First Solar (NASDAQ:FSLR) continues to make steady improvements that keep its power plants competitive in a market where most competing manufacturers make more efficient panels. First-quarter sales came in at $950 million, 26% higher than a year ago, and net income was $101.8 million, or $1.10 per share, the company reported today.  

Revenue recognition from the Campo Verde project helped drive revenue in the quarter and management was confident enough in cost cuts to increase guidance for the rest of the year. The bottom end of gross margin guidance was increased a percentage point to a range of 17% to 18%. Earnings per share are now expected to be between $2.40 and $2.80 per share, a $0.20 increase from last quarter.

Backlog did grow from 2.7 GW at the end of 2013 to 2.8 GW on May 6, but projects are less expensive so expected revenue from those products fell from $7.5 billion to $7.1 billion. That's to be expected because cost per watt continues to fall year after year.

To remain competitive long-term, First Solar will have to improve efficiency and there was progress on that front as well, with average efficiency up 0.1% sequentially to 13.5%.

First Solar is still one of the few solidly profitable companies in solar and even though it has challenges ahead it has shown the ability to adapt and innovate in a fast-changing industry. That bodes well for investors and so does increased expectations for the rest of the year.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.