First Solar, Inc.

Good afternoon, everyone, and welcome to First Solar's fourth quarter 2020 earnings and 2021 guidance call. This call is being webcast live on the investor section of First Solar's website at investor.firstsolar.com. At this time, all participants are in a listen-only mode. As a reminder, today's call is being recorded. I would now like to turn the call over to Mitch Ennis from First Solar's Investors Relations. Mr. Ennis, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its fourth quarter and full year 2020 financial results, as well as its guidance for 2021. A copy of the press release and associated presentation are available on First Solar's website at investor.firstsolar.com. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer. Mark will begin by providing a business update. Alex will then discuss our financial results for the fourth quarter and full year 2020. Following these remarks, Mark will provide a business and strategy outlook. Alex will then discuss our financial guidance for 2021. Following the remarks, we will open the call for questions. Please note this call will include forward-looking statements that involve risks and uncertainties that could cause actual results that differ materially from management's current expectations, including, among other risks and uncertainties, the severity and duration of the effects of the COVID-19 pandemic. We encourage you to review the Safe Harbor statements contained in today's press release and presentation for more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer. Mark.

Thank you, Mitch. Good afternoon, and thank you for joining us today. I would like to start by expressing my gratitude to the entire First Solar team for their hard work and perseverance throughout 2020. Although 2020 was a very challenging year, I'm proud of the way our team responded, with our ongoing commitment to health and safety, delivering value to our customers, and achieving our objectives in this unprecedented year. While Alex will provide a more comprehensive overview of our 2020 financial results, I would like to first note our full year EPS results of $3.73. This result came within, but towards the low end of, the guidance range we provided at the time of our third quarter earnings call. largely due to the value and the timing of our Sunstreams II project sale. Despite this timing impact, continued intense competition across the Chrisman PV supply chain, and unforeseen challenges related to the pandemic, we are very pleased with our financial and operational results in 2020. Turning to slide three, I will discuss some of our key 2020 accomplishments. Firstly, our vertically integrated manufacturing process, diversified supply chain, and differentiated Cattail technology enabled us to mitigate potential disruptions to our manufacturing operations from the pandemic. Accordingly, we produced 5.9 gigawatts of Series 6 and exited the year with a top production bin of 445 watts. Secondly, driven by continued strong manufacturing execution, in Q4, we achieved a year-on-year 10% cost per watt reduction despite an increase in volume sold from our higher-cost Ohio facilities and an increase in sales rate costs. Thirdly, early-generation first solar cattail modules that were installed at an NREL test facility in 1995 reached an installed life of 25 years and demonstrated a 25-year degradation rate of 48 basis points per year. While our manufacturing processes, product design, efficiency, and warranted long-term degradation rates have improved significantly over the past 25 years. This result helps us understand a legacy performance baseline and provides further confidence in the superior long-term durability and degradation performance of today's Series 6 product. Fourthly, we extended our limited power output warranty from 25 to 30 years for our Series 6 modules. And our Series 6 modules are now protected by the industry's first and only product warranty that specifically covers power loss from cell tracking, which can have a meaningful impact on reducing systems insurance costs. Finally, at the year end, we had shipments of 5.5 gigawatts, bookings of 5.5 gigawatts, and contracted an additional 0.7 gigawatts of volume that remained subject to conditions precedent. Overall, our operational financial results in 2020 have built momentum as we move into 2021. Turning to slide four, I'll provide an update on our Series 6 capacity ramp and manufacturing performance. Over the course of 2020, we realized significant operational improvements. Comparing December fleet-wide metrics year-on-year, megawatts produced per day increased to 17.3 megawatts, an increase of 23%. Fleet-wide capacity utilization increased to 117%, an increase of 20 percentage points. Product yield increased to 97.6%, an increase of 3.2 percentage points. Average watts per module increased to 439 watts, an increase of 9 watts. And as noted, our top production bin increased to 445 watts. Our manufacturing discipline and execution enabled us to achieve our cost per watt reduction objective for the year. We ended 2020 with 6.3 gigawatts of main plate manufacturing capacity. And effective January 1st, we have re-rated our throughput entitlement for purposes of calculating capacity utilization. Since launching Series 6 less than three years ago, the factory throughput entitlement was based on the initial tool set and factory design. Given the significant improvements made over the years, we have revised our throughput entitlements to reflect the 2020 exit rate throughput. Our strong execution has continued into 2021 with improvement across all key metrics since year end. In addition to February, we commenced the initial production of our second Series 6 low-cost factory in Malaysia. less than three weeks of production the factory is ramping nicely with demonstrated capacity utilization reaching approximately 80 percent yields in excess of 90 percent and a top production bin of 450 watts by the end of the year we anticipate our malaysia factories will have a main plate capacity of three gigawatts touching briefly on our systems segment in february we completed the sale of our 150 megawatt AC Sunstreams II project to Long Road Energy. We also signed agreements with Long Road to sell the Sunstreams IV and V projects, and our late-stage negotiations to sign an agreement to sell our Sunstreams III project. As part of this portfolio acquisition, Long Road intends to utilize one gigawatt of Series VI, of which 785 megawatts will represent new bookings upon the closing of these transactions. Prior to signing the potential agreement to sell Sunstreams III, the project PPA was terminated, which enabled Longroad to include Sunstreams III, IV, and V projects in their power marketing efforts after transactions closed. While this resulted in approximately 85 megawatt systems de-booking in February, at the time of closing, we expect this opportunity will be re-recognized as a new module-only booking. Turning to slide five. I'll next discuss our most recent bookings in greater detail. Our recent bookings momentum has continued with 3.3 gigawatts of net bookings since the October earnings call. After accounting for shipments of approximately 1.8 gigawatts during the fourth quarter, our future expected shipments, which extend into 2024, are 13.7 gigawatts. The majority of the bookings since the prior earnings call have been third-party module sales, which total 3.3 gigawatts. We continue to see an increase in multi-year module sales agreements driven by our customers' need for certainty in terms of technology they are investing in and their suppliers' integrity and ethics. Representative to this, we have executed an agreement with Intersect Power to supply up to 2.4 gigawatts for deployment in projects in 2022 and 2023, of which approximately 2 gigawatts is recognized as a booking. In addition to this new booking, Intersect has the option to utilize an additional 0.4 gigawatts of module volume to support their portfolio project up to 2.4 gigawatts. We've also secured 340 megawatts for deliveries in 2023 with a leading provider of hydrogen fuel cell solutions. A pillar of growth for the hydrogen economy is the ability to cost-effectively produce large-scale green hydrogen with renewable energy sources. With an environmentally-advantaged Cattail technology, we are well-positioned to address this market need. Additionally, in Japan, we have continued success adding to our contract assistance backlog with the addition of two projects totaling 51 megawatts. With new net bookings of 3.3 gigawatts and with additional 1.4 gigawatts of expected bookings associated with the closing of the sales of the SunStreams portfolio and the US project development business we are pleased with the robust demand for our Series 6 product. Including these new bookings, volumes contracted to Conditions President, and the potential 0.4 gigawatts of incremental volume related to the Intersect transaction, we have 7.2 gigawatts of volume for potential deliveries in 2021, 5.9 gigawatts in 2022, and 2.3 gigawatts across 2023 and 2024. Overall, while the market remains competitive, we are very pleased with the pricing levels that we are securing to date for our differentiated Series 6 Plus and Cure modules. In an industry that sells electrons and where products are evaluated based on the quantity of electrons they will produce, we also seek to differentiate our business model through our commitment to an environmental footprint of our technology, product circularity, and supply chain transparency. We call it responsible solar. And you can learn more about it at our corporate website. Turning to slide six, I'd like to discuss the strategy and advantages of this approach. Firstly, due to our resource efficient manufacturing process, our thin film modules have the lowest carbon and water footprints available in the market today. With this advantage position, Series 6 is the world's first PV product to be included in the EP register for sustainable products, which conforms to the NSF 457, the industry's first sustainability leadership standard. Designed to help institutional purchasers, EP is used by national governments, including the United States, and thousands of private sector institutional purchasers worldwide as part of their sustainable procurement decisions. Secondly, we have over a decade of experience in operating high-value PV recycling facilities on a global scale and remain the only solar manufacturer to have global in-house recycling capabilities. This recycling process establishes a circular economy by recovering more than 90% of the semiconductor materials for reuse in first solar modules and 90% of the glass for use in new glass container products. Thirdly, our vertically integrated manufacturing process enhances our supply chain transparency and control over our end-to-end manufacturing process. We believe that our responsible solar strategy is the right way to do business, and in a growing number of markets, yields an economic advantage. For example, France already has a rule that favors PV modules with a low carbon footprint. Spain also appears to be moving towards incorporating a carbon footprint metric in its renewable energy procurement program. A recent update requires owners of renewable energy generation assets to submit carbon footprint data to the country's renewable energy registry, gathering the information needed to shape the procurement mechanism that may benefit low-carbon solar. In the United States, Vectrin, a utility that services Indiana and Ohio, included an environmental emission minimization objective within their integrated resource plan. This objective accounts for the cradle-to-grave emissions impacts of different forms of generation, including the low carbon footprint of thin-film PV modules compared to Christmas silicon. In addition, Alliant Energy and Consumers Energy, two utilities in the Midwest, have included the aforementioned NSF 457 sustainability leadership standard for PV modules and inverters in their most recent solar solicitations. We would also like to take the opportunity to touch on the reported use of forced labor in China's polysilicon manufacturing industry. We have repeatedly and unequivocally condemned the purported use of forced labor in China's PV solar supply chain and will continue to do so as long as it remains an issue. We also reiterated our commitment to zero tolerance of forced labor throughout our supply chain. We believe there should be no place for a solar panel where even a single component, no matter how small, is produced by a human being against their will. We have seen reports that authorities in the United States are developing plans to expand their Xinjiang-specific import regulations to include solar. And in the latest version of the Forest Labor Prevention Act bill, the U.S. House of Representatives, including Polysilicon, has a high priority sector. We recognize the challenges that this potentially creates for companies that have traditionally relied on Chinese-based firms for their modules, but as an industry, we cannot accept a view of solar at any cost. This is an important reminder that over-reliance on China to supply subsidized solar panels comes at a price that may not always be reflected on the bottom line. It is a price that may include needing to look the other way on environmental, social, and human costs. It's also yet another reminder, one or several we've had this past year, about the importance of diversity of supply. Before turning the call over to Alex, I would like to provide additional context on the effects of tariffs on the U.S. and global TD markets. In December 2012, during the Obama-Biden administration, the United States imposed anti-dumping and countervailing duties after determining that domestic Christmas silicon industry was materially injured by imports of Christmas silicon cells and modules that were sold at less than fair value and subsidized by the government of China. In March 2019, the United States continued these tariffs. There also was a second set of anti-dumping and countervailing duties on Chinese Christmas silicon modules with non-Chinese cells. Those duties were imposed in 2015, and in 2020, they were continued. Given these tariffs only apply to a portion of crisp and silicon supply chain, Chinese manufacturers added cell and model capacity in nearby countries in Southeast Asia. Today, with this adjustment to their supply chain, our crisp and silicon competitors can not only avoid these tariffs, but also continue to use government-subsidized polysilicon ingots and wafers manufactured in China. Separately, in February 2018, during the Trump administration, the U.S. imposed Section 201 tariffs on imported crystalline silicon cells and modules from most countries, with limited exceptions over a four-year period. However, between June 2019 and November 2020, an exemption from Section 201 tariffs was granted for crystalline silicon bifacial modules. This exclusion enabled Chinese solar companies with bifacial cells and modules assembled in Southeast Asia to avoid the Section 201 tariffs, as well as the anti-dumping and countervailing duties, while they're still using subsidized polysilicon and ingots and wafers from China. Despite actions by the United States and India, most global markets have allowed unencumbered access of government-subsidized panels from China, resulting in PV economy and global goals that are largely beholden to a single technology supply chain and country. We believe our differentiated technology, an advantaged cost structure, and a balanced perspective on growth, liquidity, and profitability has enabled and will continue to enable us to succeed in the global marketplace despite the lack of fair trade. As the only alternative to crisp and silicon technology among the 10 largest solar module manufacturers globally, First Solar provides domestic supply security, and enables the United States and global markets to reduce their over-reliance on imported panels from China. We remain hopeful for a future where both free and fair trade can be established in the PV industry. I'll now turn the call over to Alex, who will discuss our Q4 and full year 2020 results.