First Solar, Inc.

Good afternoon, everyone, and welcome to First Solar's fourth quarter 2021 earnings 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 Investor Relations. Mr. Ennis, you may begin.

Thank you. Good afternoon and thank you for joining us. Today, the company issued a press release announcing its fourth quarter and full year 2021 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 2021. Following these remarks, Mark will provide a business and strategy outlook. Alex will then discuss our financial guidance for 2022. Following the remarks, we open the call for questions. Please note this call will include four looking statements. that involve risks and uncertainties that could cause actual results to 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 a 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 begin by expressing my gratitude to the entire First Solar team for their hard work and perseverance in the year where much of the solar PV manufacturing industry faced supply chain, logistics, cost, and pandemic related challenges. Despite these dynamics, we have continued to scale our manufacturing capacity and adapt our business model in a constantly evolving market. Through our points of differentiation, which include our CAD cell thin film module technology, a vertically integrated continuous manufacturing process, a strong balance sheet, and a commitment to the principles of responsible solar. We have created a growth-oriented business model, which we believe positions us to be successful over the long term. While ILX will provide a more comprehensive overview of our 2021 financial results, I would like to highlight that our full-year EPS results of $4.38 per diluted share came in above the midpoint of our guidance range we provided at this time during our third quarter earnings call. Of note, the CPS results, despite an unprecedented challenging freight environment, is also solidly within the original guidance range we provided last February. Beginning on slide three, I will highlight some of our key 2021 accomplishments, which we believe positioned us for sustainable growth. To begin, we had an excellent year from a commercial perspective, securing a record 17.5 gigawatts of net bookings in 2021, more than double our prior annual record. This momentum has carried it to 2022 with 4.8 gigawatts of net bookings year to date, which brings our total since the previous earnings call to 11.8 gigawatts. As we secure this very significant volume for delivery into the future, We have been employing a contracting strategy which enables our customers to benefit from the evolution of our product and technology platform, while also partially de-risking our position around sales. I will discuss this approach later in the call. We produced 7.9 gigawatts in 2021, delivering against our near-term commitments despite pandemic-related challenges. Moreover, we reduced our cost per watt produced by 6% between the end of 2020 and 2021. Despite inflationary pressures, rising commodity costs, and as a result of the COVID-19, the inability to implement, as planned, several module cost reduction programs. Expansion has been an important theme in 2021, as we set the foundation to reach approximately 16 gigawatts of capacity in 2024. We added our sixth Series 6 factory, our second factory in Malaysia, in early 2021, and announced plans for new factories to produce our next generation of solar panels, which we are calling Series 7, in India and Ohio. As a reminder, the two Series 7 factories are expected to come online in 2023, and combined with their benefit of locating supply near to demand, reducing the cost of sales rate, are expected to increase gross profit per watt by approximately one to three cents relative to our existing Series 6 fleets. On the technology front, we increased our top Series 6 production bin to 465 watts, which represents a 20-watt increase year-over-year and is in line with our guidance provided last February. We reduced our 30-year warranted power output degradation rate from 0.5% to 0.3% per year. This meaningful improvement can result in the module yielding up to 4.4% more energy on a lifecycle basis. And finally, we completed the sales of our U.S. project development and North American O&M businesses. In summary, each of these achievements are the result of our intent to focus on our greatest competitive advantage, which includes our differentiated technology and manufacturing process. Turning to slide four, I'll next discuss our most recent shipments and bookings in greater detail. We shipped approximately 2.1 gigawatts and 7.1 for the fourth quarter and full year 2021, respectively, which was within but towards the lower end of our guidance range that we provided during the Q3 earnings call. As a reminder, we generally define shipment as when a delivery process to a customer commences and the module leaves one of our facilities, whereas revenue recognition, or volume sold, occurs as transfer of control of the modules to the customer, which is commonly upon the arrival at the destination port of the project site. No extended transit times and container availability constraints contributed to our full year 2021 shipments being towards the lower end of our guidance range. The global freight market continues to experience record levels of scheduled delays and reliability issues, which has worsened since the previous earnings call. Due to these challenges, we ended the year with 1.2 gigawatts of inventory on hand and 675 megawatts of shipments in transit not recognized as revenues. While the volume in transit declined quarter over quarter, it was meaningfully above the trailing four-quarter average. Several logistic challenges trended unfairly in Q4. Firstly, total transit times for transoceanic freight increased by a factor of weeks between Q3 and Q4, reaching levels nearly double historic norms. Secondly, congestion continues to be challenging at U.S. ports, which are further exacerbated in advance of the holiday season. Thirdly, reliability was a significant issue as three and ten planned sailings were canceled around the turn of the year. Finally, over-the-road trucking is constrained from a capacity perspective with load-to-truck ratios at the highest level in several years. In summary, we are experiencing a two-front impact related to freight in terms of both higher cost and worse carrier performance. With regard to bookings, Ometum has accelerated with 11.8 gigawatts of net bookings since their November earnings call. We continue to see an increase in multi-year module sale agreements driven by our customers' need for certainty in terms of the technology they're investing in and the supplier's integrity and ethics. Representative to this, we have executed an agreement with our highly valued long-term partner, SB Energy to supply 1.5 gigawatts of deployment in projects in 2023, 2024, and 2025. After accounting for shipments of approximately 2.1 gigawatts during the fourth quarter, our future expected shipments, which extended into 2025, are 26.2 gigawatts. Including our year-to-date bookings, they are sold out for 2022 and have 10.7 gigawatts, 3.4 gigawatts, and 2.4 gigawatts for planned deliveries in 2023, 2024, and 2025, respectively. Next, I would like to provide an update on our project development and O&M platform in Japan. Today, our remaining offerings outside of our core module business include project development in Japan, O&M outside of North America, and our continued ownership of certain power-generating assets. Of these remaining businesses, our Japan platform is the most prominent in terms of perspective, scale, and profitability. In late 2021, we received an unsolicited offer to acquire our Japan project development and O&M platform. We believe the potential purchaser strategy to scale a leading solar platform in Japan, coupled with the participation in complementary asset classes, could unlock the full potential of our Japan platform. Accordingly, We are in advanced stage negotiations to sell our Japan project development and O&M platform. While there is no certainty that we will execute a definitive agreement with this counterparty, we believe that the contemplated transaction value is compelling. Though we do not complete this transaction, we expect to either continue our approach of selling down our contracted projects over time or consider an alternative buyer for the platform. And I'll turn the call over to Alex, who will discuss our Q4 and full year 2021 results.

Alex? Thanks, Mark. Before discussing our financial results for the quarter and full year 2021, I'll first provide an update on our segment reporting. With potential sale of our Japan project development and O&M platform, the revenue and margin opportunities outside of our core modules business lie largely with a relatively small pool of existing O&M contracts outside of Japan and North America, power-generating assets for projects that we previously developed, and any legacy obligations as a result of our prior systems activities. Accordingly, we've changed our reportable segments to align with our internal reporting structure and long-term strategic plans. Going forward, our module business will represent our only reportable segment. But for comparative purposes, the prospective module segment is fully comparable to prior periods. Any revenue or margin associated with activities that were historically categorized as our systems business are now presented as other in our segment reporting. Starting on slide five, I'll cover the income statement highlights for the first quarter and for the year 2021, which are presented in this manner. Net sales in the fourth quarter were 907 million, an increase of 324 million compared to the prior quarter. This was primarily a result of the sale of three projects in Japan and increased module volume sold in Q4. For the full year 2021, net sales were 2.9 billion compared to 2.7 billion in 2020. Relative to our guidance expectations, net sales were within but towards the lower end of our guidance range due to delays in module sales, revenue recognition as a result of the aforementioned freight and logistics challenges. Gross margin was 27% in the fourth quarter compared to 21% in the third quarter. For the full year 2021, gross margin was 25%, which is unchanged from the prior year. Our 2021 guidance had assumed the completion of two project sales in Japan. As a result of completing three project sales in Q4, our Q4 gross profit for our residual business operations was $102 million, approximately $25 million above the high end of our guidance range for Q4 and full year 21. The module segment gross margin was 21% in the fourth quarter, which is unchanged from the prior quarter. For the full year 2021, our module segment gross profit came in below the low end of our guidance range by approximately 12 million. Additionally, full year 2021, the module segment gross margin of 20% was down 5 percentage points from 25% in 2020. This was resolved with several items. Firstly, sales rate continued to adversely impact our financial results, reducing gross margin by 6 percentage points in 2020, 11 percentage points for the full year 2021, and 13 percentage points in Q4 of 2021. A note as a reminder, many of our module peers report freight costs with a separate operating expense. For comparison purposes, we encourage you to consider this factor when benchmarking our module gross margin percent relative to our peers. Secondly, 2021 volume sold was below our full year expectations due to the aforementioned ocean freight reliability issues, port congestion, and over-the-road trucking capacity constraints. The year-end 2021 modules and transit number of 675 megawatts remains above historic norms. Thirdly, factory upgrades in 2021 resulted in higher downtime on underutilization and lower production. The full year 2021 ramp on underutilization related expense of $19 million, or one percentage point of gross margin. Finally, while we reduced our cost for what produced by 6% between the end of 2020 and 2021, we faced a cost for what produced heavy wind in 2021 as a result of higher inbound freight and aluminum costs. In light of these circumstances, although the module segment gross profit and gross margin came in below our 2021 expectations, we are pleased with how we navigated the current environment and delivered solid module segment performance. SG&A R&D and production startup expenses totaled $73 million in the fourth quarter. It increased approximately $1 million relative to the third quarter. This increase was primarily driven by a $1 million increase in production startup expense from the addition of our third factory in Ohio and a $4 million increase in R&D expense predominantly related to cure testing, which were partially offset by an impairment charge related to a certain development project that occurred in the prior period. S&A R&D and production startup expenses totaled $290 million in 2021 compared to $357 million in 2020. Overall, we're pleased with our operating expense results of $290 million, which was within our full-year guidance range, $285 to $300 million, which represents a significant year-over-year reduction. Operating income was $173 million in Q4 and $587 million for the full year 2021. Income tax expense was $103 million for the full year 2021. Fourth quarter earnings per share was $1.23 compared to $0.42 in the prior quarter. For full year 2021, earnings per share was $4.38 compared to $3.73 in 2020. Our 2021 EPS result came in above the midpoint of the guidance range we provided on the third quarter earnings call and is also within the original range we provided last February. While there were several unexpected challenges and benefits we faced last year, our overall performance reflects the strength of our business model and ability to navigate a challenging environment over the course of the year. Turning to slide six, our cash and cash equivalents, restricted cash, and marketable securities balance at year-end was $1.8 billion, a decrease of $109 million from the prior quarter. Our year-end net cash position, which includes cash and cash equivalents, restricted cash, marketable securities, less debt, was $1.6 billion, a decrease of $71 million from prior quarters. Our net cash balance was higher than our guidance range due to lower-than-expected project spend on Japanese development projects and the timing of cash payments for capital expenditures that were delayed to 2022. Cash flows from operations were $238 million in 2021 versus $37 million in 2020. Capital expenses were $195 million in the fourth quarter, compared to $165 million in the third quarter. And CapEx was $540 million in 2021, compared to $417 million in 2020. With that, I'll turn the call back to Mark to provide a business disaster update. Thank you, Alex.

Turning to slide seven, I would like to begin by providing an update on our CUR program. Over five years ago, we announced the acceleration of our Series 6 transition. which transformed our manufacturing process and significantly increased our module wattage. While the outcome of the Series 6 program has been a great success, as reflected by our record 22 gigawatt backlog as of the end of 2021, it is easy to lose sight of the initial challenges we face when scaling high-volume manufacturing with respect to module wattage, throughput, and manufacturing yield. Through persistence, resilience, and ingenuity, Our manufacturing associates methodically resolved these challenges, enabling Series 6 to be the success it is today. Looking forward, CURE represents an anticipated enhancement to our module performance, which is expected to increase efficiency and lifecycle energy. On the November earnings call, we indicated that we had demonstrated CURE's full performance entitlement in a lab setting and are working to realize the entitlement in high-volume manufacturing conditions. As a result, we have revised our integration schedule to lead line implementation by the end of Q1 2022, with fleet-wide replication timing to be determined upon completion of the lead line. Since the previous earnings call, we have conducted a series of cure runs on high-volume production lines in Ohio, and while the trends for improving module waters and degradation appear favorable, we are still working to realize the full performance entitlement and manufacturing conditions. Over the coming weeks, we intend to conduct further testing, which we believe will inform our views on lead line implementation timing. Again, this lead line implementation timing will in turn inform fleet-wide replication timing. As highlighted on our Q2 2021 earnings call, our technology team continues to create new optionality in our technology roadmap. This optionality enables us to partially mitigate the effects of pure delays through the enhancement of our current Series 6 technology, with our top production bin reaching 465 watts at our Ohio and Malaysia factories. In addition to this improved efficiency in module wattage, Series 6 now has a significantly improved long-term degradation rate. Using the improved metrology to measure degradation at our test sites and further validated by third-party analytic methods and customer site data, The current Series 6 platform now has a 30-year warranted power output degradation rate of 0.3% per year, which is 40% below our previous warranted and represents a potential 4.4 increase in lifecycle energy. While the improved Series 6 nameplate wattage allows us to achieve our target at exiting 2021 with a top production bin of 460 to 465 watts, the expected overall lifetime energy performance of the current Series 6 program remains under that of cure, primarily due to the differences in warranty degradation rate and temperature coefficient. That said, looking into 2022, we believe there is a path for our Series 6 module to increase the top production bin to 470 watts with an upside potential of 475 watts exiting the year. Furthermore, we are also working on our Series 6 modules produced under the current program to achieve a temperature coefficient similar to what is expected under our CURE program. I'll discuss additional optionality in our technology roadmap, including bifaciality and the opportunities to drive to higher levels of efficiency later in the call. While CURE implementation has been delayed, the significant improvements in efficiency and degradation of Series 6 has been beneficial to more closely meet our customers' expectations. In connection with our CURE obligations this year, as discussed on the November earnings call, we have either amended or in the advanced stage negotiation to amend certain customer contracts utilizing CURE technology by substituting our enhanced Series 6 product. We expect these amendments to impact 2022 revenue and gross margin by approximately $60 million, which is reflected in our guidance. Note, we are still working to finalize certain CURE-related contract amendments Relative to our contracted backlog disclosure, approximately 40% of the $60 million is in our contracted backlog disclosure as of December 31, 2021. The balance will be reflected once the remaining contract amendments are completed. These amendments, coupled with the existing and forecasted improvements to our current Series 6 program related to efficiency, module wattage, degradation rate, and temperature coefficient, as well as other potential enhancements under our technology roadmap, which I will discuss momentarily, have reduced the requirements to implement our cure program by a particular deadline. Looking into 2022, we are pleased to enter the year with a record backlog on our growth plan, well underway with capacity expansions in the U.S. and India. However, 2022 is expected to be a challenging year from an earnings standpoint, both due to external factors and the near-term impact of factory startup costs associated with our growth plans. The most significant driver impacting the year is the freight market. Ocean freight costs for contracted volumes have risen 200 to 300% from pre-pandemic levels. With our recently concluded carrier negotiations, we expect our 2022 contracted freight rates to increase by more than 100% year over year. This compares to a pre-pandemic historic annual percentage increase in the mid to upper single digits. At the same time, transit times have significantly increased and reliability and availability have significantly worsened, pushing more volume into a higher-priced spot market. Despite record profitability across the shipping industry, this situation currently shows no sign of improving in 2022. We increasingly are monitoring the growing calls for accountability, in particular from Georgia Senator Warnock, who has demanded an investigation into the apparent price gouging of ocean carriers. We expect sales rate for 2022 to increase to approximately 5 cents a watt. This is a combination of contracting and premium rates. Year-on-year, we expect a better mix of contract and premium rates, but with a substantial increase in contract rates, we expect sales rate costs to increase by approximately $200 to $240 million year-on-year. Note, our anticipated 2022 shipments were largely booked prior to the shocking increase in freight rates. Relative to our expectations at the time of the negotiation, the module ASP freight rates have more than doubled. Externally, there have been a number of events that have adversely impacted our module cost reduction roadmap. Firstly, the aforementioned freight market disruption has resulted in higher shipment costs for inbound raw materials. Secondly, the increase in inflation in commodities has, both directly and indirectly, affected our filler materials and cost of production. The cost of aluminum, which has increased over 40% between the start and end of 2021, has been a strong headwind against our module costs. We have partially offset this headwind by implementing our Series 6 Plus at our Malaysia and U.S. factories, which reduced the aluminum content of our frames by 10%. Thirdly, COVID-19 constraints, including travel quarantine restrictions, for both first solar associates and third-party equipment installers have impacted the timing of our Series 6 Plus and throughput upgrades in Vietnam. While we expect to see a loosening of travel restrictions this year, this uncertainty presents ongoing risks to the timing of upgrades of our last factory in Vietnam to Series 6 Plus, which is expected to be completed in early Q2. COVID-related constraints have also delayed the fleet rollout of our glass optimization program. As mentioned previously, Our 2021 cost per watt declined by 6% versus our target of 11%. The shortfall reflective of the items noted above resulted in us missing our cost per watt target reduction by approximately $0.01 per watt. While we expect to continue to improve our cost per watt in 2022, we will not be able to offset a number of the headwinds experienced in 2021, and therefore our module cost will be higher than our roadmap by approximately $0.01 per watt. This is expected to negatively impact 2022 gross margin by approximately $100 million. While there are better sources for expert perspectives on the most recent activities in Ukraine and Russia and the resulting implication on geopolitics, from our perspective, we are watching closely the tragic events unfold. As of today, our supply chain has not been impacted by the crisis, and we have no current tier one suppliers in the conflict area. It is reasonable to anticipate natural volatility in various supply markets, such as metals or fuel, should the conflict continue to escalate. We will continue to monitor this situation daily. Internally, the current implementation delays and the expected module wattage improvements will adversely impact our expected cost per watt reductions. And finally, capacity growth decisions made in 2021 will provide long-term benefits in 2023 and beyond, but provide a headwind to the 2022 P&L start due to startup expenses of $85 to $90 million. We will continue to navigate these headwinds with a focus on the future. As we invest and realize the full value of our differentiated thin-film technology, this pivotal year will evolve around continuing significant investments in R&D, new products, manufacturing expansion, and employing new contracting strategies, all of which we believe will set the stage for sustained growth in 2023 and beyond. As it relates to R&D, our team has been cultivating optionality in our roadmap across energy attributes, including efficiency, degradation, temperature coefficient, and bifaciality, along with product attributes, including Series 7. More specifically, on the Q2 2021 earnings call, we highlighted that we are deploying prototypes of early-stage bifacial CAD cell modules at our test facility, and we're pleased with the initial results. Since then, we have continued to run performance tests on both our current and CUR device platforms, and have gathered more field data, with the results implying the potential for an increase in specific energy use. Adding bifaciality on Cattell adds to the well-understood and valued temperature coefficient, spectral response, and partial shading, and long-term degradation energy advantages. With a mid-term target of a 490-watt bifacial module, we're working diligently to commercialize this technology across our future platforms. We believe the commercial and financial perspectives prospects of bifacial Cattell are compelling due to the anticipated higher energy yield, with limited capex or retooling required in order to integrate a transparent back contact across the fleet. Turning to slide 8, as it relates to expansion, construction of our Series 7 factories is underway and the schedules are on track with the U.S. factory expected to commence initial production in the first half of 2023 and the India factory by the end of 2023. Once scaled, These factories are expected to lead the fleet in terms of module wattage, efficiency, and cost per watt. With a midterm goal of 570 watt by monofacial Series 7 module, we see the potential for meaningful improvement in our module performance. As we significantly increase our nameplate capacity, we believe this anticipated growth, when balanced with liquidity and profitability, will drive contribution margin expansion given our operating expense cost structure is 80% to 90% fixed. As a reflection of this expansion roadmap and continued optimization of the existing Series 6 fleet, we have summarized our expected exit nameplate capacity and production for 2022, 2023, and 2024 on slide 9. As it relates to our contracting strategy, A feature of our newer framework agreements is the customers entering into a contract today can benefit from the potential realization of our technology roadmap. For approximately 7.3 gigawatts of booking secured prior to the end of the calendar year, we have structured the ASP and product expectations on a baseline wattage and energy performance roadmap without the full anticipated benefits of our technology roadmap. To the extent we realize future module technology improvements, including new product design and energy enhancements beyond what is specified in the baseline agreement, the incremental value is expected to result in a corresponding increase to ASP. Our ability to contract in this matter provides our customers with clarity of pricing, product availability, and delivery timing, enabling them to underwrite PPAs from a position of strength with lower risk to their expected project returns. From our perspective, there is also strategic rationale to contract in this manner as it provides us confidence in our ability to sell through our expected supply and provides us visibility into an expected profit per watt with the potential for meaningful upside to the extent we realize these anticipated technology improvements. This framework allows us to understand the price certainty, the value of our investments across different product enhancements. Based on these potential technology improvements, the approximately 7.3 gigawatts of contracted module volumes as of December 31st, 2021. Such adjustments, it realized, could result in additional revenue of up to $0.2 billion, the majority of which would be recognized in 2023. Note this contracting approach has been incorporated in our 2022 bookings year-to-date. From a sales freight contracting perspective, last year we began employing module contract structures which mitigate our exposure to sales freight. As we continue to secure bookings two to four years into the future, these arrangements provide a balanced risk profile for us and our customers, where we are incentivized to minimize sales freight costs, but generally provide a cap above which customers are obligated to pay. We started employing these structures in Q2 2021, and approximately one-third of our expected 2022 volume includes these provisions. In 2023 and beyond, we anticipate a significant majority of volume will include these types of provisions. Across our contracted backlog, these contracts provide greater clarity into an expected gross profit per watt by providing freight relief through a higher ASP if rates remain above pre-pandemic levels. In addition to our contracting approach, our expansion strategy, including our third Ohio plant, and our new India plant are expected to further de-risk our exposure to trans-Oceanic freight costs by bringing manufacturing closer to demand. At the factory scale, our production mix exposed to trans-Oceanic freight risk is expected to decrease by approximately 30 percentage points between 2022 and 2024. Overall, from a pricing perspective, the strong demand we are witnessing for our demonstrated cattail module has enabled us to secure 10.7 gigawatts of bookings for planned deliveries in 2023 at a baseline ASP that is only 0.3 cents below our planned deliveries in 2022. It is important to note the ASP is essentially composed of two components, the module plus sales rate. The baseline ASP generally assumes sales rate will be approximately 2.5 cents per watt. To the extent that the actual sales rate is above the baseline, the ASP will increase to cover most of, if not all of, the incremental sales rate. When including this variable pricing adjustment and assuming 2022 sales rate environment, we expect our 2023 sales rate adjusted ASP to be approximately one cent higher than 2022 on a like basis. In addition, as we secure a significant volume for delivery in 2023, We have been employing a contracting strategy which enables our customers to benefit from the evolution of our technology and product platform. Realizing the entirety of the benefit of this platform would increase our baseline 23 ASP by up to two cents a watt. Turning to slide 10, we continue to see active customer engagement and high levels of interest in both individual projects as well as the multi-year and multi-gigawatt agreements across key markets in the United States and India. Our total bookings opportunities of 53.6 gigawatts remain very robust with 27.7 gigawatts in the mid to late stage customer engagement. This opportunity set coupled with our contracted backlog is as confident as we continue scaling our manufacturing capacity. Incrementally, we continue to evaluate the potential for future capacity expansion. As referenced on the Q3 earnings call, we have started to engage with certain suppliers to ensure we have line of sight on critical path tools for further expansion. We believe strong demand for our CAD-TAB modules, a dynamic technology roadmap, a strong balance sheet, and largely fixed operating expense cost structure are each catalyst as we evaluate expansion. While this potential expansion may be in the U.S., India, or beyond, we are seeking clarity on domestic solar policies to ensure such expansion is well positioned. Note, we have made no such decision at this time and any capacity expansion are unlikely to contribute to our 2023 production plan. And I'll turn the call back over to Alex, who will discuss the financial outlook and provide 2022 guidance. Thanks, Mark.

Before discussing 2022 financial guidance, I'd like to provide an update on our cost roadmap. As initially presented on our February 2021 guidance call, we forecasted a year-end 2020 to year-end 2021 cost for what produced reduction of 11%. In November, we revised our reduction assumption to 5% based on increased inbound freight, cover glass, aluminum, and adhesive costs. Our final year-over-year reduction came in at 6%. So note the 5% difference between our original assumption and our year-end result remains a headwind in 2022 and is expected to impact full year 2022 costs for Watt by approximately a penny. On a cost-to-Watt sold basis, our original year-over-year forecast reduction of 8% was revised to 3% in November. And in our final full year results, cost per watt sold remained flat year over year. This is despite a year over year increase in sales rates per watt of 70%. Excluding the effects of sales rate, our cost per watt sold declined by approximately 8% over the same period. Looking into 2022, from a glass perspective, we've largely stabilized this cost through long-term, predominantly fixed price agreements with domestic suppliers that have economic benefits as we achieve high levels of production. On the Q3 2021 earnings call, we highlighted that COVID-related delays impacted the startup timing of a new glass facility to support our Malaysia and Vietnam sites. In addition to competitive pricing, this facility is expected to reduce the cost of inbound freight for our international sites. Given recent improvements in the COVID situation in Southeast Asia, we anticipate this new facility will commence production and begin benefiting cost per watt in the first half of this year. As it relates to aluminum, we anticipate framing costs will be elevated relative to historical norms. We highlighted during our Q3 earnings call that we had a commodity swap contract in place, which covered the majority of our U.S. consumption in 2021. Note, many of our aluminum contracts which supply our Malaysia and Vietnam factories reference aluminum trade on the Shanghai Futures Exchange, which makes hedging a challenge given foreign investors cannot access the market without a registered local entity in China. While aluminum pricing remains above pre-pandemic levels, going forward, and for both our domestic and international sites, we have several strategies in process to reduce framing costs in the near to mid-term. Firstly, by differentiating the frame design and reducing costs for modules installed in certain geographies and parts of the array that are exposed to standard versus high mechanical loads. Secondly, by optimizing the mounting interface for our Series 7 module. And finally, by evaluating alternative materials for the construction of our frame, including a steel back rail for our Series 7 modules in Ohio and India. As it relates to logistics, outbound sales rate is expected to be approximately 5 cents per watt in 2022. For context, prior to the recent dislocation of the global freight market, sales rate per watt was generally between 2 and 2.5 cents per watt in 2020. Note the aforementioned sales rate contract provisions are expected to provide approximately half a penny of AOT relief on a fleet-wide basis for 2022, which is reflected in our guidance. On a fleet-wide basis, relative to where we acted in 2021, we anticipate reducing our cost per watt produced by 4% to 6% by the end of 2022. Despite an expected 25% to 40% increase in sales rate per watt, we anticipate our cost per watt sold will be flat between the end of 2021 and 2022, respectively. Excluding the effects of sales rate, we anticipate our cost per watt sold will decline by approximately 5% to 8% over the same period. Note the expected 25% to 40% increase in sales rate per watt in 2022 is expected to be partially offset by contract provisions for sales rate recovery, which cover approximately one-third of our shipments in the year. By 2023, similar sales rate recovery provisions are expected to cover a significant majority of our shipments. Turn to slide 11, looking forward, despite near-term inflationary pressure around certain commodity and logistics costs, we believe our revised midterm roadmap will enable us to continue reducing our Series 6 cost per watt. Starting with efficiency, our midterm goal is a 490-watt bifacial and 500-watt monofacial wattage. As a reminder, improvements in module watches generally provide a benefit to each component of cost per watt, including our variable, fixed, and sales break costs. Secondly, we're tracking to increase throughput by 9% to 11% in the midterm on our existing manufacturing base, resulting in a fixed cost solution benefit. Thirdly, we continue to see a path to increase our Series 6 manufacturing yield to 98.5% in the midterm. Fourthly, we see opportunities to reduce our bill of material costs by 10% midterm, primarily across framing and glass. And finally, we believe the combination of thinning our module profile, transport optimization, and employing risk-sharing mechanisms in our customer contracting could lead to a 40% to 50% reduction in net sales freight costs. Note this expected reduction includes a combination of cost recapture through the aforementioned sales freight customer contracting strategy and increased modules for shipping containers. Separately, as it relates to Series 7, we anticipate both our Indio and Ohio factories may cost for what, once fully ramped, lower than our current lowest-cost factories in Vietnam. Combined with the benefit of locating supply near to demand and reducing the cost of sales rate, Series 7 is expected to reduce cost-to-want and net sales rate costs in total by approximately one to two cents relative to Series 6. With that context in mind, I'll discuss the assumptions included in our 2022 financial guidance. Turn to slide 12. Starting with legacy systems items, we're pleased with the potential value and long-term benefits of selling our Japan development and O&M platforms. While there has been no assurance that we will enter into an agreement for a transaction, our guidance assumes a gain of approximately $270 to $290 million, which would be recognized as a gain on sale of businesses, which lies between gross margin and operating income on the P&L. As we previously assumed ongoing asset sales from the development portfolio, which benefit gross margin, this change in assumption is a headwind to gross margin in 2022. Furthermore, until any sale is closed, overhead costs associated with the Japan platform will also continue on impacting operating expenses. In addition, we signed an agreement to sell our remaining international O&M contracts outside Japan. Upon closing, which is expected in the first half of 2022, we expect to recognize a pre-tax gain on sales, showing the income statement between gross margin and operating income of approximately $10 million. As it relates to power-generating assets, we're evaluating whether to continue holding our Luz del Norte asset in Chile, whether to pursue a sale of this project. The pursuit of such a sale would require coordination with the project's lenders, and as previously discussed in our November earnings call, could result in an impairment charge in the future if we are unable to recover our net carrying value in the project. No impact from any possible sale of this project is included in our guidance for 2022. 2022 shipments are expected to be between 8.9 and 9.4 gigawatts, which exceeds our production plans of the year of 8.2 to 8.8 gigawatts, due to higher than expected inventory levels at year-end 2021. Our factory and factory expansion and factory upgrade roadmaps are expected to impact operating income by approximately $95 to $105 million. This comprises startup expenses of $85 to $90 million, primarily incurred by our new factories in Ohio and India. As previously mentioned, we're planning to implement Series 6-plus upgrades in Vietnam and other upgrades in 2022. These upgrades will require downtime, resulting in estimated underutilization losses of $10 to $15 million. We anticipate these improvements will contribute meaningfully to our 2023 production plan. Our liquidity positions have been a strategic differentiator in an industry that's historically prioritized growth without regard to long-term capital structure. For example, we're one of the few solar companies that both entered and exited the last decade. Our strong balance sheets enable us to weather periods of volatility and also pursue growth opportunities. Additionally, we were able to self-fund our Series 6 transition whilst maintaining our strong liquidity position, ending 2021 with $1.6 billion of net cash. Based on our existing liquidity position, coupled with expecting operating cash flow from our existing Series 6 factories, we believe we can self-finance our expansion roadmaps. However, based on the opportunity to secure a competitive terms and strategic benefit to a partner when entering the new market, we may raise debt financing to support the construction of our new factory in India. I'll now cover 2022 guidance ranges on slide 13. Our net sales guidance is between 2.4 and 2.6 billion, which is predominantly module segment rent. Gross margin is expected to be between 155 and 215 million, which includes $165 to $225 million of module-segment gross margin, a negative $10 million impact from other legacy activities. Module-segment gross margin includes underutilization losses of $10 to $15 billion. As discussed, we anticipate sales rate will be a significant headwind in 2022, and we anticipate sales rate will reduce our module-segment gross margin by 18 to 20 percentage points for the full year 2022. SG&A expenses are expected to total $170 to $175 million, compared to $170 million in 2021 and $223 million in 2020. As indicated on the guidance call last February, we anticipated the sale of our U.S. project development business to result in annualized savings of approximately $45 to $50 million, of which approximately 60% sits in the operating expense line. We've tracked well relative to this cost reduction plan and are pleased with the expected savings on a go-forward basis. R&D expense is expected to total $110 to $115 million, led to $99 and $94 million in 2021 and 2020, respectively. As we continue to grow our manufacturing capacity, we also intend to add additional headcounts for our R&D team to further invest in advanced research initiatives. SG&A and R&D expense combined is expected to total $280 to $290 million, and total operating expenses will be $85 to $90 million of production startup expenses, are expected to be between $365 and $380 million. Operating income is expected to be between $55 and $150 million, and is inclusive of an expected approximately $280 to $300 million gain on sale related to the aforementioned Japan project development and international O&M transactions, and $95 to $105 million of combined underutilization costs and plant startup expenses. So these are non-operating items that expect interest income, interest expense, and other income to net to negative 20 to 30 million, which is predominantly driven by FX and interest expense related to Japanese project debt. Fully attacked expense is forecast to be 35 to 55 million. This results in full year 2022 earnings for diluted share guidance range of zero to 50 cents. A note from an earnings cadence perspective, we anticipate our earnings profile will improve gradually over the course of the year, with a significant impact in the quarter in which any sale of the Japan development platform was to close. Capital expenditures in 2022 are expected to range from $850 million to $1.1 billion as we advance the construction of our Ohio and India plants, implement upgrades to the fleet, and invest in other R&D-related programs. Our year-end 2022 net cash balance is anticipated to be between $1.1 and $1.35 billion. The decrease from our 2021 year-end net cash balance is primarily due to capital expenditures associated with the building of Ohio and India manufacturing plants, which we expect will be partially offset by financing proceeds. Turning to slide 14, I'll summarize the key messages from today's call. Demand has been robust with 11.8 gigawatts net booking previous earnings call. Our opportunity pipeline continues to grow with a global opportunity set at 53.6 gigawatts. including mid- to late-stage opportunities of 27.7 gigawatts. On the supply side, we continue to expand our manufacturing capacity and expect to exit 2024 with approximately 16 gigawatts of capacity. We see significant mid-term opportunity for improvements to our module efficiency, cost, and energy metrics. We ended 2021 with full-year EPS of $4.38 and a forecast in full-year 2022 earnings per share of $0.60. With that, we conclude our prepared remarks and are going to call for questions. Operator.

Thank you. Ladies and gentlemen, if you have a question at this time, please press the star, then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question is from Felix Shen with Roth Capital Partner.

Hi, everyone. Thanks for taking my questions. The first one is on pricing. As you think through your pricing for 22 and 23 with the backdrop of the contracting strategy and the recent bookings, do you think the blended pricing in 22 could be possibly 30 cents or higher, or do you expect both 22 and 23 to be in the high 20 cents per watt? And also I was wondering if you could speak to what the expected margins might be for 23, especially as you drive some costs down in 23, maybe some of the headwinds a touch, and then your pricing can stay relatively flattish. And then finally, you talked about new products and your OPEX investments. Through some of your work, it seems like you might be exploring some – EG and Resi solar opportunities. I was wondering if you might be able to talk through whether or not you see some concrete opportunities there. You know, could that be a new product for you as you roll out the new plant in Ohio? And if so, you know, what kind of volume could that be? You know, it is a nice market with healthy ASPs, so any color there would be very helpful. Thanks.

All right. So, Phil, I guess on the pricing, there's a little bit of potential pricing upside in 2022, but not overly significant, you know, to the extent that the sales – there are – about 30% of the volume we have in 2022 has some sales rate adjustments, which will appropriately – you know, comply with the obligations under the contract and, therefore, adjust if the cost is above the cap at which we agree to. So that could impact it. You know, if we are able to, for example, improve the temp coefficient on our current product, then there's potentially some opportunity that that could be monetized in 2022. But there's not a significant increase in – and ASP opportunities off of what you see. And I think the contracted backlog that will show up in the K is going to be somewhere right around, I think, 27 cents or something like that. And that relates to the 22 gigawatts or so that we do have contracted. As you go into 2023, I'll take that. What I said in the call is that, you know, essentially the ASPs are relatively flat. I think we're down about – three-tenths of a cent or something like that, 23 relative to 22. But there's about three cents of adjustment. There's a penny or a little bit north of a penny on the sales rate. I want to make sure that's understood. Again, our pricing includes not only the module but the delivery of the module. So if you think about what our pricing or net pricing is today, just for the module, you'd call it 27 cents or so, which is in the K at the average. and you pull 5 cents out of that. So that effectively says that our net module pricing is about 22 cents. If you do that same analysis for the revised contracting structure that we have, you would take the 27 cents and back off about 2.5 cents So you're going to see an increase of ASP just from that structure. There's a potential of 2.5 cents of higher ASP monetization in 2023 than we have in 2022 because of how we structured the contract. Now, only about 70 or so percent of the contracts in 2023 have that structure. All of the bookings that we've done, you know, the whole 12 gigawatts that we just referenced as an example, have that. a modification form effectively embedded in that, or a customer may accept ex-work type of pricing. Therefore, we don't take the freight risk, and they're responsible for it, as an example. So, there's opportunities. If you take the 27 cents, and if you include the sales freight, and if you include the price adjusters for the technology, which could be bifaciality, which could be Temco, could be higher bid, so on, that you could see significant increases in 23 over 22. You can do the math. You can sort of make your own assumptions. Does it get into the 30s or not? You know, there's a potential you can start pushing upwards of that. And, again, depending on how we structured the risk profile on the sales rate, you can see individual opportunities that we'll have three handles on them for various reasons in how we structure and how we contract it. As it relates to expected margin, I can't give you the absolute numbers on that, but what I can say is that, you know, there's an upward opportunity in ASPs based on what I referenced. Alex indicated that we'll continue. We just took 6% of cost per watt down in 2020. 21 over 20, and then there's another single-digit type of opportunity of reducing 22 over 21. So if you just do your math, carry it forward, you can see that there is still a trajectory, even in the environment that we're dealing with right now, that is very challenging. There's a trajectory that can still drive to a lower cost for a lot. So you can do the margin in terms of what the expected margin is by doing the math and you know, how we've described it during the call on the ASP as well as the cost side. On the comment about DG, look, we've been saying, you know, for a while now that we are looking at tandem structures and high-efficiency modules that could drive an opportunity to expand, say, our traditional utility scale segment of the market of which we currently serve. As we think through that roadmap and that product evolution, then clearly it does open, you know, a DG type of opportunity that could, you know, enable an entitlement of higher ASPs. But, Phil, as you know, I mean, we got, you know, on a path to get to 16 gigawatts. I mean, if we're doing, let's say, 500 megawatts, you know, maybe, you know, even a gigawatt, yes, it's a great market. We want to participate. We've got some great partners. We've had some conversations in that regard. but still going to be a relatively small percentage of the overall business.

Phil, just one thing to add on the 22 to 23 on top of the ASP and cost score indication that Mark gave is that when you get into 23, we're going to have, call it 1 to 2 kW to Series 7 come online. As we indicated, that Series 7 has an ASP entitlement, you can assume, as it was. already reflected in the backlog in some cases, but in some cases it may not be. There may be some upsides in that. It also has a one to two cent cost advantage based on true cost of water and sales rate. So you're going to get the benefit of that coming through as well in 2023.

Thank you. Our next question is from Joseph Olsha with Guggenheim Partners.

Hello, gentlemen. Congratulations on continuing to represent American solar manufacturing so well. two uh two questions for you first i'm wondering given that the relatively recent shift in in policy we've seen vis-a-vis 201 and the bifacial exemptions um have you seen that manifest in terms of pricing conversation for your your more recent bookings uh and then secondly mark i i perhaps you could clarify obviously you're sort of pushing forward with ohio but I did think I heard some comment from you vis-a-vis 2023 and some maybe fluidity to the plans there, depending on policy. So if you could clarify that, that would be great.

Yeah. Look, on the policy side, just in general, around 201, and clearly we were disappointed with the bifacial exemption that was provided, you know, the reality is, for me, the way I look at this, the module has many different attributes, but every module basically takes photons and makes electrons. And how you choose to do that, you know, we talk about our attributes a lot. We talk about our spectral response and our ability to be damaged as it relates to, you know, moisture in the air and humidity. You know, we talk about our temperature coefficient. We talk about our... Shading response, as an example. You know, those are all attributes which take advantage of your technology beyond just the labeled watts and turning photons into electrons, and the bifaciality is nothing more than that. It is just another attribute that allows for additional energy generated from from a module that takes photons and makes electrons. So there, to me, is no common sense, rational reason why bifacial modules would be exempt. It'd be no different than if somebody took any attribute. It could be long-term degradation, a long-term degradation rate. You could say that if you have a long-term degradation rate that's below x, then you'd be exempt from the 201 duties, which, to me, wouldn't make any sense. Nor does the bifacial exemption in and of itself make any sense. As it relates to our customers, our customers, they value the relationship with First Soda. They value our willingness to deliver. and to honor our contracts and to stand by them in times that we're challenged in right now. And that's why we refer to our customers as partners. And we partner in times when things are going well and when things are more challenging. We're going to work together and we'll find solutions that we can enable each other's success. As we look to this as, again, a marathon, a long-term journey of which we're just on the front end of the world of electrification. And all that world of electrification starts by turning photons into electrons, and we'll do that better than anyone else. And so our partners want to work with us. And so, yes, there's some policy angst and, you know, ebbs and flows, but nobody can look around the corner and say for certain that any of our competitors, you know, again, vastly Chinese competitors, will be able to stand by our partners, you know, through their journey and the uncertainties of things that could happen. So it does play to our strengths. Just look at our – I mean, we just booked 12 gigawatts. We have a mid- to late-stage pipeline of 27 gigawatts. After those 12 gigawatts were booked, we've got a – including early stage, we've got 55 gigawatts. Both of those pipeline metrics are up about 10 gigawatts from what we talked about during the last earnings call, and we just booked 12 gigawatts. So there's lots of opportunity. I think our value proposition, our uniqueness, our technology, our growth plan, our expansion – Being America's solar company along the lines, Joe, of what you've referenced, you know, means a lot in the market that we're in right now. So I think it plays to our strength. As it relates to growth, what I meant to – we talked before about growth. You know, we've got capacity expansion for two new factories, one here in Ohio, another in India. We mentioned that we are working to evaluate further expansions. And as this pipeline, you know, or backlog of bookings and then pipeline of opportunities continues to grow, you know, we get to one where we're going to need to start evaluating expansion beyond what we've already committed to. And, you know, is there another – factory of three gigawatts. There's another two factories that could be six gigawatts, you know, to be determined. But it's all driven off the fundamentals of demand in the marketplace, our relative position, and our ability to sell forward. So we'll keep you updated. All we're trying to do is to let people know that, hey, we're working through that, and we're working very closely with our tool suppliers to enable that opportunity if it were to come about.

Thank you. Our next question is from Keith Stanley with Wolf Research.

Hi, thank you. First, just some clarifications on the 2022 guidance and appreciate the detail you've given. Much of the Japan and O&M business operations contribute to earnings for the year, separate from the gain you've noted. And I just want to confirm the year-end cash balance includes the planned sales?

Yeah, so there's very limited assumed contribution from the O&M business and the Japan business The assumption is that it wouldn't sell any assets this year. All of that would be reflected in the sale of the business and come through in the gain on sale. So you're seeing that full number be $270 to $219. There's about an additional $10 million of value associated with the sale of the O&M business. But you're seeing limited assumption of ongoing revenue and earnings for the time that we keep that business. The view there being that gets all lumped in with the gain on the sale. From a cash perspective, yes, the assumption is there are – the value in the cash from that sale is in the cash number at year end.

Perfect. Thank you. And our next question is from JB Lowe with CT.

Hey, Mark, Alex, Mitch. The question was, Mark, you mentioned previously about Your 2023 ASPs being down about 0.3 cents, but on a net basis from freight, it would be up about a cent. I'm just wondering if you would just walk through the puts and takes of that piece. And then my other question was just on, you know, given what we have seen so far out of Europe in terms of responses to the ongoing crisis over there, have you – I know it's only been a few days, but, like, have you guys been engaging with customers in Europe potentially? I mean, this goes kind of to the expansion question, but even ahead of that, have you been engaging any further with customers in, I guess, new or unexpected places since this has all started? Thanks.

So on the ASPs, the way I would look at it is there's about 30% of our contracts in Europe. in 2022 that have some freight adjuster. Again, just to put it back in perspective, to look at where we were a year ago, in Q1 of 2021, sales freight, we reported our number was about two and a half cents. So we've gone from two and a half cents in Q1 of last year to five cents a watt. So we didn't really... And we generally have assumed historically around $0.02. That's kind of what our implied assumption is. That's what it's been historically. And as we continue to drive watts up, it dilutes the average freight dollars to improve cents per watt and everything else. So we saw this dramatic shift start to happen in kind of Q2 of 2021. So we started modifying our contracts such that we weren't carrying that entire freight risk. And so there's adjusters. Now, not all of the benefits adjusters flow into 22. They start to flow into a much higher percentage, about 70% or so, of 23 will have freight adjusters. And really everything forward from 23 will have some form of freight adjuster associated with them. So when you think about it, you've got five cents as a headwind in this year's results that you're going to recover some nominal amount back from the customer. And so you will see some adjustments to ASP as we progress throughout the year. Maybe it ends up being – about a penny and a half, somewhere, or excuse me, about a half a penny. So you're going to see our ASPs will trend up from what's in the backlog right now as the sales rate adjusters are reflected for 2022 shipments. But when you do that same math and looking how we structured our freight rate, there's about a penny and a half that will come through in 2023. So the year-on-year, when you look at apples-to-apples ASPs, because of that recovery on the sales rate, is going to go up about a penny. So you're thinking about your 27 this year is probably going to end the full year closer to 27.5, and then you've got about a penny of that upside to that ASP going into 2023. Now, this all assumes that sales rate stays at 5 cents. If it goes up to 6 cents, well, then that adjuster is going to be higher because I'm still only really carrying about 2.5 cents of the total sales rate, whereas my customer is going to pay me and compensate me for anything above and beyond that. And then the other piece that will be accretive to ASPs as we go into 2023 is we refer to them as the technology or platform adjusters, right? So we've contracted with customers just to look at a baseline product. A baseline product basically is what we're producing today. Call it a 465, you know, standard cure product. If we do anything above that, the bins get better. If the Tefco gets better, the LTR gets better, it becomes bifacial, whatever it may be. Series 7 will have a premium on it, and that starts flowing into 2023 as well. So all those become incremental to the ASPs. And because while they're structured contractually that way, but we don't have certainty out of the exact product that will be delivered, we can't reflect it into our contracted backlog. Those will be realized over time, and then you'll see those benefits improve the contracted backlog. That's the point we were trying to make.

Thank you. Our next question is from Ben Callow with Baird.

Hey, thanks for taking my question. Has any of this, you know, the freight costs, you know, doubling, has that changed any of your thoughts around doing long-term contracts as you look out into 2024? And could you talk to us about how, you know, how you're selling product from India? Is it, you know, is it more localized when you get out that far? And then my third question and final question is just can you talk to us about going to bifacial and how do you make that decision and what it means on both an ASP and a cost perspective? Thank you.

Yeah. Hey, one thing before, Ben, before I get to your question, I want to go back to the last question I asked about Europe and were we seeing anything about Europe. There's been – and I forgot to answer that. I just answered the ASP – As it relates to Europe, we've had ongoing discussions with Europe, and Europe is evolving in their journey, similar to what we saw in India, as well as what we're seeing here in the U.S., around creating domestic capabilities around manufacturing. So we are engaged. We have had conversations in Europe around manufacturing there. So it's one of the opportunities that we're evaluating, along with the U.S. and India, for example, for any further craft expansion. I forgot to cover that one to hit it. So then on our freight cost, again, what we're doing, just think of it as I'm telling the customer that our base price is X, and we'll take 2.5 cents. So as we go into volumes that go on into 24 and 25, any volatility to that number is really going to result in a variable ASP. So if it stays at 5 cents, as I go on into 24 and 5, there will be an incremental ASP such that our customer – will actually then cover that incremental sales rate cost. So largely ours is fixed at two and a half cents. We think that's a manageable position to take as we contract forward. And our partners see it the same way, that there should be some element of risk sharing and given the uncertainty of what's going on in the market and who knows how long it will continue. So I do think that we've come to a reasonable balance approach around how we're thinking about sales rate and how we're contracting as we go forward. India pipeline, there's a lot going on. There's a lot of opportunity. You know, India, it doesn't generally book out in as far of a horizon. You know, you're normally going to see them maybe looking to secure modules about a year out in terms of when the expected deliveries are needed. You know, we're still looking second half of 23, so we're more than a year out to when the factory will be up and running, and we're being a little careful with loading the front-end production with selling and buying through at this point in time. just because it could be, you know, potential delays, you know, unanticipated events could happen. This could delay the project or the construction schedule or the tool install that we don't want to commit to with our customers. So we're leaving the front end, say the first quarter, kind of open right now until we have higher level of certainty we're further along in the construction as well as the install of the tools to commit to violence with our customers. But not for lack of interest and demand. We've got a lot of opportunities in the pipeline, and I think you're going to see multiple gigawatts of bookings before the end of the year for India. Bifacial, it's really an energy gain, right? And if you look at it, it should get, you know, let's say our bifaciality is going to be a little bit lower than where crystalline silicon is right now, but we're still going to give probably in the range of 1% to 2% of energy. And energy, depending on what market you're in, is worth say, 3 quarters of a penny to about a penny and a half. So you've got an ASP opportunity premium for bifaciality. And call it in the range of, if you get 2%, it's going to be a penny and a half. If you get $0.15 per 1% of energy, it's going to be close to $0.03. So you're somewhere between a penny and a half and $0.03 on ASP. You know, no different than Christmas silicon. There will be some tradeoffs, some of the balanced system costs because of row space and other things that you may need to do to capture the full benefit of the bifaciality. There may be some incremental BOS costs, which, you know, we'll actually then pull from that ASP entitlement. But as we currently see it right now, it would be accretive. It will drive, you know, a higher ASP.

um and you know it's another value of energy and we sell energy it's not labeled watts it's the actual energy profile that comes out of the module thank you presenters that's all the time that we have for today this concludes today's conference thank you again for your participation and have a wonderful day you may all disconnect