First Solar(FSLR) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for Q2 2024 increased by 25% to $1.0 billion compared to$0.8 billion in Q2 2023, driven by higher module sales volume and increased average selling price per watt[156] - Gross profit margin for Q2 2024 rose to 49.4%, up 11.1 percentage points from 38.3% in Q2 2023, due to higher utilization, advanced manufacturing credits, and a contract termination payment[157] - The company's gross profit margin improved to 49.4% in Q2 2024, up from 38.3% in Q2 2023, driven by cost efficiencies and operational improvements[189] - The company's operating income margin increased to 36.9% in Q2 2024, compared to 20.8% in Q2 2023, reflecting improved cost management and higher sales[189] - The company's net income margin rose to 34.6% in Q2 2024, up from 21.0% in Q2 2023, driven by higher profitability and reduced litigation losses[189] - Net sales from the modules segment increased by $206.5 million (26$463.4 million (35%) for the six months ended June 30, 2024, driven by a 29% increase in volume and a 5% increase in average selling price per watt[194] - Cost of sales increased by $11.3 million (2$23.2 million (2%) for the six months ended June 30, 2024, with a decrease of 15.7 percentage points as a percent of net sales, driven by higher module sales volume and advanced manufacturing production credits[200] - Gross profit increased by $188.5 million (61$422.4 million (100%) for the six months ended June 30, 2024, with gross profit as a percentage of net sales rising to 46.8% from 31.1%[203] - Research and development expense increased by $15.2 million (41$27.4 million (41%) for the six months ended June 30, 2024, driven by investments in R&D facilities and equipment and increased headcount[208] - Selling, general, and administrative expense remained consistent at $46.6 million for the three months ended June 30, 2024, representing 4.6$92.4 million for the six months ended June 30, 2024, representing 5.1% of net sales[206] - Production start-up expenses for the three months ended June 30, 2024 increased by $4.07 million (17$4.99 million (107%) compared to the same period in 2023, largely due to higher costs associated with hedging activities related to subsidiaries in India[213] - Interest income for the three months ended June 30, 2024 decreased by $427,000 (2$8.35 million (>500%) compared to the same period in 2023, primarily due to additional borrowing under various arrangements in India[218] - Income tax expense for the three months ended June 30, 2024 increased by $9.88 million (55$6 million related to the reversal of indefinite reinvestment assertion[223][224] - As of June 30, 2024, the company had $1.7 billion in cash, cash equivalents, and marketable securities, a decrease from$2.1 billion as of December 31, 2023, driven by purchases of property, plant, and equipment for U.S. and Indian facilities[228] - In July 2024, the company repatriated $1.0 billion of offshore funds after reversing its position to indefinitely reinvest the accumulated earnings of a foreign subsidiary[229] - Net cash provided by operating activities increased to$460.7 million in June 2024, primarily driven by proceeds from the sale of Section 45X credits[238][239] - Net cash used in investing activities decreased to $675.9 million in June 2024, due to lower purchases of marketable securities and higher investments in U.S. and Indian facilities[238][240] Manufacturing and Production Capacity - Total installed production capacity reached 17.6 GW as of June 30, 2024, with 3.7 GW produced and 3.4 GW sold in Q2 2024[157] - The company expects to reach an annual manufacturing capacity of over 25 GW by the end of 2026, with new facilities in the U.S. set to commence operations in late 2024 and 2025[156] - The company is expanding its manufacturing capacity by approximately 7.6 GW, including new facilities in the U.S. and capacity expansions at existing sites[187] - The company plans to invest approximately$1.4 billion in expanding U.S. manufacturing facilities, with operations expected to commence in the second halves of 2024 and 2025[232] - Capital expenditures for 2024 are projected to be between $1.8 billion and$2.0 billion, including new facilities and upgrades to increase module wattage and production capacity[233] Research and Development - The company achieved a new world record CdTe research cell conversion efficiency of 23.1%, certified by the U.S. Department of Energy's National Renewable Energy Laboratory[158] - The company completed construction of a dedicated R&D innovation center in Ohio, featuring a pilot manufacturing line for thin film and tandem PV modules[158] - The company is exploring multi-junction solar cell technologies, combining thin film PV with high-efficiency semiconductors, to significantly increase module efficiency[167] - The company commissioned a dedicated R&D innovation center in July 2024, featuring a high-tech pilot manufacturing line for thin film and tandem PV modules[233] Product Innovation and Sales - The company delivered its first bifacial solar modules to customers in Q2 2024, featuring an innovative transparent back contact design[165] - The company's CdTe modules use only 2% to 3% of the semiconductor material compared to conventional crystalline silicon solar modules, significantly reducing manufacturing costs[169] - The company's solar modules are warranted to produce at least 98% of their labeled power output rating in the first year, with a degradation factor of 0.3% to 0.5% annually over a 30-year warranty period[171] - The company has entered into contracts for the future sale of 74.6 GW of solar modules, with an aggregate transaction price of $22.3 billion, expected to be recognized as revenue through 2030[186] Government Incentives and Funding - The company sold$687.2 million of Section 45X tax credits for $659.7 million in cash proceeds, received in the first half of 2024[158] - The company expects to qualify for the advanced manufacturing production credit under Section 45X of the IRC, which provides benefits for solar modules and components manufactured in the U.S.[176] - The company received$44 million in U.S. government funding for CdTe development and perovskite tandem PV product manufacturing R&D projects[177] - The company was allocated INR 11.8 billion ($143 million) under India's Production Linked Incentive (PLI) scheme to promote high-efficiency solar module manufacturing[179] - The company expects to qualify for a Section 45X advanced manufacturing production credit of approximately$0.17 per watt for each solar module produced in the U.S. and sold to third parties, providing significant funding from 2023 to 2032[230] - In December 2023, the company sold $687.2 million of Section 45X tax credits for$659.7 million in cash proceeds, received in full by June 30, 2024[230] Operational and Strategic Initiatives - The CuRe program, aimed at replacing copper in semiconductor structures, is expected to complete lead line implementation in late 2024 and be replicated across facilities by late 2025[166] - The company has established a trust with $200.2 million in restricted marketable securities and$1.8 million in restricted cash for solar module collection and recycling obligations, with a liability of $134.8 million as of June 30, 2024[235] - The company has long-term supply agreements for raw materials, with termination penalties of up to$518.5 million as of June 30, 2024[234] - The company has no off-balance sheet debt or third-party debt guarantees as of June 30, 2024[237]