FSLR - Earnings call transcript Q2 2022

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Operator

Good afternoon, everyone, and welcome to First Solar's Second Quarter 2022 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 listen-only mode.

As a reminder, today’s call is being recorded. I would now like to turn the call over to Richard Romero from First Solar Investor Relations. begin. may you Richard,

Richard Romero

associated for thank Mark discuss the business a provide Officer. gross press Mark our joining quarter then our technology release copy on Alex domestic will Alex With Financial and financial release will by vision results. and provide Mark results Solar's Chief insight on Company pricing the update will at guidance Bradley, and Chief and website then some XXXX Today, Executive into issued A investor.firstsolar.com. quarter, update. a and press providing the for a announcing provide today of policy are strategy international you afternoon available expansion. perspective begin also us. margin our and First are for me the financial presentation Widmar, Good its and second Officer; environment.

will Following results current this Mark? forward-looking Mark will include note, We Chief the now their statements call that expectations. remarks, cause press today's my Please involve in It uncertainties we for from questions. management's call for safe differ to complete and and materially review could that presentation open pleasure statements the introduce encourage contained risks release to a Officer. is harbor Executive more you actual to description. Widmar,

Mark Widmar

This deliveries gigawatts. development are an offset $X.XX. Richard. of our Good of sale call. our further with pleased Japan, second announced platform we was us joining also discussed per closing in partially quarter April and These XXXX ASP, call XX.X in the begin, which to share gigawatts previously you, Thank XXXX for including the To new price earnings ASP XXXX. afternoon and for gigawatts. year-to-date benefited portfolio in backlog annual thank project potential project the grow of future effectively by strengthening these bookings. base today. frame as of of of are On since as results, the continued earnings by you as result stands expected record $X.XXX. sales deals with far later an mostly business pricing bookings the XXXX of to our adjustors systems during which new flat with Chile, our XX.X out time legacy XX.X many prior momentum, a are the the will at of base total now a to our of transact profile in continue The overall deliveries, our ASPs booking From be bookings We've XXXX basis, adjustors we the impairment our technology, of we to perspective, have bring for applicable encouraged an and by application deliveries contracted commodity through trajectory our trade of from remain to excluding bookings

we adjustors, it ASP as if enhanced to the relates map, Firstly, within road technology realize reflect to are has increased the profile. value associated able the the technology and energy product with achievements to our potentially

additional in adjustors, recognized XXth, result watt, $X.XX of volume XXXX. or XXXX approximately of of approximately revenue realized, contracted we in gigawatts As and of to be if June will billion with had majority these which, $X.X which up approximately XX.X the could per

under upwards the the the the contracts ASP discussed, include adjust ultimate of does those the for in main downwards previously modules adjustments to tax that investment may under States related sharing potential include upside which not potential or for the As amount extension for the United contract bin this credit. customer, U.S. or module to delivery sales

the to as may to relates Secondly, costs ASP increase it offset freight. incremental sales

Series and steel and begun aluminum. With our our to new at potential than as India, relates to be to offset increased in Series have a X costs increased it Ohio factories produced utilizing opposed potentially also introduce offset glass has ASP the aluminum to our featuring steel to as the product regards Plus to also modules XX% Thirdly, to costs. area adjustors we approximately larger X frame, of incremental

not here. contract are appropriate described To we includes reminder, that ASP adjustor the reflects such the booked adjustors recent extent every a the in recent profile. believe baseline every not As reward risk contract, an included

differentiated of For we is from customer freight In providing delivery the continue certainty, partners with terms long-term and value of example, supply risk and customer us and competitive backlog gate. to have our pricing of lower some of continue together risk for an points political and is access to and these leverage expand differentiation, the with best contracts summary, compliance critical believe encouraging to factory overall sales where appropriate record allowed have with that the These responsible our to cost mitigation. proposition technology, technology. both, CadTel and we available our our our

I'd to slide second X. review our updates like Turning some to quarter. from highlights and our

QX. faster-than-expected at higher result to benefited The due Our by of Vietnam gigawatts facilities. manufacturing in modules certain upgrades X.X was throughput manufacturing produced facilities equipment our of

in we previously have development our sale of disclosed, As completed Japan. project the platform

Ohio our our project assets, Alex Chile. will in steel schedule. divest associated del in Construction seen potential increased we on with costs. discuss transaction. the Luz potential freight third to remaining impact evaluating India date, and our our of power have in this To manufacturing and first and remains Norte facility seek plant we increases we of timing are As -- buyers financial facility manufacturing for

continue costs pressures to freight as on expansion equipment remain manufacturing building further we a opportunities, and explore expected inflationary to concern. are forward, Looking

for facility in expected our we've into disbursements with quarter. India, debt $XXX facility first the third Finally, entered manufacturing the new million a in our with new --

sales to would word freight like environment. say Before shipments, about I to the a turning current

beginning trend freight are that suggest reports normalization macro on basis, supply are chains a to there conditions While towards sales remain challenging. global

ocean for fuel spot partially were freight increased these have Although offset by fallen quarter-over-quarter, benefits costs. rates

the seen reprieve, impact represents away holiday a as continuous on to port potential experiencing From that temporary Coast we the the the of in buildup the a delivery period perspective, a which shipping we are potential may In approaching the headwind a ahead rate of of season, East are phenomenon. addition, from of West of render divert In peak terms have avoid logistics labor in after the recent ongoing easing goods as negotiations. United impacts still port shippers congestion Coast the States, congestion. some we of the year-end brief

For example, up quarter. ships berth to the previous of at vessels, to the the XX has recently queue zero of increased in looking Savannah from Port

Asia they While well from have the States averages. the United pre-pandemic transit remain times above to improved,

these incremental to execute strategy shipping has and In freight in nearly adjustors all cost freight all of fact, of allocating combined our our erosion. risk-sharing responsibility bookings, on we congestion gross or sales port customer led freight mechanisms an ocean margin contracts, to recent reduction contractual capacity. mitigating customer, to estimated challenges, as employing continue with our offset Notwithstanding challenges in sailings, with the XX% case designed blank to featuring in such global either either

contracts As of today, with coverage have freight trade XX.X backlog sales in of exposure. sales or our we gigawatts no either that

being other from example, contracts lower may from ASP for you we customers' a be the the for for estimated for targeted for where valued responsible to increase footnote average gigawatt responsibility inventory is transportation, included per the international into the in responsible from to footnote sale responsibility the take This customer for As revenue ASP sales, highly the than customers' volume $X.XX than requires for gigawatts, way partner. currently Therefore, have lower the XX-Q, long-term from XX.X to -- which our includes gigawatts of contracts this in By that entered of which in future a period. to low-bin from expect, shipping. shipping. are customers in such contracts is sales factories, in ASP contract, one on the of in on X.X is is XX-Q $X.XX contracts the is watt. customers the Note, where those with the take supply for transaction quarter's revenue from customers transport X.X quarter's this contract contracted included

transportation all volume of we contracted an factory modules by the where our we would shipping markets watt. Accordingly, $X.XX -- believe ex an estimate Alex fleet of we the customer other the equal will include expect be First watt than increase to factory in Solar basis, this the picking to works in be risen ASP the have than call. assuming lower factory in As headline India at had the Of freight implied with costs. for and be within ASPs we or gates XX address of approximately majority sales the gross we India That per assumption XX.X said, output later up will responsibility, this profit expect higher on gigawatts why ASP. the India that note, per

recent our address We Turning to slide X. shipments.

to we As accounting is since just expectation, With XX.X contracted with the future to-date gigawatts in after our earnings which our of mentioned, gigawatts, quarter for in call. is shipments total the XX.X shipments line approximately April gigawatts. backlog booked X.X respect

XXXX We India excluding sold XXXX, our are new facility. 'XX for of out as for now earnings out sold April's and call and manufacturing

planned deliveries, XX in India, XXXX XXXX have of have gigawatts X.X excluding planned in We gigawatts for beyond. and and deliveries

we longer-term we the be demand our contracts factory, the policy, we output India not signed the relates have contracts full coming and against customers first this Under will factory significant anticipate have entering as As months. into received our within until offtake. bookings near- from to it of domestic seen India recognized for bookings as security in

gigawatts U.S.-based are booking modules reflected strengthen include but broader pipeline of expanding Solar's value -- they The the our technology security, horizon seek As pricing trend U.S. XXXX XX.X reflective announced portion order First such, earlier backlog. for fully headquarter, largest long-term CadTel commitment of secured deals customers, April today. the will an pipeline. is thin XXXX, earnings delivery one Intersect one booked further to the among our earnings for standing of of as for customers their the This and call project certainty signed These for longstanding to largest Power, film not confirmed graph in of X.X their of supply scheduled with since to gigawatts in a booked but modules not our presentation. be

relying greater are framework are geographical negotiating at concentrated agreements. Notably, in that risk supply our chains China. of seeing customers diversity are We developers supply on long-term in bookings recognizing increasingly the among European

project Europe. placed portfolio megawatts and example, the its XXX one the in U.S. Akuo, an in for has just for French order which As developer,

Our bookings China benefited risk have and solar with against industry on contracts built lawsuit actions who solar top-tier pursuing excessive commitments. of traceability reported prime and growing recently on the ability agreements fraud, has Developers at related and is from example the with our state grappling filed A direct a and demonstrates increased long-term this have risk a of an deliver durable momentum volatile emphasis environment. a This any recognition pricing to growth cost fraudulent breach to solar our are that strategy. supply on profile dependencies the contrast of subsidized of delivery enabled behind Chinese partnerships obligations, product our our manufacturer, our experience alleging breach information. customers stand increasing

We industry-leading a large-scale traceability. have long-term focus also of basing approach customers drivers sustainability, focus believe benefited and to an Our and with solid our been and customer that for have transparency our seeks for on our it to that of Solar enduring multiyear growth. from procurements foundation an enabled key partnerships partner success, strategic First on

and for these from competitors our volatile stability that differentiating set success, ourselves may environment strategies for us operate We that our providing just also but transactional enduring visibility, for up shareholders. in customers, of highly longer-term our and some not the believe

potential on remain bookings of reflected total of X, year-to-date XX.X robust. we of XX.X Even at bookings our opportunities bookings gigawatts. the long-term retain As pipeline slide gigawatts,

gigawatts to its Indian to in effort have gigawatts of growing foreign IPPs in operating deploy urgent to gigawatts demand the demand North X.X certainty to the diversify gigawatts EU are government's portfolio. country manufacturers. in we war the America, Ukraine an to X.X as in and In see XX.X domestic late-stage led for meaningful demand the as in the renewables India X.X works developers it mid more we from continue EU. potential Similarly efforts to Our energy seeing opportunities to in boost India, and where relates Europe, owned domestic and geopolitics include

Turning to technology.

pleased are map. with of road We the progression current our

with us to provides of map well design energy offer allowing profile module solar the optionality, product enhancements and residential as a our to market. us as path road our for stated, level to potentially previously the next-generation high a true pursue As

that bifacial semiconductor of announced progress the operational On to the are last the teams on earnings had financial we continuing developing call, bifacial product. our as reaffirm of attributes thesis the our R&D we commercial, make and CadTel

to reliability level In to preproduction achieve to large-scale This supply the As field working is eventual the of from support path and ensure parallel, a is introduction commercial a working help bifacial runs, to large chain bifacial data. program our up evolves CadTel research module. are our viable necessary including team to to validation, R&D we stand the operational manufacturing. necessary

While to module results. necessitating the we QX CadTel expect Alex, bifacial who will have I'll supply adjustments now to manufacturing line our requirements minor, modifications call over a different be turn material chain. discuss will to

Alex Bradley

Thanks, Mark.

Both our other Before our provide an non-module results, business as well two slide I'd systems both our events, to impact full on segment. QX X, relate and legacy which this like to year results overview impact or reviewing outlook. of as business quarter's our

platform the The sale pending first is our sale and the recently our O&M project Japanese development of Japanese completed platform. of

an definitive XXXX Japanese received unsolicited and million On platforms. XXXX to QX April, XXXX Assets, entered O&M guidance guidance in QX of on our And earnings year, In our to the we development to to XXXX, project customary closing businesses assumed gain to of earnings conditions. of May late call $XXX into The these we sell sale agreements and these first this full our $XXX businesses subject in our we well. that year Real a offer PAG were toward sale million. discussed the progressing acquire call, negotiations indicated on

the As and conditions we platform in previously mentioned in related project of met. of the were earlier to sale the the Mark June, disclosed the And closed development accordingly, by sale call, assumptions a proceeds XX of in results gain guidance. billion, year the in XX were for sale on JPY of including JPY with These gross our billion. included business full line that

platform, However, of contrast to Bank dollar of XXXX and consents of QX of the in close with expected received to From third-party within be a forecasted O&M the approvals, the policy, sale Japan conditions, sale including sudden precedent of of previous economic million and $XXX the relative the on proceeds customary the be And the other calendar that the U.S. tightening the taken an U.S. stimulus dollar we place $XX year. met the than to midpoint the are of XXXX. between our monetary as of due the remaining perspective, cash Japan's weakening significant Japanese in million conditions $XXX million continued lower was U.S. commitment in yen a has largely to of function gain to the regulatory and receipt closing of to half second forecast. net cash additional $XXX received million note,

XXX-megawatt QX both, our and relates full impacting event second results project The year guidance located del Norte Luz Chile. in to

last As of to evaluate disclosed since project. or hold XX-Q year's we've a whether continued sale to filing, second the pursue quarter

result unable should charge. value we future net carrying in also that We be noted project, could impairment sale recover to any the an in our

begun in Given additional and of included in we've QX, Norte cost made recently nonbinding Luz been no that was of received on of to we lenders, cooperation sale a these analysis regards project. sale, with Norte bids project. no $XX to decision the with multiple sale has potential sales a expense from del impairment bids, in the with XXXX guidance. pretax of In recorded any tax a Luz in QX, our project Based impact the million million $XX acquire and associated process, del

post-tax QX million margin to year, this to in the sales negative benefited primarily also quarter. of in Norte year, X% X% by prior from recoveries. revenue higher QX by the the was million The million and received As to reduction volumes gross of was completed Norte, of and be impairment date, compared to range Gross million benefit net X, to QX, net assuming guidance $XX ultimate million million future background, and the $XX Note no increase prior from impairment expense, impacted of expense non-operating the the Net positive a in the the Chilean bids gross QX generation X% profit $XX of quarter, significant from project, basis, we tax to quarter. equivalent after-tax sold. which due sales to in forgiveness expect The increase is P&L. believe debt profit the received $XXX volumes freight benefit to the was there X%, a the expected net losses, income to this the impact and $XX the slide of our which line full for sale a revenue it later were and previously share of early On around amongst reduced the $XXX expense of compared stages implied from income the revenue, the $XX in remains million of margin highlights Luz compared on up to statement sale, forecasted structuring impact losses, to the pretax percentage primarily sale, in margin to sale, Luz we interest segment module on in sales million million of was of driven lines losses jurisdictional driven of operating $X.XX by million, income to sold in basis, million, in I'll uncertainty process including million quarter. appropriate, loss our sale $XXX With positively starting our segment an to for by mix potential X uncertainty a the that any relates $XXX year, a related million from million an although QX before tax $XX del module the net module not the increased a assumed we and non-operating QX prior the the impacted to entities. in and to loss given the second million a future was and del by points. total cover income $X.XX. segment is loss which with $XXX to $XX gross taxes sale of for $XXX million gross $XX per $XX of proceeds the $XX of

platform our quarter. included QX R&D to margin sales increased startup $XX reduced module factory. which sale prior The Additionally, increase percentage is tax platform in increase segment development quarter. the by percentage We and $XX of of project compared Cash the in in Japan of next quarter included I'll third freight $XXX project. was of to profit share-based del to $X $XX is of the XX expense of in loss operating points aforementioned expenses in totaled per tax a Ohio a $XX tax to $XX closing in the startup, expenditures costs the of QX Japan million associated increase items the operations prior related second and discuss share in associated and prior the million were quarter, the from million the share slide basis. an XX compensation with recorded project from to increase production totaling second with prior to cash totaled million summary and our capital compared on $XXX quarter. and the in QX $X.XX startup sales the cost SG&A sale in gross by gain a per benefit points turn expense of million A million, items the earnings Luz project of $X.XX quarter, recorded expense million, operating of on primarily sheet pretax million the to quarter flow generated to information. platform compared tax utilization were of million second sale attributable the million in in of of del of project development quarter. included $X million income quarter, Luz in Japan. the second X amortization the in on driven expense $XXX an aforementioned our and from the unchanged Chile. an impairment Norte $XXX compared expenses, select which led Production second of flows in million $XX depreciation $XX development Norte the combination diluted an of million, $XX gain to with We and sale million associated balance the

and segment offset at billion $X.X the of operating securities ended sale restricted from cash cash, the quarter. other Ohio the at Japan to a partially end of quarter by the cash million from million, platform. a with flow India development Module second sale at end before $X.X the our project and the the $XXX of project Our primarily expenditures our debt platform the marketable was and Japan compared QX, project balance new associated decrease the of of facility to development expenses operating with proceeds transferring capital Total and the prior quarter billion of repayment were credit due factories. $XX end the of associated

outstanding project debt sheet our come Norte is Luz del of All balance nonrecourse the and project off will debt is if the sold.

increased by a cash aforementioned net less marketable includes of slide as debt, Continuing Our the securities cash cash, to $X.X million billion on restricted $XXX which result approximately X. and factors. position,

full year XXXX follows. guidance Our as updated is

was which of to Our previous revenue $X.X revenue, billion predominantly remains unchanged. module segment $X.X guidance billion

to midpoint year the module guidance and our With $XXX del $X.X sale million of billion the us, project we've year. guidance total remains gross adding to of $XXX segment we million. module the second the to million $X.XX the year guidance revenue of in revised of Whilst range revenue We to are our have billion other between half $XXX half to million of $XXX greater profit behind performance. clarity into million $XXX segment $XXX full unchanged, Norte from the expected million for segment Luz reflect

Our freight is a the $XX del assumptions profit, previously $XX forecast gross of sale, Within $XX gross to margin million, impact of remain points forecasted XX now by to of gross profit profit reduce to underutilization due total million. $XX in and million Luz resulting unchanged. million to reduce forecast $XXX to sales anticipated was gross related Norte losses to by $XXX gross of million other segment, which $XX XX to million million profit to

cost to watt year to from previous Note, XXXX reduction of produced the of flat our watt sold per from remains module forecast. our X% forecasted year-end our per Additionally, both approximately and remain X% X%, unchanged our midpoint year-over-year guidance cost segment of gross forecasted forecasts year-end XXXX full unchanged. margin

a Following X% in of $XXX continue X% guidance. XXXX, margin $XXX half and in module SG&A the and the and result are gross of margin quarters $XXX module down is to segment year. million R&D million second from expenses first in improvement our million expected second to to million, the total previous forecast to $XXX

and by Japan $XX SG&A, guidance to be million and partially million Other in inclusion total income between our to million U.S. on In a operating gain $XX Operating to now a $X.X of is the of to addition, the debt million sale impact. results of Norte of previously guidance, and partially forecast of full expected forecast million guidance gigawatts as the $XXX to million value inclusion down the function sale down million a of X.X range the of currency the offset from $X.XX. negative $XX $XXX million platform. moves of to $XX from savings. $XX the reduction as Norte $XXX to Luz the $XX startup of diluted $XX is Norte a del and lower-than-forecast to million million The Full sale sale million to guidance expense sale aforementioned increased expense $XX in R&D is function shipments $X guidance of million and of XXXX of $XXX Japan current earnings X.X from Capital expenses expenses the business million. $XX startup of million, businesses sale del anticipated to expected previously income million $XXX $XX development gain $XX given project and million of from per for following million million year be income to guidance to $XX this forecasted $XXX in the estimated previous year, forecast share forecast in to dollar expense Luz year forecast guidance million, to prior tax the $XX of This interest upon $XXX remain gigawatts guidance in positive million to on unchanged. expenditures increases of project. expense Luz previously billion $X.XX offset forgiveness del the million income by of

XXXX and net cash $X.X anticipated corresponding sale in an to Luz of increase billion project-level be balance $X.X following the of Norte Our is year-end debt. between billion, million del the reduction assumed $XXX and

from back strategy and expected a our call into some of and like watt overhead revenue and I'd next is for including produced, backlog per reduction of scaling largely incremental potential capacity the structure, our expansion, to approach, freight bookings, both gross The this which significant contracting handing anticipated years provides and the agile record risk. and recent to cost benefits through pricing our expected expansion Mark, of the for components provide realization production, Before given of advance cost commodity in years of certain mitigate insight to for fixed several the include and out our our margin strategy beyond. our vision approach three contracting our capacity

contract recognized in XXXX, XXXX. be with some includes achieve XXXX these these contracting majority map, from different, and are margin Now potential contribution agile adjustors benefits, in expected structure, every is to respect incremental we've able we and to if revenue adjustor and road to describing. every technology anticipate margin while our the we're recent our gross and not Accordingly, contract been technology commodity every and seeing gross of protection revenue

from produced of expect XXXX point, watt our cost expect X% between produced in this and backlog XXXX. and reductions per cost reduced through will costs or Even to current ASP the costs the watt for to we cost to freight we On steel either relative margin making gross we the basis, Against beyond. Firstly, should and X%. in to exiting July, XXXX. pricing gross the the see of annual the pricing relates as flat, and relative contracted ASPs XXXX, of expect relates a expansion as bookings well remain per it norms, provide between adjustors effectively XXXX see not we therefore, for assumption and relative contracted to an Under profit decline in as base conservative inclusion year-end produced elevated would such anticipate in offset further cost realized reduction to in year-end XXXX as aluminum for years ASPs, provide to a would annual this an pricing either to reflected watt scenario, profile to beyond remain a increase to sales profile the of cost mitigation XXXX benefit no XXXX per backdrop, of we an would future highly it costs. pre-pandemic

earnings to perspective, XXXX. X starting is increase the on a assuming will incremental mentioned with relative watt X of to freight adjustors we volume Ohio environment, gross contract From call, a indicatively, today, sales production profit. is aluminum above add the sales per expected aluminum factories annual Series anticipated in announced provide in baseline. gigawatts and approximately additional ASPs the to significant today's expect As and freight That April growth by $X.XX India approximately

cost this structure the adding OpEx. capacity anticipate largely limited see with incremental we scale benefit addition, fixed from as In our operating we of

R&D of production and incremental $X.XX. the cost and year per watt $XXX this by combined approximately of XXXX current SG&A Assuming midpoint guidance full our SG&A R&D million, reduces

we're discussing. period make to this for The ASPs, to is reduction, commodity impact expansion within to that for combined product. case lower freight deliver other and compelling domestic base produced or to a be elimination of over are our than to Moreover, per other gross to a ASPs able lower enhanced and than gross expect fixed factory further operating the the those the due watt gross technology sales U.S. and and CapEx relates cost margin expansion that and provides the margin potential costs markets, map. road incentives, against domestically This per is we've watt a ocean profit expansion in the achievements the while been we largely flat the anticipated higher fleet to facility, be Indian for combination labor market factory our to of scale, average. it Indian equal manufacturing incentives of freight As cost extent capacity adjustors in

the future to enhancements, technology. we on earnings technology under improvements, To and product the the including revenue contracting that include realize described under technology approach, As call, today's contracts incremental we have sales accomplish designs updated extent our forward-sell opportunity module April energy-related we new adjustors.

As of not those extension United within for earlier, our States to And context which does tax the related opportunity profit that ASP this sales the the here the potential or Mark an on or sharing under downwards, contract ultimate adjust modules is either the noted to to customer, include bin current the the described finally, delivered for investment a contracts potential include gross the adjustments plan. credit. upside upwards U.S.-made capacity in may of

current our And accretive policy on gross turn the making I'll expected to provide would capacity be now to and who new a announcement be to the additional capacity back while profit over an above with Additional expansion. not update to call scenario. thinking we're will respect today, plant Mark,

Mark Widmar

To abroad. States, like the announcement many would Inflation Thanks, in and Schumer were both and by Beginning policy conclude, yesterday's Reduction the regarding the surprised we Senators environment like discuss right. joint to Manchin United in from Act. the rapidly All at sector, energy Alex. evolving home I pleasantly

to change We of clear are in are technology-neutral solutions, approach announcement that taxation. yesterday's corporate and the supportive we and made encouraged to climate balanced energy a reference investment security

if nation's incentives last secure reviewing passed, credit, helps the While still required we solar are full production deliver legislative hopeful advanced manufacturing boost night, the energy are we the that our independence. domestic and release tax to manufacturing

of dollars investment solar the manufacturing here forward, the the to move represents simultaneously designing in if process As are climate policy legislation a that we to energy step that expand that, to clean to change hopeful first to demand-side appears domestic solar tax credit result. maintain the manufacturing real legislation’s help pass urge passed, legislative We're extension deliver will home. XXX, which domestic chain to credit, critical legislation, addresses while ensure production security. Congress to codifying ensure manufacturing are certainty. urge industrial U.S. this in to we taxpayer respect the credit further at incentivize used advanced supply Senate policy content that energy fully order crucial chambers to tax help quickly enable both the moves the With This refundable intended American that designed

to manufacturing considerations to our expand our Turning further footprint.

stated, demand, cost markets, to investment into build These access or of solar materials and to through remains innovation. We low to export that needs policy a to Senator ability criteria the with the remain sourcing Our geographic for other competitively superpower as a proximity we've United energy environment. the cost-competitive domestic global labor, repeatedly agree Manchin unchanged. States estate include cost-competitive the supply ability access components, to costs, and to real chain the wholeheartedly and to raw support

plan own As light quickly for it should potential the get U.S., solar-related the consistent stated manufacturing and were passed on Inflation of future we solar these credits, Act expansion required the policy. latest with to we on expansion. previously for evaluating our noted pivot but we domestic had U.S. to in In that the first relates expansion that language capacity potential we developments Reduction tax manufacturing to clarity reevaluate

Moving about continue India. in optimistic we and to be Europe the environment policy in ahead,

seeking grow last in that the to governments, Macron Modi are numerous Conference we others domestic of with These of the met hosted addition have we -- and capabilities. members Over India President Investment meetings and having with diversify their productively along Minister France Prime constructive by engaged XX of to with cabinets. with months, attended are are

around resilient manufacturing chains is repeatable the template. calls louder world, proven domestic solar on vertically First to Solar a alternative well-positioned offer As based we uniquely a integrated markets in grow for supply viable believe

have key the scale. and summarize XXXX heart turn to responsible our while we that social footprint advancing governance to across and call as These a our I inclusion of placing Alex I the accomplishments commitment demonstrate environmental, invest to of issued our we The back at diversity business sustainability the we the our how goals. strength today's report. our detailing would our of messages, continued principles range solar, like other note successfully report to highlights achievements and progress have lowered of among Before environmental in innovation metrics,

can that our be solar compromising is and competitive proud an are principles without how Solar example of We purpose. First

technologies scaled key Alex and people without a high sustainably We messages from be solar the call. price. that have can the summarize planet shown will today's paying now

Alex Bradley

Operationally, XX. to gross module slide two of margin events. year year and Turning discrete gigawatts produce perspective, full of a earnings share of with our From QX The to guidance systems per our guidance remains updated pleased revenue the X.X our reflect we're modules. financial and midpoint gigawatts ship of legacy full we'll unchanged. $X.XX. We impact X.X

encouraged on And the finally, expansion Inflation reviewing and Act X the April this conclude that, questions. legislation base impact remains are XX.X Series backlog gigawatts earnings a XX.X currently record of new we're with potential gigawatts. by of Additionally, year-to-date demand call Reduction leading our XX.X bookings, The excluding development $X.XXX. extremely and Operator? prior net in since adjustors of our And bookings a proposed for had remarks and with business and we plans. our capacity contracted its of robust prepared to ASP, call gigawatts open

Operator

comes from the [Operator line Kallo Instructions] Baird. Your question with of Ben first

Ben Kallo

been with the takes much? optimal How because puts of and [ph] greater Day do XX% [Technical I that? then, results back Analyst out Congrats on and Difficulty] guys. just margin. you. ago, to Difficulty] booking How do than kind the and do capacity manufacturing gross so [Technical you've it Hey you was Thank figure And square bookings. the the all

Mark Widmar

So a way to X% the don't start, margin in I that know, we're module gross X% to number maybe we've Ben, I guess, think that's, one business for or in guided the environment now. right I

XXXX. Okay? This for

has and Series of remarks margin. that when such is as we commodities embedded percentage XX and gross we're X. is The steel aluminum introduced with in his Alex is impact obviously, dealing freight headwinds that so or what or that XX with So, points the that in low headwind -- said margin eventually the of around sales gross

our an for as -- normalizing I’m through that right then through cost is It $X.XX -- are can just freight that a Alex it stay to, where assuming that just have and where one referenced So we we as because they of cents, either which now lower normalizes as benefit previously. away. and come anchored come down back -- assuming X.X aluminum levels ASP see contracts to historical ASPs a to seen comes can sales incremental

that your to threshold So, what you XX% relative at we basically of guided. gets your

in you gross And of progression, the end Now, look the at our the year. year. guide is also gross for the margin if higher full is the margin

even gross be seeing XX% So this exit though are of north we if cost you use a actually also challenging margin. the Alex we indicated still will reduction. -- that in are you point, environment,

are X% X%. about X% we So, seeing to year-on-year of reduction -- cost

So, there's an incremental there. margin expansion

But the right? everything you're into you adjustors, then meaningfully should my if layer we the actions when you're taken should value that XX%. of you do then So better achieving And XX%, those capture that, just that together, solidly a think the better much forward. we of a we've capturing minimum us the So, I mind, technology than have road threshold think And and in we that in or right on. than the of still relatively as across of comfortable we've ourselves very to now, very value of the -- we to technology contracting opportunity we've strong where I terms that, front move slightly our be ASPs, great contracted our of we've gross but then and they're there's show go as line horizon. our margin to still as have around map in execute what indicated, we sight the lot we margin given flat around other increasing percent

Alex Bradley

growth demand have we we the supported through as optimum contracts, driven, size if there. you backlog today, that the of behind you to if pipeline, capacity, want the the at have at look manufacturing clearly, said we right? mean, pieces you be think that we've I And always the look Ben, Yes.

think real proximity advantage stable you policy, stable think around having we key platform drivers things a through of talked grow estate, about a we've power the manufacturing cetera. being locating technology to and or how expanding, demand, demand, If chain, et several to supply technology from which markets, other some competitive about labor,

working happy through seen as the still to our there's very in in the recently, cautiously optimistic. that remarks, been that mentioned the We've side that obviously Mark news policy we're churn people -- over about this of a challenged document, which think now. where given a a we've And of We're key driver. afternoon. last working We're there. lot months. on prepared lot read yesterday look, that way you of we're couple has of we’re a the out been hopeful been the are If in lot Washington of volatility be coming And equation,

look we key drives So, our expansion, natural for law. potential until a we signed I if want a to into about driver. talked being we policy bill what see remain But through cautiously optimistic

demand look that's clearly the there. at the backlog You and

in look terms macro You been at the And Europe the the seen for expansion. in looking solar, markets manufacturing both growth at of significant opportunity in and of India. the the we've all U.S., in

Operator

Your question Roth. from next comes of the Shen line with Philip

Philip Shen

about -- then this of per watt back the think can active, last you module how to or given [indiscernible] was way to get you new Do think And per ability of there's part you in know the also sell on CadTel passed, expansion. bill, much before you what talked -- can the follow-up kind when capacity credit Inflation year credit, that but quantify also we the there's Reduction access? extension, frame? ITC you do this see, up the the how watt I you does per demand a watt? Act $X.XX can of and do the in past, credit. the As X and $X.XX time tap access that's X, If you $X.XX you think any the of $X.XX into then, actually many in the and factories put the over the just the plus could can

Mark Widmar

in years. going Hopefully, to point take point that in relates chain in it the with us something last supply as challenges effectively if it's from the couple of less. capacity this slightly -- been dealing XX U.S. in expansion, Phil, see some over time, look, So around a time, to from of we maybe we relief somewhere months, we've the some here

we've working previously, put tools, that time we've building and the So, something But the right new keep going our faster. thing tool maybe we We're by knowing move-in factory. can with very you about the pleased good a as now a we is the mentioned do it, we're then been greenfield up, another vendors to are that and that actually be to scheduled was where the teed there -- up them we of with we've for with to not after seeing vendors, for and one cadence more Perrysburg expansion, X that options lined well. at factory the six and months want and currently and so. what And a maybe have in environment we the India here only India the then the least our have told that in we'd have, EU beyond as in given go the current U.S., but we

in partnership a operationalize of least right production. for if because utilized of a referenced EU Reduction Germany product Inflation supply do maybe on think India, forward, be here to could little the goes our at we look incremental new relief. as for priorities, bit line the terms complete still market. that -- in time in the U.S. it's the longer and with we're now some Act to and facility it's the it have going be see chain, a discussion about potentially challenge in dealing our be factory, tandem could a faster we accordingly SunPower love residential But way XX-month because even So, with a I I window. that and we But, would in we'll Eastern one at utility-scale that with

as another I'm the sure mix? make well. throw if factory also There's to get goes we're incremental other throughput U.S. mix But could potential. the avenue to every this trying through. And in at into that's we a maybe So looking

factory. our For phenomenal done has job team the through throughput driving example, incremental of a existing

additional Perrysburg running or the production at we constraints Where the when which entire U.S., constraint? look to constraint Can to another is we up at. there X increase let's the so some So, platform, can the to that to throughput add that we here the the get in you add one throughput across across gigawatts look the and factory. to want capital tool existing X that within is another allows optimize thing more path to continue clearly that at tool drive There's the set?

As read to our XXX it we particular, the be -- to $X.XX and sell-in still the a to full relates $X.XX, we everyone the through, that and the plus that ensure we accurate. go look, Protection provision, believe the Act, with We module. would interpretation which again, need to have to is Inflation everything and consult in entitlement -- believe

I legislation, thin that to prior what Phil, the think competitively to to The of said originally is I've largely same silicon. spirit the crystalline you is be was as to was not versions, relative going ensure which the in in film disadvantaged other was past thing, the

it's provision, way the it passed would we is is as from now, we to also believe square worded benefit and wafer structure the I so, if right And that be it think, the the wafer. were And $XX per meter.

our today basis, module X.X per imply that, is meters, benefit cents take about per you watt $XX basis, there's not X on which a So, modular -- a would potentially about Series there's module. square on

be that is as not capture. the law But make can want into that, do So, are that that's -- believe sure all that is another that and another sure on. but to we're crystalline we have silicon go to capitalize that work to other competitively That passed we the area again, technologies one to benefits able disadvantaged on. going try fully make intent are and anything we that finally we we to all to to at it's that entitled would we lever such

Operator

of Suisse. Your Credit next question comes line Mandloi with Maheep from the

Maheep Mandloi

comment forward? Could puts you of the just from going And clarify to declining to 'XX Thanks. a 'XX. think you base that what made expect ASP assumption? should kind takes I not we ASPs and on

Alex Bradley

What the question? was part of the last

Maheep Mandloi

and adjustors in things. aluminum that, shipping with other puts the with Just just steel and takes and for

Alex Bradley

Yes.

expect is be in So roughly to what's the the XXXX what to backlog ASPs from out if you look flat at we said today, we XXXX. going

QX. and we and QX, think where we about out, you If talked in see about were, the you'll are Q where now we've coming

$X.XX on And my out the level, XXXX of we in that we're base flat that roughly effectively is ASP to technology. comments, a said remember, ASPs. in be $X.XX range expect to I through somewhere reflective saying You're to of base horizon. the XXXX today's that But as

at upside achieve potential ASP, technology our things provide puts to around map look to road contracts value large should the customer, energy that to you've and more into adjustments, you a or takes within on and extent more that when got built based we the So, are those technology today.

you that when you look key So, at the side, ASP have other adjustment.

You have freight to its sales and protection ASP, commodities. around

and freight the prices that structure pre-pandemic, that increased norms an ranges sales remain in today, and ASP relative cost event So, we the offset incremental typically, we that in saw assume that we have would cost. our to commodity the elevated to

as that have you'd So, well. on adding

see that pieces So those are key ASP. the we moving around

Mark Widmar

But adjustors. ASP or if then there the And clear watt Completely watt. Yes. sometimes just normalize, freight be then corresponding dismiss, any I $X.XX will to understand. it want sure, means per because make a cost the it's by decline benefit to people want well, commodities is what sales won't our

right as So, stay And watt a if through core either that now ASP dismissing through ASP in to it's or at going inflated come people cost the environment in come it if reduction. we're as an think we are will a I higher sometimes per to drives it's gigawatts. realization that cost our going in the margin XX across per to watt. what or about capacity lower the of captured, up plans won't Either are $X.XX gross way, that it getting is understanding XX my be mind, without add to

or call incremental forward. we XX way or ASP a other, either as benefit production gigawatts it, CPW one lower So, move across, meaningful XX there's the or

Operator

from Osha of comes Your question with next the Guggenheim. line Joseph

Joseph Osha

about. the map past, road adders. of communicate about cost Following line watt of and of I us advance? I'm through the the in previous been as there's apples-to-apples up talk adders you technology cost sort there technology talk the that you something Because to any question, But continues used that's, remember can lots to on is reduction wondering, per

Mark Widmar

our of did X% exit we're say one per is target target watt kind cost things is of still X%. reduction rate look, the on to we for So

challenging are this even so, And a taking year. environment in out inflationary very we costs

improve We a at per have not that watt the will as time. the further we given period technology. a by of map we for haven't road that cost cost definition, reductions, continuation But updated of least decline of

whether Plus bill continue to the other of we're drive initiatives, reductions working throughput drive well. as down our through our have efficiency additional to on CPW. that's we as opportunities we going that So, higher, material it's our

on continue a will we trajectory. So,

the If a as next at you wanted issues an as we of the that previously, of X would well drive we've because improved will I what thumb throughput with improved move accomplishing as to kind and rule over design believe cost assume view we modest reduction efficiency, digits of years, drive that product digits, will just forward. And would Series should cost profile. single other product higher some the be of actually that least maybe we reductions several of upper still indicated cost single expect

per benefit you're cost the X incorporate the to into you when see So, going a overall fleet, watt. Series to

a So, continue the to peaked. It's going going cost per not direction. watt move to to it's is not positive in --

that the we've go we module. additional But we're that even address on future. initiatives environment we believe just into place, to the that some exposure in be expect have that largely environment in there that the on we most of headwinds assuming and and ourselves cost have in regard, crazier don't in but now should inflationary Assuming some our we could continued protected a we'd stable reduction

Alex Bradley

watt you Yes. And said, produced decline. to per think cost year, about, Mark X% Joe, as X% number this the a that's if

that driver we of and of the end true. in you guidance reduction. the the March, back QX back February, Those our in go that slides there's still you call, to shows showed earnings hold a there chart early cost If in

what's and key modules, If we drivers yield, look at those this. you where look efficiency, have throughput to the through

same updated watt chart there. perspective, reduction per new cost haven't the drivers that from we exist of So, cost a but still

chart on have that of also materials. We bill

reductions bill would expect are As course. that there material Mark we mentioned, of in ordinary

environment, through contracts. we're an we drivers in in protected adjustors the have also of against we some key However, our inflationary the

resource to. another can that's look So you

Operator

Your comes Brian of Goldman the question from next with Lee Sachs. line

Brian Lee

lot the of Been margins focus here. gross the cadence a and around

as about your XX% baseline margins? top things take earlier I'll the it could well. appear eased know I of let's The cadence, kind just a the you normalize. throw guess, in normalize. ring When they've steel that, of to when bit comments. much environment, impact all And pricing sort price, I we gross higher. a it margins adders to recently necessarily of also of then get P&L is freight, the going about, and margin doesn't some talking for you're tech that So, my gross aluminum question on of per But XXXX, does say really think the that all as start

the some pretty gradual and fair the in margin starts of Ohio, happen capacity in of And assume through and India So, into to real we're to step-up the next cadence this most going a 'XX. tech see and rest to year? of year then, with new adders

because we there parts how obviously of margin budget for expectations for sense couple there's trajectory. a the the get to of trying years should Just moving lot over a next

Alex Bradley

Yes, Brian.

said of we see to in onwards. benefits through come you're going the that the 'XX majority So,

benefit You some are XXXX. to going to see

through the year. watt said we cost per reduction look we're you those If flat perspective, that forecasting ASPs, cost a relatively that stay across per we From horizon. watt said this

customer. risk have the in sales year. of You're a straight some obviously. amount next we excess today, not we of just moved contract, still next early of had that From protection effectively the a orders different perspective, as varies get some It's the contracts and to the going of we every pass-through do to year, before to benefit days flavors protection

that at So majority well adjustors the introducing going that will to from but that year, We've was as recently technology incremental call of you're basis, then on last also onwards from for XXXX aluminum onwards. freight steel our on you're as in first an see we point, adjusted looking started at said being really Series that said that out going or to see adjustor benefit to sales that the big some majority XXXX. before, next and push XXXX From see the in benefit you're the perspective, protection price a started the we product, the of be commodity XXXX we well. beyond. X And going

going XXXX, majority come in benefit So through see of into XXXX. yes, but to come you're that's the little bit going of to a through fully

factory, also from You're would in going the Perrysburg as say our will growth to coming X from contribution look in that see around expectation XXXX. But in see the timing you mostly coming of potentially a that I and at if 'XX factory bit well. India some the through little value you

you'll your of some through model, doing growth in get you're XXXX well. So, benefit when coming as

Operator

Your with of last line from comes the Oppenheimer. Rusch Colin question

Colin Rusch

an capacity wanting in volume a confidence there. Could you adding capacity need you in in Europe preparations with giving Certainly, that talked you, you I'm you've that, from those And see the a horizon bit selection, of about about work there's there. would major things terms progress site terms a the little to curious decisions. on your that the about to like vendors. the perspective incremental from two-year just demand? customers and time talk the make update But of the of

Mark Widmar

Yes.

did number with customers. different find weeks country here of and Russian and for And a significantly. one the we in look has seen of there's change one Europe and the a that few goals have. as Europe, ago the of actually demand they with the India. another no and a as to pipeline, referenced suppliers. Chinese well U.S. in their than we really off as So, we've term X want seen and Solar, in climate evolve trying litigation things adversarial large our well, diversity there's in significant solar I gas, their to highlight, what against mean, we've EU significant that, can very as and a of the dependency opportunities near a lawsuit, fatigue, a long-term over they and our And you even someone opportunity at dependencies into reliability I reposition different if They're Tier demand pipeline and there's especially was by oil fatigued of don't with I grown talking market, then they're for that partnering First mean, what certainty. and ensures work to want who with of that they potentially obviously, they in

product the tandem a product what would market. be multi-junction what look, number if for it isn't in decision, the could already maybe trying production. or is of of try right mean constrained spaces. we're factor, could it utility were be out a Germany. European working do Eastern the be gigawatts build ideal Eastern with I optimal. for an of around a cell agreement, a and factory to selections counterparties. then X.X Germany evaluating They're also also And in site a mean we discussions for to that's sites to scale lot But product So, to smaller -- deep Series it a a a or Obviously, I make to high-efficiency the form better we're combination We Europe footprint be type have to through Europe. we're our X right offtake that in product footprint the size. go looks accommodate Eastern factory could market to figure space

very So, lot I say opportunity. of would I'm A encouraged.

offtakes -- of we a I more think able contractual in obligations the supply commitment have a have provide like to to would just manufacturing and and secure confidence being making matter EU. the it's to the agreements to multiyear little and enable

I right to like see promising a the now. pretty movement some would policy think on bit. We it's little still side

to trying deal dependent U.S. they're it in to Chinese things some chains there, the forced doing requirements, the other also number even we're and seeing labor footprint including things upon production. supply that positive challenges think their as relates restrictions COX are like I that of a of with

serve to it. best So, very the in happening important and the EU, what's of for and market we're at it's looking good a lot way things a us,

Operator

does you questions There very Thank are conference no further time. conclude call. joining. at much today's This for this

You disconnect. may now

First Solar (FSLR) 29 Jul 222022 Q2 Earnings call transcript