FSLR · 10-Q · 2026Q3 · Full report
Gross Margin Drivers
FIRST SOLAR, INC. · 2026-10-29 · Importance 60 · Surprise 40 · In source text
Gross profit increased 16.8% to $713.1 million for the three months ended September 30, 2026, while gross margin rose 19.6 percentage points to 57.9% from 38.3%. The 45X advanced manufacturing production credit reduced third-quarter cost of sales by $237.7 million, and higher sales price per watt also supported the margin increase. These benefits were partly offset by $118.9 million of higher production costs, primarily from a greater mix of U.S.-produced modules, and lower revenue associated with customer contract terminations. For the nine months ended September 30, 2026, gross profit increased 24.0% to $1,804.2 million and gross margin rose to 54.2% from 41.1%; the 45X credit reduced cost of sales by $426.3 million, while higher U.S.-produced module mix added $100.4 million of production costs.
Key facts
- For the three months ended September 30, 2026, Section 45X credits reduced First Solar’s cost of sales by $237.7 million; lower sales volume reduced it by $229.9 million and logistics costs by $55.7 million, partly offset by $118.9 million of higher production costs, primarily from a higher U.S.-produced sales mix. source
- For the nine months ended September 30, 2026, Section 45X credits reduced First Solar’s cost of sales by $426.3 million and lower logistics costs reduced it by $129.8 million; higher production costs of $100.4 million, largely from a higher U.S.-produced sales mix, partly offset the decrease. source
- For the three months ended September 30, 2026, First Solar’s gross margin increased 19.6 percentage points to 57.9% from 38.3%, primarily due to more modules qualifying for Section 45X credits and a higher sales price per watt, partly offset by higher U.S.-module production costs and lower termination-related revenue. source
- Gross profit as a percentage of net sales increased 13.1 percentage points to 54.2% for the nine months ended September 30, 2026, from 41.1% in 2025. source
- The nine-month gross profit percentage increase was primarily due to a greater benefit from the advanced manufacturing credit and lower logistics costs, partially offset by higher manufacturing costs per watt due to sales mix and lower revenue associated with customer contract terminations. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +34.6% | For the nine months ended September 30, 2026, Section 45X credits reduced First Solar’s cost of sales by $426.3 million and lower… |
| operating_income | positive | realized | +18.7% | For the three months ended September 30, 2026, Section 45X credits reduced First Solar’s cost of sales by $237.7 million; lower sales… |
| operating_income | positive | realized | +10.5% | For the nine months ended September 30, 2026, Section 45X credits reduced First Solar’s cost of sales by $426.3 million and lower… |
| operating_income | negative | realized | -8.2% | For the nine months ended September 30, 2026, Section 45X credits reduced First Solar’s cost of sales by $426.3 million and lower… |