Business Overview and History

Founded in 1999, First Solar, Inc. has established itself as a pioneer in the development and manufacturing of advanced thin-film solar modules. The company is the only U.S.-headquartered company among the world's largest solar manufacturers, focusing on developing and manufacturing advanced thin-film PV modules using a proprietary semiconductor technology distinct from the more prevalent crystalline silicon PV technology.

In its early years, First Solar made significant investments in research and development to improve the efficiency and lower the cost of its CadTel (cadmium telluride) thin-film PV technology. This strategic focus allowed the company to emerge as a leader in the utility-scale solar market, where its modules could compete on price and performance with fossil fuel-based electricity generation.

Over the years, First Solar has expanded its global manufacturing footprint, establishing facilities in Malaysia, Vietnam, and India in addition to its U.S. operations. The company's vertically integrated manufacturing process, which integrates all steps from module design to final assembly, has been a key competitive advantage. By 2022, First Solar had over 6 GW of annual manufacturing capacity worldwide.

Throughout its history, First Solar has faced various challenges, including a difficult solar industry downturn in the late 2000s and intense pricing competition from crystalline silicon module manufacturers, many of whom were subsidized by the Chinese government. The company responded by further improving its technology, reducing costs, and diversifying its global manufacturing base. Additionally, First Solar made strategic decisions, such as exiting the solar project development business, to focus on its core module manufacturing operations.

Financial Performance and Metrics

First Solar's financial performance has been impressive, showcasing its ability to capitalize on the increasing adoption of solar power globally. In 2024, the company reported net sales of $4.21 billion, a 27% increase from the previous year. This strong revenue growth can be attributed to higher module sales volumes and the company's strategic focus on expanding its domestic and international customer base. The company's net income for 2024 reached $1.29 billion, with annual operating cash flow of $1.22 billion and annual free cash flow of -$308.08 million.

The company's gross profit margin also saw a significant improvement, reaching 44.2% in 2024, up from 39.2% in the prior year. This can be attributed to the company's successful implementation of cost reduction initiatives, as well as the benefits derived from the Inflation Reduction Act's (IRA) advanced manufacturing production credit.

First Solar's balance sheet remains strong, with a net cash position of $1.2 billion as of the end of 2024. The company had $1.8 billion in cash, cash equivalents, and marketable securities, along with an undrawn $1 billion revolving credit facility. This financial flexibility allows the company to invest in capacity expansion, research and development, and strategic initiatives, positioning it for long-term growth and success.

In the most recent quarter, First Solar reported revenue of $1.51 billion and net income of $393.12 million. The increase in Q4 revenue was driven by a 30% increase in module sales volumes compared to the prior year quarter. Net income increased 12.3% year-over-year but missed analyst estimates due to $56 million in warranty charges related to manufacturing issues with the Series 7 modules, as well as increased costs from ramp-up at new facilities and supply chain challenges.

First Solar's financial health is further demonstrated by its strong liquidity ratios, with a debt-to-equity ratio of 0.09, a current ratio of 2.45, and a quick ratio of 1.93. The company does not break out performance by geographic market but notes that 93% of 2024 net sales were in the United States.

Looking ahead to 2025, First Solar has provided guidance for net sales between $5.3 billion and $5.8 billion, with a gross margin expected to be between $2.45 billion and $2.75 billion, or approximately 47%. The company anticipates operating income to be between $1.95 billion and $2.3 billion, with an operating margin of approximately 38%. Full-year 2025 earnings per diluted share are expected to range from $17 to $20. Capital expenditures in 2025 are projected to range from $1.3 billion to $1.5 billion, with a year-end 2025 net cash balance anticipated to be between $0.7 billion and $1.2 billion.

Technological Advancements and Innovation

At the core of First Solar's success is its commitment to technological innovation. The company's three-pillar strategy focuses on continuous improvements to its core CdTe semiconductor technology, the development of next-generation thin-film semiconductors such as perovskites, and the advancement of tandem device structures that combine multiple semiconductors to achieve even higher efficiency.

In 2024, First Solar commenced a limited commercial production run of modules employing its CuRe technology, which is expected to enhance the module's performance by improving its bifaciality characteristics, temperature coefficient, and warranted degradation. This technological breakthrough underscores the company's ability to stay at the forefront of the industry and deliver increasingly efficient and reliable solar solutions.

Moreover, the company's acquisition of Evolar, a European developer of perovskite technology, is expected to accelerate the development of high-efficiency multi-junction devices by integrating Evolar's expertise with First Solar's existing research and development capabilities.

First Solar's module technology represents the next generation of solar power generation, providing a competitive, high-performance, and responsibly produced alternative to conventional crystalline silicon PV solar modules. The company's CdTe solar modules use approximately 2 to 3 times less semiconductor material compared to conventional crystalline silicon solar modules, enabling cost competitiveness. Additionally, First Solar's modules can produce more annual energy in real-world operating conditions than conventional crystalline silicon modules with the same nameplate capacity, due to technological advantages such as superior temperature coefficient, spectral response, and immunity to cell cracking.

Navigating Industry Challenges and Opportunities

The solar industry has faced its share of challenges, including intense competition, fluctuating trade policies, and supply chain disruptions. However, First Solar has demonstrated its resilience and ability to navigate these obstacles effectively.

The company's strategic focus on expanding its domestic manufacturing presence in the United States has positioned it to capitalize on the favorable policy environment created by the Inflation Reduction Act. The IRA's advanced manufacturing production credit and domestic content requirements have made First Solar's CdTe technology an increasingly attractive option for customers seeking to maximize the benefits of these incentives.

At the same time, First Solar has had to address certain manufacturing issues that affected its Series 7 modules in 2024. The company has taken corrective actions and continues to collaborate with customers to resolve these challenges, underscoring its commitment to product quality and customer satisfaction.

Looking ahead, First Solar remains well-positioned to capitalize on the growing global demand for renewable energy. The solar industry is one of the fastest-growing forms of renewable energy, driven by declining costs and increasing competitiveness versus traditional energy sources. The global solar power market was valued at $253.69 billion in 2023, indicating significant growth potential for companies like First Solar.

Operational Excellence and Capacity Expansion

First Solar's primary segment is its modules business, which involves the design, manufacture, and sale of CdTe solar modules that convert sunlight into electricity. As the world's largest thin film PV solar module manufacturer and the largest PV solar module manufacturer in the Western Hemisphere, First Solar's modules are produced using a fully integrated, continuous process that does not rely on Chinese crystalline silicon supply chains.

In 2024, First Solar's modules segment net sales increased by 27% to $4.20 billion, driven by a 24% increase in the volume of modules sold to third parties and an increase in termination payments associated with certain customer contract terminations. During the year, the company produced 15.5 GW and sold 14.1 GW of solar modules.

For 2025, First Solar expects to produce between 18.0 GW and 19.0 GW and sell between 18.0 GW and 20.0 GW of solar modules. The company's recent manufacturing capacity expansions, including the construction of its fifth U.S. manufacturing facility expected to commence operations in the second half of 2025, are aimed at meeting the growing demand for its solar modules, particularly in the United States and India, which are the company's primary markets.

In addition to its modules business, First Solar also has residual business operations that include certain project development activities, operations and maintenance (O&M) services, the results of operations from PV solar power systems the company owned and operated in certain international regions, and the sale of such systems to third-party customers. However, these residual business operations continue to wind down and contributed only $3.56 thousand to the company's net sales in 2024, down from $21.79 thousand in 2023.

Conclusion

First Solar's story is one of innovation, resilience, and a relentless pursuit of sustainable energy solutions. As the world increasingly embraces the transition to clean energy, the company's advanced solar technology and strategic positioning make it a compelling investment opportunity for those seeking to participate in the renewable energy revolution. With its strong financial performance, technological leadership, and ambitious expansion plans, First Solar is well-equipped to maintain its position as a key player in the global solar industry and drive the adoption of clean, efficient, and responsible solar energy solutions.