First Solar Inc

Strong quarter; margins expanded sharply (good) - Q2’26 net sales: ~$1.06B (-4% YoY), driven mainly by lower termination-related revenue (from terminations recognized in the prior year period), partially offset by higher module volumes sold. - Gross margin: ~57% (+12 pp YoY), primarily from an estimated ~$89M net IEPA tariff benefit, better mix of modules qualifying for Section 45X, and lower logistics costs (though there was offset from higher duties/tariffs and higher over-the-road freight due to capacity/diesel volatility). - Adjusted EBITDA: $644M, above the high end of previously guided Q2 range; margin ~61%. - Net income: $423M (+24% YoY). - Balance sheet: $1.7B net cash (within long-term targeted cash range $1.5B–$2B).

Backlog and bookings remain solid but policy-driven (good with some caution) - Contracted backlog (6/30/26): 45.1 GW, $13.6B aggregate transaction value (excluding technology adjusters), deliveries extending through 2030. - U.S. gross bookings since last call: ~1.9 GW at ~$0.36/W (inclusive of applicable technology adjusters). - Indian market (short-cycle book/bill): ~1.1 GW bookings in H1 at ~$0.20/W; guidance assumes India production is largely sold domestically. - Important new project context (surprising/positive): Cypress Creek’s Steel River Energy Center (Arkansas) began construction; First Solar modules are in backlog, with ~1.6 GW generation plus 1.9 GWh storage at phase 1, and expansion expected.

Outlook maintained; Q3 and full-year guidance include tariff/frieght moving parts (watch items for investors) - Full-year 2026 guidance reaffirmed (unchanged), but with updated assumptions: - Net tariff impact: ~60% ($80M). - Incorporates net IEPA recovery and assumes Section 301/“3.0.1” tariffs of zero in H2. - Offsets include expectations for changes in production start-up expense vs R&D expense and incremental freight driven by delivery-location mix. - Q3’26 expectations: volumes sold 3.9–4.5 GW; adjusted EBITDA $625M–$775M. - Key investor takeaway: Management is not revising guidance, but tariff/logistics/IEPA recovery estimates remain a meaningful swing factor.