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Item 1A. Risk Factors

2025-08-07 compared with 2025-05-06 · 71 added, 21 removed, 57 unchanged (62% of the section changed)

Except as set forth below, and to the extent additional factual information disclosed elsewhere in this Quarterly Report relates to such risk factors (including, without limitation, the matters discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ), there were no material changes to the risk factors disclosed in Part I, Item 1A, in our 2024 Annual Report .

Except as set forth below and as filed as Exhibit 99.2 to our June 24, 2025 8-K, and to the extent additional factual information disclosed elsewhere in this Quarterly Report relates to such risk factors (including, without limitation, the matters discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ), there were no material changes to the risk factors disclosed in Part I, Item 1A, in our 2024 Annual Report .

Geopolitical, macroeconomic and other market conditions could adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price.

Geopolitical and macroeconomic developments such as the global or regional economic effects resulting from the current Russia-Ukraine war and ongoing instability in the Middle East (including, but not limited to, the Israel-Iran conflict and disruptions in the transportation of goods through the Suez canal and to shipping in the Red Sea), inflation and related economic curtailment initiatives, evolving trade policies between the U.S.

and international trade partners, or the occurrence of similar events in other countries that lead to uncertainty or instability in economic, political or market conditions could negatively affect our business, operating results, financial condition and outlook, which, in turn, could adversely affect our stock price.

Political issues and conflicts could have a material adverse effect on our results of operations and financial condition if they escalate into geographies in which we do business or obtain our components.

A local conflict, such as the Ukraine-Russian war or the Middle East instability, could also have a significant adverse impact on regional or global macroeconomic conditions, give rise to regional instability or result in heightened economic tariffs, sanctions and import export restrictions in a manner that adversely affects us, including to the extent that any such actions cause material business interruptions or restrict our ability to conduct business with certain suppliers.

Additionally, such conflict or sanctions may significantly devalue various global currencies and have a negative impact on economies in geographies in which we do business.

Any general weakening of, and

related declining corporate confidence in, the global economy could cause current or potential customers to reduce or eliminate their budgets and spending, which could cause customers to delay, decrease or cancel projects with us which could have a negative effect on our business, operating results and financial condition.

Changes in the global trade environment, including the imposition of import tariffs, could adversely affect the amount or timing of our revenues, results of operations or cash flows.

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to impose new tariffs on imports from Canada, Mexico, and China, to take effect on February 4, 2025.

On February 3, 2025, President Trump announced his intention to pause these tariffs on Canada and Mexico for the next month.

impose an additional 25% ad valorem rate of duty on all imports from Canada and Mexico (other than imports of Canadian energy resources exports, which are subject to a 10% ad valorem rate of duty) and an additional 10% ad valorem rate of duty on all imports from China.

On February 3, 2025, President Trump announced his intention to pause these tariffs on Canada and Mexico for a one-month period.

The tariffs impose an additional 25% ad valorem rate of duty on all imports from Canada and Mexico (other than imports of Canadian energy resources exports, which are subject to a 10% ad valorem rate of duty) and an additional 10% ad valorem rate of duty on all imports from China.

On March 3, 2025, the announced 25% tariff on Canadian and Mexican goods took effect and the tariff on Chinese goods was doubled to 20%.

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On April 2, 2025, President Trump introduced tariffs on most countries of a baseline rate of 10%, and individualized rates on some countries of up to 50%.

On April 9, 2025, President Trump increased tariffs for Chinese goods to 125% and subsequently to 145%, while the tariffs announced on April 2, 2025 for all other countries was reduced to a baseline rate of 10% for the next 90 days.

On July 7, 2025, President Trump extended the initial 90-day period for the 10% baseline rate until August 1, 2025 while also announcing increased tariffs for certain countries.

These modifications were announced via an executive order on July 31, 2025 and became effective as of August 7, 2025.

President Trump also launched a new Section 301 investigation into Brazil’s alleged unreasonable or discriminatory trade practices;

initiated a new Section 232 investigation into imports of polysilicon and its derivatives;

initiated a new Section 232 investigation into imports of unmanned aircraft systems and their parts and components;

and announced a 50% tariff on imports of copper following the conclusion of a Section 232 investigation, effective August 1, 2025.

Finally, President Trump has most recently threatened to increase tariffs

on imports from Canada to 35% and on imports from Mexico to 30%.

Initially, Canada and Mexico were not subject to reciprocal tariffs as they were subject to earlier tariff actions.

We are currently evaluating the potential impact of the imposition of the announced tariffs, and any additional or retaliatory tariffs, to our business and financial condition.

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in 2025 will have a material adverse effect upon our results of operations, financial condition, or liquidity, the actual impact of the new tariffs is subject to a number of factors including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that the target countries may take and any mitigating actions that may become available.

More broadly, President Trump has directed the USDOC, USTR, and other agencies, to review and identify unfair trade practices by other countries and recommend appropriate actions, as well as recommend modifications of AD/CVD laws to further induce compliance by foreign respondents and governments involved in those proceedings.

These directives have been issued under the America First Trade Policy and Reciprocal Trade and Tariffs memoranda, and the effects on the global trading system can be far-reaching.

More broadly, President Trump has directed the USDOC, the U.S.

Trade Representative (the “USTR”), and other agencies, to review and identify unfair trade practices by other countries and recommend appropriate actions, as well as recommend modifications of AD/CVD laws to further induce compliance by foreign respondents and governments involved in those proceedings.

These directives have been issued under the America First Trade Policy and Reciprocal Trade and Tariffs Presidential Memoranda, and the effects on the global trading system can be far-reaching.

In January 2018, the U.S.

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While this tariff does not apply directly to the components we import, it may indirectly affect us by impacting the financial viability of solar energy projects, which could in turn reduce demand for our products.

On February 4, 2022, former President Biden extended the safeguard tariff for an additional four years, starting at a rate of 14.75% and reducing that rate each year to 14% in 2026, and directed the U.S.

Trade Representative to conclude agreements with Canada and Mexico on trade in solar products.

On July 7, 2022, the U.S.

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Products on Lists 1, 2, and 3 are subject to 25% tariffs, while products on List 4A are subject to 7.5% tariffs.

On December 16, 2024, the U.S.

Trade Representative (“USTR”) announced that it would increase Section 301 tariffs on polysilicon and wafers to 50% in 2025.

On December 16, 2024, the USTR announced that it would increase Section 301 tariffs on polysilicon and wafers to 50% in 2025.

At the same time, the USTR implemented 14 tariff exclusions for listed solar cell and wafer manufacturing equipment.

While these tariffs are not directly applicable to our products, they could impact the solar energy projects in which our products are used, which could lead to decreased demand for our products.

On August 18, 2023, the U.S.

Department of Commerce (“USDOC”) issued final affirmative determinations of circumvention with respect to certain crystalline solar photovoltaic (“CSPV”) cells and modules produced in Cambodia, Malaysia, Thailand and Vietnam using parts and components from China.

As a result, certain CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam are now subject to antidumping and countervailing duty (“AD/CVD”) orders on CSPV cells and modules from China that have been in place since 2012.

Subject to certain certification and utilization conditions, imports of CSPV cells and modules covered by

the circumvention determinations that entered the U.S.

On August 18, 2023, the USDOC issued final affirmative determinations of circumvention with respect to certain CSPV cells and modules produced in Cambodia, Malaysia, Thailand and Vietnam using parts and components from China.

As a result, certain CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam are now subject to AD/CVD orders on CSPV cells and modules from China that have been in place since 2012.

Subject to certain certification and utilization conditions, imports of CSPV cells and modules covered by the circumvention determinations that entered the U.S.

during the two-year period prior to June 6, 2024 – which had been authorized by the former President Biden on June 2022 – were not subject to AD/CVD cash deposit or duty requirements.

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If the USITC’s decision is overturned on appeal, the imposition of AD/CVD orders could negatively impact our business, financial condition, and results of operations.

On April 24, 2024, the American Alliance for Solar Manufacturing Trade Committee, an ad hoc coalition of domestic producers of CSPV cells and modules, filed a petition with the USDOC and the U.S.

International Trade Commission (“USITC”) seeking the imposition of AD/CVD tariffs on imports of CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam.

The USITC made a preliminary affirmative determination on June 7, 2024, and the USDOC made its preliminary affirmative determination on October 1, 2024.

The preliminary tariff rates vary from below 1% to almost 300%, depending on the relevant company.

On April 24, 2024, the American Alliance for Solar Manufacturing Trade Committee, an ad hoc coalition of domestic producers of CSPV cells and modules, filed a petition with the USDOC and the USITC seeking the imposition of AD/CVD tariffs on imports of CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam.

On May 20, 2025 the USITC made a final determination that U.S.

industry had been materially injured by imports from Malaysia and Vietnam and threatened by imports from Cambodia and Thailand.

On June 9, 2025, the USDOC issued AD/CVD orders that took effect on June 16, 2025.

The tariff rates under the final determination vary from below 1% to more than 3,400%, depending on the relevant company.

On July 17, 2025, the Alliance for American Solar Manufacturing and Trade, which consists of First Solar, Mission Solar Energy, and Qcells, filed another petition with the USDOC and USITC seeking the imposition of AD/CVD tariffs on imports of CSPV cells and modules from India, Indonesia, and Laos.

The petition alleges margins of 213.96 percent for India, 89.65 percent for Indonesia, and 245.79 to 249.09 percent for Laos.

The final determination by the DOC is expected to be made sometime in fall 2026.

While we do not sell solar modules, the degree of our exposure is dependent on, among other things, the impact of the investigation on the projects that are also intended to use our products, with such impact being largely out of our control.

We have seen a number of projects in our order book delayed as a result of the USDOC investigation.

The repeal of the 24-month exemption, and any affirmative determinations made once the exemption expires in any event, would have an adverse effect on our business, financial condition, and results of operations.

We have seen a number of projects in our order book delayed as a result of the USDOC investigations, and effective enforcement of the AD/CVD orders could negatively impact our results of operations.

Tariffs and the possibility of additional tariffs in the future like those described above have created uncertainty in the industry.

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It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions.

The reduction, elimination, expiration, or our failure to optimize the benefits of government incentives for, or regulations mandating the use of, renewable energy and solar energy, particularly in relation to our competitors, could reduce demand for solar energy systems and harm our business.

Our customers typically use our systems for grid-connected applications wherein solar power is sold under a power purchase agreement or into an organized electric market.

This segment of the solar industry has historically depended in large part on the availability and size of government incentives supporting the use of

renewable energy.

Consequently, the reduction, elimination or expiration of government incentives for grid-connected solar electricity may negatively affect the competitiveness of solar electricity relative to conventional and non-solar renewable sources of electricity and could harm or halt the growth of the solar electricity industry and our business.

These subsidies and incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as renewable energy adoption rates increase or as a result of legal challenges, the adoption of new statutes or regulations or changes to existing regulations, or the passage of time.

These reductions, eliminations or expirations could occur without warning.

There is no guarantee that such policies and incentives will continue to exist in the current form, if at all.

The reduction, elimination or expiration of such incentives could reduce customer demand for our offerings, lead to a loss of customers and potential customer projects, and could harm our business, operating results and cash flows.

While government incentives are intended to encourage investments in new solar projects, the impact the tax credit regime applicable to solar facilities in the U.S.

will have on our results of operations is unclear.

In particular, the tax credit regime in place prior to the IRA’s enactment provided annual reductions in the applicable credit amount at the beginning of 2023 and 2024 and therefore encouraged customers to acquire our products prior to calendar year-end dates in order to qualify for a higher tax credit available for projects that commenced construction (within the meaning of IRS guidance) prior to those dates.

Although the IRA eliminated similar annual reductions for at least ten years, the OBBB reintroduced a termination date of December 31, 2027 unless the project begins construction before July 4, 2026, which could again act as an incentive for taxpayers to construct facilities before a certain date.

Additionally, the Trump Administration has issued, and may continue to issue, executive orders that impose restrictions on the IRA or other relevant laws or regulations.

We are currently evaluating these executive orders and other related memoranda to determine what, if any, impact they might have on our customers, suppliers, or business and such could have a material adverse impact on our business, financial condition and results of operations.

In addition, if we are unable to meet the foreign entity of concern or domestic content requirements necessary for customers using our tracker products to qualify for the base tax credit or the incremental domestic content bonus credit and our competitors are able to do so, we might experience a decline in sales for U.S.

The timing and nature of implementing regulations clarifying the foreign entity of concern requirements as applied to our products remain uncertain.

In addition, the Trump Administration could modify the guidance implementing the domestic content bonus credit.

Depending on the criteria set forth in those regulations or other guidance, we may not have an adequate supply of tracker products satisfying the requirements, which could put us at a competitive disadvantage relative to suppliers who are able to maintain a more robust domestic supply chain.

In addition, compliance with this requirement may increase our production costs.

As a result of these risks, the foreign entity of concern and domestic content requirements may have a material adverse impact on our U.S.

sales, business and results of operations.

Moreover, changes in policies of recent U.S.

presidential administrations have created regulatory uncertainty in the renewable energy industry, including the solar energy industry, and have adversely affected and may continue to adversely affect our business.

For example, since 2015, the U.S.

joined, withdrew from, rejoined and then withdrew again from the 2015 Paris Agreement on climate change mitigation following changes in administration among U.S.

Presidents Obama, Trump, Biden and Trump.

The international markets in which we operate or may operate in the future may have or may put in place policies to promote renewable energy, including solar.

These incentives and mechanisms vary from country to country.

In seeking to achieve growth internationally, we may make investments that, to some extent, rely on governmental incentives and support in a new market.

We may not be able to optimize the benefits offered by these incentives or realize the growth that we expect from investments in the incentives, particularly in relation to competitors whose products might benefit disproportionately from these incentives.

In addition, there is no certainty regarding how the Trump Administration will implement the OBBB through regulations.

There is no assurance that these governments will continue to provide sufficient incentives and support to the solar industry and that the industry in any particular country will not suffer significant downturns in the future as the result of changes in public policies or government interest in renewable energy, any of which could adversely affect demand for our solar products.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors