional near-term Fiacre supply for the U.S. market.
As well as improve the gross margin profile of our sales by reducing tariff charges and logistics costs associated with importing finished modules.
Moving from industrial policy to trade policy. We continue to see evidence that pursuing anti-dumping and countervailing Duty or add CBD cases while time consuming and expensive is effective at addressing illegal Trade Practices, Imports of cells and modules from
Cambodia, Malaysia, Thailand, and Vietnam, which were the subjects of the Solar 3 Add CBD case, means we decreased in the January through May 2025 period, as compared to the equivalent period in 2024.
However, trade data also demonstrates an influx of sales and modules imported into the U.S. from other countries.
As the Chinese solar and silicon industry continues to move production to circumvent existing trade laws.
Against this backdrop, the Alliance for American Solar Manufacturing and Trade, a distinct but similar coalition from that which launched the solar 3 AVD case, AVD ADD CBD case directed at Cambodia, Malaysia, Thailand, and Vietnam.
As far as the new ad CBD, petition.
with the US International Trade Commission, and the US Department of Commerce
Seeking investigations into the violation of trade laws by Chinese-owned companies operating through entities in Laos and Indonesia.
As well as Indian-headquartered companies, which we believe utilize a Chinese-subsidized supply chain.
Separately, the Department of Commerce has made the decision to self initiate a section, 232 investigation into Imports of polysilicon and its derivatives.
Our scope of deliver derivatives is unclear. This could implicate Downstream pricing for poly, silicon based products such as wafer cells or modules, introducing a new source of uncertainty. For those relying on Chinese tide, crystalline silicon, procurement
The scope of the investigation includes many of the Strategic vulnerabilities created by China's dominance of the poly silicon production.
Such as the risk posed by over-concentrated supply chains.
Subsidy fueled mandatory Trade Practices.
Systematic overcapacity and the potential for export restrictions by U.S. adversaries.
In addition, we are encouraged by recent developments.
We recently made available, though not broadly publicized, data.
Regarding the processing of cell and module entries by the U.S. Customs and Border Protection (CBP) that were imported during the Biden Administration's June 2022 to June 2024 solar moratorium.
As a reminder, the moratorium provided a add CBD duty-free treatment for Southeast Asia Imports. If the entries,
We were both circum... circumventing the China solar, adding CBD orders, and were utilized in projects. No later than December of 2024.
The US government recently reported that approximately 44,000 entries were processed during the moratorium window.
And that more than half roughly 24,000 entries did not qualify for the moratorium and remain subject to the application of add CBD tariffs.
The government reports that is taking multiple approaches to collect duties on these Imports.
The remaining approximately 20,000 continue to be under manual CBB review.
Which could take several months to complete.
And may become subject to the application of these tariffs.
In short, despite the Biden administration's ill-advised enforcement suspension, no single entry has yet been closed with the benefits of the tariff moratorium.
Liabilities for the importers of record of these foreign-produced Christmas silicon modules.
We applaud CBP for the thorough, entry-by-entry process they're running.
Our determination to advocate for strong industrial policy, represented by the new reconciliation legislation, is matched by our commitment to employ the rule of law to help create a level playing field for domestic manufacturers.
As we have long stated, we are supported of free trade and international competition. So long as this trade is also fair and within the constructs of the law,
Unfortunately, in our industry, China relentlessly engages in an unfair, in our view, illegal, Trade Practices leaving us, no choice but to seek the enforcement of existing law that are designated to address these practices.
Disrespect, uh, for the rule of law. Also underpins our effort to enforce our Top Gun patent portfolio against potential infringements.
For example, following our previously announced filing of the complaint against various jinko, solar entities, alleging infringement of our us Top Gun patents during the quarter, we filed a similar lawsuit against various Canadian Solar entities.
These actions reflect our attention to actively enforce our intellectual property rights against companies that we believe are infringing upon our long-standing Topcon technology patents.
In summary, our policy trade and legal efforts can be viewed as a consistent three-prong approach.
Firstly, a dedicated commitment to continuously advocate for strong industrial policies that enable domestic solar manufacturers in the face of foreign adversaries seeking to dominate critical aspects of the U.S. energy supply chain.
Secondly, a commitment to employee, the rule of law, against the industrial representation of those adversaries who seek to violate our trade laws.
And thirdly, a commitment to employ the rule of law to enforce long-established principles of intellectual property rights protection.
As discussed during our previous earnings call.
We are not immune from adverse effects related to trade policy.
Later in the call, Alex will address the impact of the global tariff measures on our international production capacity considerations, as well as on our bill of material costs.
That said and I was standing in these headwinds together with the uncertainty related to the executive order mentioned earlier as well as the potential implications for the recent Department of interior directive. Ordering secretaries approval of many renewable project development activities. We believe that the recent policy and trade development have on balance strengthens first solar's. Relative position in the Solar manufacturing industry.
As Illustrated on slide 5.
At a broader macro level, we believe the long-term position of the utility scale solar industry, as a whole remains, strong given significantly increasing demand for electricity.
And the ability of solar generation to meet this demand.
As we stated previously.
American leadership in AI.
Cryptocurrency and reshore in manufacturing needs abundant cost competitive electricity generation.
Absent new generating capacity coming online quickly, there is a risk of not having enough electricity to power strategically important industries to their full potential before the current administration ends.
Given its attributes of low cost and high speed to deployment relative to other sources of energy. Generation solar. Should clearly be a significant part of the near-term solution. Mix
This argument is supported by numerous recent reports. For example, in June, Lazar, the most recent Levelized Cost of Energy report, demonstrates that utility-scale PV is cost competitive with conventional forms of energy generation, including natural gas and nuclear.
This fact does not consider the practicalities of a typical natural gas project development timeline, which requires approximately 5 years to complete.
Assuming it is untethered by supply chain constraints or the availability of pipeline infrastructure.
Or nuclear projects, which take about twice as long.
And creates a potential supply chain strategic vulnerability, requiring sourcing uranium from Russia and China.
And faster. Time to power profile.
The case for utility-scale solar generation is compelling, regardless of the policy environment.
This case is underpinned by the role that utility-scale solar can play alongside energy storage as a viable, reliable, cost-competitive complement.
To the eventual scale-up in nuclear power generation capacity.
Utilities' adoption of solar energy has also been shown to help lower electricity prices, dampening the effects of inflation, while supporting grid reliability and helping utilities navigate peak demand.
And extreme conditions.
Lowering the likelihood of blackouts.
Solar is mission-ready today to help power the key pillars of economic growth, which we believe places First Solar, a utility-scale leader, in a position of strength.
And I'll turn the call over to Alex to discuss shipments, bookings for Q2, financials, and guidance.
Thanks Mark. Beginning on slide 6. As of December 31st 2024, our contracted backlog totaled. 68.5, GW valued at 20.5 billion or approximately 29.9 cents per word.
Through Q2, we recognize 6.5 GW in sales.
Continued our disciplined approach to new bookings, strategically leveraging, the strengths of our customer backlog, amid the policy uncertainty that continued during the quarter and limited pricing visibility as a result. We recorded 0.9 gigawatts of gross bookings in the first half of the year.
Offsetting this, we recorded 1.1 gigawatts of Deb bookings driven by contract terminations, resulting in net Deb bookings of 0.2 gigawatts through June 30, 2025.
No. Noticeably, 0.9 gigawatts of the DEB bookings related to our Series 6 International products were recorded in our Q2 results.
As a result, our quarter end, contracted backlogs that at 61.9% for what?
As a reminder, a significant portion of this contracted backlog includes pricing adjusters that provide the opportunity to increase the bass, ASP contingent on meetings. Specific Milestones within our current technology roadmap by the time of delivery,
These figures exclude such potential adjustments, including additional changes tied to module bin freight, overages, commodity price shifts, committed wattage, U.S. content, volumes, and tariffs.
Following the enactment of the recent reconciliation bill, we saw an increase in customer engagement, resulting in 2.1 gigawatts of new bookings as customers pursued near-term opportunities.
Of this total, approximately 1.4 gigawatts with Series 6 international product.
0.9 GW of which was reconstructed volume that was previously terminated in Q2.
Including the associated termination payments, this recontract volume was effectively sold at approximately 33 cents per watt.
The remaining 0.7 gigabytes of the 2.1 gigabytes was contracted at approximately $0.32 per watt, excluding the impact of the Justice in India on domestic sales.
As of today, our total contracted backlog stands at 64 GHz.
while demand for our us manufacturer products remains strong, we continue to face an underallocation of Series 6 production from our Malaysia and Vietnam facilities,
This imbalance initially resulted, from customers exercising. Contractual delivery shift, writes, out of 2025, due to policy uncertainty, and has more recently been exacerbated, by increased tariff pressure
These factors contribute to the termination of a portion of our Series 6 International backlog, this quarter.
Of our total 64 gigawatt backlog, approximately 11 gigawatt consists of international Series 6 products.
Of that approximately 10.1 gigawatts is planned for sale into the US with a vast majority under contracts, that include circuit breaker, Provisions designed to mitigate tariff exposure, as referenced in our previous earning School.
Accordingly, the inclusion of tariff mitigation provisions in our contract serves as a strategic safeguard, enabling us to proactively manage and limit potential gross margin erosion, should tariff-related impacts not be resolved through customer engagement.
On these immediate drivers and contractual mitigants, we also continue to observe indicators of a broader strategic shift among multinational oil and gas and power utility companies, particularly those headquartered in Europe, away from renewable project development and back towards fossil fuel investments.
Moving to slide 7, our total Pipeline and mid to late stage. Booking opportunities, remain strong, the booking opportunities of 83.3 gigawatt and mid to late stage booking opportunities of 20.1 G.
a mid to late stage pipeline, includes 3.9, gigawatts of opportunities, that our contracted subject to conditions precedent,
As a reminder, signed contracts in India will not be recognized as bookings until we've received full security against the offtake.
For our second quarter Financial results.
We recognize 3.6 GB of module sales, including 2.3 GB to my U.S. manufacturing facilities.
This resulted in second quarter, net sales of 1.1 billion, an increase of 0.3 billion from the first quarter.
The increase was primarily driven by an anticipated increase in shipment volumes and stronger demand for domestically produced modules.
Our second quarter results, included 63 million in contract. Termination payments tied to 1.1 gigawatts of volume with 50 million related to 0.9 gigs that terminates seriously. International volume.
note this 1.1 gigawatts of Terminator, volume represented only less than 2% of our contracted backlog as of the second quarter end
Gross margin for the quarter was 46% up from 41% in q1.
The increase was primarily driven by higher contract termination revenue and a greater proportion of modules from our U.S. manufacturing facilities, which are eligible for Section 45X tax credits.
These factors were partially offset by increased detention and demurrage charges, higher core costs associated with a sales mix weighted towards U.S.-produced modules, and a change in Section 455x credit valuation between periods.
The sale of a portion of these credits through an agreement with a leading financial institution, combined with our expectation to sell the majority of credits generated in 2025, resulted in a cumulative $29 million reduction to cost of sales, reflecting the anticipated value of the remaining credits generated through Q2.
As an update on warranty-related matters, we did not incur any new warranty charges in this quarter related to the Series 7 modules affected by prior manufacturing issues.
As of the end of Q2, we continue to hold approximately 0.7 GB of potentially impacted Series 7 inventory.
We're making continued progress and reaching settlement agreements for impacted Series 7 modules, consistent with our disclosed warranty range from our initial production.
Sgna R&D and production startup expenses total $138 billion in the second quarter, reflecting an increase of approximately $15 million as compared to the first quarter.
But the primary driver of this increase was production startup costs associated with the ramp-up of our Louisiana facility.
Additional one-time expenses included broker fees related to the sale of our Section 4 of the next tax credits and legal costs tied to the previously disclosed SEC Division of Enforcement investigation.
And we're pleased to report that the SEC has concluded its inquiry into First Solar. And the staff is not intend to recommend any enforcement action against the company.
Operating income for the quarter was $362 million, which included $125 million in depreciation, amortization, and accretion, as well as $15 million in rampant underutilization costs.
31 million in production, startup expense, and 7 million in share-based compensation.
Non-operating income results in a net expense of 9 million in the second quarter representing a decline of approximately 5 million compared to the prior quarter. This was primarily driven by lower interest income, as a result of a decrease in investable, cash, cash, cash multiple securities.
Tax expenses for the second quarter were $10 million compared to $8 million for the first quarter, which increased as per the manager, due to changes in pre-tax income and the jurisdictional mix of such income.
And this resulted in the second quarter, earnings of $3.18 per to lose its share.
Time slide 9, I was discussed, select balance sheet, items and summary, cash flow information.
As of the end of Q2, our total balance of cash, cash equivalents, restricted cash, cash flow, and some marketable securities was $1.2 billion, an increase of approximately $0.3 billion from the prior quarter.
This increases primarily driven by the sale of certain of our section 455x tax credits generated in the first half of 2025, furthermore, as it slows in our Form 8K file yesterday on July 28th. We entered into a new tax credit transfer agreement to sell up to 391 million reception, point of X tax credits.
Generating up to approximately $373 million in proceeds.
Transaction destruction 3, installments with approximately $124 million received in connection from closing, and the remaining payments expected in the fourth quarter of 2025.
This transaction is further demonstrates, the liquidity of the 45 credit market and the proceeds will continue to support our needs and working capital capital expansion priorities.
The quarterly increase in accounts receivable was, primarily driven by higher sales volumes with approximately 2/3 of our quarterly Revenue being recognized in June resulting in back-end weighted receivables.
As of quarter-end, total overdue balances stood at approximately $394 million.
This includes a previously negotiated settlement of the customer following a payment, default, which deferred payments to Q4, which 93 million remains outstanding with interest payments, being current and made on schedule.
Also included is 70 million in cumulative, uncollected receivables related to customer termination payments.
these overdue termination related receivables, correspond to approximately 1.8, gigawatts of contract of canceled volume,
Inventory balances increased by $121 million, consistent with expectations, reflecting the backload of revenue profile. This is tied to continuous production throughout the year to fulfill contracted commitments.
We anticipate our working capital opposition to improve throughout the year as our module, shipment and sale, profile increases relative to production inventories, Decline and we continue to collect on our accounts receivable.
While they remain contracted due to overdue payments, termination payments are expected to remain outstanding pending the resolution of arbitration and litigation proceedings.
Capital expenses, total 288 million in the second quarter, primarily driven by investments in our newest facility. In Louisiana, where we've begun the integrated production run and expected to complete plant qualification in October.
Our net cash position increased by approximately 0.2 billion to 0.6 billion as a result of the aforementioned factors.
Before we turn to our updated financial advisors, I’d like to revisit the key assumptions informing our current guidance in light of recent policy and trade developments.
These include tariff-related impacts on anticipated international module sales volumes and their associated logistics costs.
As outlined on slide. 10, our prior guidance was based on a binary set of tariff, policy of scenarios each with distinct operational and financial implications.
The upper end of our guide, we assume the continuation of the universal paraphrasing through year end. 2025 applying a 10% tariff and maintaining the suspension of country, specific reciprocal tariffs, excluding China,
The lower end reflected the same baseline but incorporated the impact of reciprocal tariffs taking effect as of July 9th, with rates of 26% for India, 24% for Malaysia, and 46% for Vietnam.
Our revised guidance incorporates the anticipated implementation of recently negotiated tariffs at 25% in Malaysia and 20% in Vietnam.
So, relates to India. Our revised guidance incorporates the previously announced reciprocal tariff rate of 26% to India and does not incorporate the president's announcement yesterday of a 25% rate, plus an unquantified penalty for India's purchase of military equipment and energy from Russia.
A volume sold out in the U.S. Manufactured modules remains unchanged at 9.5 to 9.8 gigawatts.
Our forecast is sales from our India, manufacturing entity remains unchanged and combined with an increase at the low end of the Series 6 International range. We now forecast International module sales at 7.2 to 9.5 gigabytes for total module sales of 16.7 to 19.3 gigabytes.
The international volume, cell range, remains wide and reflects both uncertainty and opportunity related to the outcome of tariff, cost discussions with customers. The section 232 action related to poly silicon and its derivatives
SEO related restrictions and these solar 4, add CBD investigation.
In the event of customer determination resulting from an inability or unwillingness to absorb tariff impacts on our international product, we plan to address the resulting supply-demand imbalance through additional content, including the potential temporary idling of production.
As such the lower end of our guidance range, reflects increased underutilization, period costs and the associated loss margin type of these volume assumptions.
Calling me. This is not a human incremental cost related to the warehouse in detention, the marriage, or other logistics associated with internationally produced modules.
It's important to note that certain indirect or currently unknown costs related to these tariffs, including potential, restructuring charges or asset impairments. Are excluded from the guidance provided today.
As it relates to the Tariff impact, based on a doubling of section, 232 tariffs on aluminum and steel from 25% to 50%, as well as updated rates applicable to other Imports, including substrate glass and Inter layer. We anticipate a fully production cost impact from tariffs of approximately 70 million.
We forecast, approximately 80 to 130 million in tariffs on finished goods, Imports. Net of contractor. Recoveries from customers
It's important to note that without tariff recovery, International module sales, may be dilutive to earnings.
As such the ability to recover tariffs is a key factor in our production and sales volume guidance.
If we are unable to effectively negotiate these recoveries, we may further reduce International Series 6 production for low current assumptions which would result in an additional uneven elevation charge.
At the utilization charges related to running our International series, its production below, full production capacity with under absorption costs accounted for as period. Expenses are forecasted total approximately 95 to 180 million for the full year.
Additionally, non-standard Freight, warehousing detention emerge and other logistics related costs have increased approximately 100 million to 400 million for the full year.
This increase was driven by several factors accelerated Imports ahead of the July 9 and subsequently revised August 1 ter of implementation dates.
At times, which led to an earlier than expected Port arrivals.
Q2 customer terminations of Series 6 International products.
Lower than forecasted Series 6, International sales, resulting a short notice inventory buildup.
and ongoing efforts to avoid anticipated section 301 tonnage fees on Chinese Bill vessels beginning in Q4
and lastly, Although our forecast value of 2025 section 5x tax credits, generated remains unchanged
Our daily guidance. Now assumes the sale of these credits from all, but 1 of our us facilities,
So remaining facility, we plan to utilize the credit to offset taxable income and claim any any residual benefits via direct pay.
Accordingly, we've reduced the projected value of section 45x tax credits in our guidance, by approximately 75 million.
I'll Now cover the full year 2025 guidance. Ranges on slide 11.
Our net sales guidance is between 4.9 and 5.7 billion, which includes an unchanged range of US, manufactured volume, and India manufactured volume sold.
Our updated narrow range of international Series 6, volume sold, and includes contract, termination revenue of 63 million recognized in our Q2 results.
Gross margin is expected to be between 2.05 and 2.35 billion or approximately 42%, which includes approximately 1.58 to 1.63 billion section 455x tax credits, 95 to 190 million of ramp and utilization costs.
$80 million to $130 million in tariffs on finished goods imports, and $70 million in tariffs on the bill of materials.
Scna, expense is expected to Total 185 to 195 million and R&D expects the expected total 230 to 250 million.
Scna and R&D combined expense, is expected to Total 415 to 445 million. The total operating expenses which include 65 to 705 million of production starts at expense are expected to be between 480 and 520 million.
Operating income is expected to range between $1.53 billion and $1.87 billion, with an operating margin range of approximately 32%.
This guidance includes $160 million to $2555 million in combined ramp and utilization, and plant startup costs.
As well as approximately 1.58 billion to 1.63 billion in section 45x credits, net of the anticipated loss associated with the sale of these credits.
This results in a full year 2025 earnings per diluted, share guidance, range of 13 and a half dollars to 16 and a half dollars. The midpoint of which is unchanged, from our previous guidance, notwithstanding the approximately 70 cents of impact to forecasted diluted EPS. So our updated guidance. Now assuming the sale of 2025 section for the X credits from over 1 of our us facilities,
From an earnings Cadence perspective, we anticipate module sales of 5 to 6. Gigawatts for the third quarter with 390 to 425 million in section 45x credits,
resulting in earnings per diluted share between $3.30 and $4.70.
Capital expenses for 2025 remain consistent with prior guidance, expected to range between 1 and 1.5 billion.
Our year end, 2025 net cash balance is anticipated to be between 1.3 and 2 billion.
Turner, slide 12, I'll summarize the key messages from today's call our Q2 earnings per diluted share came in above the high end of our guidance range at 318 per share primarily due to the customer contract, termination payment. So a favorable mix of US versus International products sold within the quarter,
Our forecast, the US produced volume sold remains unchanged for the year.
In the near term, ongoing trade policy uncertainty, particularly around the tariff regime, has introduced challenges that were not anticipated at the start of the year and have persisted and continuously evolved throughout.
We've updated our guidance to reflect the expected impact of the most recent proposed tariffs, other than the present indication yesterday of a potential penalty rate applying to India, and our current outlook on their implications.
We know that the midpoint of our diluted EPS guidance remains unchanged, even with the approximately $0.70 impact from the forecast to lose CPS. In our updated guidance, which assumes the sale of 2025 Section 5x credits from all one of our U.S. facilities,
Looking ahead. We are on balance pleased with the overall industrial and trade policy. Environment has emerged in a recent weeks.
We continue to remain confident in the long-term outlook for US dollar energy demand. And first of all has continued leadership underpinned by our vertically. Integrated manufacturing platform domestic supply chain non-cancer profile, and proprietary CAD cell technology.
Demand for our U.S. manufactured product remains strong, and our updated outlook continues to reflect the potential long-term resilience of our Series 6 International product, contingent on the U.S. market's ability to adapt amid ongoing policy and trade uncertainty.
With that, we conclude our prepared remarks, and over the course of questions operate.
First question today from Brian Lee from Goldman, Sachs.
Thanks for uh taking the questions here, Kudos on the uh the night. Nice execution. I think um you know obviously there's going to be a lot of focus here on. Uh what seems to be uh incremental Improvement in the bookings environment, as well as um uh some uh expansion and kind of your pricing power uh, based on some of the numbers, you rattled off. So maybe just digging into that a bit. So, 2 2 plus gigawatts bookings just in the month of July. Um, presumably pent up demand waiting for, you know, obba to get that through to the Finish Line. What kind of run rate, bookings? Kind of, are you seeing real time? Like what can we read into the 2 plus? Gigawatts of bookings, just in the month of July? And then, uh, maybe as a follow-up just on the pricing side, the 32 to 33 cents per watt, depending on which portion of the bookings. You're talking about, uh, you know, a couple pennies uh, higher, several pennies higher than what you had been run rating at what is, what does that reflect is? That is that ad cvd? Is it fiac? Is it domestic content? Entitlement like how much of that is
Actually being captured already and and what do you think could still be, um, you know, part of that that pricing picture as you you know, move through the next couple of quarters and into into 26? Thanks guys.
All right, thanks Brian. I'll take that. Um, first off, I would say that we're still learning. We're kind of filling our way around in terms of what's happening in the market and what are the implications around around pricing. Um, clearly after, you know, July 4th when the bill was signed, um, we had a lot of inbounds, a lot of questions, a lot of inquiries. Um, a lot of people trying to think through their their Safe Harbor strategy and what's really nice, when you think about what what what what we already had Safe, Harbor. Largely with through 28. Okay? And really robust demand for that period of window. Now with the kind of where we are right now, you've got a window now that will take that that activity all the way out through 2030, all right? So another 2, more years of Safe Harbor, you know contingent pin depending on what else may happen to the executive order. Um, it's given us a nice, the industry, a nice Runway to move forward, you know, to the end of this decade, which is what we all love to have in terms of long-term visibility and certainty. Um,
The.
When you when when we look at the individual drivers and trying to translate that into what's, what sort of created the ongoing engagement, I would argue this in the bookings. We saw in July, it's a little bit of everything um you know, some of it is wanting to Safe Harbor for projects that would then be, you know, completed in 2029. Um, some of it is you call it fiak or you could call it 80 CBD related and we had a large volume of um uh if the bookings was really
Related to, um, uh, a customer who had already committed volume, or believe they had committed volume from a Chinese supplier, uh, and that Chinese supplier, um, reneged on that volume. And that volume was actually needed in, uh, kind of the 26 time frame. And so they needed to react very quickly, uh, in order to recover, um, and get a certainty of a supply chain available and, and we were able to leverage, um, kind of the opportunistic, um, debugging that we saw on the quarter. Plus some inventory position, we had on International volume to, in order to fulfill that requirement for that, for that particular customer. So I would say there, there's still good momentum. Um, you know, I was talking with our chief commercial officer today and we got a number of deals near-term um that we would expect to close that. You know, they could add add up to, you know, another gigawatt here near term. Um so we're encouraged when we're going to continue to sort of fill our way through it. And we'll do a little price Discovery and
Of see where everything, you know, settles in. Um, but as we said, we've done a lot here to try to best position this market and you know, to, um, address a Level Playing Field and we think we're finally getting into that position. And and we think there's opportunity for additional price. Um, you know, in terms of our average aspects, we'll have to sort of discover where that ultimate lands. But we're encourages what we're seeing right now.
Moving on to Mark Strauss from JP Morgan.
Uh, yes. Good afternoon. Thanks for taking our questions. Um, just going back to the the last point mark, on, on some of your customers that are contracted, uh, out through year in 28, to the extent that there is a negative change in the. Uh, um, uh, I'm sorry in in the safe harbor language from the executive order. Uh, can you just talk about, uh, kind of the percentage of that backlog? That could potentially be a risk? Uh, that it's contractually open for them to cancel. Thank you.
First off, I just want to make sure we're we're clear on 1 Thing, the executive order was not intended to address the section. Uh, 48 and 45 ITC and PTC. Uh, that was Safe Harbor at the end of 24. And from that point in time, you have 4 calendar years in order to complete and build your project and put the place them in service, so that executive order shouldn't have any impact. Um, relative to the Legacy section 48 and section 45, the intent of the executive order was to focus on the tech neutral um uh ITC PTC. And to focus on a couple of different things 1 is to ensure. There's 2 substance uh and appropriate guidance, as it relates to um, what determines the command's construction. And there's a couple different ways to do that. 1 is through, you know, uh, committing 5% or so of the capex of a project or um, implementing.
Um, um, uh physical activities at at the project or at at, at the site, um, physical work. So that those those are being looked at to provide definition and guidance you know, the but the reconciliation Bill alluded to that a need for guidance. I think the guidance was originally to be placed out. No later than, uh, end of 2026. Executive order came out after the bill was signed saying, hey, we want that closer dated, so it, you know, it has a effectively, a 45 day window,
Which I think goes out to August 18th, where that guidance is to be provided or notice of of guidance. Um, it also has some Fiat Provisions in there as well, so it's not just to address the commence construction. It's also to address, um, some of the Fiat, uh, provisions and to, you know, effectively ensure that the Investments that we're making, you know, we're not uh, tethering back into, you know, Nations that could be adversaries such as, you know, Russia and China and others. Um, so the 48 Legacy as it relates into our project, um, contracted backlog that carries through 28 should be uh an unaffected by uh whatever comes out to the executive order. Uh, but the opportunity is what are the catalysts going beyond that? And that is the new new technical guidance, which will have some clarity around definition for for uh, commence, construction and fiac. But assuming that those are all um, amenable and manageable by uh, the market. Then now we have a new window that we can continue to book out and see strong.
Demand through 2029 into 20230 which we think is highly encouraging from that standpoint.
The next question today comes from prai. Satish Wells, Fargo?
Thanks. Yeah. So in terms of the bookings in in July, um, looks like it's included Series 6 and and reconstructed volumes, but it it doesn't look like you've tapped into your um, 2027 and Beyond us Series 7 capacity yet. And so should we interpret that interpret that to mean that pricing in that 32 to 33, Cent range, just isn't compelling enough for you to commit your 27 to 2030 us, capacity. I mean, you mentioned you, you've got 1 gigawatt of booking here in advanced stages. So, you know, kind of putting 2 and 2 together. Here should be assumed that, at a minimum, you, you're trying to look for some price Discovery above 32, 333 cents and and maybe just as a follow-up to that. Um, I mean, why even sell capacity at these levels, you've got the section, 232 um, poly silicon probe underway. And if that's successful and it's full intent, it could really boost pricing. So maybe if you could just kind of talk through that that rationale
Yeah, so so you're you're right a good, a good percentage of the um uh the bookings that we had in July were for S6 International uh and really even the the bookings through the first half of the year, you know, we had call 1.2 gigawatts or something like that and slightly less than half of it was was International product. Um and so as we think about, okay, how do we want to position the products and knowing the backdrop of everything that's going on?
Around us. And how do we ensure? I mean, getting what we think is full entitlement for for the product, what I like about some of the Safe Harbor. So let me let me back up first, before I go. If I look at the Series 6 that we reconstructed to me, that was a great transaction with a great price and to clear out the inventory that was largely sitting either in a warehouse or sitting in a port and incurring DND, uh, charges because the customer, uh,
defaulted on that obligation. So I wanted to get that inventory cleared as possible as quickly as possible. So this inventory while it won't be deployed until 2026 with the customer. It is actually there taking ownership and it is going to their warehouse and I'm not incurring any cost.
In DND cost down in particular. The other thing I like about the, um,
Feathering in some Safe Harbor, taking some of the Safe, Harbor volume, that that we did in July is under the new uh, 488 tech tech neutral. Um, the
Safe Harbor requirements in the tech-neutral investment tax credit or production tax credit have to be done at the inverter level.
Okay. Now, once I, once I committed to some percentage of a project, right? I think I have in a very strong position to capture the balance of that opportunity. So as you, as you think about it right now, if we Safe Harbor, 200, megawatts if, if you kind of do the math that potentially creates 2 to 3, gigawatts of opportunity a follow-on, right? Because you it's going to be very difficult to take um, our technology at the inverter level. And try to blend it with Chris and silicon, we have different voltages, and you can't and string lengths and everything else. It's very, very difficult and costly. So I'm looking at, look if I can take some near-term, Safe, Harbor, uh, see those projects and then create a follow-on opportunity for the balance of that. That's a good thing for us to do and I do fully take your comments about. Yes, the we we very much are appreciative of the self-initiated 232 case and, and
Collie and and the associated derivative so you know that obviously it could be another Catalyst for us. So we're being very selective in that regard but I do think what we did here near term with the bookings was to be very strategic uh and I do like doing some safe harboring that allows me to be better positioned for follow-on volumes when those projects ultimately get built.
Philip Shen from Roth Capital Partners has the next question.
Hey guys, thanks for taking the questions. A few here. Uh, just as a follow up on, on the price. And um, uh
The prior question I talked about the 2322 uh there's also what we've read about which is the ramping uflpa reinforcement and so that's yet another potential catalyst. So Mark as you think through pricing, I mean if International is at this 32 cents, level
Um, domestic content must be. I mean, I gotta imagine...
High 30s is is possible. So wondering if you can comment on that at all. And then how much inventory might be left in the warehouse? And then, finally, as it relates to capacity expansion now that we're past obb, and, um, we have these strong fiac rules the 232 and the line of catalysts that you have, uh, to what degree are you starting to
Think about new capacity. What are the things that you need to see before you make that next enhancement? Thanks.
Um, look on the last 1. In terms of what do I need to see? We kind of, I think need to let all the dust settle and dust also includes, you know, kind of, um, understanding what comes out with this executive order, uh, you know, um, to see what implications it has, um, that, that I think is piece of the puzzle that, you know, hopefully, we'll we'll see here near term, um,
look, I think the
the thing I want to maybe, I want to make sure we we said in our prepared remarks, but I want to make sure it's it's clear as well. We are domestic.
uh, Supply and our contract for that domestic Supply is
pretty solid through 2028.
Okay, so our lovers to for the domestic.
Discrete domestic is sits further. It's further out in the Horizon, okay? But what we have supply for is, um, with that, I think I said in my prepared remarks to that domestic position that we have created is a strategic foothold, in my mind to leverage our International volume. As both Series, 6, and Series 7,
okay and what we're looking to do and I think we've alluded to this in the past because this ties back to your capacity, expansion question is
To bring finishing capability into the US.
For to about a third of that. So now I'm bringing it in and it's costing me called 10 11 cents, kind of number versus something in the 30s and then from my tariffs are much lower.
The other thing that it does is it allows us to qualify for the manufacturing tax credit for assembly.
So that's another level that gets played into the math and for the fundamental economics and we alluded to, you know, the business case is is very attractive to doing that. Um, and so and then what happens is, I have the opportunity, um, because of the constructs that are put in place right now to determine domestic content requirements. I can actually blend some more International in with my domestic and it allows that opportunity to be multiplied, um, you know, significantly, in terms of its value level. Um, so there's lots that that's in in play and that in that regard, Phil, you know, we're working through each 1 of those items. We're trying to, you know, um, triangulate, get our insights understanding. What, what direction we want to go, um, you know, but I've been telling telling, uh, our team that, hey, we've got to be ready for this. We've already been working through and identifying site selection. We've already are thinking through the, um, uh, transferring of tools and equipment. The nice thing about running Malaysian Vietnam at lower capacity, right now means there's excess tools that are available.
That means we can go after those tools. Um, if the decision is that as the rates have come now with the announcement of the Tariff rates, um it really is going to be uneconomical to continue to import from those markets. It's going to be uh more uh beneficial for us to to bring in semi-finished product. Do that here in the US take advantage of of um
The, um, manufacturing tax, credit environment, and then give a little bit more, there will be some domestic content associated with that product. Um, you know, I guess some more value in that regard as well. So, just 1 thing, I'll add in terms of what do we need to see in Mark, just touched. On a little bit of the periphery. There is related to tariffs, tariffs impact, both. How we might price our International fully finished products. But also as impactful as we think through, if we do a Finishing Line, how do we Source the, uh, the early stage product, and bring it over as it coming from Malaysia Vietnam. Uh, just given that if you go back to our previous guy, we gave you 2, just weeks from now, is because there was so much uncertainty around long term care of outcomes. Would it be at about 10% or would it be at the more, uh, reciprocal rate. So we, we we've updated that in our current guide to what, we believe the current Outlook is today. So clearly we have some better visibility, but I say it's far from perfect and even as we're putting the guys together, there was information that came out yesterday that could have potentially changed in the see if you were out in India. So what do we still need to see? We still need to have a bit.
Bit more understanding of how the Tariff regime is going to play out.
Next question is Moses Sutton BMP, parabas.
Thanks for squeezing me in, um, if I look at the uh, North America, booking opportunity pipeline so it it's up a gigawatt, maybe 3 gigawatt. If I gross up the 2, that you booked in July, slide, 7,
How do we, how do we think of this? Because there's 70 gigawatts of North America booking opportunity. There's your stuff that's in contracted backlog and then there's like in the industry that has a bunch of panels. If I add all that up, it almost looks like it's the whole industry volume for the next few years. So, is there a signal there that we could even see that there's, you know, more coming into the pipeline, or you just seeing everything in the market already, and that's reflected in that metric.
Ah, Moses looked. I think, um,
there's a lot going on.
Right now. And and and and we've had a number of of inbounds, um, that are very large. Now, what what? I don't,
What I don't fully know. I'll, I'll use an example, um, of this, as I indicated, we had, we had a customer who had a near-term. Need who, um,
Because their supplier, Chinese supplier reneged on that deal and they came to us.
And I've got others that are coming to us as well. And what I in that particular customer is looking to do something even bigger than what we've done meaningfully larger um, for us in 27 and 28. Um, again that volume we sold to them. This time around was 426
Um or people pivoting away from from what they had initially envisioned that they were going to do. Um, so that I don't I don't know, it's hard for me to determine if what I'm seeing because I've seen a handful of very large commitments. Uh, some of it I think, is more incremental some of it I do think is is, um, you know, I'll call it. Put it in the that hyperscaler bucket, um, you know, AI related. Um, you know, that could be an incremental Catalyst to, to, um, maybe near-term visibility of market demand, but, but I think there's many things that are that are adding up right now that, you know, are maybe influencing a, a, a bigger view of the market um, than it would be otherwise.
And everyone, our final question today comes from Julian Duman Smith from Jeffrey's.
Excellent. Hey thanks. Uh, thanks for the opportunity to clean up here. Um, Team. If I can just tell the use of cash, right? Obviously, you found yourself in a nice position here coming into the back after the year, um, got this. These chunk of clarity coming out of, oh, Triple B. Um, pending tariff, how do you think about use of cash here again? Obviously, you've got a final incision on the fishing line. You've now disclosed that you're moving forward in a props, kite line in Ohio. Um, how do you think about, you know, the, the palatability of use of cache the different decision trees and the timeline for it. Um, again, pending tariffs seems to be a big consideration for your prior comments. But when, and how do you think about it? But both in the R&D sense, um, and as well as in Sherrill,
Of returns.
Yes, you know, I say we we've shored up the liquidity position from where we were at the last call. Pretty meaningfully this year, and I think I mentioned on the call. We were at a lower cash point that we'd be in historically. Uh, not something. I was worried about necessarily but we wanted to make sure we we put small resilience in there, which is what we've done. We continue to expect that to get better, over the year, as we get back to, somewhat of a more normalized, working capital position across both are and inventory. So, that's helpful. If you look at where we are in the year, absence significant new investment. We're through a large amount of the capex cycle that we've been through over the last couple of years. So there still will be some spend to finish up on the Louisiana site although that's uh, getting up and running. Now some of the cash payments that hold backs will happen in 2026. Uh as Mark mentioned, There's an opportunity around the finishing line that will depend on if we're bringing back-end tools from Asia that exists today and repurposing them here. Are we adding any new tools? Uh whether we lease the building, whether we buy a building that will change the capex profile here,
As well, the perovskite line, the development lines up and running. Uh, if that goes well, with opportunities to expand around that. But in general, I would say I'm viewing this year as, let's get through the year. Let's figure out how we stand around tariffs, and as the dust settles and the executive order, we should have a lot more clarity going into Q3 Q4 of this year of what that longer term position. Looks like when you combine that with the clarity, we had out of the, the obba being passed, that's helpful for the longer term view. Uh, the fundamental of waterfall approach, we have to catch
Hasn't changed. So we still look at cool running the business. Can we expand either new manufacturing sites or finishing lines? Uh, are we willing to spend more on R&D? And the answer recently has been yes, both internally and potentially looking at m&a around the R&D side. Um, and uh and then if we can't find a creative uses of cash through there, then we'll potentially look at how we would learn Capital so there's a lot more still. I think that to happen this year, as Mark mentioned, there's still just a settle around a lot of the policy that's really very fresh once we have better Clarity on that and we send. So we're going through next year, we'll update you on on the cash position most likely as we go into the 2026 guide, uh, towards the end of the year, early next year
And ladies and gentlemen that does conclude our conver our question and answer session. It also does conclude our conference. For today, we would like to thank you all for your participation. You may now disconnect