First Solar Reports Q4 Performance: Strong Sales but EPS Misses

First Solar recently announced its financial performance for the fourth quarter, showcasing a mix of results. The company reported sales exceeding expectations, yet earnings per share (EPS) fell short of analyst forecasts.

For Q4, First Solar, a leading manufacturer of thin-film solar modules, recorded a revenue of $1.5 billion, surpassing analyst predictions of $1.48 billion. However, the EPS of $3.65 did not meet the expected $4.63. This inconsistency indicates a promising growth in sales alongside ongoing challenges in profitability.

Metric	Q4 2024	Analysts' Estimate	Q4 2023	Change (YOY)
EPS	$3.65	$4.63	$3.25	12.3%
Revenue	$1.51 billion	$1.48 billion	$1.16 billion	30%
Gross profit	$567.7 million	-	$502 million	13.1%
Net income	$393.1 million	-	$349.2 million	12.6%

Source: First Solar. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.

About First Solar

First Solar is known in the solar industry for its innovative thin-film cadmium telluride (CdTe) technology. This technology offers advantages such as better performance in high temperatures and uses fewer materials compared to traditional silicon panels. The company is globally recognized, operating several facilities aimed at boosting production capabilities.

In recent years, First Solar has prioritized enhancing its manufacturing processes and expanding into new markets. Key milestones include the launch of its production facility in Alabama and ongoing work on a new site in Louisiana, which are expected to strengthen the company's supply chain and cater to increasing market needs.

Quarter Performance and Challenges

In the fourth quarter, First Solar achieved $1.5 billion in sales, a 30% increase compared to the same period the previous year. This growth was largely attributed to strong module sales. However, the decline in EPS signals potential difficulties related to management of costs and unexpected expenses.

The company demonstrated a commitment to innovation, investing in its CuRe production line and expanding its research and development (R&D) initiatives. These initiatives are part of First Solar's goal to provide competitive solar products. Sustainability continues to be a key focus area, with various recycling programs in place to meet environmental standards.

Despite the positives, First Solar encounters challenges including stiff competition and lower pricing pressures in markets like India. Rising interest rates and changes in regulations may also affect product demand. Additionally, reliance on government policies, such as the Inflation Reduction Act, could significantly impact profitability.

As of year-end, First Solar maintained a healthy financial position, reporting a net cash balance of $1.2 billion. However, it expects a noticeable decrease in cash reserves due to its aggressive expansion plans, projecting a net cash balance between $0.7 billion and $1.2 billion by 2025.

Future Outlook

The management of First Solar provided optimistic guidance for 2025, estimating net sales would range from $5.3 billion to $5.8 billion, with an EPS forecast between $17 and $20. The company anticipates selling between 18 and 20 gigawatts (GW) of solar modules in 2025, fueled by enhanced production capacity and robust market demand. They also expect to benefit from incentives outlined in the Inflation Reduction Act, estimating contributions from production credits between $1.65 billion and $1.7 billion.

Investors should continue to monitor First Solar’s growth in manufacturing and advancements in technology as these factors are crucial for improving its market position. As the company navigates through competitive pressures and regulatory changes, its strategic decisions will play a vital role in achieving sustainable profitability and expanding into new markets.

FirstSolar, Earnings, Performance