Earnings call transcript Q4 2022

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Operator

Good afternoon, everyone, and welcome to First Solar's Fourth Quarter and Full Year 2022 Earnings Call. This call is being webcast live on the investors section of First Solar's website at investor.firstsolar.com. [Operator Instructions] 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. Richard, you may begin.

Richard Romero

you. Thank and joining everyone, you thank afternoon, us. for Good press its financial fourth the XXXX. as company and announcing a issued for guidance XXXX Today, quarter release full as its well results year press copy website Solar's release A investor.firstsolar.com. the and presentation on at are associated First available of

year Chief a financial today me full business quarter will discuss our Bradley, update, for Widmar, Mark the will and Officer; and Chief Alex With Officer. Executive begin results fourth Mark Alex are Financial XXXX. by providing then

Following for remarks, a and these will Mark business discuss strategy provide then will our outlook. XXXX. Alex financial guidance

Following their open call for remarks, questions. we will the

could this call differ materially actual management's note, related today's involve and Harbor results current statements that from uncertainties and you in encourage complete contained expectations. Safe risks press that description. and for to the the Please release Act to presentation cause include including more statements Reduction review risks will to uncertainties, Inflation We forward-looking XXXX a of

to It Mark? is now my introduce Mark Chief Officer. Executive Widmar, pleasure

Mark Widmar

domestic for of financial capacity and international operational X XXXX and R&D transition, position year Series logistics a we Thank profitability and and significantly and to earnings began it commodity a thank We and with joining today. expectation stage us setting commercial, new stronger the face with beyond. But investment, it in year XXXX be afternoon, Richard. the we unprecedented product. into growth coming as challenging costs. We from a would Good perspective new also you entered an expected for you, and increased be online that this

associates. vertically pipeline markets. a robust manufacturing This momentum and balance of process, rapidly is with by This in due particularly demand including is opportunities, our position environment. CadTel the significant strong by evolving domestic commitment hard respond in those our work, the began also record enabled opportunity contracted to technology, core unique us responsible placing and to a year a a the backlog, and differentiation, solar, driven to policy integrated points sheet commitment momentum of production, our bookings We of to emerging a also passion

by Beginning XXXX, commercial a contracting, highlight deals trust towards procurement. agile shared will saw our spanning was precipitous From in long-term, I of in perspective, the of Slide are some multiple for. ability This deliver technology, customers years to combination key XXXX we pricing, driven values a multiyear competitive multi-gigawatt and competitive shift accomplishments. volume on that our X, our looking record module of certainty a

we a gigawatts XX.X prior gigawatts a excellent result, an XX.X of was perspective, set an This of XXXX. from in from had year bookings gigawatts increase securing annual record net our a in As record bookings XX.X XXXX. of

at call stands a total today's deliveries XX.X backlog of as future earnings now Our record gigawatts. of

of of and a Alex ended at year We quarter net strategic a capacity, net our strength to of versus billion an improvements position us This opportunities. of $X.X debt, or our is to in gross in and pursue and billion, puts $XXX $X.X cash which invest expand increase year. and technology research results will overview end prior the gross million comprehensive in towards provided our time came third results, we with Financially, of provide cash XXXX EPS a earnings high year guidance while range of financial the our the call. more our of the full the development

record XXXX. From gigawatts X.X produced in a we a manufacturing perspective,

increased produced watts watts in from our bin XXXX, watts per start in significant module XXXX. XXXX. production our we and of in production Average at to top XXXX milestone, gigawatts Additionally, XX the XXX watts, producing watts, to increased increase XXX XXXX commercial since an in a XXth of began achieved we XXX

X Series commenced month, of with ramp XXXX our gigawatts which factory continue in will nameplate initial Ohio, manufacturing capacity last exited and, production We through next-generation X.X to at XXXX.

are factory India of X our also and Series construction the the ramp XXXX. to track during complete in commence on We

X.X-gigawatt expansion our in capacity factories. expect we nameplate manufacturing a factory our capacity capacity approximately to program, of global Furthering in XX.X XXXX, we increase Ohio gigawatts X.X-gigawatt gigawatts. Series By announced XXXX, new at and nameplate U.S. and of Alabama approximately a nameplate XX.X X

also Ohio. We facility located plant million dedicated additional an in and announced manufacturing a our XXXX investment development Perrysburg in research near be $XXX existing and to

reduce commercial that produce full-sized lines, expect improve learning production allowing cycles downtime tandem of this We PV and our while modules. prototypes both of us and investment to film and will innovation on thin

which our legacy largely when potential exit Strategically, call. in business Alex XXXX, opportunities to competitive will advantages. able we focus greatest and remaining technology he in costs us systems this legacy later and the guidance business were provides related enables to our to on discuss

IRA require, content including Looking treasury among respect to the as of and IRS in expansion expansion our objectives. to greenfield at other understanding throughput chain both manufacturing forward, an we robust the well evaluate guidelines, continue expansion no will and evaluation presence for things, Therefore, have time. further This at that this opportunities including decisions domestic investments capacity, the our currently capacity. in confidence incremental planned made supports anticipated as supply the of been optimization

in quarter and that discuss fourth was shipped within third which year next gigawatts X.X quarter recent Turning the We guidance X.X provided most full our earnings Slide we and detail. call. respectively, XXXX, shipments approximately bookings during to greater X. gigawatts the the for I'll and range

to site. a which the define arrival whereas reminder, port or to upon the shipments control project at or a a when sold, commonly recognition, commences, process as destination revenue As the delivery generally volumes is of at we customer, of occurs customer modules transfer

we $X.XXX quarter bookings, of the gigawatts earnings base bookings recent have at our ASP with XX net to since sustained average third per regards momentum With an call watt. of

seeing of customers. evidenced perceptible as placed multi-gigawatt volume shift the a As previously we orders procurement by in noted, are by multiyear, behavior our

relations. orders these X an it Current, by And gigawatts. Origis transactions of Grid, competitors. Ranch Savion, of indication for buyers Lightsource differentiator Swift beginning National are Since a that such as many the Silicon placed our many the taken least of our repeat clear fact Energy, shared BP, more underpin is and trust large approach with and developers most at have The customer values is transactional of the others, XXXX, Power, from Intersect that among

accounting XX.X for shipments now of the After which expected approximately during quarter, our X.X future are gigawatts into shipments, XXXX, fourth extend gigawatts.

through India, Excluding sold we our XXXX. year-to-date and including are bookings, out

to months, recent over work for negotiating in the XXXX looking customers remainder decade. have, We secure with multiyear volume to from are who of the pivoted solely contracts

fully quarter this not, production of have out shift, As previously of earnings expected, our non-India XXXX. sold of we call, a as as in result the commercial third

in and more beyond. expected gigawatts sold beyond, XX.X In have than increase our of we XX.X of earnings in an XXXX We now deliveries volume for prior call. previously XXXX gigawatts total, from planned deliveries and have

full discuss I'll now QX results. who Alex, and over year turn XXXX will our the call to

Alex Bradley

Slide billion, in on quarter. and $X.X financial the Thanks, results were increase an billion cover fourth fourth the quarter Mark. Starting compared I'll quarter XXXX. Net $X for to X, prior our of sales full year the

million slight in attributable $XXX of in volumes the Norte increase Chile. Our period. remaining million, module segment sold, the is our Luz in project was sales reduction sales by prior revenue increase net by the partially The higher an sale from a increase our net of offset del ASPs. driven to module in completion were The $XXX of

businesses net segment $X.X development year. O&M of international by compared Japan, $X.X the due driven divestitures our lower in modules higher in the $X.X to American business volumes the This module Other by in the For United and partially The with billion reduction along divestitures our in residual revenue our was to year billion of billion project and were increase decrease our sold, revenue partially businesses. a full States to our XXXX, was North segment by in billion of $X.X sales ASPs. of due offset from prior operations a offset revenue decrease the

was X% by freight quarter, costs, lower offset the margin quarter X% due to in ASP. module primarily the partially reduction Gross fourth a and in third compared to in

year. X% net demurrage margin the For the in impairment of gross partially projects in higher our Luz ASPs, project, sales The by Norte certain was was del of and full year, in sale reductions the impacted and gross prior offset year year negatively costs. lower full module sale the in margin compared by XX% charges prior to rate XXXX, the module

our XXXX. reducing margin Sales results, in costs gross percentage impacted adversely XX financial percentage in XX percentage points points rate XXXX XXXX and points in logistics by compared with X in

shipping Given the a of market towards spot rates reversion logistics sales XXXX. we the pre-pandemic less of charges to conditions, rate decline be headwind and expect the in recent in and

sales As outside a rate module of many a peers manufacturing of as expense operating separate margin. report reminder, gross our

with percentage factor gross our you encourage we benchmarking purposes, module comparison to this margin our when consider peers. For

and $XX $XXX the by the increase share-based in of million expense, Ohio, lower quarter, offset approximately relative primarily expense. million a R&D production driven third was which addition fourth increase by in an our was partially expenses the start-up SG&A, quarter. factory start-up totaled prior production to to $XX of related This in increase million compensation

$XX which of share-based million. depreciation of million, compensation and $XX included of Our fourth expense million million, quarter operating loss amortization $XX $X production was expense and start-up

partially share-based operating $XX Luz of project the by a offset $XXX of of of gain loss production our $XXX were million net businesses. which million, of $XX million, with Our certain year XXXX expense net associated compensation sale million, Norte expense from million, full amortization losses depreciation of $XX and and start-up $XX million sale included the del

quarter, million in a other income an year million, balance, the del $XX forgive the and quarter. were within on interest marketable interest our income the in and leases compared fourth a Norte was recorded fourth increases of connection increase gain the agreed with income resulted our million the cash driven quarter. project was income. of the XXXX by With the $X interest prior of sale Separately, other expense to And project's to for rates lenders outstanding in regard loan compared full Luz to balances. quarter in of $XX Both and higher which million $XX portion to the prior securities $XX to million

the income $X in million an We recorded of tax quarter. fourth expense

Chile diluted $X.XX $X.XX, year, expense Fourth benefit of our For recorded could sale primarily losses be tax per in of the no development recorded. in to the project $XX quarter. attributable prior Japan compared tax which for loss million, and full was to share the we quarter platform certain due to

full XXXX. the loss earnings was year share per of For $X.XX to diluted $X.XX, diluted per compared XXXX, share in

we EPS of that the quarter came the in third mid-point guidance result XXXX Our range provided during the above call. earnings

quarter turn Slide summary of the at from billion items equivalents and end of flow sheet to X our aggregate year. and an increase and restricted balance prior cash, billion the prior was cash equivalents, of $X.X cash, balance information. $X.X billion cash cash to restricted from discuss securities select Let’s The marketable the $X.X year, the

expenditures which in and increases in $XXX from and associated was Our prior United million Capital less fourth by were the the net million an future payments balance million India. partially XXXX. billion to $X.X cash expenditures construction $X.X $XXX in year-end includes XXXX. increase prior million quarter. in from Cash to higher the sales, flows position, $XXX driven were in expenditures received year. were new compared to from in advanced XXXX, by Capital $XXX States The operating capital billion aforementioned including the of debt the our offset compared million $XXX quarter with quarter, $X.X plants flows, net primarily our segment cash cash balance $XXX module module for under the in compared million billion, in third were XXXX, operations

that, strategy a back and call to to business provide I’ll the turn update. With Mark

Mark Widmar

Alex. you, Thank right. All

solid underway. to fundamentals, XXXX, orders of with backlog record manufacturing we to plan enter including pleased are capacity Looking is the well growth and forward a that a year

Series to online capacity come are nameplate this India. in the of new as X We U.S. our on X.X and track global gigawatts add year factories manufacturing

expect We gigawatts XX XXXX nameplate exit of capacity. to with annual

as evolve invest expect We and our road be pivotal to and in XXXX in manufacturing, a also maps. technology scale build on established year we XXXX product R&D to the foundations

for to Reduction manufacturing await advanced intend production Inflation domestic expect Act. expect the under In credits of will the benefiting reflect guidance that of we modules We provided and the and to addition, production components. related tax Treasury begin the Section the incentivize we IRS and statute’s XXX from language

approximately credits process, guidance estimate that and thin $X.XX module integrated integrated manufacturing will equal assembly, fully the expect States a modules our tax in entitle cells which watt we for United to Given this produced us for wafers, we and to sold per will third-party. film

to year, manufacturing we expect and an to be maps later Finally, highlight event deliver technology, in date product newest manufacturing Day our announced, well this as to Ohio host Ohio as at factory. overview road an to on our Analyst our a facility of

X. Slide to Turning

remain The our production to in continue U.S. X previously factory XXXX ramp will the on and factories Series XXXX. new January remainder initial noted, As of commenced schedule. of over

production Our lead and to the forecast is these ramped, and of module fully on cost-per-watt see and terms Based X XXXX potential map, are in basis. India monofacial factory the our a half meaningful achieving Once regionally goal factories of begin on ramp expected in XXXX. improvement fleet we module second XXX-watt a efficiency of the to into for our technology current in Series performance, with mid-term a module. road wattage

fixed earnings expense when as liquidity capacity, this contribution anticipated As we accretion leveraged profitability a operating balanced is largely believe nameplate significantly growth, increase expansion we structure. will our margin with drive and against

and we to capacity production the continued summarized for slide. this of on expected XXXX our As map a optimization have exit expansion of nameplate road fleet, XXXX reflection existing this in

Turning to X. Slide

Our robust of a solid XX.X total late-stage foundation current growth believe backlog engagement. visibility. combined gigawatts XX of gigawatts, gigawatts demand with mid opportunities we with of we are bookings with record for remain well-positioned to customer XX.X When in our

balance the multi-year relates supply, it record by procurement. available with large driven future XXXX favorable in demand bookings mid-term customer As converting our were for volume pipeline near into aligned to bookings, the to of

The line U.S. into now we selling sales cycles. are longer-dated than time historic which is

supply could a year-on-year look long-term bookings reduction As and to in we sell XXXX beyond. volume consequence, result in this forecasted in as

supply long-term prioritize and who price multi-year remains transparent certainty as as strategy supporting customers largely well product availability and focused commercial chains. on ethical Our

to this demand to the guidance the future domestic related evaluating growth, Furthermore, IRA capacity our and of supports environment aforementioned chain. related content of to assessment including the rationale considerations subject those expansion, supply

speaking, moment Alex, the like solar placed brief the our back us turning Before markets. to XXXX a global to in would touch domestic policy cusp call of manufacturing on I within take Broadly the growth on to environment. core significant

of here policymakers tackling it. abroad democracies States the about with that in serious leading supply in come the chains solar As overconcentration they unhealthy and United are and demonstrates, China vulnerabilities the

movement designed manufacturing tangible saw Deal the the scale. Act a progress the India jobs with of with spurring production-linked XXXX industrial fact, The industrial the the create with year the Inflation spur program and towards the to at in passage European In policy in Reduction saw Green domestic within plan. investment of U.S. and incentive Union introduction

governments the the seen for the the significant on in also a Act focused Australia demonstrate Forced manner issue uptick recent labor supportive consideration, be in Europe, a significant developments Kingdom States laws are of Labor scaled planet. and ongoing with tackling solar Japan. and in initiatives, the implemented we’ve under forced and Furthermore, United legislation and of that the sustainable Uyghur technologies United in that or and around both These the people policy can similar passage Prevention of either world

outlook Alex, who over call the back guidance. will and to discuss XXXX now turn provide I’ll our financial

Alex Bradley

Mark. Thanks,

growth approach gross reiterate margin Before financial I’d our to guidance, and to like expansion. discussing

and our of contracting earnings capacity scaling risks. years expected is watt our out freight expansion overhead on strategy discussed the revenue potential second our contracting in The incremental incremental generate benefits of capacity anticipated mitigate through and and several our would expected of order production. includes agile approach structure produced, from As realization per certain fixed of reduction our a cost this call, contribution in advance to both to commodity provides largely the quarter approach margin

approach benefiting results financial to we to relative to we look continue guidance, our see As XXXX this forecasted XXXX.

of we approximately $X.XXX in ASP year, to $X.XX watt, per average than sold full recognize XXXX. the higher For expect an

base in XXXX, $XX.X XX as as horizon, future per with December the $X.XXX potential for application is of we of contracted a of filing, showed of had Looking the the average total XX.X XX-K before of a billion gigawatts backlog across expected revenue ASP adjusters. watt, portfolio

on timing the their our provide As the to approach and XX-K impacts filing and XXXX reflected I’d on potential relates the maps. both contracting technology of brief it of are to technology in cost value update adjusters, guidance, financial the award our road a and our like which and cost

continue cure prove copper initiatives. replacement technology both From to perspective, to well our both we program a with map bifaciality out or are and work road progressing and

expect for technologies elect out these fleet even of implementation ready However, we across deployment, if high-volume majority manufacturing push to the of reasons. two to the for

Firstly, with our on out process typically And implementations delay as to through ability to would technology and significant executing be manufacturing shipments, both necessitate trials. sold and suboptimal downtime, delivery to conduct to XXXX make limited preproduction commitments. tooling we’re downtime changes

then, at Perrysburg perspective. the content This Secondly, modules, across domestic our and fleet. value anticipated from during to greater improvements domestically for facilities the highest cost and fully XXX Perrysburg leads we opportunity typically the technology has given a downtime out which an initial rollout, optimized, potential produced of the of once remainder Section roll in both IRA

dedicated and be commercial alleviate new disruption with R&D means projected optimize is providing implementation for to the Our to choosing operational expected to lines. downtime by technology manufacturing less need in between mid-XXXX, facility, significantly to improvements our a these

With XXXX. of push technology the respect programs to expected to the with particularly supply XXXX of in will technology of and the products adjusters potential early reduction reflected in to an improvements, potential in technology result the value as improvements, adjusters, these reduction XX-K, these a in technology in future out the related leading

gigawatts We gigawatts estimate to XX.X $X.X these billion reduced QX. in have QX for across our in from adjusters across XX.X correspondingly billion $X.X

original in yield forecasted and used cost relates to QX watt the was to to fixed variable reduction to XXXX our from This produced, of ended and QX production X%. per the the year, throughput, lower been XX% X% our of costs, efficiency range QX reductions cost cost having road QX increases of a From watt watt than a reduced we map sustained produced reduction achieve We’ve previous over several by it costs. able improvements as road XXXX map per X% perspective, slightly midpoint cost in to at years, last offset by per XXXX.

logistics. freight, XXXX headwind basis, and a we conversion improvements X% X% all yield, by of per full higher to and versus XXXX year produced, years. in to future On cost in in mechanical costs high offset With load by and watt so, expect a to a inbound may mechanical high we in the benefit. management And cost stand-alone fulfillment reintroduce we throughput, load to a optimize product the efficiency would driven regards from XXXX to modules in order doing see modules, fixed expect reduction per to production standard watt partially

results front by but at in exit to to by cost associated X factory XXXX, watt XXXX, per full reduction yet higher year-end. its relates rates, of late increase approximately QX Series with expected watt. it with operating in our factors, headwind several our associated planned at a XXXX, Series X lead X% offset QX As in to or in downtime comparing forecasting $X.XX energy by line XXXX throughput our of including ramp by phase produced in bifaciality driven QX Perrysburg to production in is which a scale and of Ohio; a a side the optimization we’re This profile; watts, mid in costs Perrysburg, exiting implementation not driven per X%

recent watt over a was freight XXXX, increase per X% XXXX to largely costs. our with we with sales ended forecast. cost logistics to line year-over-year QX QX and This most due relates higher it As sold, in

key congestion expect including we year. metrics, currently freight times levels trend transit schedule, XXXX, and and positively. back pre-pandemic throughout of the trending towards reliability Several are In costs logistics sales

potential and headwinds. generally volatility Coast time labor in transit relations post West However, ports

through We of optimization warehousing further are and these utilization network. route and port-of-entry shipping to working our issues mitigate through

strategy, of of form In our volumes XXXX risk XX% sold sales has in freight as part coverage. approximately of addition, our contracting some

logistics given limited the in Although forecasted costs, freight XXXX. excess in expect reduction and sales recovery we

and expect transit costs with costs to be international On pre-pandemic year norms. our logistics sales full freight watt we per remaining approximately a cents $X.XXX per basis, above watt,

freight QX watt net forecast reduction Taken logistics XXXX together, produced, costs to to watt and to XXXX to X% and we XX% sold and per combine sales yield year QX in ramp On X a watt expected underutilization of cost per cost full of reduction percentage points. watt XXXX to and cost sold ramp impact full X%. XXXX basis, a to X% sold per our costs and underutilization reduction approximately year cost by per

as respect fixed through glass we exposure costs commodities, predominantly suppliers levels high price continue production. have with agreements mitigate other With strategic largely that benefits to economic to we domestic us to of achieve long-term, to

the in XXXX, in cost expect And do seeing contracts near-term in increase glass given on provisions We of slight the therefore, a are half backward-looking pricing, the is basis. year. then adjustments volatility operates to in second expected half contractual relating supply of our that first input the the cost we to reduce a which in

reversion From perspective, aluminum to levels. a rates back been a frame steel and there’s of historical

headwind expect for XXXX. Series hedged aluminum costs We less in our XX% Related of is our of plants U.S. have our to framing Series to these X X X/X a in approximately which be exposure XXXX, production. of costs, we

In substantially Series to a rail, of which X production, all back steel steel subject utilizes contractual our is adjusters. addition,

than with particularly continue expense increase respect fixed a operating lastly, a at despite increase rate related we in to cost operating structure scale XXXX, operating our and operating per forecasted margin. development, research expenses, and expenses capacity operating watt And manufacturing leveraging reduce greater to to to in expenses,

today, zero. Norte asset this to our this the our del year, on India, we with project in discuss as O&M of power completed I’ll Please our to our in and balance Chilean PV the solar in Japan turn operating bringing development X. business, sheet, So Slide Luz Japan completed January mind, financial of sales [indiscernible] sale Maricao guidance. XXXX our asset. XXXX, our systems next XX-megawatt business we Strategically, of balance of In

our business. resolution back to payable, have and indemnities, module-only we accounts involvements remaining do a related other former warranty company. legacy risks, effectively obligations, sales, these certain We have systems With collection, receivable, cash dispute to transitioned accounts liabilities, earn-outs,

longer but of other no segment, other the impact segment-specific any from note our guidance, the segment our in we future impact shall declining financials. will significant to consolidated provide the Given

our India; As it expenses primarily estimated costs remain to the factory relates will $XX million of incurred anticipate meaningfully $XXX impact and income to new XXXX. and million. capacity approximately million on production in operating to with Ohio are to $XXX $XX is comprised million by on upgrades in expansion expected $XXX million start-up to of expansion, schedule and This ramping in utilization of to these an connection our and our upgrades million factories contribute and in $XXX plans We XXXX beyond. expansions

sheet Operationally, gigawatts in gigawatts. a produce to into XXXX, and to inventory, as and Series both volatility as X and periods in X after to enabling we’re to flexibility expecting XX.X opportunities XX.X pursue been self-funding reductions strong Series to weather XX.X a account our strategic capital our growth taking of From perspective, differentiator, modules, providing of fell balance transitions. has including us well XX.X structure remains

finance facility, and cash credit XXXX capital position. to current expect advance modular programs existing payments acquiring financing. strong coupled able ended operating in external to We a with forecasted India And flows, our strong our we be liquidity without

We putting our liquidity revolving outlook cash structure place in address are capital our more Analyst as evaluating management short-term optionality to jurisdictional well expect support details credit at on as to facility our and and to Day. provide

credits incentives, for words the a in amongst finally, Act. offers, modules tax on few solar Reduction manufactured module the IRA And third components production parties. other solar U.S. and sold and Inflation to The

regarding the the of begin credit XXXX. Treasury of and in the our to intend IRS view Section on both credits the recording statements we statute, legislation, intention of under from the XXX guidance await corresponding our and to the language of based these of benefit continue a we QX financial in Although

a advisers, to with and review the sales integrated cost consultation and we period these customers. the modules sold to the expect to credits in recognize as are SEC, outside of components auditors such Following our reduction eligible

amount receivable the credits sheet. we receiving press addition, harbor tax statements entitled are our related to we contained grants shown and We as to benefits you today’s risks in review to In balance be the of will release also under encourage for the safe the full that IRA. presentation on believe our these government

year on Slide full the cover now ranges I’ll guidance XXXX XX.

guidance $X.X under net IRA; be production between tax and billion, and which expected sales is $XXX gross $X.X Section margin $XXX Our includes underutilization million million $X.X $XXX manufacturing the million costs. to million ramp of of and $X.X million $XXX $XXX in to SG&A billion expense is to expected in compared $XXX million XXXX billion total credits to advanced to billion; XXXX. between million $XXX is $XXX and XXX of and to million

R&D expense million XXXX, million expense compared XXXX expectation total $XXX headcount and in million to is and to to primarily of due million increasing our advanced team invest to $XXX respectively. is our research XXXX expected to The in further $XX $XXX adding to initiatives. R&D

million expense, And to includes expense be SG&A $XXX million. expenses, combined million. production and million operating $XXX and R&D to expected to $XXX to total start-up is between total are $XXX expected which $XX million $XX of million

million million, to is million income ramp million expenses, $XXX of and credits. $XXX startup of expected between combined to and and underutilization $XXX as million be costs and Operating million plant XXX $XXX $XXX Section $XXX inclusive of to

Turning non-operating items. to

$XX other income, interest rate $XX of blended expense U.S. tax net by is to expense million driven which approximately to million, interest expect tax Full million expected million. to predominantly XX%. higher to is largely by income forecast rates and We to deposits. the $XX is interest year to expense driven $XX XXXX be for Tax

rate. results However, begin a guidance higher we tax we XXXX a in we year also year leading earnings which for to range the a per effective diluted to expect This share will current a in $X. manufacturing full benefit, not receive significant as $X loss of

result at inventory half forecasted shipping distribution to our is this reverse of year. the delivery half both earnings will X are timing perspective, which year, anticipate products, second as the cadence first forecast first in we higher the which to centers in XXXX, Note the increase due Series half of to in our This expected the in profile be second of begin in year. our in as an from sales schedules QX an of earnings well to of of the contractual is

timing products lag, Additionally, credits, have after driven inventory may well sold XXXX. volumes by sold manufactured XXX been the early QX, as Section XXXX will the as recognized, in the whereby both increase in of of part

in range XXXX expenditures billion our of and R&D-related to construction plants, expected Ohio to in construction and fleet on commence our Series X from to the Capital upgrades X Alabama $X.X Series as programs. we India are $X.X plant, invest implement complete throughput billion the other

cash Our expect financing billion capital and which XXXX balance is expenditures, to be be by cash billion. year-end payments. anticipated partially primarily to offset will we our from proceeds customer between decrease net XXXX year-end balance $X.X net $X.X The and advance is due

Turning key call. the of prior today’s has leading I’ll bookings Demand call, XX, XX.X Slide been XX record since backlog net the gigawatts of robust, with contracted messages a to to from gigawatts. summarize earnings

Our pipeline set XX.X a gigawatts. mid- global to opportunity to of with gigawatts, late-stage including opportunities strong remains XX opportunity

On the including supply of side, with capacity, expand exit approximately to manufacturing XX.X of gigawatts expect capacity U.S. our the XXXX approximately we nameplate and XX.X continue to capacity gigawatts in nameplate

manufacturing in disruption operational lens. us which significantly projected to new announced, are, optimize technology in less to our allow be previously dedicated facility commercial we a believe to We Ohio, with as mid-XXXX, R&D adding will improvements

cash research, And finally, or XXXX cash capacity, the of of net to an a ended prior year share invest strategic in improvements diluted technology million the which strength development other both balance and opportunities. billion year. increase to pursue net debt, in this of earnings We forecasting a $XXX We of we’re us year and per is with $X full $X.X gross $X. believe $X.X to gross billion of expand puts and position our versus

conclude the we for our and Operator? prepared open And call questions. with that, remarks

Operator

ROTH. Instructions] Shen [Operator take we’ll you. a Philip from of now question Thank And

Philip Shen

thanks guys, for my Hi taking questions.

versus First X gigawatts is bookings it And on ahead? looks momentum the quarter. QX, your maybe we bookings It like Silicon last incrementally versus source Ranch your should in $X.XXX look incremental think, on might Is about how then deals. share in Can had quarter? bookings. topic the higher you you per from the or light lower $X.XXX I here QX. Congrats It like? of were watt pricing think bookings what incremental

pricing on there? what more And expecting do you’re sounds agreements? like expect you multiyear

shifting over to domestic content. then And

I content, of representing watt done of contracting then? last XXXX, $X.XX think think much guidance? value. is I in X.X you have since call, And gigs domestic into much ultimately roughly of talked the How in that a guys how about factored you

here. housekeeping question for finally, then And a

think how in gigawatts were in very revenue I recognized Thanks of many revenue shipped versus but QX? $XXX megawatts the module X.X million QX, you much. in

Mark Widmar

All right.

On X.X the we call, booked -- earnings our we bookings so okay? side, gigawatts. XX we Since gigawatts, year-end, booked last since

$XX in as get think $X.XX, it’s well, you If that $XX.X $X.XXX. of like believe. you’ll backlog you implied like the I our around from is billion. on The at referenced mean, the as less a I than disclosure contracted the walk ASP something year, of prior little the the end our look that’s is do revenue quarter, math, billion it And Alex the if K, I

call, earnings was booked in the since gigawatts $X.XXX. If What say lot you’d that’s that did a on look, XX we there’s rounding going that of last ASP that the and we the stuff there. is on on

here If what the I booked quarter ASP ASP right, call so that than first is look for through year today, the this the higher earnings far, that we $X.XXX. at in

other for the we than booking higher booked that earnings the booked last the since total ASP of So since average that five call. the we $X.XXX the the portion is

way in from just the are XXQ it solid So the position. at a year guess at is ASPs I other pretty the XXK the look pretty to QX, end. – I

eight to I a tenths cent think the or we added about something ASP. of average

$X.XX was like think something I prior it saw it, quarter. So that you or like the

obviously $X.XXX. of add goes $X.X slightly that the more were bookings now, seeing I February, you revenue about than $X.XX. think or that we're to that higher Now bookings lot something the have to – ASP and in include you we if it's I for average like that. billion above be January And think backlog, like And contracted a on the

XXXX, seeing So more which we than from happy we just remember, targeting volumes in we be what booking about ASP the of and We XXXX. out XX% or volume into so into XXXX now of XXXX I XX our XX XX or XXXX. so capacity to were have It's with and the booking obviously we're very said call earnings is standpoint we're were last an is And from trajectory. India. gigawatts what not and XXXX, that a we're – going think go excluding of gigawatts lot

ASPs we're so up getting, with So we're good and the through pleased booking all relatively XXXX, which, far pretty with out that. we're way

not challenges I Momentum do discrete to customers contract of XXXX with to that your want to bring that things right? into trying XXXX, horizon. years, sell sell in finding in XXXX in out just So we're bring the continue selling the we're just customer. XXXX, trying we're instead wise, each guess the even multiple is be or we're of to Phil, to discussions but that out the out, far XXXX, And one volume trying year the

goes. that opportunities the there pipeline opportunities pipeline that we there's momentum's got than could we've of clearly and how says close see I on. enough will we more So, the mean,

with customers go bookings again, of U.S. And we're and out dynamics cadence to particularly years. that. the So years, the cases we out just people some multiple not kind But are of and six seeing the are happy out only three or in changing a in in or that it's willing of that years. five but wouldn't lot normal momentum. do But most four

last $X.XX. still up we're Alex But know, uplift precise than of ASP we in wasn't booking number Domestic incremental bit range from amount little XXX megawatts. that a a the more is do. $X.XX I of there around content, getting call. the I a to volume may that significant earnings ended of It the have few

production uplift out So that customers. aggressively right we're XXXX and talking our now customers we seeing to for incremental domestic good get momentum we would provide are And with ASP there. XXXX

activity an from standpoint. that's ongoing that So

gigawatts a And have actual Alex may the standpoint. revenue from

Alex Bradley

Yes.

was from a X.X, So QX solar but shipped volume we it X.X.

year takes numbers. that So full

XXXX, perspective, up a about yes. X.X So ended from X.X, we [indiscernible] shipping

Operator

will from come And question next our Brian Goldman of Lee Sachs.

Brian Lee

of you on guys. up is Hey more spot. the question recourse, your those guess, investors these of contracts Kudos kind multi-year long-term, set multi-year And getting when Can from deals? on year. are – we’ve contracts? versus the lot you you what business the up then these guidance setting is remind of strong to I work afternoon. been us how given sort your just deposits for Good lately one shifting a and quarter

here Phil’s impact, any and your around fall that thoughts to then you get are ability your poly pricing – will from seeing And content the in I Thanks requirements that expectations pricing if guess a in discussions just in what partners are continue panel seeing and squeeze term. to then medium the maybe any And follow you to crystal anything or silicon up, question as customers hearing guys. or and around or price? in domestic discussing with around pricing, I

Mark Widmar

cash. necessarily Yes, deposit. the XX% deposits, in we so do Brian, of cash, but up in on We we take some that take to don’t all somewhere typically ask

of guarantees. We’re that credit deal. also number take through the roll healthy impairing willing would and the in the the sometimes deals take of We worthiness deal, depending then very other security and liquid size surety be security to bond, on counterparty deals, large. gets that very it to some multi-year the large get If potentially and that of and

of us with to So towards the deal. we it until that stay end continues get

of on as And today. we If recognized to as sheet of region would to revenue. terms customer year. going the you of $X.X the of of year bookings see future in the a that rise as will of balance go we side something, billion some end, you’re sheet that deposits through There expect on look balance be

but signed that the would revenue, of number some rise from the expect deposits year. of that the come we’ve through it’ll trajectory already the we deferred So last deals year, to in given placed timing off and being the bookings

Alex Bradley

largely views not relates from Yes. with and obviously I with Brian, pricing their kind ones which deals I have silicon kind we’re customers you’re concerns around it closing to take go, excess sort some Chinese that – of have you as around. where around indicators to seeing what poly customer’s that’s mean, think will leading the being prices will going have and which of they’re lift of capacity negotiating added are that

to kilogram, dropped I trending down year they’re stepped in But they XXs, like of kind they I which down think up think I they end. from per were there. something is the somewhere pretty XXs, $XX in low slightly back or think bounced from that and the significantly, they back then to,

So some taking they will. Others are from customers clues looking there. at their are if

more U.S., in and whether look the going Chinese Southeast Let’s generally than or even but to market to also market. is able available And can from a supply some be constrained that’s U.S. actually domestic India to production. the potentially Christmas to poly. poly. of silicon be particular, the the it’ll the And that is that’s it’s use resource have it that obviously non-Chinese supply India come at there’s going address largely Asia address In market, U.S.

just module be and the done of on And meet what most assembly for domestic component U.S. that so there's content. also than is but likely there the to the And in substance criteria, cell. content there, include is – domestic to and production has in and and the around could order ultimately more – domestic lot criteria there true then which potentially says it there’s be still content defines momentum think going work policy to a I

U.S., of poly the there's non-Chinese to right And a production in be cell that. use in there'll not module and now, assembly to where actually lot announcements not having just but as U.S., of here the do again,

The opportunity to opportunity asset there's utility what there's I IRA the time, piece over everybody. generating so everybody whether or own right? where, evaluate about And great of module those everyone, you're the think developer risk is and they're you're takes wanting for going type that when the all profile accept, IPP together everyone, the you're whether for dynamics to for or whether a the manufacturer thing the or who's

then the that a that at do business option so secure and First take is of sort Solar And that. price, to willing do question you is, want and risk your do the And fair to off do plan you're a great if table? to

to risk But wait. most enough an it that than some a opportunity still most trying and is of part, in you're that that to got and to find we've right process. take more may our see you potential to that's some maybe now allow take want to is some in opportunities will to to the But for then potentially paying under engage. we supplies you're Yes, wanting customers' lot to avail item regard. thought benefit attention that IRA, to aren't what people it's maximum that yourself a the of alternative risk If

U.S. the in domestic today both the include production international include deals content, and Pricing-wise, we're production. pricing that look domestic and

ASP, differentiated are that pricing. the pricing. not the into but breakout We we in reflecting bookings are We're differentiated in the

production. So our to generally our at premium international a be domestic production will

captured the today. being bookings that recognizing So is in that we're

customers Now, specific and specific have there conversations of XXXX certainty we for sits do XXXX that require XXXX with engaging from bunch in is that allocation the factory. XXXX because in allocation, contracts and to volume of not are on a whole a

not more. we but X.X a of booked few in earnings to coming a this $X.XX. a to So nice production few booked in of a those adjustments which And a should about allocating megawatts, we We around and call, referenced at be cases, we quarter are there gigawatts we that before from is what consideration in most more last $X.XX the ASPs, uplift potential talking lot, domestic through if some hundreds last the quarter. for last are that's

a go So get the work to We'll of next over be and update done. still you if quarters benefit. lot we that that few to opportunities realize

Operator

Rusch Colin will Thank you. to [Operator Instructions] of go And now Oppenheimer. we

Colin Rusch

of so talk the the just CapEx bit as you well Can Thanks on much, deferred cadence revenue? about unwind the as little a guys.

Mark Widmar

Yes.

forecast this plant. asset is billion CapEx X through about So side year the the construction of on the of

see a fairly through that going the You're to Alabama. cadence on regular for year

those going and remaining you're on the the on a the plants even from CapEx going relatively be back of There's year, so to year. front the towards of year CapEx some you're side, spend different to On at that areas. across more R&D the see basis, U.S. occurring be India end end see the but blended the

significant on we recognized don't the see unwind balance amounts the current of expect of There's X.X to In revenue deferred today. actually about the this year. terms sheet

current meaningful going will roll something million deposit year XXX and not million as XXX be think this I base. recognized so revenue, to of that a that it's to off number to added be recent.

As I said, amounts material year. this to we that expect to add

question signed timing been little agreed. that already and year. of it's a portion the bookings, is simply the we'll already of on schedule that this deferred expectation and deposits a of significant will therefore, assumptions, The deposits our and deals and future piece already There that relates that that of that to just on bookings is total volume the signed for a posting. majority that of from bit But timing get for depend of is our time have the bookings deals the based for have

Operator

of Dumoulin-Smith to And we Julien go America. will of Bank next

Unidentified Analyst

Hey [indiscernible] it's guys, Alex Julien. for

Just one quick one.

a were into if specifically, looking in You for places mentioned about announce expansions you far Europe you to curious if some sell markets, guidance about sort the to just produced as I'm think U.S. something would doing in at then about or this expansions, Thanks. further caution thinking announcing like at to indications basis And this elaborate possibly as of you're can point? point other what you additional expansion? order think

Mark Widmar

are expansion, we to it as a and of Look, manufacturing that believe that the tax as me, ITC, the well as manufacturing we want credit, to intent the IRA like that an clarity to but definitions understand. applicable we thorough have in components excuse to – for the to policies domestic sure the ITC we'd relates make that bonus, the domestic there's of we avail still sure would make understanding

getting be engaging But now of to want and our the right point we're not we pivots there's to additional with selections at we where as point to in of site that to nothing quickly point point tool clarity the where in at envisioning looking possible. just we direction vendors, evaluating So a even actively the get shovel-ready so that this as time. can a is we're are

well incentives true would in from assembly intent U.S., to production the module as to all which as is align U.S., is we be chains, more personally for final motivate that being international with than to us of manufacturing and For well crystalline in to create the silicon manufacturing the the believe supply the criteria long-term as just sourced enduring begin locations. IRA therefore build what going the material

those integrated very tax would factory believe manufacturing up we're credit, to get lines to from everything expansion. we IRS to of inform and can we as then sure we through entitled the the of extent think to that plus lines, want domestic beneficial there our that while sort make value it if that the guidance about as inherent view fully more And that, along relates confirmation helps vertically manufacturing, we Treasury, be

particular. through other glass, our in just And chain working is then the supply

for of materials things example. Our expand got the U.S. chain product the in continue seven the glass in rails And of the percent and we've to – new and steel, U.S. for our here substrate glass, to is like back glass Series XX-plus supply cover production build

through we're that. So all working

And patient. so focused strong on being demand the bookings the and We're capture – just to very much we're obviously to continuing that able we been last we see have quarters. over several

So that that bodes furthering well for decision. investment

exports, think careful to I be we all with relates it real to As that. got

put the if have clearly, in be place, they incentives and ourselves to we they what aligned that's as and to administration availing the with an in do right industry ASPs domestic market, incentives here the I in make at U.S. are would mode which look exporting to in if now, sense. you into the some think a choosing right products a that some that supporting lot industry, the we that think incentives higher careful the unfortunately, the to of set India well significant domestic are, But in as even of because limited of going U.S. that not that provided U.S., on they've capability, with intended what's now I

sure compromise should our the we very through been not domestic put we've around got we U.S. spirit IRA And aligns original this an years manufacturing risk and what I'm spirit U.S. intent. not to And security And at and very long-term standpoint, help just all and then with from the and independence the think the supporting thought exporting needs, in internationally, of the to documented of the IRA out that and well true energy could IRA. view thing then is let's has Act. well stay, have created my that I was the – and been in – and the benefits is XX the create

Operator

Maheep a Credit question Suisse. of take we'll from now And Mandloi

Maheep Mandloi

about Hi, facility, here? any for from taking new on just to capital Suisse. Maheep And does slightly could you that? the revolving Thanks. talk needs add decide timing that for avoid Mandloi Also, the and when capacity talk as of to And the Credit about you Thanks credit need the other kind questions.

Alex Bradley

Yes.

both there from reason our our Vietnam we the cash is you our main facilities the majority So U.S. the flow if Malaysia look and products at facilities. today and generated across sell the into business, of vast U.S.,

that works transfer of international the we However, we send the modules profitability significant of well. our also and as is with profitability the way price, back back cash associated the locations, international production amount the to

of to U.S. is at look you CapEx If the for CapEx our year, about forecast in three the the the for year going be quarters

cash our about we're as is program. at net billion profile comes what year that forecast, $X CapEx so down, to over the And of we billion cash, see about the starting expect a have, year we $X.X

cash. You look $X.X cash to takes guide our have come the at What cash $X the we're we're see going going to of is about more our implies international balance. billion, year-end balance billion that cash, billion down $X.X to than us U.S.

to of gives does of terms cash. what jurisdictional mix manage is it So able a flexibility revolver being us in

in the In terms this. U.S. we're got timing, liquidity in today. a do not We've of rush of to plenty

we're not at now, but something into. So we're looking it's rushing something right

mentioned have us to we you R&D space, front forecast, were profile, and the other manufacturing said, finance and current look on that we to in additional spend find capacity, raise capital of terms that the capital. That incremental In at everything can add of other current raise forecast if may out at, capital, we to to if we to point. profile, something call, as we were our need continue go we in at need the without look that we if R&D our or opportunities expansion

intend to look capital in continuing we're a Analyst remarks, this later at. there as year. mentioned his We'll Mark liquidity Day update around So hold prepared give plans. our to and we more an And something

Operator

Joseph will now go we And Guggenheim. of to Osha

Joseph Osha

book going and Hi, until if to but the it about a but a year, based making first your not credit thanks. this Further to we you work credit it you're not a the this just basis, conversation looks so I'm the to frequently, could think me, enforces fact of any future it that to quarterly cash monetize next guide, go-forward that probably on manufacturing see you're on the And lot Alex, that? the if having, also we're like year, booking more you. it I'm monetize thought because something on say, like little Thank actually you curious, year, that better a receiving. ways basis about or curious,

Alex Bradley

Yes.

payment. it go then months then a to cadence through As you're reflected that is of the at will to be it a which, nine see there'll typically the the over go now, year, regular That filing, to But our paid we'll the review some six direct cash will and around quarterly going in right is to IRS, end year. somewhere basis. P&L treasury process stands occurs the on they which today after happen and tax of time, end what's to the going after

So first that likely expect in the to we slower year. be most

there's it the not a you're same to as case in may recognizing be chance that it's gets As this P&L. credit year going see from going little in speed you're a the coming where program underway, value bit. the up cash But to some in,

XXXX. one today, cash you're our in reflection if no the look right, from you it's balance cash there's of credit So why at the reasons IRA

XXXX in come up will potentially We XXXX. that expect even through and into

take said, bit might I year of increase first time. see some speed may the As a in thereafter. We

Operator

and call. session everyone participation, to disconnect. And you for thank now We'd that today's with today's may conclude question-and-answer does your like that, and everyone

First Solar (FSLR) 28 Feb 232022 Q4 Earnings call transcript