First Solar, Inc.

Good afternoon, everyone, and welcome to First Solar's third quarter 2024 earnings call. This call is being webcast live on the investor section of First Solar's website and 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 First Solar Investor Relations. You may begin.

Good afternoon, and thank you for joining us. Today, the company issued a press release announcing its third quarter 2024 financial results. A copy of the press release and associated presentation are available on First Solar's website at investor.firstsolar.com. With us today are Mark Whitmer, Chief Executive Officer, and Alex Bradley, Chief Financial Officer. Mark will provide a business and technology update. Alex will discuss our bookings, pipeline, quarterly financial results, and provide updated guidance. Following the remarks, we will open the call to questions. Please note this call will include forward-looking statements that involve 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 Whitmark, Chief Executive Officer.

Good afternoon, and thank you for joining us today. As we approach the end of 2024, we remain pleased with the progress made across our business, navigating against the backdrop of industry volatility and political uncertainty, with a continuous focus on balancing growth, profitability, and liquidity. As noted at our Analyst Day in late 2023 and our previous earnings call, our story is about the value of long-term strategic decision-making, underpinned by differentiated technology and business model, which endeavors to drive value creation for our shareholders and partners. We expect that this disciplined long-term approach will allow us to work through the outcomes of the upcoming U.S. elections, as well as continued volatility across the solar manufacturing industry. Beginning on slide three, I will share some key highlights from the third quarter. From a commercial perspective, we continued our highly selected approach to contracting with a net 0.4 gigawatts of new bookings since our last earnings call. This brings our year-to-date net bookings to 4 gigawatts and our total contracted backlog to 73.3 gigawatts with orders stretching through 2030. From a manufacturing perspective, while we're pleased with record production of 3.8 gigawatts in the quarter, our financial results were impacted by a product warranty charge of $50 million due to manufacturing issues. which we have identified and taken actions to address related to the initial production of our series six, series seven, excuse me, product. Primarily attributed to variability in the effectiveness of the glass cleaning process at the beginning of our production line and an error in our process of predicting the engineering performance margin. We inaugurated our new 1.1 billion Alabama facility, which when fully scaled, adds 3.5 gigawatts of vertically integrated nameplate solar manufacturing capacity. The start of commercial operation at the Alabama facility, along with our under construction Louisiana facility, which remains on track to begin operations in the second half of 2025, keeps us on course to achieve our projection of over 14 gigawatts of annual US nameplate capacity and over 25 gigawatts of global nameplate capacity by 2026. This growth is expected to support an estimated 30,000 direct, indirect, and induced jobs in the U.S. alone, representing $2.8 billion in annual labor income, demonstrating the significant contribution to our nation's economic growth that high-value solar manufacturing can provide. Turning to technology, as planned, we are launching QR production at our lead line in Ohio in Q4 this year. We intend to launch this production in a phased approach, initially producing and selling approximately 0.4 gigawatts of CURE product through Q1 of 2025. Upon successful field performance validation following the deployment of this volume of sold CURE product, we intend to permanently convert the Ohio lead line to CURE in Q4 2025, as well as replicate CURE across the fleet, beginning as scheduled with our Vietnam and third Ohio facilities in time to start capturing upside from our contractual revenue adjusters. In addition, at our new perovskite development line in Perrysburg, this quarter will be the first time we'll be able to run technology samples through an automated process that simulates in-line manufacturing conditions as we accelerate our efforts to develop the next breakthrough in thin-film photovoltaic technology. With regard to intellectual property, we have recently sent notification letters to Tier 1 solar manufacturers that we believe are infringing on First Solar's Topcon Patent Portfolio, which I'll discuss in more detail later in the call. While Alice will provide a comprehensive overview of the third quarter, 2024 financial results, I would like to highlight our third quarter earnings per share of $2.91, which includes the $50 million product warranty charge referenced earlier. Finally, our leadership in thin film technology and track record of investing in innovation led to First Solar being recognized by MIT Technology Review's annual list of climate tech companies to watch, the only solar technology and manufacturing company to be included in this year's list. Furthermore, we were also proud to make our debut as Times Magazine's World's Best Companies in 2024 list. Moving to slide four, we recently published our annual sustainability report and would like to take this opportunity to share a few highlights. In our 25th year, we are doubling down on our commitment to the principles of responsible solar, which drives our company's environmental, social, and governance strategy, leadership, and differentiation. From the health and environmental benefits of achieving greater avoidant emissions, through our ultra-low carbon solar technology to our longstanding leadership in PV recycling and commitment to human rights, transparency, and credible third-party validation, we continue to establish new standards while challenging the industry as a whole to do better. Over the past year, we continue to drive environmental, social, and governance progress as part of our culture of continuous improvement. We successfully reduced our water and waste intensity per watt produced, and increased the percentage of women in our workforce in 2023 relative to the preceding year. We continue to build on our longstanding leadership position in PV recycling in 2023, achieving a global average material recovery rate of 95% across our recycled facilities. Today, we operate high value recycling facilities in the US, Germany, Malaysia, Vietnam, and India. A shift to producing verifiable ultra-low carbon solar is needed to ensure that the global PV manufacturing industry does not undermine its role in its fight against climate change. Although the industry currently accounts for a small portion of global emissions today, that's changing. A report by Clean Energy Buyers Institute warns that a business-as-usual approach dominated by energy-intensive crystalline silicon would lead PV manufacturing to exceed aluminum manufacturing, currently the fourth most emission-intensive industrial commodity by 2040. We are proud to be leading the charge by having the world's first solar modules to achieve EP Climate Plus designation and meet the industry's first ultra-low carbon solar thresholds for global use. Turning to slide five, I would like to address the numerous intellectual property challenges concerning crisp and silicon cell technology that are currently ongoing within the industry. Historically, PV industry intellectual property claims, particularly related to crisp and silicon technologies, and especially among Chinese headquarter producers, have been limited and seldom asserted. This has largely been due to the understanding that cell-related technology advancements were effectively open source with patents and know-how freely shared within the Chinese manufacturing ecosystem. Today's intellectual property landscape within the solar manufacturing sector has clearly changed. As shown on slide five, a number of leading manufacturers are asserting patent-related claims against one another. Notably, a number of these actions are focused on alleged infringement of top-con patents. As just one example, earlier this month, Trina filed a Section 337 complaint at the U.S. International Trade Commission, or ITC, against the funds of Rennergy and Adani. According to the complaint, Trina is seeking to exclude TopCon solar cells, modules, and components from importation into the United States due to alleged patent infringement, which the ITC is now investigating. As disclosed earlier in the third quarter, First Solar also possesses a TopCon patent portfolio through our acquisition of TetraSun in 2013, which we have begun to leverage as part of our ongoing efforts to develop the next generation of PV technologies. Our TopCon portfolio includes patents and patent applications in the United States, Australia, Canada, China, Europe, Hong Kong, Japan, Mexico, Malaysia, Singapore, South Korea, Vietnam, and the United Arab Emirates, with patent terms extending to 2030. Note, regarding the India market, although First Solar does not possess a top-con patent in India, several jurisdictions where we do have patents are sourcing India-bound cell manufacturing and exports. We believe we will be able to assert our patent rights in these jurisdictions against manufacturers and exporters of infringing India-bound products. While a number of other market participants are claiming they too own Topcon patents, it is important to note that as with any mature technology, it is not unusual that multiple key patents may be held by multiple unrelated parties. Without ownership or license covering, every relevant patent used in the manufacturing process a manufacturer does not have the freedom to produce and sell an otherwise infringing product. Since our July announcement regarding First Solar's Top Gun patent portfolio, we have advanced our investigation into several leading Christmas silicon solar manufacturers for potential infringement of our patents. The result of these efforts has enhanced our conviction that we possess fundamentally valid and enforceable patents in relation to Top Gun cell technology. To that end, we have recently begun sending letters to various solar manufacturers shown on slide five under the letterhead of a law firm with one of the world's leading intellectual property practices, providing notice to each recipient that they are using First Solar's Top Gun patents without a license and reserving First Solar's rights in their entirety. We are currently in negotiation with multiple interested parties and rights to our TopCon patent portfolio. Finally, during the third quarter, we achieved a victory upholding the validity of our Chinese TopCon patents in the Patent Reexamination and Invalidation Department, or PRID, of the China National Intellectual Property Administration, which is the patent office in China. The PRID upheld the validity of all 17 claims of our Chinese Topcon patent against a number of asserted prior art references. Together with our aforementioned outreach to manufacturers aimed at discussing potential structures to authorize the actual or planned use of our Topcon patents, our recent victory in China provides third-party validation of the strength of our Topcon patent portfolio. First Solar has long held a commitment to fundamental concepts of respect for the integrity of property rights. As shown on slide five and reflected in numerous public announcements and public reporting over the past year, First Solar is not alone in seeking to protect its intellectual property rights, with a number of other leading manufacturers taking actions to protect their rights as well. To the extent these manufacturers, the majority of which are Chinese-based, continue to report significant financial loss in their race to the bottom, it is reasonable to expect that they will continue to aggressively assert these claims. We believe the IP-based uncertainty surrounding crystalline silicon manufacturers' freedom to manufacture and sell Topcon solar products and the potential complications for a PV project utilizing potentially infringing solar cells should be taken in consideration by developers, project owners, and PPA off-takers, as well as debt and tax equity financing parties. In addition, we believe the current intellectual property landscape, particularly as it relates to top-come-sell technology, underscores one of First Solar's key competitive differentiators of delivering a unique proprietary, homegrown, cadmium telluride semiconductor technology, in contrast to the highly commoditized crystalline silicon modules. And I'll turn the call over to Alex to discuss our bookings, pipeline, and finances.