First Solar, Inc.

Good afternoon everyone and welcome to First Solar's First Quarter 2024 earnings call. This call is being webcast live on the Investors section of First Solar's website at .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 Richard Romero from First Solar Investor Relations. Richard, you may begin.

Good afternoon and thank you for joining us. Today the company issued a press release announcing its first quarter 2024 financial results. A copy of the press release and associated presentation are available on our website at .firstsolar.com. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer. Mark will provide business, strategy, and policy updates. Alex will discuss our bookings, pipeline, quarterly financial results, and provide updated guidance. Following their remarks, we will open the call for questions. Please note this call will include forward-looking statements that include risks and uncertainties that could cause actual results to differ materially from management's current expectations. 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.

Good afternoon and thank you for joining us today. We are pleased with our start to 2024 with good operating performance, selective -to-date bookings of 2.7 gigawatts, with an ASP over 31 cents per watt excluding adjusters, or 52.7 cents per watt assuming the realization of technology adjusters and solid financial performance. We're also pleased with the developing foundations to enable our long-term goal of exiting this decade in a stronger position than we entered it. From increasing production of our most advantaged Series 7 module to expanding our manufacturing footprint, to the building of an R&D Innovation Center and Perovskite Development Line that is expected to enable development of the next generation of disruptive solar technology, we are focused on a future of differentiation and sustainable growth. But while we continue to play the long game, we must acknowledge the current environment in the solar manufacturing industry, which remains in a state of heightened volatility driven by intentional structural over capacity in China. As we previously said, our ability to play this long game is a direct result of our differentiated technology and business model. From a technological perspective, the contrast is clear between our unique proprietary cadmium telluride semiconductor technology and highly commoditized crystalline silicon modules. This difference has become increasingly apparent in light of the recently announced disputes concerning alleged infringement of -cum-cell technology and intellectual property rights, which cast doubts on numerous crystalline silicon producers having the freedom to legally manufacture and sell this technology. From a business model and growth perspective, we are once again reminded of the value of our balanced approach to growth, liquidity and profitability. According to reporting, large Chinese solar companies have warned of potential quality and reliability issues as manufacturers cut corners and the impact of the current oversupply environment and associated financial stress on R&D and innovation. By contrast, we continue to invest. We are on track to commission our R&D Innovation Center and a perovskite development line in Ohio in the second half of this year, representing a combined investment of nearly half a billion dollars, and we continue to optimize our product for energy efficiency and cost. In the face of overcapacity, the average large Chinese solar manufacturing facility reportedly had a record low capacity utilization rate of 23% in February of this year. In contrast, supported by our large contract backlog, our facilities were operating near nameplate capacity in the first quarter of this year. The Chinese solar industry is engaged in a race to the bottom with a rationally low market-distorting pricing that has caused even Chinese companies to call for intervention by the Chinese government to manage the pricing environment and stem the financial hardship this is causing them. By contrast, we remain focused on a highly selective approach to forward contracting that provides optionality and healthy ASPs. We are not immune to the broader ramifications of the Chinese solar business model. However, we continue to focus on our points of differentiation, which aim to provide some resiliency in light of current industry challenges. We're also focused on policy and trade drivers that can counter anti-competitive and abusive market behaviors. There should be no doubt we invite competition and free trade. All we continue to seek is that the competition and trade are practiced on a fair and level playing field. We believe this approach will help us to drive growth, navigate industry volatility, and deliver enduring shareholder value. On slide three, I will share some highlights from the first quarter. From a commercial perspective, we continued our selective approach to building backlog underpinned by our cumulatively oversold position through 2026. Since our last earnings call, approximately nine weeks ago, we have booked 854 megawatts with an ASP of 30.1 cents per watt, excluding adjusters where applicable. This brings our -to-date net bookings to 2.7 gigawatts with an average ASP of 31.3 cents per watt excluding adjusters or 32.7 cents per watt, assuming the realization of technology adjusters. Our total contracted backlog now stands at 78.3 gigawatts with order stretching through 2030. From a manufacturing perspective, we are pleased with our solid Q1 performance, including producing a record 3.6 gigawatts of modules as a result of our relentless focus on manufacturing excellence. From a technology perspective, we are pleased with our CURE module field test and have completed the UL and IEC certification process. We continue to anticipate launching CURE at our lead line factory in Ohio in Q4 this year. In parallel to preparing for launch, we continue to make progress on technical solutions that could enable accelerating CURE's replication across our factories at a lower capex than assumed at our recent analyst's day. BIALYS will provide a comprehensive overview of our first quarter 2024 financial results. I would like to highlight our ability to deliver strong performance in a market challenged by Chinese oversupply, which in our view validates our approach to long-term forward contracting. This led to first quarter earnings per diluted share of $2.20 and a quarter and net cash balance of $1.4 billion. Moving to slide 4, our growth plans are made on track. The expansion of our Perrysburg, Ohio manufacturing footprint is expected to be completed and commercial shipments are expected to begin before the end of the second quarter. Construction activity at our new facility in Alabama is complete and the first tools are now being installed in preparation for the expected start of commercial shipments in the second half of this year. Our new Louisiana facility is also on track with a start in commercial operations expected in late 2025. Internationally, our India facility is continuing to ramp and we're proud that the first Indian made Series 7 modules have been deployed in the field. We therefore expect to exit 2024 with over 21 gigawatts of global nameplate capacity and 2026 with over 25 gigawatts of nameplate capacity. All of this capacity is available to serve the US market with over half of our capacity physically located in the US. Additionally, we are on track to commission the previously mentioned R&D projects in Ohio in the second half of this year, which will comprise a Proskite development line and a new R&D Innovation Center at our Perrysburg campus. The Innovation Center features a high tech cad tail pilot line, which we expect will accelerate our development activities and bring capabilities for full size prototyping of thin film and tandem PV modules. At our analyst day in September 2023, we talked about the need to create a disruptive transformative technology platform that balances energy efficiency and costs. We believe that these investments in R&D will help accelerate our cycles of innovation, optimize our technology roadmap and reinforce our position of strength through technology leadership. I'll now turn the call over to Alex to discuss our bookings, pipeline and financials.

Thanks Mark. Beginning on slide five, as of December 31, 2023, our contracted backlog totaled 78.3 gigawatts with an aggregate value of 23.3 billion. Through March 31, 2024, we entered into an additional 2.7 gigawatts of contracts and recognized 2.7 gigawatts of volume sold, resulting in a total backlog of 78.3 gigawatts with an aggregate value of 23.4 billion. Which implies an ASP of approximately 29.9 cents per watt, excluding adjustments. As we previously stated, given our diminished available supply, the long dated time frame into which we're now selling, the need to align customer project visibility with our balanced approach to ASPs, payment security and other key contractual terms, and uncertainty related to the policy environment and the upcoming US election cycle, we expect to take advantage of our position of strength in our contracted backlog and be highly selective on our approach to new bookings this year. We will continue to forward contract with customers who prioritize long term relationships and appropriately value our points of differentiation. The substantial portion of our overall backlog includes the opportunity to increase the base ASP through the application of adjusters if we are able to realize achievements within our current technology roadmap as of the expected timing delivery for the product. The end of the first quarter, we had approximately 40.2 gigawatts of contracted volume with these adjusters, which if fully realized could result in additional revenue of up to approximately 0.5 billion or approximately one cent per watt, the majority of which would be recognized between 2025 and 2027. This amount does not include potential adjustments, which is generally applicable to the total contracted backlog, both the ultimate module being delivered to the customer, which may adjust the ASP under the sales contract upward or downwards, and for increases in sales rate or applicable aluminum or steel commodity price changes. As reflected on slide six, our total pipeline of potential bookings remains strong with bookings opportunities of 72.8 gigawatts and increase to approximately 6.3 gigawatts in the previous quarter. Our mid to late stage bookings opportunity decreased by approximately 2.6 gigawatts to 29.4 gigawatts and now includes 25.8 gigawatts in North America and 3.3 gigawatts in India. Included within our mid to late stage pipeline are 3.7 gigawatts of opportunities that are contracted subject to conditions problems, which includes one gigawatt in India. As a reminder, signed contracts in India will not be recognized as bookings until we have received full security against the offtake. We're seeing meaningful increases in demand expectations driven in part by data center low growth. According to McKinsey, US data center power consumption is expected to reach 35 gigawatts annually by 2030. Much of this growth is supplied by renewable energy given that hyperscalers like Apple, Google, Meta and Microsoft are committed to 24-7 use of carbon-free energy. We believe that First Solar is strongly positioned to supply this emerging sector given our advanced technology and more sustainable product. Slide 7, I'll cover our financial results for the first quarter. Net sales in the first quarter were 794 million, a decrease of 365 million compared to the fourth quarter. Decrease in net sales was driven by an expected historical seasonal reduction in the Q1 volume of modules sold. Growth margin was 44% in the first quarter compared to 43% in the fourth quarter of 2023. This increase is primarily driven by a higher mix of modules sold from our US factories, which qualify for Section 45X tax credits, partially offset by higher warehousing and logistics costs in India and the US. SCNA, R&D and production startup expenses totaled 104 million in the first quarter, a decrease of approximately 7 million compared to the prior quarter. This decrease was primarily due to lower professional fees as we incurred certain costs to facilitate the sale of our 2023 Section 45X credits during the prior quarter, lower incentive compensation and the receipt of an R&D grant at our factories in Ohio. These reductions were partially offset by higher production startup expenses for our Alabama factory and Ohio manufacturing footprint expansions, as well as the reversal of certain credit losses in the prior quarter to improve collections for our accounts receivable. Our first quarter operating income was 243 million, which included depreciation, amortization and accretion of 91 million, ramp costs of 12 million, production startup expenses of 15 million and share-based compensation expenses of 7 million. The increase in other income and expenses was primarily driven by the prior quarter impairment of our strategic investment in cubic PV. The recorded tax expenses of 19 million in the first quarter compared to 27 million in the fourth quarter. The decrease in tax expenses was largely driven by excess tax benefits associated with share-based compensation awards and lower pre-tax income. The combination of the aforementioned items led to first quarter earnings for the losing share of $2.20. Next turn to slide 8 is to discuss select balance sheet items and summary cash for information. Our cash, cash equivalents, restricted cash, restricted cash equivalents and marketable securities entered the quarter at 2 billion compared to 2.1 billion at the end of the prior quarter. This decrease was primarily attributable to capital expenditures associated with our new US factories in Alabama and Louisiana and our Ohio capacity expansion, partially offset by operating cash flows from our module segment. Total debt at the end of the third quarter was $620 million. An increase of $60 million from the fourth quarter as a result of additional work and capital facilities support the ramp of our new India plant. Our net cash position decreased by approximately $0.2 billion to $1.4 billion as a result of the aforementioned factors. Cash flows from operations were $268 million in the first quarter. Capital expenditures were $413 million during the period. Continuing on to slide 9, our full year 2024 volume sold and P&L guidance is unchanged from our previous earnings and guidance call in late February. We're increasing our capital expenditures forecast by $0.1 billion with the intention of accelerating the cure conversion at our Vietnam facilities as well as at our third Perrysburg facility. We're also increasing our capital expenditures forecast by $1.2 billion with a view to advancing global fleet replication by more than one year from our assumptions at our recent analyst day, which could drive incremental upside to the current estimates additional revenue realizable through technology adjusters referenced earlier in the call. Our year end 2024 net cash balance guidance range has been revised due to four factors. A selective accommodation of customer schedule shift requests, potential sale by a customer of a US project development portfolio, our strategic approach to new bookings and higher capex. Firstly, as noted in our previous call, we have seen some requests from customers to shift delivery volume timing out as a function of project development delays. We continue to work with our customers to optimize delivery schedules for their contracted volumes to the extent we are able to accommodate them. Secondly, consistent with reports that some energy project developers are coming under investor pressure to pursue returns commensurate with those currently prevalent in fossil project development. We may therefore be examining their renewable procurement positions. We have indications that a customer is expecting to sell their US solar development portfolio. We understand that the potential purchase of these assets is a first solar customer with an existing module framework agreement. We expect that the development timelines for the projects within this portfolio will be delayed, including as a result of the sales process, pushing construction schedules out of 2024. Because the potential purchase of these assets is an existing customer with a framework agreement covering the revised construction schedules. And a portion of our backlog, the selling customer is among our limited contracts with a termination for convenience rights. We expect that this right will be exercised in connection with this portfolio sale. As discussed on previous earnings calls, if this termination for convenience rights is exercised, we will be owed a termination payment. We look to reallocate or resell these modules. Between selectively accommodating customer timing optimization requests and the expected termination for convenience by the aforementioned portfolio selling developer customer. We now expect a greater concentration of the shipments and sold volume in the second half of the year to be in Q4 versus Q3. As a result of this back-ending of deliveries, we expect the timing of some cash collection previously assumed in Q4 of 2024 to now occur in Q1 of 2025. Thirdly, relating to the revision of our year-end 2024 net cash balance guidance range, as a function of our highly selective approach to bookings, we're forecasting a reduction in assumed cash deposits associated with new bookings in 2024. And fourthly, as previously mentioned, we're forecasting higher CAPEX associated with our intention to accelerate Q1 conversion in our Vietnam and our third Ferris wheel facilities. So taken together, the combination of higher year-end accounts receivable balance due to accommodating customer timing optimization requests, the expanded termination for convenience by the aforementioned portfolio selling developer customer, and reduced deposits for new bookings due to our highly selective approach to bookings, as well as the increased CAPEX due to Q1 conversion in Vietnam and Perisberg, results in an updated year-end 2024 net cash balance guide of -$900 million. From an earnings cadence perspective, we expect our net sales and -to-sales profile, excluding the benefits of Section 45X tax credits, to be approximately -40% in the first half of the year and -65% in the second half of the year. We forecast Section 45X tax credits of approximately $400 million in the first half of the year, approximately $620 million in the second half of the year. With an operating expense profile roughly evenly split across the year, this results in a forecasted earnings to diluted share profile of approximately -40% in the first half of the year and -65% in the second half of the year. Now I'm going to call back to Mark to provide an update on policies.

Turning to slide 10, as we stated in the past, we believe the Inflation Reduction Act represents America's first durable solar industrial strategy and it's implemented with a -of-government commitment to on-shoring, together with strong and consistent enforcement of trade laws. It also has the potential to dismantle China's dominating influence over solar manufacturing value chains. Quite simply, the IRA pays a viable pathway for the U.S. to secure supply of critical clean energy technologies, enabling America's energy independence while capturing the value of our economy and creating well-paying enduring jobs. At the same time, and also as previously stated, while we are not the only American solar manufacturer to come into existence at the end of the last century, the grim reality is that, as a consequence of China's strategic objective to dominate the solar industry, we are the only one of scale to remain today. For the IRA to achieve one of its intended purposes, which is to spur U.S. manufacturing to the scale required to support the country's energy independence and climate goals, we must ensure that more companies that are aligned with U.S. ambitions and are committed to fair competition and innovation can scale, compete, and prosper. The purpose of the IRA will not be achieved under current unsustainable market conditions. The relentlessness of the Chinese subsidization and dumping strategy has caused a significant collapse in sell and module pricing, and threatens the viability of many manufacturers who may never be able to get off the ground or have the ability to finance and start up the growth of their operations. Given this unfortunate reality, together with our role as a market leader and the Western Hemisphere's largest solar module manufacturer, we have joined an alliance of seven solar manufacturing companies comprising the American Alliance for Solar Manufacturing Trade Committee, which last week filed a set of anti-dumping and countervailing duty petitions with the U.S. International Trade Commission and U.S. Department of Commerce to investigate unfair trade practices from factories in four Belt and Road Initiative countries in Southeast Asia, Cambodia, Malaysia, Thailand, and Vietnam, that are injuring the U.S. solar industry. This action takes place against a backdrop of growing momentum on the part of current U.S. administration to broadly address structural overcapacity across a range of industries in China. The administration's leadership in tackling this wide-ranging issue is remarkable, and in the past few weeks we have heard senior members of the administration, including Treasury Secretary Janet Yellen and White House climate adviser John Podesta, state in no uncertain terms that the President intends to act to level the playing field for American manufacturing. We welcome the actions focused on solar supply chains, including the reported potential withdrawal of the Section 201 by facial exemption and the pending expiration on the moratorium on tariffs related to anti-circumvention findings. These are clear actions that deliver on the President's intent. The context of our decision to support the petition starts with China's role in the global solar market. That country's long history of egregious subsidies, dumping of modules at prices believed to be below their cost, creation of structural overcapacity, engagement in circumvention of measures designed to address these factors, and other unfair trade practices have intentionally distorted markets around the globe, causing a significant decline in solar prices and denying international competitors access to a level playing field. As Secretary Yellen herself has recently said, China's overcapacity distorts global prices and production patterns and hurts Americans' firms and workers. China ended 2023 with more than twice the solar manufacturing capacity that was deployed worldwide last year, had record low factory capacity utilization rates in the first quarter of 2024, and despite these market distorting factors, is still expected to add 500 to 600 gigawatts of new capacity this year. With China expected to exit 2024 with sufficient capacity to meet global demand through 2032, it appears that the overcapacity is not a miscalculation, but an intentional feature of the Chinese government strategy to dominate clean energy supply chains. Notably, the four Southeast Asian countries in question account for 75% of U.S. solar imports in 2023 and were responsible for an approximately 140% increase in exports to the U.S. in the 18 months following the passage of the IRA, compared to the 18 months preceding August of 2022. While the current environment, if allowed to persist, will provide a short-term pricing benefit to developers, allowing these practices to continue denies non-Chinese solar manufacturers the opportunities to scale and compete on a level playing field, while multiplying installers' and developers' exposure to the risk of overconcentrated supply chains. A word about the impact on the potential tariffs resulting from this case on module pricing. While some may choose to reference triple-figure tariff rates and claim that these types of rates will cause severe disruption in achieving our deployment goals, the reality is far different. Currently, Chinese AD and CVD rates range from 15 to 50% for most cooperating companies. Secondly, projects should not be affected as historical module pricing has already been baked into those project economics. Finally, from a supply standpoint, there is, contrary to the view expressed by some industry participants, more than sufficient product available to serve as current and anticipated U.S. demand. The recombination of currently warehouse modules, fairly traded imports, and the capacity of Western manufacturers such as First Solar. As noted earlier, we expect to exit 2024 with over 21 gigawatts and 2026 with over 25 gigawatts of global nameplate capacity, all of which is available to serve the U.S. market. Time and again, we have heard about the detrimental effects of enforcing trade laws on the books on deployment. And yet, time and again, we see annual records set for solar deployment in this country. In our view, the real risk for U.S. solar deployment comes from the long-term detrimental effects of allowing China's unfair trade practices to continue, which could result in a decimated domestic solar manufacturing base, exceeding all pricing power, and a complete control of supply chain distribution to a highly adversarial nation. This represents a strategic risk to developers of solar assets, the clean energy transition, and U.S. energy independence and economic prosperity. U.S. energy independence isn't just about producing electricity at home. It's about having the supply chain and R&D for future advancement at our nation's disposal as well. Historic, -a-lifetime policies like the IRA, while transformative of our country's energy transition and our industry, are not enough to deliver independence due to China's unfair trade practices. We believe the IRA must work in conjunction with strong and effective trade measures that level the playing field for investments it catalyzes. We must think of government policy in the terms of a three-legged stool, the first leg is industrial policy, such as the 45X Advanced Manufacturing Tax Credit, which incentivizes investment in American manufacturing. This provides solar, wind, and battery storage, and other manufacturers the momentum needed to scale domestically, drive down costs, and spur cycles of innovation to maintain America's technology leadership. The second leg is demand and demand-side drivers. In the U.S., demand continues to grow, but the domestic content bonus enhances this growth by creating a crucial parallel demand-side driver to incentivize purchasing the output of these American factories. Through the introduction of a bonus to the investment or production tax credit, accessed by solar generation, asset owners, if projects procure domestically made content, including solar panels. The third leg is a level playing field that addresses anti-competitive market distorting behavior, such as dumping and circumvention. While industrial policies such as IRA has the power to incentivize domestic investment in significantly growing this industry, the ability of those investments to endure is enabled by a corresponding trade policy. This level playing field ensures that domestic manufacturing investments incentivized by American taxpayer dollars are incubated as they scale. Take away any one of the legs and you render the whole apparatus unusable. Look no further than Europe as the one example of an unsustainable environment for clean energy manufacturing, not just in solar, but wind as well, due to the lack of effective trade measures to support policies that seek to incentivize the growth of a domestic supply chain production base. There can be no doubt that trade policy is intrinsic to the efforts to build a resilient American solar value chain and we believe this view has bipartisan support. This dynamic goes well beyond being just a risk to our company. It threatens the viability of all aspiring US-based manufacturers who may never be able to finance the startup of growth of their operations. Our petition is founded on the thesis that we believe a level playing field, one that allows manufacturers to compete on the basis of their own merits, is essential for driving American innovation and competitiveness, promoting quality and enabling technology diversification that enhances developer choices. We also believe that everyone benefits from a thriving, resilient domestic manufacturing industry enabled by a level playing field apart from the positive impact of domestic investment, job creation, and economic value, which is reflected in the Economic Impact Study commissioned by us and conducted by the University of Louisiana at Lafayette that was released in February. Domestic manufacturing also insulates developers and their pipelines against the risk of disruption resulting from global supply chain issues or potential geopolitical crises. We are encouraged by our customers and our order book, domestic manufacturing supply chain, build resiliency into development pipelines, providing certainty of pricing and supply, and ensuring continuity even in the face of widespread international supply chain disruption. Again, I want to be clear, we invite competition and free trade. All we seek is that the competition and trade is fair, enabled by a level playing field where all companies and companies are at their best. The petition is about enforcing the rule of law and holding rule breakers to account, enabling a level playing field for domestic manufacturing and supporting the efforts to scale American solar value chains. Importers of solar panels from manufacturers playing by the rules and operating in compliance with U.S. trade laws have little to fear from this petition and any potential investigation. The rapid of models at prices below cost also adversely impacts the Indian and European markets, both of which are seeing record levels of imports and low pricing. Referring to my earlier comments about thinking of policy as a three-legged stool, the principle also applies to India, which offers supply-side drivers in the form of production-linked incentive programs, deployment targets that offer non-tariff barriers such as the approved list of Module and Manufacturers, or ALMM. We are pleased that the government has decided to revise the mandate of its ALMM program and first solar was added to this list on April 29th. We believe that enforcing this vital non-tariff barrier will support the effort to level the playing field for domestic manufacturers, especially if combined with a similar program that is based on cell manufacturers that could materialize as more domestic cell capacity comes online in the country. However, we remain concerned about the level of dumping in India and its potential to undermine the country's manufacturing ambitions. While ALMM applies to fully assembled modules, it does not safeguard the market against the dumping of solar cells or other upstream components, which undermine efforts to scale vertically-integrated manufacturing. With this in mind, we are seeking an investigation into the dumping of solar cells in the Indian market. We believe that investigation is necessary to unfair, market-distorting behavior that denies domestic manufacturers in India a level playing field on which to compete as the industry scales. Finally, moving to Europe, which lags the U.S. and India in its response to dumping near total dependency on Chinese-made solar panels. While Europe currently appears to not have the political will to consider trade barriers that could address dumping, we are encouraged by decisions to use the EU's foreign subsidies regulations to investigate potentially illegal subsidies to Chinese solar and wind manufacturers. We continue to monitor developments in Europe and engage with stakeholders there as we seek out opportunities to advocate for a new energy field in that market. To conclude, Alex will now summarize the key messages from today's call on slide 11. Demand

continues to be robust with 2.7 GW of net bookings -to-date with an AST of 31.3 cents per watt for adjusters, leading to a resilient contracted backlog of 78.3 GW. Our continued focus on manufacturing technology excellence resulted in a record-quantity production of 3.6 GW, and our Alabama and Louisiana factories and our R&D Innovation Center Brodsky Development Line remain on schedule. We continue to anticipate launching CURE at our lead line factory in Ohio in Q4 of this year. In addition, we are increasing CAPEX by 0.1 billion this year to accelerate CURE conversion at our Vietnam facilities as well as at our third Perrysburg facility, with a view to advancing global fleet replication by more than one year Financially, we earn $2.20 per diluted share and we earn the end of the quarter with a gross cash balance of $2 billion or $1.4 billion net of debt. Maintaining our full year 2024 volume sold and P&L guidance, including forecasted full year earnings per diluted share of $13 to $14. And with this, we conclude our platter of marks and open the call for questions. Operator?

And everyone, just a reminder, it is star one and we'll go first to Mark Strauss, JPMorgan.

Great. Thank you very much for taking our questions and appreciate all the color. Obviously a lot going on right now. Mark, I wanted to start with your comments on India. So good to see your attitude to ALMM list. I know it's still somewhat early, but can you just talk about what you're seeing as far as pricing in that market since the ALMM went back into effect? And how are you weighing shipments to that market versus potentially shipping back to the US?

Yeah. All right. Thanks, Mark. Look, since the ALMM has gone back into place, we are seeing pricing move up in the market. Again, ASPs generally in India are much lower than what we see here in the US, but they have moved up 5% or 10% from where we saw them before the ALMM so that's moving in the right direction in that regard. I do think that with some of the other initiatives that we have in place, and especially as we move forward towards the latter half of this year, I think we could see even firmer pricing as we exit this year going into next year, which is encouraging. In the interim, we are shipping a lot of product into the US. So this year we'll produce about 2.6 gigawatts and we'll be shipping about a gigawatt maybe slightly north of that into the US market and really most of the first half shipments that we'll see or really into Q3 even, are going to be from India into the US market at this point in time. So that continues to be an option for us. It's also, like I said, in our prepared remarks as we scale up to 25, 26 gigawatts from a global fleet standpoint. All that product is really available to address and serve the needs of our US customers. We'll continue to figure out what's the right optimal allocation in terms of how much data is in the Indian investment market and what comes into the US. But I do see pricing dynamics improving in India since the elements have been put back in place.

The next question is Andrew Percoco, Morgan Stanley.

Thanks so much for taking my question. So I guess over the last few quarters, you guys have been highlighting that you expect bookings growth to slow. But I'm just curious now that you've got some headlines around the potential removal of the bifacial exemption and the new ADCED petition and Yellen's commentary on China. I mean, shouldn't that be an accelerant for bookings? You know, I get that you guys want to be selected because of your capacity position. But just curious on your updated thoughts on what you're seeing and expecting for bookings for the remainder of the year now that policy seems to be moving in your favor. And you've also got growing demand for clean energy and some of the AI data center markets that you guys have alluded to earlier in the call. Thank you.

Yeah, so what I would say right now just in conversations with our commercial team and our chief commercial officer, clearly pricing in the market and it has changed. As soon as there was an indication, really it's starting to increase three, four cents since the beginning of the last year and then we continue to see a little bit more momentum now that the petition has been announced and some of the other statements that have been made by the current administration which are all very supportive and constructive. So we are seeing more activity, more engagement. You know, we're encouraged. You know, we have taken our assumption around bookings down a little bit. We did that largely with a lens of being conservative, of waiting to see exactly what we're starting to see and the momentum is starting to pivot back in a more constructive way and we'll see how that pans out. But a lot of engagement, a lot of customer meetings. I'll be actually meeting with a number of customers next week as well with our commercial team and we'll get a better pulse at that point in time. But I'd say that the sentiment clearly has changed over the last three, four weeks.

And up next is Philip Fenroth, MKM.

Hey guys, thanks for taking my questions. First one is related to the termination of convenience clause. Can you talk about how much of a buffer you guys might have to meet your guide even if all the terminations for convenience clauses in 24 and 5 are exercised? And then secondarily, as it relates to pricing for future bookings, have you already started to see the benefits of the recently filed Southeast Asia ADCVD petitions? My sense is pricing has already maybe started to move. Just curious if maybe you saw that in some of the bookings you recently announced. And then finally, as always, the technology, we recently wrote about a Japanese startup that announced a record perovskite and SIGS lab efficiency of close to 27%. Can you give us an update on your tandem technology research and specifically when do you think you can make a definitive decision on the next-gen technology so that the commercialization path can be realized? Because our understanding is that it might take three full years. So you kind of need to maybe lock it in today in order to commercialize in the next three years. So thank you for taking the questions. I really appreciate it.

Yes, so I'll take the termination for convenience and hand it over to Mark. We haven't given a specific number related to this year, but if you note in the guide we're maintaining our volume sold guide at 15.6 to 16.3. So we're working on the assumption that if this volume were to be terminated, which has not happened yet, we've just been having discussions with the customer who's indicated as the buyer being someone who already has volume from us and given the timeframe of those deals pushing out a little bit that they are likely to, if those all happen, then they would be likely to exercise that termination for convenience right. That's a customer that we have a larger order book with. They've already taken delivery of over 50% of the volume under that order. They will continue to take delivery of some of the remaining that have been terminated a portion of that backlog now. As I said, we will look to either reallocate to others or resell that volume, but it is one of the reasons you're seeing the cash guide come down a little bit is that just given we're already into Q2, if we reallocate or resell now it's likely not going to be until late Q3, early Q4 at best before we move that volume to someone else. So even though we're maintaining is right now the guide hasn't changed what we're seeing this year we think is manageable with that range that we've given.

Yeah, and then on the pricing side, so I made this statement on one of the other questions as well. We clearly are seeing the benefit in the market pricing is clearly firmed up and is moving up. If you look at just what we booked this last quarter before any of the adjusters is 30 cents, if you look at the graph that's in the presentation slide you can see that really none of that happened in April. So all that was really bookings that happened in the first quarter which is really before any of the indications of this case started to get into the marketplace. So none of that really is reflected yet into, so none of that impacted the Q1 bookings that we just reported. But we are seeing movement into the market where pricing is firmed up, moving up and they're looking to move quicker than they would have otherwise because of the various uncertainties and trying to figure out the implications to the extent for their development pipeline and projects that they're looking to build out over the next several years and also knowing that the order book is already tight with Fursolar and we're somewhat still supply constrained in the grand scheme of things. As it relates to the TAN technology we continue to move in progress that from a couple different paths. One is our thin film SIGS tandem product. The other is continuing to work on a thin film Crisland technology and then still advancing work on perovskites and it's kind of alluded to in our comments about next generation innovative disruptive technology and the advantages of our R&D Innovation Center that is just, we'll be starting up here by the end of this quarter, beginning of next quarter and then our perovskite pipeline between the two of them with almost a half million dollar investment that we made since we announced those decisions over a year ago. What I'd like to do right now is I think those investments and getting those up and running are going to be clearly operational and informative of understanding of where we are with our technology as we produce full-size models and we're going to be able to really understand them in terms of their reliability. It's one thing to produce a record sell or even a module. The other is how will it endure and stand up to the elements in terms of the conditions that we need to from a reliability standpoint and no different than some of the reporting that's coming out and we've been hearing about this over the last six months with TopCon. TopCon and when you look at some of the performance and reliability that we're seeing right now is significantly challenged and not hitting a performance level that would be anywhere close to acceptable to the market and nowhere close to its prior technology perk. So we've got to be very careful and mindful it's not just working within the labs it's also been producing it at scale and then getting it into the field and testing and getting comfortable with long-term reliability and viability. So I don't have a specific indication of how it will go until as we're making good progress. I think some of the R&D Innovation Center and the Froskite pilot line that we're working on right now and that will be up and running will have much better insights in terms of where we are in commercialization and tying the market as we exit this year.

The next question is Brian Lee, Goldman Sachs.

Hey guys, good afternoon. Thanks for taking the questions. I guess I know a lot of focus on the $0.03 to $0.04 roughly you've been getting that sense or feedback since April and then that doesn't even include the more -to-date kind of ADCVD feedback. So if we look at the bookings you know $0.31 this quarter not reflecting any of that that's to suggest you're having discussions real time around kind of a mid $0.30 per watt maybe even going higher off of that. Is it fair to assume that level is in play over the next couple quarters if you think about booking future volume here mid to high $0.30 and could we see it that quickly in the next couple quarters? And then just secondly Alex you you kind of quickly alluded to data center demand for electricity that's obviously gaining a lot of attention. I mean if you look historically I think you guys have had meaningful indirect exposure to some of the corporates building some of that stuff out and I would like to hear your thoughts or give us some sense of your best estimation of what percent of your demand in the US is coming from those types of customers data center driven corporate etc. and what you think that could become over time as you kind of look at that as being a new you know growth vector if you will. Thanks guys.

On the pricing one Brian look I'm happy with what we're seeing right now I don't want to commit to you know an ASP you know in the mid 30s is what we'd expect to be able to realize at this point in time what I'm trying to indicate is that we have seen a move in the market pricing and there is a difference between just make sure we're clear a difference between you know international versus domestic there's an adder for the domestic product as I said before we'll be priced at a higher ASP than not so but what I would say is that we're encouraged and you know our whole strategy for this year is to be patient and continue to move forward with bookings at attractive ASPs and you know as we said before this business model is so levered to growth and contribution margin if we can get to a stable ASP environment as we book out over the next several years and grow the production capacity that we have in front of us and get our cost out as we continue to do leverage our fixed costs across our overhead you know there's pretty pretty strong operating margin expansion and that we can realize if we do that well

yeah so I don't know if I have a good number for you I would say if you look at the companies that we talked about in the call the ones who are going to be adding to the data send demand significantly Apple, Google, Microsoft, Meta they value certainty even more than the utilities so if you think about utilities and they can deal with a level of failure or delay in a way that these guys can't if they have commitments to renewable targets at certain times so they value certainty and they certainly value the reliability of where the product is coming from and the concerns around slave labor so we tend to be the first port of call for many of these companies or the developers who are doing the work for them so in many cases developers will come to us saying that they have had discussions with these people and that they have a preference to work with those products especially for US based demand so I don't think I have a percentage I can give you but I would say that generally we're going to be the favored supplier to projects that are going to be supplying power to these data centers for these kind of asset owners

Hi Moses Sutton from BNP Paribas has the next question

Thanks for squeezing me in what would be the biggest consideration in determining whether you add another factory I know the paper bookings at the National East Coast flow considering how far out you booked but if the industry needs let's say 50 to 70 gigawatts per annum by late decade of ground down in total and considering your market share position is further improving could at least another factory be viable is watching into connection bottlenecks the poly based competition unknowns as they ramp up in the US or just waiting on developer visibility to get more confident here for these out years

but I think the framework that we use is pretty consistent with what we've done in the past one is whatever we do we want it to be demand driven and if we get confidence especially as we progress down through the second half of this year around a strong enduring demand profile that we would need to the balance this decade and one of the catalysts that we reference already is what's going on with data centers and there's a lot of activity going on there right now so first off starts with demand the other one just to make sure is a stable policy environment and so what I am doing and what I think I said before and a couple of other calls that I've had is I've told my team is we need to be ready to go we need to figure out our supply chain so we need to have our glass strategy we've got to think about tellurium we've got to think about site selection process and access to power and ready to go as quickly as possible through the other side of the November elections that we believe we have a highly predictable and stable policy environment that we can then make informed decisions from that starts to come into the mix then I think we're in a much more positive position to think about further capacity expansion so that's what we're doing and we're going to be as nimble as possible and if all those we start filling out our scorecard a little bit there with the key dependencies that we need to make sure that we're ready to go to further capacity expansion we'll be ready to go as quickly as possible and what we've proven is that once we make decisions we get projects built, constructed tools installed and up and running and ramped probably best than anyone else in this industry and we want to continue to be able to do that I know there's been at times I've heard which someone was caught me by surprise that there was some concern about execution risk because we exited last year at 12 gigawatts and we're going to 25, 28 and 26 that in my mind is the least of things that keep me up at night we do this well and we've demonstrated that and like I said our current activities that we currently have on going right now are progressing extremely well and on schedule and we know if we need to continue to grow off the base we have right now we truly have capability doing that we just want to see the demand in the right policy environment to make that decision

Up next is Zikram Bhagari Siddhi Zikram your line is open please check your mute button

Good evening everyone I realize five in one question is the way to go so I'm going to try that Mark you previously commented excess time in the US was nearly 30 to 40 gigawatts at year end 23 a lot of debate about how much that excess inventory is now I was wondering if you can share some color on where you think that stands and the reason for debate is the steep price increase as soon as the petition was filed indicates some level of concern that the excess inventory might not be that high and then as you mentioned delays in potential cancellation from hydrogen customers in the past is there any way you can take advantage of the increased spot pricing in the market and then finally a couple of press releases about bookings in the last two days were these contracts done in first quarter given the chart on slide five shows no bookings since March and if these contracts were entered into after first of May can you share the price on those bookings as well thank you

all right please come back with me on some of the things I want to make sure I got some of the questions as I start with the last one the bookings that we reported really were all done from when was our that's 20 whatever our earnings call that's 27th or 28th whatever the date was and really through March 31st so that 854 megawatts there's very little of that that happened in the month of April that's probably what I was trying to say before is that the indication of a potential case against Southeast Asia really wasn't into the market at the time that we were negotiating and closing on that booking buying so all that booking volume 854 which is incremental was happened pretty much in the month of March the quarter to date number 2.7 that we referenced as well and again all that happened before there was any real indication of some of the policy changes or even some of the statements that the administration has made here recently the inventory I think the other question that you you asked was about the inventory levels and how much inventory may be in the U.S. of 30 gigawatts maybe even more that sits in the U.S. that's been brought in partly because of the moratorium that was provided on the circumvention we've heard that type of number in the past I have no real way to to validate that but I do believe that there has been looking at the import records an excessive amount of product that has been brought into the U.S. at a rate that's much higher than what's on demand which all is going to have to be managed and worked through and there's issues that are going to have to be dealt with once this moratorium is over in theory all that inventory has to be deployed and installed by the end of this year to monitor and to ensure that it truly is happening it's uncertain to me how that would happen to be honest with you so some of that inventory may be subject to tariffs if that were not to happen then you asked me about the other two can repeat there was a question around hydrogen and I think there was a question around spot prices unless Alex you got either one of those

I think just related to spot I mean we talked before there isn't a huge immediate spot market new 30 scale solar in the same way that there is in Rezi so when we talk spot we're still talking for projects that are two, three quarters ahead maybe just not eight, ten, twelve quarters ahead so when I think about the opportunities for us to do that in the future if we have some short-term holes open up with things like termination convenience there is an opportunity yes for us to capture what I think you would call spot on a utility scale basis which is forward a few courses I don't think there's a lot of ability to sell meaningful volume on an immediate basis given the timelines for permitting and development of a utility scale project but certainly if we have opportunities around any termination for convenience or if we have other customers that have the ability if anyone else looks for products and wants to have product we're willing to work with customers in that way there could be some opportunity there we also said we continue to be cumulatively oversold through 2026 so we continue to do a almost daily balancing of our supply demand and work with our customers to see where things need to move both in and out

and then maybe if you could repeat your question on hydrogen or clarification on any of the things we responded to

we might not take the delivery you could feed out those volumes in the spot market and benefit from that but Alex already answered and next we'll

hear from Cassie Harrison Piper Stanley

thanks for taking the question at this point I'm glad I made it so I'm going to follow Vikram and just ask a bunch at once as well first one is on ADCVD does your alliance expect to ask for critical circumstances if the Department of Commerce accepts your case and then as we think about just critical equipment shortages in the market I'm just curious if you know what proportion of your customers have secured all their critical equipment high-capacity circuit breakers for their project development needs over the next several years just given how long those lead times are and then just finally as it's indicated in your queue if so it seems like your cogs per watt X credits have come down quite a bit and I was just wondering if you could talk to some of the drivers of lower cost here thank you

let me just take the credit one the credit was higher than that so we had 194 in the quarter and then the guide was 190 so it's a little bit over if you go back into the queue there's a few moving pieces in the government grants receivable

in terms of the ADCVD which you know critical circumstances are effectively retroactivity of some of these to me that's facts and circumstances that will evolve it depends on what happens you know it's extremely unfortunate in my mind that China has chosen to do what it's done so far I think we were in a position a balanced environment that we believe it was adequate for domestic industry to grow and scale and create domestic capabilities China clearly not only here in the US but in India is aggressively trying to prohibit that from happening and given the amount of overcapacity and pricing and just to be clear you guys are listening to all their comments and everything else you know I think Dago made a comment recently that -80% of the polysilicon guys are selling below cash cost right for a JNCO but for a one-time item and including their subsidy income their last quarter they lost $3 a share so everyone's it's a bloodbath and if China wants to continue to do that let them do that on their own accord right we should not have to be exposing our domestic industry here in the US and our domestic industry in India as an example to China's behaviors right we need to be able to find a way that allow companies to compete and buy China's oversupply and abusive and aggressive behaviors so if imports stay relatively stable as we go forward if pricing on those imports stay relatively stable then I think there's less of a likelihood that critical circumstances would be requested but to be determined and again this is not just the first solar this is the coalition that has to make that call but to me it's around facts and it's a question around equipment and critical procurement and critical components transformers and everything else a number of our large customers are very sophisticated and they have gotten ahead of this procurement and supply chain constraints as best they can in some cases people are ordering spares and other things that they can utilize across their development portfolio and trying to de-risk as much as they can and in no way you can insulate yourself 100% from that supply chain disruption and constraint but we try to work as closely as possible that's also why when we do our we're over allocated on an annual basis when we then step back and assess the allocation against that we do try to work as closely as we can with our customers to understand where they are in their development stage of their particular projects and then things get moved out accordingly but at any point in time there's always subject to change and what we're trying to do is create some resiliency as best we can as we enter into a year and hopefully manage some of that during the year as best we can as projects move around

and everyone that does conclude our question and answer session it does also conclude today's conference we would like to thank you all for your participation today you may now disconnect