First Solar Lowers 2026 Sales Outlook as Q3 Margin Expands

First Solar (Nasdaq: FSLR) lowered its 2026 sales, shipment and adjusted EBITDA outlook after third-quarter revenue declined 23%, even as a larger mix of U.S.-made modules and lower manufacturing-related costs drove a sharp expansion in profitability.

The solar manufacturer now expects full-year net sales of $4.6 billion to $4.9 billion, compared with its previous range of $4.9 billion to $5.2 billion. Forecast volume sold was reduced to 16.0 GW to 17.0 GW from 17.0 GW to 18.2 GW, while adjusted EBITDA guidance moved to $2.55 billion to $2.75 billion from $2.6 billion to $2.8 billion.

First Solar maintained its gross profit forecast of $2.4 billion to $2.6 billion and year-end net cash outlook of $1.7 billion to $2.3 billion. The company also reduced planned capital expenditures to between $600 million and $800 million from $800 million to $1.0 billion.

U.S. module mix lifts quarterly earnings

Net sales for the quarter ended Sept. 30 fell to $1.23 billion from $1.60 billion a year earlier, in line with the sales cadence anticipated by the company. First Solar sold 3.9 GW of U.S. volume and 0.2 GW in India during the quarter.

Despite the lower revenue, gross profit rose to $713 million from $611 million. Gross margin expanded by 20 percentage points to 58%, reflecting a greater contribution from U.S. modules eligible for Section 45X manufacturing tax credits, the absence of a prior-year charge related to discounts on those credits, and lower freight, underutilization, tariff and duty costs. Lower termination-related revenue partly offset those benefits.

Net income increased 25% to $571 million, or $5.30 per diluted share, from $456 million, or $4.24 per share, in the prior-year quarter. The GAAP net income margin was 46%, compared with 29% a year earlier.

EBITDA, a non-GAAP measure, rose 19% to $692 million, while adjusted EBITDA increased 11% to $744 million. Adjusted EBITDA margin reached 60%, up from 42% in the third quarter of 2025. Operating expenses increased 15% to $167 million as First Solar continued research and development spending tied to its CuRe technology and perovskite programs.

Global manufacturing fleet utilization was 87%, including 98% in the U.S. and 87% in India. Underutilization costs declined to $21 million from $49 million, while production start-up expenses decreased to $34 million from $37 million.

Backlog extends through 2030

First Solar reported a contracted backlog of 44.0 GW, valued at approximately $13.5 billion, extending through 2030. From Jan. 1 through Oct. 29, U.S. bookings excluding India totaled 4.9 GW at an average selling price, including anticipated technology adjusters, of about 36 cents per watt. Since the company’s July 30 earnings call, U.S. gross bookings excluding India were 1.4 GW at roughly the same adjusted price.

India gross bookings totaled 1.3 GW during the year-to-date period at an average selling price of approximately 20 cents per watt. First Solar said its fully integrated U.S. production was substantially committed through 2028.

Management is shifting customer engagement from broad multi-year framework agreements toward project-specific contracts with defined assets and delivery schedules. The company said it is seeking improved pricing on new sales following the Section 232 trade action, along with stronger contractual protections, credit support and firmer delivery schedules.

The presentation identified availability, delivery certainty, warranties and supply-chain security as priorities for customers planning projects for 2028 and later. First Solar said minimum import pricing and an additional 15% ad valorem duty established under Section 232 are scheduled to take effect on Dec. 4, 2026.

Capacity investment continues

Phase one production has started at First Solar’s South Carolina facility, and the company expects the 3.5 GW finishing plant to be fully operational by mid-2027. The facility is not additive to the company’s Vietnam capacity and is eligible only for the Section 45X module assembly tax credit. Deployment of Series 7 CuRe technology is also advancing in India.

First Solar ended the quarter with $1.64 billion of cash and marketable securities and net cash of about $1.5 billion. It had $1.6 billion of working capital, $1.88 billion of government grant receivables and an undrawn $1.5 billion senior unsecured revolving credit facility.

Year-to-date operating cash outflow was $403 million, which the company attributed to working-capital seasonality, while capital expenditures totaled $435 million. Its 2026 investment plan includes about $300 million for capacity expansion, including a sixth U.S. facility, and approximately $300 million for technology and R&D investments. Perovskite-related R&D expense is expected to be about $120 million, while start-up costs for the sixth U.S. plant are forecast at $80 million to $90 million.

For the fourth quarter, First Solar expects to sell 4.3 GW to 5.3 GW, including 3.4 GW to 4.3 GW in the U.S., and generate adjusted EBITDA of $643 million to $843 million. Full-year assumptions include $2.07 billion to $2.19 billion of Section 45X credits, $110 million to $120 million of underutilization costs and a net tariff-related impact of $55 million to $65 million. The outlook assumes no Section 45X tax-credit sales in 2026.

The company cautioned that its outlook remains exposed to global solar-module supply-demand imbalances, changes in trade and tax policy, customer financing and contract performance, manufacturing ramps, supply-chain disruptions, raw-material costs and its ability to execute technology and capacity-expansion plans. First Solar did not provide GAAP net income guidance because it said several potentially significant items cannot be predicted with reasonable certainty.