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Released May 02, 2025 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Presidents give, and they take away. That may not be a particularly new insight, but it's one becoming particularly clear as energy companies report first-quarter earnings, which are starting to reflect the dramatically different energy, tax and tariff proclivities of President Donald Trump.
Former President Joe Biden's administration favored renewable generation and non-emitting electric resources like wind, solar and battery energy storage while targeting coal and other hydrocarbons. Trump is taking the opposite tack, favoring traditional hydrocarbon resources while disadvantaging renewables.
The 180-degree shift in presidential priorities was evident in the first-quarter earnings report and call held by First Solar Incorporated (NASDAQ:FSLR) (Tempe, Arizona), the nation's largest solar technology company.
On the company's April 29 earnings call, Chief Executive Officer Mark Widmar used the term "significant near-term uncertainties" repeatedly to describe the U.S. market environment. He was referring to the varying levels of import tariffs the president announced April 2, but then paused for 90 days, as well as uncertainty over how Congress will treat clean-energy and advanced manufacturing incentives contained in previous federal legislation, such as the Inflation Reduction Act of 2022 (IRA), when it crafts a budget for the fiscal year starting October 1 using the budget reconciliation process.
First Solar manufactures solar panels in the U.S., India, Malaysia and Vietnam. Most of the panels it manufactures overseas are slated to be used in the U.S. solar power stations. The company also is in the process of building a $1.1-billion solar panel manufacturing plant in Louisiana.
Industrial Info is tracking about 150 solar power projects around the world that are scheduled to use First Solar's technology, valued collectively at about $34.3 billion. The vast majority of those projects, about 138 valued at roughly $32.7 billion, are scheduled to be built in the U.S. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a complete list of projects scheduled to use First Solar's panels.
Last month, Trump announced "reciprocal" tariffs of 26% on Indian imports, 24% on goods coming from Malaysia and 46% on goods imported from Vietnam, before suspending them for 90 days in an attempt to work out bilateral trade deals. These levies were in addition to Trump's baseline 10% universal tariff on all imported goods plus a 25% tariff on imported steel, a critical ingredient of solar and storage projects. One of Trump's announced reasons for the tariffs was to reshore U.S. manufacturing. Economists and supply-chain experts have said it can take years to reshore manufacturing capacity and rebuild domestic supply chains for all of the imported goods targeted by the president.
Even if the "reciprocal" tariffs were waived and the 10% universal levy was retained, Widmar said the company would still see a "meaningfully adverse gross margin impact" unless the duty could be fully passed along to the module buyer, typically a solar power project developer.
"The new tariff regime imposed (in April) has introduced significant challenges that were not known at the start of the year," Widmar told analysts and investors. The company also faces "significant near-term uncertainty from the budget reconciliation process and its potential impact on the IRA clean energy tax credits." Unless those tariffs are lifted, First Solar's overseas panel manufacturing sites face "significant economic headwinds" in selling into the U.S., he added. Most of those uncertainties will persist in the second and even into the third quarter.
Analysts and investors probably were not hugely surprised by First Solar's earnings report. As a first-time president, and as a second-term candidate, Trump made no secret of his hostility to renewable energy and his fondness for tariffs.
First Solar's stock hovered between $27 and $70 during the first Trump administration, but rocketed to a high of about $250 last summer, propelled by federal largesse to renewable energy during the Biden administration. But since then, shares have steadily declined to about $140 prior to the earnings call. Shares fell about 14% after the call, to about $127.
Investors and business leaders don't like uncertainty, but the market may have overreacted because the company's financial results were not actually that bad. Net income for the quarter fell to about $210 million on revenue of approximately $846 million. By comparison, in the comparable year-earlier quarter, First Solar reported earnings of $237 million on sales of $794 million. Its gross profit margins (sales minus the cost of goods sold) fell to 40.8% in the just completed period compared to 43.6% in the first quarter of 2024.
On the April 29 earnings call, Widmar walked analysts and investors through a series of scenarios under which First Solar's commercial agreements allowed it to terminate sales if module buyers would not absorb any of the costs of the tariffs to opportunities to negotiate a sharing of the financial burdens created by the tariffs.
First Solar reported a project backlog of about 66,300 megawatts (MW) through 2030, but said about 12,000 MW of that could be lost to terminations if the module buyer refused to absorb some of the tariffs.
"Despite the near-term challenges ... we believe that the long-term outlook for solar demand, particularly in our core U.S. market, remains strong, and that First Solar remains well-positioned to serve this demand," Widmar said. "This belief is based on the unique profile of First Solar compared to its peers, as America's largest, and most established solar module manufacturer, and the country's only fully vertically integrated producer, our significant network of domestic supply chain vendors, and our proprietary (panel) semiconductor" technology."
Once the company got through the Trump tariffs, Widmar said utility-scale solar had "strong fundamentals," driven by projected U.S. electricity demand growth of up to 50% by 2050. Artificial intelligence (AI) was expected to be a strong driver of future electric demand growth, Widmar said, adding that utility-scale solar was "capable of rapidly delivering cost-effective incremental peaking and baseload capacity." The reference to "baseload" capacity presumably was when solar was paired with storage.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Former President Joe Biden's administration favored renewable generation and non-emitting electric resources like wind, solar and battery energy storage while targeting coal and other hydrocarbons. Trump is taking the opposite tack, favoring traditional hydrocarbon resources while disadvantaging renewables.
The 180-degree shift in presidential priorities was evident in the first-quarter earnings report and call held by First Solar Incorporated (NASDAQ:FSLR) (Tempe, Arizona), the nation's largest solar technology company.
On the company's April 29 earnings call, Chief Executive Officer Mark Widmar used the term "significant near-term uncertainties" repeatedly to describe the U.S. market environment. He was referring to the varying levels of import tariffs the president announced April 2, but then paused for 90 days, as well as uncertainty over how Congress will treat clean-energy and advanced manufacturing incentives contained in previous federal legislation, such as the Inflation Reduction Act of 2022 (IRA), when it crafts a budget for the fiscal year starting October 1 using the budget reconciliation process.
First Solar manufactures solar panels in the U.S., India, Malaysia and Vietnam. Most of the panels it manufactures overseas are slated to be used in the U.S. solar power stations. The company also is in the process of building a $1.1-billion solar panel manufacturing plant in Louisiana.
Industrial Info is tracking about 150 solar power projects around the world that are scheduled to use First Solar's technology, valued collectively at about $34.3 billion. The vast majority of those projects, about 138 valued at roughly $32.7 billion, are scheduled to be built in the U.S. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a complete list of projects scheduled to use First Solar's panels.
Last month, Trump announced "reciprocal" tariffs of 26% on Indian imports, 24% on goods coming from Malaysia and 46% on goods imported from Vietnam, before suspending them for 90 days in an attempt to work out bilateral trade deals. These levies were in addition to Trump's baseline 10% universal tariff on all imported goods plus a 25% tariff on imported steel, a critical ingredient of solar and storage projects. One of Trump's announced reasons for the tariffs was to reshore U.S. manufacturing. Economists and supply-chain experts have said it can take years to reshore manufacturing capacity and rebuild domestic supply chains for all of the imported goods targeted by the president.
Even if the "reciprocal" tariffs were waived and the 10% universal levy was retained, Widmar said the company would still see a "meaningfully adverse gross margin impact" unless the duty could be fully passed along to the module buyer, typically a solar power project developer.
"The new tariff regime imposed (in April) has introduced significant challenges that were not known at the start of the year," Widmar told analysts and investors. The company also faces "significant near-term uncertainty from the budget reconciliation process and its potential impact on the IRA clean energy tax credits." Unless those tariffs are lifted, First Solar's overseas panel manufacturing sites face "significant economic headwinds" in selling into the U.S., he added. Most of those uncertainties will persist in the second and even into the third quarter.
Analysts and investors probably were not hugely surprised by First Solar's earnings report. As a first-time president, and as a second-term candidate, Trump made no secret of his hostility to renewable energy and his fondness for tariffs.
First Solar's stock hovered between $27 and $70 during the first Trump administration, but rocketed to a high of about $250 last summer, propelled by federal largesse to renewable energy during the Biden administration. But since then, shares have steadily declined to about $140 prior to the earnings call. Shares fell about 14% after the call, to about $127.
Investors and business leaders don't like uncertainty, but the market may have overreacted because the company's financial results were not actually that bad. Net income for the quarter fell to about $210 million on revenue of approximately $846 million. By comparison, in the comparable year-earlier quarter, First Solar reported earnings of $237 million on sales of $794 million. Its gross profit margins (sales minus the cost of goods sold) fell to 40.8% in the just completed period compared to 43.6% in the first quarter of 2024.
On the April 29 earnings call, Widmar walked analysts and investors through a series of scenarios under which First Solar's commercial agreements allowed it to terminate sales if module buyers would not absorb any of the costs of the tariffs to opportunities to negotiate a sharing of the financial burdens created by the tariffs.
First Solar reported a project backlog of about 66,300 megawatts (MW) through 2030, but said about 12,000 MW of that could be lost to terminations if the module buyer refused to absorb some of the tariffs.
"Despite the near-term challenges ... we believe that the long-term outlook for solar demand, particularly in our core U.S. market, remains strong, and that First Solar remains well-positioned to serve this demand," Widmar said. "This belief is based on the unique profile of First Solar compared to its peers, as America's largest, and most established solar module manufacturer, and the country's only fully vertically integrated producer, our significant network of domestic supply chain vendors, and our proprietary (panel) semiconductor" technology."
Once the company got through the Trump tariffs, Widmar said utility-scale solar had "strong fundamentals," driven by projected U.S. electricity demand growth of up to 50% by 2050. Artificial intelligence (AI) was expected to be a strong driver of future electric demand growth, Widmar said, adding that utility-scale solar was "capable of rapidly delivering cost-effective incremental peaking and baseload capacity." The reference to "baseload" capacity presumably was when solar was paired with storage.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
