FSLR - Earnings call transcript Q1 2018

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Operator

Good afternoon, everyone, and welcome to the First Solar's First Quarter 2018 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investor.firstsolar.com. At this time, all participants are in a listen-only mode.

As a reminder, today's call is being recorded. I would now like to turn the call over to Steve Haymore, from First Solar Investor Relations. Mr. begin. may you Haymore,

Stephen Haymore

press the Good update. the and release Chief financial With company financial will at of first Ashley. available presentation joining our on a providing begin announcing you Widmar, and us. quarter website the copy and Alex A Today, issued then results. and Bradley, afternoon, you, associated our Executive thank quarter technology are discuss everyone, investor.firstsolar.com. for its will release Thank a today for guidance me Mark Chief updated Alex results by business Officer; are for Financial Mark provide and Officer. XXXX. press

note forward-looking and contained more Accepted that for reported cases few Principles. now we will will Safe reconciled management's description. to open statements involve today's the non-GAAP In report Officer. based expectations. on where We to to press results today's pleasure as We such my that include a have at introduce materially current Mark? non-GAAP differ we review statements call cause or of these our Generally Chief the the corresponding are actual to flow, questions. measures and the free the uncertainties presentation. Accounting encourage Executive discussed could back Harbor and presentation you EPS, measures is of risks for Widmar, in release Please financial this cash numbers complete call the from call then measures, It U.S. Most GAAP Mark on

Mark R. Widmar

a increase This domestic press Solar will us issued thank in module Good Moments afternoon joining release plans new ago Furthermore, our within global that X significantly in manufacturing and X a market. us in and which facility landscape. U.S. Steve. growing announcing capacity. Thanks, manufacturing Series testament competitiveness allows Ohio, First production today. to construct for better we product Series demand the our the U.S. to address solar is to strong the it a of the decision to continued for strong is you response

has have X.X be greenfield manufacturing this to existing As highlighted Combined of our will slide in and X, will factory factory Ohio. in nameplate will X facility Ohio, of bring this which to nameplate total our a capacity with operations solidify on Series production as U.S. megawatts, Series built the XXX gigawatts essentially X largest module the current capacity next solar a and gigawatts in additional U.S. our planned the X.X position manufacturer. further

capital of size we competitive our could end and additional in the The to for XXXX. and as accommodate The production over and adding two manufacturing conditions XXXX total to a a construct be expect incurred potential approximately equal this selected site facility second expected position continue we new $XXX be building market three are of begin factory expenditures relative and We fully will by the monitor million years. U.S. There capacity. the to facility in next are ramped to factory benefits the will be to the late integrated fully evaluate to major

local U.S. favorable enhance business the and for Firstly, the and recent U.S. national economic tax rationale manufacturing. reform environment

per cost the labor the watt manufacturing or Vietnam Malaysia of lower our Series the arbitrage relative labor Secondly, X benefit module U.S. reduces in of to

experienced the our be near leverage locating existing know-how teams. and Lastly, efficiently to and facility, capabilities by R&D the factory will our manufacturing we able manufacturing U.S. of

permanent new will spend operations. will local from the impact, benefit economic the approximately be the created manufacturing in by to there XXX which a high-quality is of be directly that jobs addition to construct our terms facility, In capital

their our jobs create economies supply will higher roadmaps. production this scale enhance chain economic of supply growth cost volume and, significantly create also additional new to expect to Furthermore, to We reduction grow and for the thereby, local benefits. chain our partners support

to slide announcement as exit the highlight an Series have not impact important XXXX. to we our X factory Turning previously-announced to is that will X, any roadmap new item

As incremental to XXXX. in increase Relative shown announcement, of the we we X.X Series X X, X.X on factory with to X to nameplate Day In our gigawatts. expect that capacity of years. Series nameplate over Ohio, combination the next supply production add of to December, approximately three expected X.X plan is slide is with Series at restart the we gigawatt expected today's two lines in recent U.S. X with capacity total Analyst gigawatts X of to global provided this combined capacity, an gigawatts exit have as new

X provide of the will future calls. on additional factory progress We Series details the on latest

slide to our have Series we X to been progress next ramp I'll Turning making X, factories. discuss the

captures In staffing to building such readiness, accelerate is at we to Ohio across installation, readiness at as the this transition To continue which excellent embarked upon. manufacturing The had we preparation, as we highlight terms of put months activities, achievement other journey start we our most of progress perspective, in X, achievement announced we the to notable our of factory decision confident beginning our factories. Series four and green elements scored the the tool production to our this make when all and of XX in month. ago, were

have be and process shipping the of begin that our and target initial would However, modules to is commitment needed we challenging. the production First a fact to able the manufacturing to associates new journey to validated, and that meet capabilities designed projects we been of tribute delivering The Solar's be our and mid-XXXX knew results. equipment to

the we Ohio. The earlier continues to the steadily this QX move closer a achieved by we to factory in start in first produced production and learnings is of our aided Malaysia, module. complete in milestone initial ramp as week Next, from significant

both schedule. on X of front We XX% end and of are installed factory likewise first Vietnam. making is the the The good is the the progress with factories of Series factory line in now second construction continued

we working progress, are our related readiness manufacturing through a the manufacturing issues of with pleased are we number While ramp. to

wattage, the readiness scored yellow. of have product as metrics we throughput reason, associated and three this For

and The we wattage, them. and are of first we ongoing been entitlement for we are we started the line. to making to XX% addressing current distribution or since the are that module above bin normal the note this occurrences being at of the steady by encouraged have production factory at having watts, produced proactively thing the modules ramp improvements yields of XXX is we The watts. top that issues are progress phase XXX Related with

day, XX the days, per takes the the roadmap each early see discussed XXX as where the long-term focus as which which area watts. and Day. of last the laser beyond wattage front currently the next path us clear Furthermore, and module is module, average production of of is our in to Analyst number processes, increase watts well. the a includes greatest the and we watts production XXX which measures Over scribing, working top to end complex improve confidence levels. of to our gives bin performing XXX an placing deposition order produced are manufacturing in Notably, bin we such equipment modules most we a availability us Throughput, unique line, at and

of are are However, therefore, constraints technically-challenged placing portion the the And where on line. processes the this back-end current the we less greatest focus assembly are.

that be transition, timeframe. given but expected output the properly, technology matter levels, core in but get in under four at risk X we would will rather would our reach ramping of the greatest a the some range. the put Series As challenges a context, supply be it the whether factories expected risk end existing be the if at the low function believe when extent persist, not onset will schedule an we XXXX X there we To could our of whether is schedule the potential would question in of not of was of aggressive module indicated Series succession the there. we risk To

believe own we managed near-term can by for our we that we to projects. any delay given self-developed complexities have ramp module through resolved As near-term the we how undertaking, encouraged far X exists and originally delivery production But the be shortfalls schedules that Series in the still on flexibility transition. effectively, in period. the have Overall, come of potential due to are this planned, the

which metric from the Series entities. or readiness, ramp testing manufacturing other product requirements, provided customer is whether third X product The captures

is the certification anticipate is intent design all the meeting product We yellow past on few slip of there score based timing. a the a fronts, may weeks While completion target. of the original on our

partners total it capabilities before with it's familiarize However, will customers these to question that roadmap They that be One mounting we we costs. structures our X. continue structured lower innovative that continue EPC Series and systems to and remain readiness confident to request on other certifications, ecosystem time new is whether enable of themselves of product rather note question but obtain completed. not a a

are mounting we're working X application factories while Solar our current The can been tremendous typical design First and to variants very summary, wattage to the pleased readiness and of that this reach point our Series capabilities bring response encouraged progress in customer's has this is issues, execution we the with by are frame evaluating manufacturing related input. module also In we results. to-date. and ramp through

last discuss call. to turn our activity our Next, slide since to I'll bookings X

of After gigawatts. we on X roughly shipments earnings As which year-to-date shipments our XX.X I Series capacity mentioned demand total two to QX, our of for volume, the additional since expected our for future net through decision accounting this end gigawatts of months strength report, was based bookings a In X time. to previously, expand contracted now product. of X.X we brings the balance at our gigawatts last have have the at

confident last agreement customer level we the recent to separate XXX now level this While XXXX. combined in a feel and Combined visibility pipeline, I The XXXX U.S. leading have with largest booking we single mid- module with and in which a late-stage this shortly, visibility deals is now with contracted supply for this of add making capacity. agreement signed over among discuss additional deliveries of with a shipments XXXX module the we into will have – with between to year, megawatt gigawatts of developer. decision our X.X signed

With year during XXX for primarily the booked module as region. other quarter progress we in U.S. include other Europe megawatts the the customers in various XXX international since locations. booked bookings as sales months, deals XX well megawatts were good than more are this of making and in Our over France and past the beginning bookings and Turkey, with

customer markets by advantage carbon low Our on our and focus yield footprint, continued progress energy these in aided engagement. is

customers was supply added now While EPC already last case, we in total module our a each two not signed have included of In bookings, agreements with a DC. for we've agreement XXX and as megawatts scope. new EPC since place earnings call,

EPC First of to a Tampa X in to an completed of to expected power next agreements first opportunities for completion DC XXXX. years, than Construction The Longroad be XX Electric, three with XXXX. is yet with will second EPC over in will This (XX:XX) their continue Longroad booked, megawatts signed construct in are with DC to these are in expected We've in highlights contracted addition approach, to of future XX,XXX not utilize was collaboration they Vectren have tailored that households. DC project previously the with as also more in is to is that over project agreements modules still Series project expected that's begin construct XXX Texas EPC Solar's that XXXX which design a our pipeline. with in project the with In with plant forward XXX customers. of the discussions megawatt build over of the XXX half out U.S. projects utility-owned development signed combination we utility project late with we ownership values. We to megawatt agreement EPC megawatts Energy we and look now Indiana

to period, next in which X.X With increase will is mid- late-stage to booking the from opportunities, X I X, approximately have growth gigawatts grown in prior during DC slide to the that actual X.X Turning our gigawatts. gigawatt X.X time quarter. opportunities gigawatts booked discuss

XXXX The Australia, a in both were In include pipeline. the were development combination yet opportunities combination the these opportunities increase up and total noteworthy such closing primarily not total terms and of the shipment CPs. have of potential developers the utilities, increase mid- Japan opportunities total over they with U.S. or a of final opportunities the today of X in The dependent in Asia-Pacific. later. customers. and and geographical more the to are are is remaining than potential of to opportunities U.S. or progressed module of the mix, X.X increases on also in opportunities bookings signed, counted the last project several In sales, the the systems gigawatts good as several and announced profile in of the deals timing of our to provides largest demand that or X.X deliveries Similar to Approximately timing quarter, included bookings. included Australia. up projects matches gigawatts booking as gigawatt are financing point capacity in and additional in projects The where late-stage made have three-fourth closely next module of that decision the the other years. approximately potential the we these visibility now The into corporate but is have

our less a opportunities to now system pipeline than potential and X Lastly, per provide primarily first in XXX gigawatt opportunities have X.X in of for late-stage versus approximately that to project mix we approximately since business financial the turn prior our in U.S. gigawatt meet Australia. as of XXX months project our of the detail increase foundation our more nearly on quarter. X additional guidance updated Alex, With megawatts two into I'll XXXX. X gigawatts is who our to systems of the pipeline we're we business. quarter progress development is the strong target systems is of saw the and compared over Systems megawatts comprise signed building, account ago. This call we gigawatts, year our positive now agreements momentum will have encouraging. bookings discuss the beginning results development the growth Taking result to of making of fact recent EPC in mid- booked the opportunities a development and year,

Alexander R. Bradley

of the will was our of Series is the due for the use X sales X projects the our Turn Mark. India, California Rosamond from phase slide Net Thanks, statement to megawatts noting in recognition the U.S. Japan although modules worth project million the previous highlights first the quarter. $XXX of first Rosamond that XXXX, revenue It's first ship initial sale we sale start the which Flats in were is by to increase modules. in of compared quarter. exclusively of projects Series million, and of second the sold QX project sold to that increase to produced $XXX will XX, income megawatts project, I'll in XXX covering an XX in The

close. or As of last there earnings mentioned for and to a quarter's of the potential loss contributor these revenue on call, was was did these a for in QX the execution all not quarter. if deals projects But significant some

$XX tax revenue use examination quarter a California with the to associated state also EPC of First related included sales and contracts. settlement the million

module gross a a module in that of we in supply prior to improve in margin revenue sales gross tax was total segment projects reflective quarterly is gross were in of and margin as higher projects on As decline sales, in to the the in The module and was higher improved a pricing quarter of coming a agreements average The recent segment gross our India, lower Series with quarters. segment of our margin XX% in bookings ago. was use gross of systems segment associated U.S. QX The to sold result primarily systems the in and ASP quarter more the ASPs XX% to percentage was Japan, ASPs compared X%. was XX% first not strong profit net examination. quarters was sales the QX the XX% quarter. margin X and module the settlement The contracted Gross margin QX. several QX. expect system recognized from result On of as margin and due XX% of our basis, first mix

now Earnings was is quarter compared to from modules beginning for and further $X.XX. million start-up impacted costs revised Adjusted QX provision. mostly as reconciliation. our any systems, reporting non-GAAP quarter. federal higher per Vietnam estimates compared as operating $X.XX to because reform the increase compensation, ASPs the of the million previously, module projects sale as was $X third-parties. factories. the million return Income $XX systems to solar QX. investments the income segment of expect million were the Plant $XX in preproduction and And efficient associated our And, the loss systems decrease to higher Series million only recycling reminder, of the towards profit of year a our our amounts sold. Malaysia production We adjustments X provisional to with lower SG&A includes and continue Ohio, tax QX interpretation is subject of record activities the of of result through certain fourth remainder of expense year. low, from loss was a Series in segment business. fourth please The we from the loss including the from by Other segment in increase, the offset start-up the as power was which share additional in to to the share was the quarter until trust. increased our QX the gain is expenses revenue accompanying file an margin share not targeted of management. for presentation at expected module by ramp-related in as profit in and quarter $XXX to $XX variable gross Even mix the for segment government a all as and, QX to the in the the across asset was and due result related expense module result XXXX GAAP Operating module $XX results is R&D tax $XX million, revising an impairment be a impact initial and higher later per of The QX million sales to million $XX expense, sale collection million The includes QX first and last and first on was refer compared restricted well of this increase systems module. tax we as and a higher expense guidance quarter. a compared net operating operating overfunded quarter X restructuring in the per non-GAAP of U.S. And of tax charges, reimbursement the for reform tax to of expense our appendix U.S. earnings $X.XX. by in analysis for previous to effects $XX was did QX expense regulators. the original indicated of

flow cash on Moving discuss and select balance items I'll XX, to summary information. slide sheet next

Our balance million quarter $XXX cash at marketable prior of quarter. and from securities the decrease a $X.X the ended billion,

by In essentially at end securities, received in lower increase the accounts balance recycling balance project offset by includes was and $XXX due and to increased flows from in to the sold. of projects million $XX assumed million. X in QX in India. that Cash The inventories, And if our our assumed the a sales. operations to and all Our primarily $X.X expenses assets to the likewise million come for ramp, payments. related variable which The Total an of and $XXX sell a QX operating is is net net inventory, in cash lower of $XX and that project-level from would in $XXX million non-recourse debt these sell operating QX to marketable $XXX by structured cash position project to increase increased increase the project asset quarter following when in Series If accrued this revenue, QX, issuing in is decreased cash compensation was receivable leverage in international capital from were had excludes non-current net of was been fully have the point. liabilities see increases in increase $XX in cash first change asset flow debt our simplified and $XXX net by payments due increase $XX the collection related partially cash working project of we these help flow. example million trust. net illustrate billion. been we increase approximately to $XXX overfunded amounts were to partially in million project from our offset reimbursement $XXX for by debt change but prior $XXX, variable with unlevered the increase debt transactions. from customers same sales $XXX and module capital, differently, The If support constructed we we sheet of due cash cash. expenditures and compensation million, of see $XXX, higher. project-level primarily increase not $XXX Japan debt, outstanding and would such buyers, off quarter. our And revenue will used $XX resulted the The million

increase the in $XX the customer. is is cash $XX comprised increase and a $XXX in in debt, an cash by of assumed reduction However, which net

some portion drawing in ultimately, showing value utilizing optimizing working debt on down the project project on the especially hold operating sale. depending reduced a leverage, therefore, risk, the show or the transaction to flow, different FX and, equity with the in construction are cash flow prior unlevered overall Therefore, operating of same of cash project. impact profile for and and, Historically, flow of sold to Now, structure. has asset, either significant economic significantly, Despite is in means on the including develop balance this as we profile, them effect same assets the this same a where assets international cash the non-recourse there occurred sheet visual and optimizing assets can the there increase managing and to benefits net example. $XX construction, markets, only upon cash capital we've sold construction constructed significantly operating sale revenue prior

$XXX the million million $XXX expense were amortization X first our to expenditures as XXXX quarter, slide in in slightly. I'll the Continuing and quarter capital decreased prior QX. on guidance. million discuss spending on in XX, compared Series Depreciation Finally, was $XX

QX leaving potential statement for with associated we're positive aluminum to start because the tariffs. The primary project earnings being revenue guidance update sales guidance we're our project is was impacts XXXX. Our to timing provided but and making cost associated the with the risks timing unchanged the we steel a our XXXX to in income time year, of of project Australia, Beryl to originally which in now expect sale our anticipated in pertains which recognize on complete and and

for weather-related of delays mitigate completing delays. and this project of of results. plan in this not months, QX revenue a year construction are year. in which the our in XXXX, project risk Japan, these to due offsetting experienced impact the project While to earnings the guidance sale associated income items Ishikawa identified guidance is of the an recent increases We've our Separately our action to which statement in moving included lowering our we're

size does the this move at sale project of project project, project highlight the given therefore, XXXX, and, the the change economics. risks. that If initial sale it's or to and COD be recognition prudent the the occur into revenue However, not expected there believe of near in we would will to any the expectation

low the to fall guidance as could we revenue of our XXXX ranges earnings end cash a and However, result.

higher direct such of of seeing as torque through indirect on impact aluminum recent our and due as well items The tariffs. or costs risk to our module. on projects systems a posts tariffs as is certain used higher U.S. these have Series frame tubes potential Another in commodity to impact guidance construction on steel the tariffs also X prices. We're XXXX

the also actively the are potential the minimize mitigation year. We continue evaluate impact tariffs these of to to order and pursuing in strategies impact to

closing for expect over either sales it guidance approximately of remaining and the As or total transaction. the is the to expenses breakeven. A project reason similarly expect of expenses the from timing X.X earnings due timing be relates we certain closing distribution the highest QX, we of part quarter this to year, But of on positively earnings QX start-up change to depending is of year. of to quarters negatively could both the OpEx the the QX as QX expected well lower of some be to the of any the be quarter pushed is QX. as that of next peaking our This that

the Series expect support due the the sold project, financing but flow factory debt. our cash We're quarter the range adjustment capital $XXX QX to This with be of due to of did $XXX $X assumed be systems due incurred an Note net cash million is asset, We the million unlevered lowering factory the as offsetting will guidance billion CapEx higher as inflow. to $XXX be to cash to in impact financed updates was to originally Operating new project-level $XXX net of of remaining to guidance. Beryl year XXXX. expenditures to strongest is which primarily an expected be a lower to the billion now there's that incremental not we're cash included this to making by to X sales. revised $X.X million new in year's million

impact sales previously, the operating have Lastly, structural as on discussed project a transactions cash flows. can significant

the addition of In guidance structural sale timing XXXX. cash a on to the also flow project sales, meaningful impact the can for operating have

expectations and than later to is will lower by anticipated a intervening debt unchanged, the the project the of debt continues example, a be cash impact we Even economic flows project. is though the can of this operating transaction flow for the of buyer for substance the cash may XXXX For assumed cash financing if proceeds in the assuming flow classification the operating the in down periods, sell be project draw our and year. different

summarize turning the messages key call from Finally, XX, our to I'll slide today.

strong demand to visibility, our potential continue modules market the strong evaluate have discussed, with our and of Series and expand gigawatts capacity. expansion Mark the to we subject in of which technology. encouraged future to bookings conditions. demand we're further enabled add presence opportunities as for in gigawatts, Ohio by manufacturing X contracts the shipments future, Firstly, market Northern With decision we'll to X.X We're excited continued to XX.X

this Secondly, Series and we're we began milestones shipments. on our first ramp progress reached X making we started important as production, commercial the month

the with we're the management to for share. $X.XX results contributed pleased OpEx per which of quarter strong Thirdly, and earnings execution and our the project effective sale core

maintaining net our and billion strong that, conclude net new as even in and updating at as our for capacity and capacity. invest the expansion we're project earnings remained we X open we Series XXXX And announcements Operator? position Our a the sale prepared guidance continue result $X.X cash with cash questions. to call lastly, And guidance of remarks timing. our

Operator

Karp. we'll you. Sophie And our ahead. next Thank Please go question take from

Stephen Haymore

are can there? then, if please. next you caller go to Sophie, Ashley, the we

Operator

Shen ahead. our next take Capital Philip with Please Partners. We'll question from ROTH go

Philip Shen

It something weeks. than to was original deadline parties the what that's XXXX, X, perhaps modules cost kind may fantastic. the seeing is depend been back you great Series than making on year-end Can Series clear first Day ramp-up. looks do slip more expect have update sight remarks, you're at terms first you third the think mentioned half Does of that you XX% to but what date certifications at you're When to and Back shifting an line Analyst lower missed X X. own it. that making of XX% the now you're talked it's structure third-party then you now? what at your projects, watts, I that the And of if certification sorry a about like prepared shipments? XXX this about and I to of ship few a on year, that your of progress said progress you in give guys. you If progress and on Hey, always Series on making? the I know it your you're in shipment us

ramp-up? So, on expect with And success the how very is bookings as you that much well? Series target having you're the that X then Thanks. do finally, to with the trend

Mark R. Widmar

All right.

lot a try So it. I'll on to hit there,

go until is start happen volume timeframe, we we third-party of shipments. to Series to to early shipments meaningful relate to shipments see The our of for that's to and starting originally into vast the go end planned really assets to year As where really it going the majority was production don't the what start happening. and the into third-parties third-party any the into own November, self-developed again really X December

self-developed or allowed So, and potentially own to of absorb implications that the and optionality volatility with the that our flexibility may timing have ramp again, certifications. we've this potential various around the assets even

do I As again I party, impact of no to want in-field effectively thing relates is certification. put third-parties we will other do here, the the just certifications, anything see but we going third to in that historically all have to to it perspective the again, and at

use going now X we've will assets the done and with one are this self-developed our then before right the and Series So, have that certification shipments initial in-field out we and of so type that with ship, same of continued to do to methodology.

to third-party aluminum, won't don't any – tariffs Series that have are further – I from the slipping from own bit like potential on you on the will to in now even commodity issue bit any shipments little standpoint. our around but the impact self-developed won't only the points little what of but feel stress it's that So, standpoint. that they're and, want impact customer an volumes cost out not price it side friction of fact assets, right equation, going horizon, and to a timing on because certification what's the with there's really with seeing X increases, the mainly for a with be general, we're have

a we are where it, Series frame. on at watt primarily our to look the bit related I is around assumptions per if little cost X So stressed

us XXXX good we the at production have higher is in well. look right feel again, like, look gigawatts. I costs which, that XX the now, to two them X.X about will indicated that we're will when our to be help which in gigawatts says added down that number what Analyst run lines we last manufacturing you volume type and X, because XXXX than now, announced to of that, of we the look over capacity what with that X From now and plus and the if where much exit initially remarks, as volume horizon that decision manufacturing, drive as it shut should ramped. the XXXX, about feel confident get We give with standpoint prepared at end we XXXX, restarting had Perrysburg continue right in our with now high The that quarter actually two very combination incremental Series where Relative to those good down. and said to once was booking Again, we fully of we'll – in to are. about Beyond profile production you relative it very for we XX%, that. Day, is over we've Series an we of cumulative the a them feel

now [gigawatts] the X signed to to gigawatts XXX-or-so quarter, to You that years. we gigawatts late-stage, number, megawatts another got against right we've that, pull first right Against XX.X over book. of got we've have that XX.X our next that subject production shipped will which is gigawatts mid- And we means says CP. the that happen booked, continue X.X it through out to got I've in now several

a you're little of out all X realize sell a that on at make that gigawatts this is to mean bit sure horizon. XXXX, in put a have board north to beyond at gigawatts, largely look more me When back lot of so to say that of the X of points then gotten in to bookings we gigawatts, the XXXX. I sold So year that goal we to and there A look that additional be that could through to done, the but starting through gigawatts by X through X that of the mid- still north gigawatts way position late-stage accomplished to path of the would or leaves X.X everything work could end I starting be happen. be to has and

Operator

Securities. take Sophie we'll from Please with our ahead. next Karp Guggenheim go And question

Sophie Karp

Good Can now? hear Hello. me afternoon. you

Mark R. Widmar

ahead. Yes, please go

Sophie Karp

Thank guys. you taking question. my Hi, for

that on do there declines bookings, of are it? you a I signing as types Maybe the just the think price follow-up how to pricing much different embedded you anticipate continue you is risk on contract to and discussion much when Just book you're about guess, there? of, this volumes, how

Mark R. Widmar

contracts of lines. First the relative or whether obligations there's not adder adders pipeline, with or talking and been have bin. they perform for per obligations customer and or structured, through prices been LC the a become is there's that to form those they and are that fixed to contracted firm to Sophie, There of our are the se, we've any of something Solar associated contracts. an deltas, down way the look, or enforceable in cash, horizon along And those price the some payment, about take the security they're price are also but for form Well, building of payment

ASP. the for contracted the than ultimately contracted no contract module, module, be and If ASPs, we watt deliver to XXX the XXX down. allow other to is contract in if price a was there's really the relative deliver than bin. a into watt deduction. we there And up the we really So adder. a on variability price bin contracted. a to in module and variability be at would Other deltas XXX that, goes a only watt what That's customer will It there the that the then provisions there's delivered

Operator

And ahead. question Kallo W. Baird. our we'll next take go from with Please Robert Ben

Benjamin Joseph Kallo

a big just would some but than think, compared I you think better with (XX:XX) you XXXX. huge think how you On were Hey, to you where breakdown guidance? little I you guys. Congratulations. mentioned, you everyone X, Series expected, about being I all. Mark, like mean, you out talking that about, sold didn't Can bookings, so until I there be, basically, about were raise guidance. I guess bit beat so talk know you risks and a had there thought

the that to left say, nothing do. have they okay, at Street Now, can think look and I

So, counter you but leave side the I'm this what's there. would the margin I more? how it Are I you, maybe to that? next sorry, you to missing What do step? or going are we guess, capacity on I'll expand always

Alexander R. Bradley

Yes.

and X. So, guidance the Ben, talk Series the I'll with Mark about start will

So risks QX. the not opportunities and of sales the being some guidance examination, which had use quarter and at we for upside settlement the to in side, year, the from looked the of but was suite on our necessarily tax in for

upside. been by, out an the And Beryl I partially that's as that's So we've mentioned, project. offset pushed

expectations we that we exceed around on we're process the XXXX. asset in project. or So that the for we'll close meet that sale expect in current position think to now clients' process, the sale currently Based and in potentially our

now, value will a we said, got making a value risks on a optimize always look by we've quarter asset of specific pushing it's over guidance. specific of We've year. the right optimize looking out. as However, that like or And also year can project for even to it we couple total

costs challenges EPC related aluminum bit as non-tariff And keeping Ishikawa the see plan if some then to there's have have the had look the into has or range totality, then exempted So schedule around we Mark we as that of and the lot those talked of path selling a lastly Ishikawa well. pricing we where impact a of in the good of the mitigation variability little tariffs of year. gives business potential in slip to to some we that next still or you potentially adverse But costs a think which in in have a and Japan, steel, at the and project we ancillary in the today all increase frame. then also aluminum project We're think guidance us XXXX. the we traffic weather, increase potentially X flexibility is the it of for about across year should the out impact Series and function aluminum seeing on steel, a a

for is. guidance keeping we're year why it that's as the So

In first the to for could that guided we the year. of terms guidance of be the the a year, about over half the earnings quarter

tax we place. the you that recorded, the at to go out you look first for piece quarter the and guidance and QX, we giving breakeven sales use same that you about If take are

year. So guidance. guidance still lot are But for bottom not the confident in of range to year variability have the good we the we changed, path of a the a pretty

Mark R. Widmar

as a take and prudent be And the still want very lot as to we're guidance, selling it it to in asset we obviously thing to development we early optionality and the a a know, to year. we're versus there's value relates going up it by relates year of when make Yeah. I'll particular to you fit do guidance. reserve is, add capturing for as value to the that think trying quarter or equation the pieces always Ben, I at better to it time moving into that optimal capture this

we'll see that So, be regard our call. bit more year next always in the in how that balanced a around to and an we're going earnings provide little and update progresses

was and look, sits but with the for As only not and for pipeline we to this in more contracted, reason, this contracted. for our now and, already point of happy very also we're in late-stage a bookings development me, excuse EPC, so or showed X that or capacity added we've what's it Series relates what mid- – another our time. continuing add XXX top megawatts so taking, we to that we're on We're module at agreement quarter to booked that

going to contracted another look have that. have continue that to able to on We be volume we and add to to most EPC XXX of likely we're additional modules that megawatts we'll

EPC to Then also add the going will piece that to be volume on add we're all O&M next close scope. working another another about additional so. that's that So to X the We're to now here or EPC O&M, or added gigawatt, will quarter talking be over adder. we've to to

come another top X. Series stream contracted that already earnings we've and will revenue So pool on of what on

of managing OpEx margin flow OpEx. contribution continue cost and The make – model is it I sure relatively continue I want people think other to a fixed piece thing through and scale, is we through against to and and the think

relatively we op margin fixed as and now And we'll that north says, roadmap expansion incremental a start drives be as contribution XXXX, that's looking flat, at against exit X gigawatts. that EPS So we of and margin it modeling cost well. have OpEx we expansion a

X. need related things to people at. understand I make thing is people So, sure look want those think are to Series I that other to the And

on on well. most that's got think at as can of throughput work done. The issue. the the a the and, pleased of in all issues the wattage We're and But of go efficiency for entitlement more line you through we some end happy extremely still the the is of especially that and started lot performing us. with module time, that. We on with a ultimately, risk where we're extremely have front this was front-end We front that I'm though, around in line, costs trying we point where not and through to reality, the focused end, X, the is back the Series efficiency, it's

question to of overall enhance product. and know to So asked on competitiveness costs continue There's lower meaningful around a further and opportunity drive up continue the still we the the than I XX% to X. Phil Series down where the were to the X Series on drive efficiency

me, give ask mention. the maybe model people move But So, are those if all points probably need as future. had to that we forward, those that the where the I'd main to about you in business we'll in things are think updates

Operator

ahead. And we'll Brian take from question Please next Lee go our Sachs. Goldman with

Brian Lee

related think, to start-up modeling specifics, for and fair out, costs with systems million years? maybe XXXX. said change of in – thinking questions. million the you're for and is target X less $XXX us know the if in, business couple taking for How the seeing, that traction in year, But some then, Analyst XXXX help on projects this Thanks. penalty XXXX of Maybe, this Day, right but comes off, secondly, gigawatt $XXX that new Alex. year. Hey, on capacity plant XXXX of $XX those had other I And The EPC the quarters. trends guys. the the the specific pieces and then million given you X is assume guys in in recent you to recent in Thanks each at seem topping constructive bogey does bogey this in still ramp could about you And beyond? a just new Ohio moving gigawatt XXXX there for and plant, terms Mark, more CapEx expansion. first the in I XXXX,

Mark R. Widmar

and doing on also happy some we target take systems said potential that seeing that will above there's with what beyond always any to take progress could the the maybe, that maybe I'm other are systems right could that given in see over in and and number is opportunities, what time, clearly happen, U.S. trend international we up. the the Brian, And where right. the just business I'm All now very gigawatt look, with we've number we're here two. said that question, we more the what especially the a year right the we're annually now continue We've goes I'll Yeah, of seeing Alex business. as

than market do movement systems to as those upside could we think, and look So particularly, systems business in that horizon. there the that we geographies our business, which to to combination specific that next as better want two want happy do development, is as there over opportunity of be will and we're systems business with an an the the I additional there I mean, a very and over to be position ourself general. subject in And out we could the selective. says of the the and well in the set unique be the going after few that kind very years. we where opportunity we'll I'm guardrails, But

Alexander R. Bradley

for and total clarify, million. to in originally, $XXX just year Day, XXXX. increase we current $XX guidance $XXX And ramp combined. approximately XXXX so spend numbers, $XXX the of guided adding which CapEx million the to in We're it's $XX startup XXXX, combined and on startup is side, of Brian, about so $XXX $XXX we'll to on at million XXXX million, for so Analyst And million that in number this today, million both the and million

haven't the XXXX. $XX we only for and the But is for XXXX later or now, we updated in so million update beyond yet, Now, may year. to do addition

Operator

our Colin from next And question we'll Rusch take with Oppenheimer.

Colin Rusch

that little much. on opportunities there to existing offset incentives any incremental then, the into projects? actually are booked bid a to Thanks with capacity expense Could this And if you so products are on how capacity many Ohio talk new seeing many about adding business you you're expansion. year? bit How customers

Mark R. Widmar

Okay.

So, in just terms can the which you announcements that Vectren, Colin, on Vectren, quarter we haven't ago. what just for some use that first deal Tampa made on new deal the Electric, that but specifically, – customers, with first of done we I tell so The reported we I'll just historically or of the a customers. announced example we've

we going we markets, volumes got Turkey, a there. the some customer of volumes Japan, we with developer we've done U.S. that essentially That's I the Vectren, out momentum into we haven't last done that done international of X.X had we're again in XXX-plus past. business Australia the gigawatt that a which in really time We're new First we a year we've is the customer. haven't talked that get customer, lot about, expanding on highlighted expanding done When this with and Australia. in with there. anything year. that XXX-or-so

not profile the of the of enabled terms grow customer we set the report we as because I done in of that and well that's been while at created look customers us excitement customers, X. it very new business when specifically, one bookings as things to that's to So don't have is contracted pipeline have of Series on of diverse the And a we with mid- with is that a late-stage the part lot historically. it

push from even, have there's extent, So of me more I And technology didn't talked our sure to capacity. work is and come heard us of in question, now but incentive because that Solar pull marketplace. we're at said – versus the competitively to in of of First capacity. advantaged I customers the the understand to I'm that of the I the Help something product you bringing looked with not that say market about wanting I some adding to customer. some question. that you a terms understand we to standpoint. with also a as adding customers thought

Colin Rusch

folks what or we a are there's sites to existing been adding replacing of has sites around used, have those little started land capacity modules within see existing interconnects. bit existing either is If where

significant I'm activity if in just that. seen you've of a amount So wondering

Mark R. Widmar

we I found opportunities of a there's add opportunities in international mean, where lot actually haven't that. of in done incremental cases. certain some some seen that to We've the interconnect's DC than gets development of ways we of that that's and built done site sized larger then actual being the to where phase that. and customers expanded capacity been was beyond in the the have particular something first Clearly,

time. those happen from to do really So, time

to least relates any we it seen that much First potential perspective, As from haven't Solar repowering, a at of all.

Alexander R. Bradley

Ohio of largely job so side, local incentives, incentives, those. those of the Yeah, level a what on the county state of or finalized, have have range range and finalize abatements, completely potentially got we either they and incentives, things include most exactly haven't are. voters property training Colin, listed creation local tax sales but been But to which

place, So there's range. a wide and largely they're in

corporate expand of we The that's sales also tax the manufacturing. other made reasons competitive And manufacturing been reason lower of part and less a another is more direct say has relative ability the equipment, reform one tax thing tax this U.S. that the with I'd reform. is that incentive, to so can associated but immediately international or expense capacity rate, to

Mark R. Widmar

the terms that I support level the the not the content what the just incentive some and relative per the Series the we said U.S. general in customers state federal to us overwhelmingly and the to manufacturing that ability in it but productivity add right capacity some comments or and to It's mean, ability U.S. manufacturing just do of now, it table, manufacturing level tax with module, to here labor me in logistics, with tax the also to customers competitive to freight and And very around or product delivering right manufacturing been I that can get in timely as the U.S. the can the of is have we're its our get can really may exciting brought well, now very of our X in to the what costs, position. everything markets, corporate at the really coupled and Yeah. about more else U.S. see be. less and just happy here the relative – responsiveness more support labor my it's our relative we competitiveness look, reduce U.S., whatever serve advantages helps U.S. we and rate and to in extent structure that, international

Operator

from Michael do the incentives Hi guys. Weinstein to flow ahead. might with the and you question go about - our Michael taking talk factory? (USA) they take Credit Please next Suisse we'll Credit Thanks state you and question. And local Weinstein Securities when Suisse. Could new start in for think LLC the for

Alexander R. Bradley

Yeah.

on there not the being in of So process But call later those, update they're range you Michael, beyond is I get finalized. as we'll we more of can give the you clarity. further much update

Mark R. Widmar

And of have manufacturing we them that say, when the in will tax reductions and other would happen the we that lot had comparable thing incentives – Yeah, I would I property started mean just to to incentives relate other first over getting the to we're time. abatements some some Ohio. a extent, are will of

communicate So for actually we're be have But but they'll to you'll of years. many benefit, in number, you also able to look on see the large the numbers, a aggregate. when them, the at they'll timeline carry which

Operator

we'll And with go ahead. take & Needham question last our Please from Company. Mok Edwin

Edwin Mok

in. thanks for squeezing Hey, me

your on start-up will then less suspect new in to you costly model term, be you then long the higher X year, be you for And guess things just costs. lower or then projects? actually Is But quick And higher about labor will if OpEx for you that the it guess. your there OpEx I about? and, then that automation two potential therefore, million, up bidding be start-up one help may think questions, talked costs. I what for on some OpEx, excluding $XX additional capacity, costs on OpEx costly first, produce it I like other lower that aggressive last Series So more it U.S. might Is costs, be produce thinking capacity having I right, does take to correct? the is U.S., system you're question that higher is here? here of And to more you sustain think kind gigawatt like this can a million that about level (XX:XX) you capacity Is Mark's that to selling? leveraging $XXX even that point eventually ramp of you you X as by would

Mark R. Widmar

Yes.

it the produced. Series take content handful So one labor of of I will Yes, first to manufacturing. U.S. just I'll let the of is lower kind a module relates as per X Alex them. competitiveness

less content of and manufacturing So productivity the so that – better effectively Malaysia. again, labor Vietnam in helps labor U.S., playing have with relative in a combination almost then and our you productivity field level a better and creates

chain. of is The other get supply thing though that localization we the

through and customers. to And reduce having a look is now with that higher have as through First you from freight while normalized is well. so it's rate, to supply them we Malaysia holiday tax further standpoint. that at that, drives that through you tax holiday benefit chain, Vietnam to flow have normalized production look or chain the relative U.S. favorable deliver enables to local drivers which scale that costs, Malaysia, rate the couple reality you the when in cost that we economies their then period lower extremely yes, which tax impactful And suppliers supply which we Solar can volumes And to a their of run our to

So has to in competitiveness there's aspects able the many enhanced very overall of be we're Ohio. different like manufacturing that U.S. expand I said, happy And manufacturing. to

Alexander R. Bradley

say be it about other us key of we in X would product directly projects. bid to very ability more for scale. one be systems to having on enables Ohio X don't talked in that more competitive having systems overall is a I on on recent manufacturing Series the changes manufacturing side. So, Series U.S. competitive the (XX:XX) I systems But that internationally. and the international relative domestically know to that product OpEx impacts our business, or be things our

start-up per you running And time aim around be year effectively yes, down previous to This over managing core of So, from $XX company going we will if look $X.XX significant at to OpEx. our we're year, in the increases of this X-plus guidance. mean does still we be going without grow SG&A that to growth are gigawatts which of up at be million we're watt about at slightly OpEx. our capacity

and So, But OpEx by increases of XX% we some that more there'll get our look variable call a which OpEx of at of we're remember when including to, of out look to is that most a freight number would we're it, watt including competitors. at be minimal to range. sales costs also that our same that outside talk expense. And the $X.XX gigawatt down if that, when X around bring or about of not we that warranty per down number, number you in kind number

So, that out strip apples-to-apples you'd number. comparison, of have to to do our

So, as get Mark mentioned, the OpEx that can and value there's we in OpEx margin benefits the managing contribution through of clear carefully. that in profile scaling incremental

Operator

earnings you call. And session may question-and-answer for the and disconnect. We the thank conclude XXXX quarter your participation. you now does first this And First Solar's all

Stephen Haymore	First Solar, Inc.
Mark R. Widmar	First Solar, Inc.
Alexander R. Bradley	First Solar, Inc.
Philip Shen	ROTH Capital Partners LLC
Sophie Karp	Guggenheim Securities LLC
Benjamin Joseph Kallo	Robert W. Baird & Co., Inc.
Brian Lee	Goldman Sachs & Co. LLC
Colin Rusch	Oppenheimer & Co., Inc.
Michael Weinstein	Credit Suisse Securities (NYSE:USA) LLC
Edwin Mok	Needham & Company, LLC

First Solar (FSLR) 26 Apr 182018 Q1 Earnings call transcript