First Solar, Inc.

Thank you for joining us on today's earnings call. Joining me today are our Chief Executive Officer, Mark Whitmore, and our Chief Financial Officer, Alex Bradley. During this call, we will review our financial performance for the quarter and discuss our business outlook for the remainder of 2025. Following our remarks, we will open the call for questions. Before we begin, please note that some statements made today are forward-looking and involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We undertake no obligation to update these statements due to new information or future events. For discussion of factors that could cause these results to differ materially, please refer to today's earnings press release and our most recent annual report on Form 10-K, as supplemented by our other filings with the SEC, including our most recent quarterly report on Form 10-Q. You can find these documents on our website at .FirstSolar.com. With that, I'm pleased to turn the call over to our CEO, Mark Whitmore. Mark.

Good

afternoon,

thank you for joining us today. Beginning on slide three, I will share some key highlights from Q2 2025. We recorded 3.6 gigawatts of module sales during the quarter above the midpoint of what we forecasted on the previous earnings call. Our Q2 earnings per diluted share came in above the high end of our guidance range at $3.18 per share. From a manufacturing standpoint, we produced 4.2 gigawatts in Q2 with 2.4 gigawatts produced from our US facilities and 1.8 gigawatts from our international facilities. We progressed our domestic capacity expansion during the quarter, continuing to ramp up at our Alabama facility. As of today, equipment installation and commissioning at our Louisiana site is complete. We have begun the integrated production run and expect to complete plant qualification in October. Once fully ramped, the facility is projected to boost our US nameplate manufacturing capacity to over 14 gigawatts by 2026. As it relates to technology, we have seen further improvements regarding our Cure technology platform from both a performance and a manufacturability standpoint over the course of the quarter. Recent field data from deployed Cure modules continues to validate the enhanced energy profile expected from the improved temperature response and bifaciality of Cure. This field data is consistent with the superior degradation rate that we have seen through laboratory accelerated life testing. In addition, progress continued during the quarter at our new Perovskite development line located at our Perrisburg campus. The line on track for full inline runs in August is expected to produce small form factor modules featuring a Perovskite semiconductor. We have continued to timely meet our internal metrics for our Perovskite development program, including the achievement of initial stage efficiency, stability, and manufacturability objectives. We are pleased with the progress we are making towards commercializing our Perovskite technology over the next several years. Finally, we are proud to have published our annual corporate responsibility report yesterday. This report highlights First Solar's efforts to lead the way in strengthening support for solar by leveraging and extending our demotiation. As noted in the report, our vertical integration drives resource efficiency, enabling our products to deliver up to five times greater energy return on investment than crystalline silicon panels made from components manufactured in China. This not only supports our nation's energy independence, it helps unleash American energy dominance. We also continue to achieve and surpass key metrics. For example, 2024 marked the second straight year that we have nearly doubled the volume of water we recycle, conserving resources in water scarce regions. We continued our focus on reducing waste, diverting 88% of waste from disposal, and increasing recycling, recovering a global average of 95% of materials from recycled panels. These are among just a few of the highlights of our approach to responsible corporate stewardship that can be found in the report, which is available through our website. Turning to slide four, I would like to focus on the current US policy and trade environment. From an industrial policy standpoint, earlier this month, the president signed the new reconciliation legislation that we believe places first solar at a greater position of strength than it was following the passage of the Inflation Reduction Act of 2022. As it relates to Section 45X, advanced manufacturing tax credits, under this new law, key provisions for solar were maintained and new restrictions severely limit 45X eligibility for products manufactured by or with material assistance from foreign control, foreign entities of control or FEOCs, such as Chinese solar manufacturers. These restrictions address one of the biggest loopholes under the IRA, and we expect these FEOC provisions will factor into capital commitment decisions for US manufacturing by our Chinese competitors. In our view, it is not unreasonable to expect there will be limited Chinese solar manufacturing in the US in the foreseeable future, which together with other recent industrial policy and trade developments that I will discuss momentarily may reduce the supply of domestic content. Turning to the investment tax credit, the legacy PTC and ITC, which support projects safe harbored by the end of 2024 and require place in service by year end 2028, remains unchanged by the new legislation. We expect that these projects will proceed as scheduled, thereby strengthening the resiliency of our existing contracted backlog. We have a strong contracted position for our US production through 2028, which we believe, coupled with the current policy environment, create the strategic foothold to integrate our international supply with US, and potentially create a US finishing line to leverage our Series 6 and Series 7 international assets. In addition, the provisions in the reconciliation legislation relating to the new technology neutral investment and production tax credits, potentially incentivize near term demand for new bookings with deliveries through the end of this decade. There are three reasons for this potential demand catalyst. Firstly, under the new tech neutral credits, projects that commence construction prior to July of 2026, will have a required place in service deadline by the end of 2030, thereby potentially incentivizing new procurement to safe harbor projects through 2030. Secondly, projects that commence construction starting January 1, 2026, are subject to the new FIAC material assistance restrictions in order to be eligible for the tech neutral credits. And thirdly, projects that have not commenced construction before June 16th of 2025, will be required to meet increasing domestic content thresholds should they seek to qualify for the related bonus. While there remains uncertainty around the structure and scope of the forthcoming begin construction guidance pursuant to a recent executive order, we expect this guidance will be consistent with longstanding rules. Note, the same executive order also mandates the development of FIAC guidance, focusing on the threat to national security by quote, making the United States dependent on supply chains controlled by foreign adversaries. As indicated earlier, these new demand drivers also potentially support a business case to establish one or more lines in the United States to finish front end production initiated within our international fleet. Leveraging existing overseas capital assets and our skilled workforce for front end production combined with new backend factories in the US could enable additional near term FIAC free supply for the US market, as well as improve the gross margin profile of our sales by reducing tariff charges and logistics costs associated with importing finished models. Moving from industrial policy to trade policy, we continue to see evidence that pursuing anti-dumping and countervailing duty or ADCVD cases, while time consuming and expensive, is effective at addressing illegal trade practices, imports of sales and modules from Cambodia, Malaysia, Thailand and Vietnam, which were subject of the Solar III ADCVD case, meaningly decreased in the January through May of 2025 period as compared to the equivalent period in 2024. However, trade data also demonstrates an influx of sales and modules imported into the US from other countries as the Chinese crystalline silicon industry continues to move productions to circumvent existing trade laws. Against this backdrop, the Alliance for American Solar Manufacturing and Trade, a distinct but similar coalition from that which launched Solar III ADCVD case directed at Cambodia, Malaysia, Thailand and Vietnam, has filed a new ADCVD petition with the US International Trade Commission and the US Department of Commerce, seeking investigations into the violation of trade laws by Chinese owned companies operating through entities in Laos and Indonesia, as well as Indian headquartered companies, which we believe utilize a Chinese subsidized supply chain. Separately, the Department of Commerce has made the decision to self-initiate a Section 232 investigation into imports of polysilicon and its derivatives. While the scope of derivatives is unclear, this could implicate downstream pricing for polysilicon based products such as wafers, cells or modules, introducing a new source of uncertainty for those relying on Chinese tied crystalline silicon procurement. The scope of the investigation includes many of the strategic vulnerabilities created by China's dominance of the polysilicon production, such as the risk posed by over-concentrated supply chains, subsidy-fueled mandatory trade practices, systematic over-capacity and the potential for export restrictions by US adversaries. In addition, we are encouraged by recently available, though not broadly publicized data, regarding the processing of cell and module entries by the US Custom and Border Protection, or CBP, that were imported during the Biden administration's June 2022 to June 2024 solar moratorium. As a reminder, the moratorium provided ADCBD duty-free treatment for Southeast Asia imports if the entries were both circumventing the China solar ADCBD orders and were utilized in projects no later than December of 2024. The US government recently reported that approximately 44,000 entries were processed during the moratorium window and that more than half, roughly 24,000 entries did not qualify for the moratorium and remain subject to the application of ADCBD tariffs. The government reports that it is taking multiple approaches to collect duties on these imports. The remaining approximately 20,000 continue to be under manual CBP review, which could take several months to complete and may become subject to the application of these tariffs. In short, despite the Biden's administration's ill-advised enforcement suspension, no single entry has yet been closed with the benefits of the tariff moratorium and all remain subject to potential ADCBD tariff payments representing potentially significant contingent liabilities for the importers of record of these foreign-produced crisp and silicon models. We applaud CBP for the thorough -by-entry process they are running. Our determination to advocate for strong industrial policy represented by the new reconciliation legislation is matched by our commitment to employ the rule of law to help create a level playing field for domestic manufacturers. As we have long stated, we are supported of free trade in international competition, so long as this trade is also fair and within the constructs of the law. Unfortunately in our industry, China relentlessly engages in unfair, in our view, illegal trade practices, leaving us no choice but to seek the enforcement of existing law that are designated to address these practices. This respect for the rule of law also underpins our effort to enforce our top-cut patent portfolio against potential infringements. For example, following our previously announced filing of a complaint against various Jinco Solar entities, alleging infringement of our US top-cut patents, during the quarter we filed a similar lawsuit against various Canadian Solar entities. These actions reflect our intention to actively enforce our intellectual property rights against companies that we believe are infringing upon our long-standing top-cut technology patents. In summary, our policy, trade, and legal efforts can be viewed as a consistent three-prong approach. Firstly, a dedicated commitment to continuously advocate for strong industrial policies that enable domestic solar manufacturers in the face of a foreign adversary seeking to dominate critical aspects of the US energy supply chain. Secondly, a commitment to employ the rule of law against the industrial representation of those adversaries who seek to violate our trade laws. And thirdly, a commitment to employ the rule of law to enforce long-established principles of intellectual property rights protection. As discussed during our previous earnings call, we are not immune from adverse effects related to trade policy. Later in the call, Alex will address the impact of the global tariff measures on our international production capacity considerations as well as on our bill of material costs. That said, notwithstanding these headwinds, together with the uncertainty related to the executive order mentioned earlier, as well as the potential implications for the recent Department of Interior directive ordering the Secretary's approval of many renewable project development activities, we believe that the recent policy and trade development have unbalanced strengthens first solar's relative position in the solar manufacturing industry. As illustrated on slide five, at a broader macro level, we believe the long-term position of the utilities-care solar industry as a whole remains strong, given significantly increasing demand for electricity and the ability of solar generation to meet this demand. As we stated previously, American leadership in AI, cryptocurrency, and reshoring manufacturing needs abundant cost-competitive electricity generation. Absent new generating capacity coming online quickly, there are a risk of not being enough electricity to power these strategically important industries to their full potential before the current administration ends. Given its attributes of low cost and high speed to deployment, relative to other sources of energy generation, solar should clearly be a significant part of the near-term solution mix. This argument is supported by numerous recent support, recent reports, for example, in June, Hazard, the most recent levelized cost of energy report demonstrates that utility-scale PV is cost-competitive with conventional forms of energy generation, including natural gas and nuclear. This fact does not consider the practicalities of a typical natural gas project development timeline, which requires approximately five years to complete, assuming it is untethered by supply chain constraints or the availability of pipeline infrastructure, or nuclear projects which take about twice as long and creates a potential supply chain strategic vulnerability requiring sourcing uranium from Russia and China. We believe that on a fundamental basis with its cost-competitive energy and faster time to power profile, the case for utility-scale solar generation is compelling regardless of the policy environment. This case is underpinned by the role that utility-scale solar can play alongside energy storage as a viable, reliable, cost-competitive complement to the eventual scale-up in nuclear power generation capacity. Utility-scale solar has also been shown to help lower electricity prices, dampening the effects of inflation while supporting grid reliability and helping utilities navigate peak demand in extreme conditions, lowering the likelihood of blockouts. Utility-scale solar is mission-ready today to help power the key pillars of economic growth, which we believe places first solar, a utility-scale leader, in a position of strength. And I'll turn the call over to Alex to discuss shipments, bookings, Q2 financials and guidance.

Thanks, Mark. Beginning on slide six, as of December 31, 2024, our contracted backlog totaled 68.5 gigawatts, valued at 20.5 billion, or approximately 29.9 cents per watt. Through Q2, we recognized 6.5 gigawatts in sales. We continued our disciplined approach to new bookings, strategically leveraging the strength of our customer backlog amid the policy uncertainty that continued during the quarter and limited pricing visibility. As a result, we recorded 0.9 gigawatts of gross bookings in the first half of the year. Offsetting this, we recorded 1.1 gigawatts of de-bookings driven by contract terminations, resulting in net de-bookings of 0.2 gigawatts through June 30, 2025. Notably, 0.9 gigawatts of the de-bookings related to our Series 6 international products and were recorded in our Q2 results. As a result, our quarter-end contracted backlog stood at 61.9 gigawatts, valued at 18.5 billion, or approximately 29.9 cents per watt. As a reminder, a significant portion of this contracted backlog includes pricing adjusters that provide the opportunity to increase the base ASP, contingent on meeting specific milestones within our current technology roadmap by the time of delivery. These figures exclude such potential adjustments, including additional changes tied to module bin, freight overages, commodity price shifts, committed wattage, US content volumes, and tariff changes. Following the enactment of the recent reconciliation bill, we saw an increase in customer engagement, resulting in 2.1 gigawatts of new bookings as customers pursued near-term opportunities. Of this total, approximately 1.4 gigawatts for Series 6 international product, 0.9 gigawatts of which was re-contracted volume that was previously terminated in Q2. Including the associated termination payments, this re-contracted volume was effectively sold at approximately 33 cents per watt. The remaining 0.7 gigawatts of the 2.1 gigawatts was contracted at approximately 32 cents per watt, excluding the impact of adjusters in India domestic sales. As of today, our total contracted backlog stands at 64 gigawatts. While demand for our US manufactured products remain strong, we continue to face an underallocation of Series 6 production from our Malaysia and Vietnam facilities. This imbalance initially resulted from customers exercising contractual delivery shift rights out of 2025 due to policy uncertainty, and has more recently been exacerbated by increased tariff pressure. These factors contribute to the termination of a portion of our Series 6 international backlog this quarter. Of our total 64 gigawatt backlog, approximately 11 gigawatts consist of international Series 6 products. Of that, approximately 10.1 gigawatts is planned for sale into the US, with a vast majority under contracts that include circuit breaker provisions designed to mitigate tariff exposure, as referenced in our previous earnings score. Accordingly, the inclusion of tariff mitigation provisions in our contract serves as a strategic safeguard, enabling us to proactively manage and limit potential gross margin erosion should tariff-related impacts not be resolved through customer engagement. Beyond these immediate drivers and contractual mitigants, we also continue to deserve indicators as a broader strategic shift among multinational oil and gas and power utilities companies, particularly those headquartered in Europe, away from renewable project development and back towards fossil fuel investments. Moving to slide seven, our total pipeline and mid to late stage booking opportunities remain strong. The booking opportunity is 83.3 gigawatts and mid to late stage booking opportunities of 20.1 gigawatts. Our mid to late stage pipeline includes 3.9 gigawatts of opportunities that are contracted and subject to conditions precedent. As a reminder, signed contracts in India will not be recognized as bookings, so we've received full security against the off-stake. Turning to slide eight, I'll cover our second quarter financial results. We recognize 3.6 gigawatts of module sales, including 2.3 gigawatts from our US manufacturing facilities. This resulted in second quarter net sales of 1.1 billion, an increase of 0.3 billion from the first quarter. The increase was primarily driven by an anticipated increase in shipment volumes and stronger demand for domestically produced modules. Our second quarter results included 63 million in contract termination payments tied to 1.1 gigawatts of volume, with 50 million related to 0.9 gigawatts of terminate series six international volume. Note this 1.1 gigawatts of terminator volume represented only less than 2% of our contracted backlog as a second quarter end. Gross margin for the quarter was 46%, up from 41% in Q1. The increase was primarily driven by higher contract termination revenue, and a greater proportion of modules sold from our US manufacturing facilities, which are eligible for Section 45X tax credits. These factors were partially offset by increased detention and demerge charges, higher core costs associated with a sales mix weighted towards US produced modules, and a change in Section 45X credit valuation between periods. The sale of a portion of these credits were in agreement with a leading financial institution, combined with our expectation to sell the majority of credits generated in 2025, resulted in a cumulative 29 million reduction to cost of sales, reflecting the anticipated value of the remaining credits generated through Q2. As an update on warranty related matters, we did not incur any new warranty charges this quarter, related to the series seven modules affected by prior manufacturing issues. As of the end of Q2, we continue to hold approximately 0.7 gigawatts of potentially impacted series seven inventory. We're making continued progress in reaching settlement agreements that impacted series seven modules from our initial production, consistent with our disclosed warranty range. SG&A R&D and production startup expenses totaled 138 million in the second quarter, reflecting an increase of approximately 15 million as compared to the first quarter. The primarily driver of this increase was production startup costs associated with a ramp up of our Louisiana facility. Additional one-time expenses included broker fees related to the sale of our section 20X tax credits and legal costs tied to the previously disclosed SEC Division of Enforcement Investigation. And we're pleased to report the SEC has concluded its inquiry into First Solar and the staff does not intend to recommend any enforcement action against the company. Operating income for the quarter was 362 million, which included 125 million in depreciation, amortization and accretion, 15 million in ramp and underutilization costs, 31 million in production startup expense, and seven million in share-based compensation. Non-operating income resulted in a net expense of nine million in the second quarter, representing a decline of approximately five million as compared to the prior quarter. This was primarily driven by lower interest income as a result of a decrease in investable cash, cash coverage, and multiple securities. Tax expense the second quarter was 10 million compared to eight million in the first quarter. This increase was primarily driven by a change in pre-tax income and the jurisdictional mix of such income. And this resulted in second quarter earnings of $3.18 per diluted share. Turning to slide nine, I would discuss select balance sheet items and summary cash for information. As of the end of Q2, our total balance of cash, cash equivalents, restricted cash, restricted cash equivalents, and multiple securities was 1.2 billion, an increase of approximately 0.3 billion from the prior quarter. This increase was primarily driven by the sale of certain of our Section 45X tax credits generated in the first half of 2025. Furthermore, as disclosed in our Form 8K file yesterday, on July 28th, we entered into a new tax credit transfer agreement to sell up to 391 million Section 45X tax credits, generating up to approximately 373 million in proceeds. Transaction instruction and three installments with approximately 124 million received in connection with closing, and the remaining payments expected in the fourth quarter of 2025. This transaction further demonstrates the liquidity of the 45X credit market, and the proceeds will continue to fall on its own working capital and capital expansion priorities. The quarterly increase in accounts receivable was primarily driven by higher sales volumes with approximately two thirds of our quarterly revenue being recognized in June, resulting in backend weighted receivables. At the quarter end, total overdue balances stood at approximately 394 million. This includes a previously negotiated settlement with a customer following a payment default, which deferred payments to Q4, which 93 million remains outstanding, with interest payments being current and made on schedule. Also included is 70 million cumulative uncollected receivables related to customer termination payments. These overdue termination related receivables correspond to approximately 1.8 gigawatts of canceled volume. Such cases were actively pursuing litigation arbitration to enforce our contractor rights and recover the payment load. Inventory balances increased by 121 million, consistent with expectations, reflecting the backloaded revenue profile tied to continuous production throughout the year to fulfill contracted commitments. We anticipate our working capital position to improve throughout the year as our module shipment and sale profile increases relative to production, inventories decline, and we continue to collect on our accounts receivable. While they remain contractually due, overdue termination payments are expected to remain outstanding pending resolution of arbitration and litigation proceedings. Capital expenses totaled 288 million in the second quarter, primarily driven by investments in our newest facility in Louisiana, where we've begun the integrated production runs and expect to complete plant qualification in October. Our net cash position increased by approximately 0.2 billion to 0.6 billion as a result of the aforementioned factors. Before we turn to our updated financial outlook, I'd like to revisit the key assumptions informing our current guidance in light of recent policy and trade developments. These include tariff-related impacts on anticipated international module sales volumes and their associated logistics costs. As outlined on slide 10, our prior guidance was based on a binary set of tariff policy scenarios, each with distinct operational and financial implications. The upper end of our guide, we assumed the continuation of the universal tariff regime through year-end 2025, applying a 10% tariff and maintaining the suspension of country-specific reciprocal tariffs excluding China. The lower end reflected the same baseline but incorporated the impact of reciprocal tariffs, taking effect as of July 9, with rates of 26% for India, 24% for Malaysia, and 46% for Vietnam. Our revised guidance incorporates the anticipated implementation of recently negotiated tariffs of 25% for Malaysia and 20% for Vietnam. So, relates to India, our revised guidance incorporates the previously announced reciprocal tariff rate of 26% for India and does not incorporate the President's announcement yesterday of a 25% rate plus an unquantified penalty for India's purchase of military equipment and energy from Russia. Our volume sold outlook for US manufactured modules remains unchanged at 9.5 to 9.8 gigawatts. Our forecasted sales from our India manufacturing entity remains unchanged. Combined with an increase at the low end of the series six international range, we now forecast international module sales of 7.2 to 9.5 gigawatts, for total module sales of 16.7 to 19.3 gigawatts. The international volume sold range remains wide and reflects both uncertainty and opportunity related to the outcome of tariff cost discussions with customers, the Section 232 action related to polysilicon and its derivatives, COQ related restrictions, and the Solar 4 ADCBD investigation. In the event of customer terminations resulting from an inability or unwillingness to absorb tariff impacts on our international product, we plan to address the resulting supply demand imbalance through additional curtailment, including the potential temporary idling of production. As such, the lower end of our guidance range reflects increased underutilization period costs and the associated loss margin tied to these volume assumptions. According to this curtailment strategy, it's not assumed the incremental cost related to warehousing retention, demurrage, or other logistics associated with internationally produced modules. It's important to note that certain indirect or currently unknown costs related to these tariffs, including potential restructuring charges or asset impairments, are excluded from the guidance provided today. As it relates to tariff impacts, based on a doubling of Section 232 tariffs on aluminum and steel from 25% to 50%, as well as updated rates applicable to other imports, including substrate glass and interlayer, we anticipate a fuller production cost impact from tariffs of approximately 70 million. We forecast approximately 80 to 130 million in tariffs on finished goods imports, net of contracts for recoveries from customers. It's important to note that without tariff recovery, international module sales may be dilutive to earnings. As such, the ability to recover tariffs is a key factor in our production and sales volume guidance. If we are unable to effectively negotiate these recoveries, we may further reduce International Series 6 production below current assumptions, which would result in additional underutilization charges. An utilization charge is related to running our International Series 6 production below full production capacity, with under-absorption costs accounted for as period expenses, our forecast total approximately 95 to 180 million for the full year. Additionally, non-standard freight, warehousing, detention, demurrage, and other logistics related costs have increased approximately 100 million to 400 million for the full year. This increase was driven by several factors, accelerated imports ahead of the July 9 and subsequently revised August 1 tariff implementation dates, short ocean freight transit times, which led to an earlier than expected port arrivals, Q2 customer terminations of Series 6 international products, lower than forecasted Series 6 international sales, resulting in a short notice inventory buildup, and ongoing efforts to avoid anticipated Section 301 tonnage fees on Chinese-built vessels beginning in Q4. Lastly, although our forecast value of 2025 Section 40X tax credits generated remains unchanged, our updated guidance now assumes the sale of these credits from all but one of our US facilities. The remaining facility we plan to utilize the credits off their taxable income and claim any residual benefit via direct pay. Accordingly, we've reduced the projected value of Section 40X tax credits in our guidance by approximately 75 million. I'll now cover the full year 2025 guidance ranges on slide 11. Our net sales guidance is between 4.9 and 5.7 billion, which includes an unchanged range of US manufactured volume and India manufactured volume sold. Our updated now range of international Series 6 volume sold and includes contract termination review of 63 million recognized in our Q2 results. Gross margins expect to be between 2.05 and 2.35 billion, or approximately 42%, which includes approximately 1.58 to 1.63 billion Section 40X tax credits, 95 to 180 million of ramp and underutilization costs, 80 to 130 million of tariffs on finished goods imports, and 70 million tariffs on bill of material. SCNA expense is expected to total 185 to 195 million, and R&D expects to expect to total 230 to 250 million. SCNA and R&D combined expense is expected to total 415 to 445 million. Total operating expenses, which includes 65 to 75 million of production startup expense, are expected to be between 480 and 520 million. Operating income is expected to range between 1.53 and 1.87 billion, applying an operating margin range of approximately 32%. This guidance includes 160 million to 255 million in combined ramp underutilization and plant startup costs, well as approximately 1.58 billion to 1.63 billion in Section 45X credits, net of the anticipated loss associated with the sale of these credits. This results in a fully 2025 earnings per diluted share guidance range of $13.50 to $16.50, the midpoint of which is unchanged from our previous guidance, notwithstanding the approximately 70 cents of impact of forecasted diluted EPS, but updated guidance now assuming the sale of 2025 Section 45X credits from all but one of our US facilities. From an earnings cadence perspective, we anticipate module sales of five to six gigawatts for the third quarter with 390 to 425 million in Section 45X credits, resulting in earnings per diluted share between $3.30 and $4.70. Capital expenses for 2025 remain consistent with prior guidance expected to range between one and 1.5 billion. A year-end 2025 net cash balance is anticipated to be between 1.3 and 2 billion. Turn to slide 12, I'll summarize the key messages from today's call. Our Q2 earnings per diluted share came in above the high end of our guidance range at $3.18 per share, primarily due to customer contract termination payments and a favorable mix of US versus international product sold within the quarter. Our forecast for US produced volume sold remains unchanged for the year. In the near term ongoing trade policy uncertainty, particularly around the tariff regime, has introduced challenges that were not anticipated at the start of the year and have persisted and continuously evolved throughout. We've updated our guidance to reflect the expected impact of the most recent proposed tariffs, other than the President's indication yesterday of a potential penalty rate applying to India and our current outlook on their implications. We know that the midpoint of our diluted EPS guidance remains unchanged, even with the approximately 70 cents of impact forecast diluted EPS in our updated guidance, which assumes a sale of 2025 Section 40X credits from all but one of our US facilities. Looking ahead, we are on balance, pleased with the overall industrial and trade policy environment that has emerged over recent weeks. We continue to remain confident in the long-term outlook for US solar energy demand and first of all, its continued leadership, underpinned by a vertically integrated manufacturing platform, domestic supply chain, non-FEOC profile, and proprietary cab-tail technology. Demand for our US manufactured product remains strong and our updated outlook continues to reflect the potential long-term resilience of our Series 6 international product, contingent on the US market's ability to adapt to mid-ongoing policy and trade uncertainty. With that, we conclude our prepared remarks and end the course questions. Operator.

Thank you, sir. We'll take our first question today from Brian Lee from Goldman Sachs.

Thanks for taking the questions here. Kudos on the nice execution. I think obviously there's gonna be a lot of focus here on what seems to be incremental improvement in the bookings environment, as well as some expansion in kind of your pricing power based on some of the numbers you addled off. So maybe just digging into that a bit. So you two plus gigawatts bookings just in the month of July, presumably pent up demand waiting for OB-BBA to get through to the finish line. What kind of run rate bookings kind of are you seeing real time? Like what can we read into the two plus gigawatts of bookings just in the month of July and then maybe as a follow up, just on the pricing side, the 32 to 33 cents per watt, depending on which portion of the bookings you're talking about. A couple pennies higher, several pennies higher than what you had been run rating at. What does that reflect? Is that ADCBD, is it FIAC, is it domestic content entitlement? Like how much of that is actually being captured already and what do you think could still be part of that pricing picture as you move through the next couple of quarters and into 26? Thanks guys.

All right, thanks Brian, I'll take that. First off, I would say that we're still learning. We're kind of filling our way around in terms of what's happening in the market and what are the implications around pricing. Clearly after July 4th, when the bill was signed, we had a lot of inbounds, a lot of questions, a lot of inquiries, a lot of people trying to think through their safe harbor strategy. And what's really nice when you think about what we already had safe harbor largely was through 28, and really robust demand for that period of window. Now with the kind of where we are right now, you've got a window now that will take that activity all the way out through 2030. So another two more years of safe harbor, contingent and depending on what ultimately happens through the executive order, it's given us the industry a nice runway to move forward to the end of this decade, which is what we all love to have in terms of long-term visibility and certainty. When we look at the individual drivers and trying to translate that into what's sort of created the ongoing engagement, I would argue this in the bookings we saw in July, it's a little bit of everything. Some of it is wanting to safe harbor for projects that would then be completed in 2029. Some of it is you call it FIAC or you could call it AD, CBD related. And we had a large volume of, if the bookings was related to a customer who had already committed volume or believe they had committed volume from a Chinese supplier. And that Chinese supplier reneged on that volume. And that volume was actually needed in kind of the 26 timeframe. And so they needed to react very quickly in order to recover and get a certainty of a supply chain available. And we were able to leverage kind of the opportunistic de-booking that we saw in the quarter, plus some inventory position we had on international volume to in order to fulfill that requirement for that particular customer. So I would say there's still good momentum. I was talking with our chief commercial officer today and we got a number of deals near term that we would expect to close that could add up to another gigawatt here near term. So we're encouraged. We're gonna continue to sort of feel our way through it. And we'll do a little price discovery and kind of see where everything settles in. But as we said, we've done a lot here to try to best position this market and to address a level playing field. And we think we're finally getting into that position. And we think there's a opportunity for additional price in terms of our average ASPs. We'll have to sort of discover where that ultimately lands but we're encouraged with what we're seeing right now.

Moving on to Mark Strauss from JP Morgan.

Yes, good afternoon. Thanks for taking our questions. Just going back to the last point, Mark. On some of your customers that are contracted out through year end 28, to the extent that there is a negative change in the, I'm sorry, in the state harbor language from the executive order, can you just talk about kind of the percentage of that backlog that could potentially be a risk that it's contractually open for them to cancel? Thank you.

So first off, I just wanna make sure we're clear on one thing. The executive order was not intended to address the section 48 and 45 ITC and PTC that was safe harbor at the end of 24. And from that point in time, we have four calendar years in order to complete and village your projects and place them in service. So that executive order shouldn't have any impact relative to the legacy section 48 and section 45. The intent of the executive order was to focus on the tech neutral ITC, PTC, and to focus on a couple of different things. One is to ensure there's true substance and appropriate guidance as it relates to what determines command construction. And there's a couple of different ways to do that. One is through committing 5% or so of the capex of a project or implementing physical activities at the project or at the site, physical work. So those are being looked at to provide definition and guidance, but the reconciliation bill alluded to that a need for guidance. I think the guidance was originally to be placed out no later than end of 2026. Executive order came out after the bill was signed saying, hey, we want that closer dated. So it has effectively a 45 day window, which I think goes out to August 18th where that guidance is to be provided or notice of guidance. It also has some FIAC provisions in there as well. So it's not just to address the commence construction. It's also to address some of the FIAC provisions and to effectively ensure that the investments that we're making, we're not tethering back into nations that could be adversaries such as Russia and China and others. So the 48 legacy as it relates then to our project contracted backlog that carries through 28 should be unaffected by whatever comes out through the executive order. But the opportunity is what are the catalysts going beyond that? And that is the new tech neutral guidance, which will have some clarity around definition for commence construction and FIAC. But assuming that those are all amenable and manageable by the market, then now we have a new window that we can continue to book out and see strong demand through 2029 into 2030, which we think is highly encouraging from that standpoint.

The next question today comes from Praneeth Satish, Wells Fargo.

Thanks, yes. In terms of the bookings in July, looks like it included series six and re-contracted volumes, but it doesn't look like you've tapped into your 2027 and beyond US series seven capacity yet. And so should we interpret that to mean that pricing in that 32 to 33 cent range just isn't compelling enough for you to commit your 27 to 2030 US capacity? I mean, you mentioned you've got one gigawatt of bookings here in advanced stages. So, you know, kind of putting two and two together here, should we assume that at a minimum, you're trying to look for some price discovery above 32, 33 cents? And maybe just as a follow-up to that, I mean, why even sell capacity at these levels? You've got the section 232 polysilicon probe underway. And if that's successful and it's full intent, it could really boost pricing. So maybe if you could just kind of talk through that rationale.

Yeah, so you're right. A good percentage of the bookings that we had in July were for S6 International. And really even the bookings through the first half of the year, you know, we had called 1.2 gigawatts or something like that, and slightly less than half of it was international product. And so as we think about, okay, how do we want to position the product and knowing the backdrop of everything that's going on, around us and how do we ensure getting, what we think is full entitlement for the product. What I like about some of the safe harbor, so let me back up first for a second. If I look at the Series 6 that we re-contracted, to me, that was a great transaction with a great price. And to clear out the inventory that was largely sitting either in a warehouse or sitting in a port and incurring D&D charges, because the customer defaulted on that obligation. So I wanted to get that inventory cleared as quickly as possible. So this inventory, while it won't be deployed until 2026 with the customer, it is actually there taking ownership and it is going to their warehouse and I'm not incurring any cost. And that's pretty important and pretty critical for us. We got to get that warehouse and D&D cost down in particular. The other thing I like about the feathering in some safe harbor, taking some of the safe harbor volume that we did in July is under the new 48E tech neutral, the safe harbor requirements in the tech neutral either investment tax credit or production tax credit has to be done at the inverter level. Now, once I committed to some percentage of a project, I think I have in a very strong position to capture the balance of that opportunity. So as you think about it right now, if we safe harbor 200 megawatts, if you kind of do the math, that potentially creates two to three gigawatts of opportunity, a follow-up, right? Because it's going to be very difficult to take our technology at the inverter level and try to blend it with chrysanthilicum. We have different voltages and string lengths and everything else. It's very, very difficult and costly. So I'm looking at, look, if I can take some near term safe harbor, seed those projects and then create a follow-on opportunity for the balance of that, that's a good thing for us to do. And I do fully take your comments about, yes, the, we very much are appreciative of the self-initiated 232 case and poly and the associated derivatives. So, you know, that obviously could be another catalyst for us. So we're being very selective in that regard, but I do think what we did here near term with the bookings was to be very strategic. And I do like doing some safe harboring that allows me to be better positioned for follow-on volumes when those projects ultimately get built.

Philip Shen from Roth Capital Partners has the next question.

Hey guys, thanks for taking the questions. A few here, just as a follow-up on the pricing, the prior questioner talked about the 232. There's also what we've read about, which is the ramping UFLPA reinforcement. And so that's yet another potential catalyst. So Mark, as you think through pricing, I mean, if international is at this 32 cents level, domestic contents must be, I mean, I gotta imagine high thirties is possible. So wondering if you can comment on that at all. And then how much inventory might be left in the warehouse. And then finally, as it relates to capacity expansion, now that we're past OBB and we have these strong FIAC rules, the 232 and the linear catalyst that you have, to what degree are you starting to think about new capacity? What are the things that you need to see before you make that next announcement? Thanks.

Look, on the last one in terms of what do I need to see it, we kind of, I think, need to let all the dust settle and dust also includes kind of understanding what comes out with this executive order. To see what implications it has. That I think is piece of the puzzle that hopefully we'll see here near term. Look, I think the thing I wanna, maybe I wanna make sure it was said in our prepared remarks, but I wanna make sure it's clear as well. Our domestic supply and our contract for that domestic supply is pretty solid through 2028. So our lovers for the domestic, discrete domestic, it's further out in the horizon. But what we have supply for is with that, I think I said in my prepared remarks, that domestic position that we have created is a strategic foothold in my mind to leverage our international volume as both series six and series seven. And what we're looking to do, and I think we've alluded to this in the past, because this ties back to your capacity expansion question is to bring finishing capability into the US. So we can bring finishing capabilities into the US for both series six and for series seven. And the other thing that that does for us is we can get to market faster with new volume, which is great, but it helps mitigate the exposure to the tariffs. Because at these price points that we're seeing, you know, to do simple math at a 25% tariff, the tariffs are pretty hefty. The opportunity to bring it into the US and to do that on a semi-finished product drops my declared value upon import to about a third of that. So now I'm bringing it in and it's costing me called 10, 11 cents kind of number versus something in the 30s, and therefore my tariffs are much lower. The other thing that it does is it allows us to qualify for the manufacturing tax credit for assembly. So that's another level that gets played into the math for the fundamental economics that we alluded to. The business case is very attractive to doing that. And then what happens is I have the opportunity because of the constructs that are put in place right now to determine domestic content requirements, I can actually blend some more international in with my domestic and it allows that opportunity to be multiplied significantly in terms of its value lever. So there's lots that's in play in that regard, Phil. We're working through each one of those items. We're trying to triangulate, get our insights, understanding what direction we wanna go. But I've been telling our team that, hey, we've got to be ready for this. We've already been working through and identifying site selection. We've already are thinking through the transferring of tools and equipment. The nice thing about running Malaysian Vietnam at lower capacity right now means there's excess tools that are available. That means we can go after those tools if the decision is that as the rates have come now with the announcement of the tariff rates, it really is gonna be uneconomic with a continued import from those markets. It's gonna be more beneficial for us to bring in semi-finished product, do that here in the US, take advantage of the manufacturing tax credit environment and then get a little bit more, there'll be some domestic content associated with that product, get some more value in that regard as

well.

So just one

thing I'll add in terms of what do we need to see and Mark just touched on a little bit of the periphery there is related to tariffs. Tariffs impact both how we might price our international fully finished products, but also it impacts what we think through if we do a finishing line, how do we source the early stage products and bring it over? Is it coming from Malaysia Vietnam? Just given that if you go back to our previous guide, we gave you two discrete scenarios because there was so much uncertainty around long-term tariff outcomes. Would it be at that 10% or would it be at the more reciprocal rates? We've updated that in our current guide to what we believe the current outlook is today. So clearly we have some better visibility, but I'd say it's far from perfect. And even as we're putting the guide together, there was information that came out yesterday that could have essentially changed in the review around India. So what do we still need to see? We still need to have a bit more understanding of how the tariff regime is gonna play out.

Next question is Moses Sutton, BMP Paribas.

Thanks for squeezing in. If I look at the North America booking opportunity pipeline, so it's up a gigawatt, maybe three gigawatts if I gross up the two that you booked in July, slide seven, how do we think of this? Because there's 70 gigawatts of North America booking opportunity. There's your stuff that's in contracted backlog. And then there's like in the industry that has a bunch of panels. If I add all that up, it almost looks like it's the whole industry's volume for the next few years. So is there a signal there that we could even see that there's more coming into the plan or are you just seeing everything in the market already? And that's reflected in that metric.

Moses, I think there's a lot going on right now. And we've had a number of inbounds that are very large. Now, what I don't fully know, I'll use the example of this. As I indicated, we had a customer who had a near-term need because their supplier, a Chinese supplier, reneged on that deal and they came to us. And I've got others that are coming to us as well. And that particular customer is looking to do something even bigger than what we've done, meaningfully larger for us in 27 and 28. Again, that volume we sold to them this time around was for 26. What I don't know is that if others are getting, those who, and this particular customer is not one that we've actually sold to over the last several years. I don't know if they're all getting signaled the same way, that the commitments they thought they had from their supply chain have now been reneged on and they're coming to First Solar. So our pipeline could be just a reallocation of demand that's already in the marketplace because of disruption to their supply chain or people pivoting away from what they had initially envisioned that they were going to do. So I don't know. It's hard for me to determine if what I'm seeing, because I've seen a handful of very large commitments. Some of them I think is more incremental. Some of it I do think is, I'll call it put it in that hyperscaler bucket, AI related, it could be an incremental catalyst to maybe near term visibility of market demand. But I think there's many things that are adding up right now that may be influencing a bigger view of the market than it would be otherwise.

And everyone, our final question today comes from Julian Dimmel and Smith from Jeffries.

Excellent, hey, thanks for the opportunity to clean up here. Team, if I can just on the use of cash, right? Obviously you found yourself in a nice position here coming into the back half of the year, got this at least chunk of clarity coming out of .B.B. Pending tariff, how do you think about use of cash here? Again, obviously you've got a final decision on the finishing line. You've now disclosed that you're moving forward on a perovskite line in Ohio. How do you think about the palatability of use of cash, the different decision trees and the timeline for it? Again, pending tariffs seems to be a big consideration for your prior comments, but when and how do you think about it, both in the R&D sense and as well as in shareholder returns?

Yes, as you guys say, we've shored up the liquidity position from where we were at the last call pretty meaningfully this year. I think I mentioned on the call, we were at a lower cash point than we've been historically, not something I was worried about necessarily, but we wanted to make sure we put some resilience in there, which is what we've done. We continue to expect that to get better over the year as we get back to somewhat of a more normalized working capital position across both AR and inventory. So that's helpful. If you look at where we end the year, absent significant new investment, we're through a large amount of the capex cycle that we've been through over the last couple of years. So there still will be some spend to finish up on the Louisiana side, although that's getting up and running now, some of the cash payments that hold back will happen in 2026. As Mark mentioned, there's an opportunity around the finishing line. That'll depend on if we're bringing back end tools from Asia that exists today and repurposing them here. Are we adding any new tools? Whether we lease a building, whether we buy a building, that will change the capex profile here as well. The perovskite line, the development lines up and running, if that goes well, the opportunity to expand around that. But in general, I would say I'm viewing this year, let's get through the year, let's figure out how we stand around tariffs and as the dust settles on the executive order, we should have a lot more clarity going into Q3, Q4 of this year of what that longer-term position looks like. When you combine that with the clarity we had out of the OBPBA being passed, that's helpful for the longer-term view. The fundamental waterfall approach we have to cash hasn't changed. So we still look at core running the business. Can we expand either new manufacturing sites or finishing lines? Are we willing to spend more on R&D? And the answer recently has been yes, both internally and potentially looking at M&A around the R&D side. And then if we can't find a creative use of cash through there, then we'll potentially look at how we would earn capital. So there's a lot more still, I think, to happen this year. As Mark mentioned, there's still dust to settle around. A lot of the policy that's really very fresh. Once we have better clarity on that and we sense what we're going through next year, we'll update you on the cash position. Most likely to go into the 2026 guide towards the end of the year or early next year.

And ladies and gentlemen, that does conclude our question and answer session. It also does conclude our conference for today. We would like to thank you all for your participation. You may now disconnect.