First Solar, Inc.

Good afternoon and welcome to First Solar's second quarter 2026 earnings conference call. This call is being webcast live on the investors section of First Solar's website at investor.firstsolar.com. All participants are in a listen-only mode. And please note that today's call is being recorded. I would now like to turn the conference over to your host, Byron Jeffers, Head of Investor Relations.

Good afternoon and thank you for joining First Solar's second quarter 2026 earnings call. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer. Mark will begin with second quarter highlights, followed by Alex, and then we'll open the line for questions. Today's discussion contains forward-looking statements. Actual results may differ materially due to risks and uncertainties as described in our earnings press release and other SEC filings and the earnings material available at investor.fursolar.com. We undertake no obligation to update these statements due to new information or future events. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are in our earnings press release and presentation. This non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. With that, I will turn it over to Mark.

Thank you and good afternoon. Beginning on slide four, we delivered both Record second quarter in first half sales volume and improved financial performance relative to the prior year. During the quarter, we generated over $1 billion in net sales, expanded gross margin to approximately 57%, and delivered strong adjusted EBITDA performance. We also surpassed an important milestone for First Solar, exceeding 100 gigawatts of cumulative module sales globally. We view this as a reflection of the Trust Customers have placed in First Solar over the more than two and a half decades and the durability of our technology and manufacturing platform. We entered the quarter with approximately 45.1 gigawatts of contract backlog. We delivered with deliveries extending through the end of the decade, demonstrating the demand for our demonstrated technology platform, domestic manufacturing footprint, and delivery certainty. Turning to manufacturing, our U.S. facilities continue to operate at high utilization rates during the quarter. In South Carolina, the first phase of the finishing facility remains on track to begin production in the second half of 2026 with equipment installations progressing as expected. For the second phase, we now expect completion in mid-2027. While the revised timing reflects a number of factors associated with optimizing the facility's launch, it also enables the earlier incorporation of CURE technology. We are pleased with the performance of CURE with both high-volume manufacturing at our Perrysburg facility and performance data from field deployments across multiple climates exceeding expectations. We believe incorporating the technology closer to the onset of the facility's commercial launch will simplify execution, accelerate value realization, and enhance customer value and the facility's long-term financial performance. Once completed, the South Carolina facility is expected to provide up to 3.5 gigawatts of finishing capacity for modules initiated at our international manufacturing sites giving us greater flexibility to optimize our supply chain flexibility while also optimizing freight, tariff, domestic content, and section 45X economics. With respect to our international manufacturing fleet, production planning and utilization levels in Malaysia and Vietnam continue to be influenced by U.S. market demand drivers and economics. including the pending section 232 polysilicon and derivative investigation and tariffs. We expect greater policy clarity will help inform the long-term operating profile for the approximately 1.8 gigawatts of fully finished international capacity that remains available. After accounting for capacity being used to produce semi-finished product destined for our new South Carolina finishing line. A note on manufacturing optimization and allocation. Approximately 41 gigawatts of our 45 gigawatt backlog includes some form of domestic content requirement. These requirements vary significantly and range from requiring exclusive supply from U.S. fully integrated factories to blending U.S. made supply with both fully integrated domestic factories as well as product from our upcoming South Carolina finishing line to a domestic content points requirement, which is factory agnostic, allowing blending of product from across our global fleet. We therefore continually balance and refine our module supply and demand allocation across the fleet to meet customer contractual obligations, optimize factory throughput, and optimize gross margin. This typically means that Over a period of time, we will seek to maximize production and sales firstly from our fully integrated U.S. factories, secondly from our South Carolina finishing line, and thirdly from our international facilities. As it relates to perovskites, we continue to advance our development program for this potentially significant technology platform. Our previously announced development line continues to progress to process improved efficiency and reliability attributes on smaller form factor modules, while our series six form factor pilot line remains on schedule and is expected to reach operational readiness in the first half of 2027. Our continued progress has given us confidence as we continue to invest substantial capital in our efforts to realize the commercialization process. Earlier today, we published our latest corporate responsibility report reinforcing our conviction that how and where solar technology is made matters. The report details how we create enduring value by developing, sourcing, manufacturing, and recycling solar modules domestically, supporting jobs and communities, strengthening industrial capacity, and help ensure the benefits are realized locally. It also highlights our continued focus on responsible manufacturing, supply chain transparency, workforce development, and resource efficiency. The report reflects the effectiveness of a business model where corporate responsibility isn't a construct but the default. Before turning the call over to Alex, I want to briefly address the market and policy environment and how it is informing our commercial approach. The underlying drivers for utility-scale solar remain intact, including low growth, data center development, electrification, aging generation assets, and the need for affordable, scalable new capacity. The policy landscape continues to evolve, particularly as it relates to pending outcome for the Section 232 polysilicon and derivatives investigation, as well as final FEAC regulations. In this environment, we continue to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term bookings volume. Relative to the beginning of the year, we are seeing increased customer engagement, and as policy clarity improves, we believe First Solar remains well-positioned to capitalize on these opportunities. With that, I'll now turn the call over to Alex to discuss our bookings, financial results, and outlook.

Thanks, Mark. Beginning on slide five, as of June 30, 2026, our contracted backlog totals 45.1 gigawatts, with an aggregate transaction value of $13.6 billion, exclusive of technology adjusters, with scheduled deliveries extending through 2030. Early this month, Cypress Creek Energy broke ground on the Steel River Energy Center in Arkansas, a project utilizing first solar modules and previously included in our contracted backlog. The initial phase is expected to provide approximately 1.6 gigawatts of solar generation capacity and 1.9 gigawatt hours of battery storage to support Google's growing energy needs with the opportunity for future expansion. Since our last earnings call, we've recorded approximately 1.9 gigawatts of additional U.S. gross bookings at an average selling price of approximately 36 cents per watt, inclusive of applicable technology adjustments. While near-term customer activity continues to be influenced by the current policy environment discussed by Mark, our fully integrated domestic manufacturing fleet remains substantially committed through 2028, providing a high degree of volume and pricing visibility. Given the limited amount of uncommitted domestic capacity available over the next several years, we continue to be disciplined in evaluating incremental contracting opportunities. We also initiated our first customer notifications related to contractual cure adjusters during the quarter. An important milestone and beginning to translate Cure's performance benefits from potential ASP adjusters into backlog value and future revenue realization. We expect the contribution from these adjusters to increase as Cure deployment expands across our contracted portfolio. As a reminder, we expect limited ASP upside from Cure sales in 2026, largely as a function of contractual notification deadlines relative to the timing of decision to recommence Cure production. In India, our guidance continues to assume production is largely sold domestically in a short cycle book and bill market, with the factory operating at a high utilization rate. Indian growth bookings during the first half of the year totaled approximately 1.1 gigawatts, an average selling price of approximately 20 cents per watt. Given the shorter contracting cycle of the domestic Indian market, booking economics generally provide a reasonable indicator of near-term revenue realization, such as its normal foreign currency books. So in slide six, net sales for the second quarter were approximately 1.06 billion, a decrease of approximately 4% year over year. The decrease was primarily driven by lower revenue associated with customer contract terminations recognized in the prior year period, partially upset by how module volume sold. Gross margin was approximately 57%, an increase of approximately 12 percentage points compared to the second quarter of 2025. The increase was primarily driven by an estimated $89 million net IEPA tariff-related benefit, a higher mix of modules qualifying for Section 45X tax credits, and lower logistics costs. The net IEPA tariff-related benefit reflects our current estimate of expected recoveries, related commercial obligations, and other tariff-related considerations that remain subject to refinement as additional information becomes available. These benefits were partially offset by lower termination-related revenue and higher duties and tariffs. While logistics costs improved year-over-year, the quarter included higher over-the-road freight costs driven by overall capacity tightening and volatility in diesel costs. These impacts were partially offset by higher sales rate recovery. Operating expenses were approximately $155 million, including $76 million of R&D expense. R&D increased year-over-year, primarily affecting continued investment in perovskite development and the impairment of certain R&D equipment that is no longer expected to be used as part of our technology roadmap. Net income was $423 million, up approximately 24% year-over-year. Adjusted EBITDA was $644 million, above the high end of our previously communicated Q2 preview range, with an adjusted EBITDA margin of 61%. Moving to slide 7, we ended the quarter with approximately $1.7 billion in net cash, providing substantial balance sheet strength and financial flexibility, while remaining within our targeted long-term cash range of $1.5 to $2 billion. Operating cash outflows year-to-date were $360 million, reflecting first half working capital dynamics, and improved compared to outflows of $458 million during the first half of 2025. First half capital expenditures were $280 million, primarily supporting our South Carolina finishing facility and technology investments. We completed the full prepayment of our India DSC loan during the quarter. So in slide eight, our full year 2026 guidance remains unchanged. With that said, our guidance now assumes a net tariff impact of $60 to $80 million, with updates including the previously mentioned net IEPA recovery and the assumption of Section 301 tariffs in the second half of the year. We also forecast offsetting updates between production startup expense and R&D expense, as well as incremental freight costs due to certain non-recoverable domestic trade expenses above our previously assumed forecast, largely driven by changes in module delivery locations. and note in some cases domestic trade costs are now approaching international shipping economics. For the third quarter, we expect volume sold between 3.9 and 4.5 gigawatts and adjusted EBITDA between 625 and 775 million. Summary, our first-half performance and reaffirmed outlook reflect the strength of our strategy of reshoring and scaling domestic manufacturing, progressing our technology roadmap and maintaining a selective approach to new bookings in light of key pending trade and policy determinations. So we look ahead, our priorities remain unchanged, remain focused on disciplined execution, serving our customers, advancing our technology roadmap, managing capital prudently, and maintaining financial flexibility. With that, operator, please open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of John Windham with UBS. John, your line is now open. Please go ahead.

Perfect. Thanks. Hey, congratulations on the result and appreciate you taking the questions. So obviously the FCC had a ruling about solar inverters a couple of days ago. I think on one side, it goes along to show how serious the government is in promoting domestic content within especially electrical equipment hardware, which is obviously very good for you given your position in domestic solar modules. But just curious if you have any early thoughts on potential impact on broader solar installations and the ability to work around the industry to work around that provision. Thank you so much.

Thanks, John. I think it continues the theme of our U.S. government trying to ensure that we don't have any over-reliance on adversarial countries, and obviously China being one of them in particular. I think the good thing about this is that the industry has started to get ahead of trying to find domestic supply chains, comprehensive domestic supply chains. We obviously were an early industry in that regard of reshoring manufacturing and creating a supply chain here in the U.S. for our U.S. operations. You're seeing this now really across all components and equipment suppliers all the way up even to, you know, trying to find localization for the battery supply chain as much as you can. So I don't see it being a constraint near term. I think the current models that have been shipping into the U.S., will continue to be allowed to be shipped into the U.S. I do think there is a theme or a message there, though, that that scrutiny may be stepped up as we move forward. But I think it just sends another great signal to domestic manufacturers of, look, we need to move forward. We need to create domestic supply chains, resiliency to enable not only the solar industry to thrive, but really all of the industries, you know, that as we reindustrialize in the U.S., So again, I think it's a good indicator of a continued theme and message that this administration has and we fully support it.

Your next question comes from the line of Brian Lee with Goldman Sachs & Co. Brian, your line is now open. Please go ahead.

Hey, guys. Thanks for taking the questions. Just had two. I guess first, on this Google Steel River project, appreciate you guys commenting on that. I might have missed it, but how much of the 1.9 gigawatts in U.S. gross bookings came from that one project in the quarter? And then how much more bookings potential exists on that project site? And then your bigger picture, maybe speak to how you're seeing general interest from that hyperscaler data center community. And then second question I have is just kind of the The customary latest thoughts, timing, visibility into Section 232, how you're viewing the potential for floor prices in the $0.40 per watt or higher range, and then how quickly do you move on your booking funnel and Southeast Asia strategy once you get clarity on this, presumably, hopefully, in the next few months? Thanks, guys.

All right, Brian. I'll try to take kind of the first two, and Alice, talk maybe a little bit about the views of Southeast Asia. So make sure it's clear. On the project that we announced with our partner that we supplied models to for Cypress Creek, that is already in our bookings. Okay, so that was just to highlight. It's a great project. If you actually look at some of the more recent announcements that have been made over the last several weeks, I think you kind of see a theme there. You've got a very large project with Cypress, the one that we referenced, that's It will be phase one, kind of called the 1.6 gigawatts. Then it goes to phase two, which will be about 2 and 1 half gigs. So that's a very large project. And I think the battery component of that as well is going to be north of the 2 gigawatts megawatt hours from the battery standpoint. Really important strategic project. It's there to support Google. We have two other projects that have been announced over the last couple of weeks. One with Terrigen, which was about 1.4 gigawatts. And then we had another one with Panamint, which was another gig plus. So those three projects that have been announced recently are about five gigawatts of capacity. The Panamint, part of the Panamint volume was actually announced last quarter. So when we did the and the other two and a half gigs. They haven't disclosed the counterparties, but if you look at the verbiage around the announcements on that, they'll reference, a very large corporate account, one of the largest companies in the U.S. You can kind of get a sense of, you know, the likelihood of who that counterpart is going to be for that project. So strong demand, you know, for continued demand for hyperscalers, really strong relationships and partnerships with First Solar to support those types of strategic projects that really kind of thrive on the importance of certainty. Those projects are strategic. They're important. They obviously include storage as reflected in the Cypress Creek project. As I've always said, the first thing you need to do as you're building out your projects and de-risking is that you need to make sure that you have a reliable partner who can make sure those photons become electrons. Without that, the whole project's going to be set at risk. And we can deliver that certainty and that great technology and that reliability. So we're seeing that in the marketplace and continued strong interest driven by as currently still somewhat in stationable demand from hyperscalers. As it relates to 232, I'll take the pricing piece and then I'll talk to how we thread that into our views around Southeast Asia. Look, it's still, you know, there's still a lot of views out there. I think everybody has a view of how the construct may be with minimum import price and maybe with a tariff on top of that. There's some views of whether there's quotas or not. You know, all I can say is it's still evolving. And we do believe it will be constructive. I don't want to give kind of our internal read of what we think it potentially could be because there's still a lot of moving pieces. I can say that we're still in constant contact with the appropriate parties at USTR and Commerce to continue to bring our voice into the conversation. And we're still optimistic that the outcome will be constructive. and you know we've used it as a reason to be disciplined and we'll see what happens once it's finally announced and you know there's there's the man that's still sitting there on on the sidelines you know if you look at our cadence and our momentum around our bookings you know just here in the month of July we booked almost two gigawatts in in the U.S. at very good prices as Alex indicated um There's about two more gigawatts north of two gigawatts that sits into a contract that's subject to CP. And then I've got another two gigawatts of active conversations with customers that, you know, there's a high probability we can close through by the end of the year. So and we'll see how much that gets further catalyzed by a decision around 232.

Brian, as it relates to set these days capacity, we talked on the last couple of calls around looking at this a bit like an option. So we're We're running somewhere around $30 million quarter of underutilization associated with running Southeast Asia manufacturing well below its theoretical capacity. About half of that's cash, about half non-cash. Given that we've been holding through the first half of the year, making a decision on the long-term future there pending the outcome of the 232, it makes sense to continue to do that. So I'd still view this as we're waiting for the outcome of that policy. And just to frame the amount, if you were to go back and look at the slides we put out in our February call, it shows you nameplate capacity of production. So we originally had about seven gigawatts of total capacity sitting in Malaysia, Vietnam. About half of that is going to be dedicated to production that will feed our New finishing line in South Carolina. So there's about three and a half gigawatts left of that. We did take out some tools, bring them over to the U.S. to reuse in our broad sky work. So ultimately leaves us with about one point eight gigawatts of end to end fully finished capacity that we could ramp up across Malaysia and Vietnam. So it's about that one point eight that we're talking about. We're thinking we're holding a decision on pending the outcome of the 232.

Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is now open. Please go ahead.

Thanks. Good evening. Maybe just going back to Section 232, obviously, you know, there's a lot in play and I recognize that. But, you know, we've heard and you mentioned the potential for Waivers or quotas being allowed for certain domestic cell producers that could exempt them from some of these policy changes. I guess I'm just curious conceptually, you know, from your perspective, if some of these waivers are granted, do you think that could mute some of the price upside from Section 232? Or do you still see a constructive supply-demand setup? Just trying to think conceptually, you know, how you think about that.

I mean, obviously, any modifications versus a 100% restriction will create some potential diluted impact to the strategic intent of the 232. It also depends on if there is a waiver of some type or a quota of some type. I mean, how big is it? Does it scale down over time? I mean, is it something that It's hard to give you a great insight to the impact. Clearly, we're advocating to try to minimize any of those impacts, and as well as they should only be a limited duration to the extent that they're enabled or allowed at all. We really want to create a domestic supply chain, and any type of and many other workarounds that you get will disincentivize the investments that need to be made here in the U.S. to scale up those capabilities. And I think it's much easier for people to understand the policy and environment with certainty versus creating uncertainty by waivers or FOAs and those types of things that they can create. So we'll have to wait and see. We're firm in our positions that we don't believe that they should be allowed. But we'll have to see how the final outcome is.

And there's some history here, too. If you look back at the Section 201 tariffs and the exemption was put in place by facial technology, it was clear that that exemption effectively gutted that provision. So I think the administration has seen how those exemptions can effectively undermine what they're trying to do. If there's a belief that the 232 provides a need around the national security interest, it doesn't make a lot of sense to have a carve-out or a quota piece associated with a national security interest provision.

Got it. That makes sense. And then, you know, if we say that Section 232, you know, goes through, you get some kind of, you know, reasonable outcome, positive outcome. You kind of mentioned that there's four gigawatts. It sounds like four gigawatts plus of kind of pending deals for the second half. But do you get the sense that there's more demand sitting on the sidelines that's waiting for policy clarity and You know, once we get clarity, you could see that number move up significantly higher. And then just a point of clarification, I guess, again, if Section 232 goes through, you get a good outcome. On the Southeast Asia capacity, would you bring that volume into the U.S. as finished products, or would it come through as unfinished and you would expand your U.S. finishing line?

I guess on the 232, and I'll let Alex take the other question around how we think through Southeast Asia and whether a company is finished or partially finished in order to expand capacity for finishing here in the U.S. I'll let Alex take that one. There clearly are customers that are sitting on the sidelines. There is absolutely no doubt about that. And even some of these that we're are all tethered to posting of security. So one of the challenges that, especially as you get longer dated and in terms of contracting some of this volume, we are really trying to enforce having cash liquid security against new bookings. That's been a priority of ours. In some cases, some of the counterparties can't post through the required security So that's a piece of it. But there's clearly people sitting on the sidelines waiting to see what happens. You know, we have a couple of counterparties that are, you know, they're hedging their weight. They know that the risk is that ASPs may go up. But at this point in time, they're trying to wait and see how it plays out. And again, just kind of the conversation last time, are there quotas or not? And, you know, what are the options they have and so forth. So that's all being, you know, is in the mix right now. And as we've always said, the best thing for this industry is we just have clarity and certainty. And 232, we just really need a decision on that because we can all understand how it's before.

As it relates to what we could do with the Southeast Asia facilities, we could bring fully finished product in subject to demand and pricing in the U.S. It's not only a function of where the 232 sits, it's also a function of where other tariff provisions sit. So right now we have a Section 301 that's just gone into effect, replacing the Section 122 tariffs that were in effect for the first half of this year. Those relate to forced labor. There is still risk around a 301 relating to excess capacity, so that investigation is ongoing. Pending the outcome of that will obviously determine what the total tariff impact could be then to product coming in from Malaysia, Vietnam. We could bring some of it in as semi-finished Whipshare product and finish it in our existing U.S. facilities with a limited amount, probably in the couple hundred megawatt range of incremental capacity at our finishing lines across existing fleet in Ohio. So we could do a little bit of that, but it's not effective to run Malaysia at low throughput, as you're seeing with the underutilization costs we're having this year. So really what we're looking for is an ability to run that factory at close to full capacity. So then either it's selling fully finished international product subject to where tariffs end up, or there is the potential to build another finishing line in the U.S. that's subject, again, to finding available site with power and the time it would take to build that out. So I think that's less likely, but it is still an option.

Your next question comes from the line of Julian Dimalin-Smith with Jefferies LLC. Julian, your line is now open. Please go ahead.

Thank you, operator. Good afternoon, team. Appreciate the opportunity. Quickly, actually, to follow up on that last line of thinking on bookings, how do you think about the safe harbor having played into the latest quarter here, obviously July 4 being a relevant threshold, and also, again, that being a leading indicator for future sales into the later part of the decade? How are you thinking about that? Obviously, that's a big part of your open book. What are you thinking in terms of having, say, Farber to acquire your initial customer conversations? And then as a follow-up on what you were just alluding to there, can you elaborate a little bit more around the permutations and the timeline for that remaining piece in Southeast Asia? I know it's a little bit of just an extension of the logic you were just delineating there, but can you expand a little bit on... It sounds like it's not that far off that you'll make a decision. Let me put it more bluntly.

Maybe I'll just take that one. On the Southeast Asia, we're really waiting for the outcome of the 232. We would expect to evaluate that and have a view shortly thereafter. It doesn't necessarily mean that we will have an immediate action plan that relates to, say, a shutdown or a full capacity. But once we have a sense of where the policy is, it allows us to evaluate it. It will take a little bit of time, though. We want to make sure whatever policy comes through, we understand it, and our customers also have a chance to evaluate it, and we can have discussions around whether there's a view of long-term off-take potential from those facilities.

Yeah, and then I just want to make sure a couple of things. The bookings that we're reporting, most of the bookings that we're All of that was outside of the quarter close. So most of that happened in July, which would also have been outside of the safe harbor date. And most everyone has safe harbored with, you know, transformers. You know, there's really no safe harboring. I know there was a You know, I don't know, it was like maybe 10 days left in the quarter where there was a ruling that was made that the decision, you know, that came out in August, you know, the prior year where it said that, you know, you eliminated the ability to use modular 5% CapEx rule to safe harbor. There was a ruling by one of the courts that came out, I think. or someone like June 20th. There was hardly any time left in the quarter. And that theory you could use, you know, assuming that that wasn't challenged, the theory you could use, you know, modules to potentially save harbor projects. But, I mean, that was really not an opportunity. It just happened way too late. And most people had already saved harbor with the inverters or transformers, excuse me, anyways. But, you know, as you go forward, it is an important component, especially for anything that was safe harbor. If you save harbor The first half of this year, you know, with the ability to COD even out in 2030, you know, there are stricter requirements from a FEOC standpoint at the project level that have to be met that I think positions us well to serve that demand as you get out into 29 and 30 for when those projects most likely could be commissioned. But the other thing I would say is we are seeing there's a lot of kind of rigid interpretations a little bit, and there are some people that are interpreting that even if something was safe harbored, you know, let's say in the second half of 25, that if you do anything with a change order or let's assume you move something from a MSA to a PAPO or until a PAPO, a purchase order, excuse me, is actually generated, you have to always be mindful of is there a restriction that you could have to comply with from a primitive foreign entity perspective. So there's a lot of very conservative, which is right. So people want to be airtight and not taking any risk to jeopardize their either ITC or PTC. And I think there's a view towards maybe being overly conservative, advice they're getting from tax counsel and others. And I think that's, if I was in their situation, I clearly would do that as well. I don't want to put anything at risk. So there's that, you know, safe harbor and those requirements under 48E as it relates to, you know, fiat restrictions or requirements, I think will continue to play well for us as we look to book out through the end of this decade.

Your next question comes from the line of Philip Shen with Roth Capital Partners. Phil, your line is now open. Please go ahead.

Hey, guys. Thanks for taking my questions. Just wanted to follow up on the 232, specifically on timing. You know, we've been thinking it's August, but we've seen a bunch of delays. The issue is if it slips past August, then we go into September, and then that gets closer to the midterms, then there's a chance that decision can push on that. Our base is still August, but One of our contacts, who is in Tustin Commerce, OSTR, has shared that from a priority authorization standpoint.

Phil, we're really having a hard time. We're having a real hard time here. You're breaking up.

How is this? Is this better?

Try it again, because it was really hard to get that.

Mark?

Yes.

Okay. Yeah, go ahead, Tom. So, talking about the 2.32 result. Okay. And, anyway, we've been thinking it's August, but there's a sense that the 2.32 will come out in September or beyond. Some of the contacts believe that, you know, the 1.32 front and center. And so, what's your view on based on the folks that you guys are in touch with that this should be August or do you think there's a greater probability that this could slip into the fall or even beyond? Thanks.

Bill, I think I got your question. Look, I know there's a lot that's in the mix and what the administration is trying to evaluate when this is implemented and we also want to make sure they do and what is implemented achieves the strategic intent and the spirit of what it was set out to do. So we are patient. We continue to be engaged. We are anxious as well as you are and others. And as I indicated, the industry really needs the certainty of understanding. I can't give you any level of conviction, maybe more than what you have right now. We are still getting signal that, you know, decisions will be made. There are meetings that are being had that would indicate they're close to making a decision. But, you know, we also want to make sure that this is done right. And so to give you some sense of, you know, my level of confidence in August or whether way to September, You know, I can't really give you a strong view on that. I can just tell you we want this to be implemented with the achieving the strategic intent and spirit of what it was set out to do. And that's, you know, that's the most important thing. And we're going to continue to be engaged with the administration to ensure that that happens.

Your next question comes from the line of Colin Rush with Oppenheimer & Co. Your line is now open. Please go ahead.

Thanks so much. Guys, are there opportunities for you to reduce input costs on the US manufacturing? And can you talk a little bit about the supply chain and how that's evolving? I know you've had some discussions with glassmakers around capacity expansion and the capital needs that they have. But just curious about how you might be able to look at that trend on a multi-year basis.

Yeah. Colin, I mean, it's challenging. You know, we're still in this, and especially in the U.S., as you see more reshoring, you know, pressure on commodities, you know, the data centers being built out, I mean, things, obviously, as you would expect, steel, copper, you know, we don't use silver, but obviously our competitors do. I mean, there's just a lot of pressure, you know, Those, you can look at fuel costs, you can look at what's happening in the Middle East, and I see that as more of a transit area in nature. And then once that's resolved, then I think we'll see much more competitive fuel prices and what have you. The electricity prices, you know, in some of the locations in which we operate, we're dealing with some of those same adverse impacts that others are. So we're in a pretty challenging Rising Commodity Cost Environment. Now, are we able to do things like drive more throughput through our operations? Absolutely, we're focusing on continuing to do that. Are we finding ways to create further automation and capabilities that can reduce labor costs? So there's levers that we're focused on. There's some redesign of the product that we're looking at on trying to take costs out of the The back rails of the frame. We continue to look at glass and thickness and other things that we could do from that standpoint. But it's a pretty challenging environment from a commodity cost standpoint. And our ability to get a lot of profit, I think, is probably one of the most challenging times that we've been in. Now, I will say that when you look at our cost per watt, not necessarily our cost per module, the great thing about is that we have the opportunity to drive the efficiency up. So as we, you know, drive the efficiency up, you know, as we go from kind of where we are right now and add another, you know, 10, 15, 20, 30 watts, that'll help the CPW numbers, right, cost per watt numbers, which is important, right? We need to drive that number down. And then the ASPs, the value uplift because of the energy attributes of the higher efficiency of cure, then that drives to an entitlement for higher ASPs and the like. So that's what we're focused on, and we're never going to give up on the input cost. We've got to do the best we can to get cost out, but it is a pretty challenging environment right now.

I'd also say that the potential to use the balance sheet to work with suppliers who are looking at expansion or needing funding, there's an option there. We could try and leverage our position of financial strength to get forward pricing that makes more sense, that has to be done at the right premium risk profile. and then the other thing I'd say is outside of just bill of material costs let's see we're having a challenging time around period costs going from cost for what produced over the cost for what sold so again we're seeing freight challenges as relates to cost of trucking and I think I mentioned in the prepared remarks that we're seeing costs now to deliver product from Peresberg over to the West Coast of the U.S., the equivalent of delivering product from Asia to the West Coast of the U.S. So continue to look how we can optimize our domestic transport routes, freight, and try and optimize between factories so that we can reduce those costs to the greatest extent possible.

Our final question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is now open. Please go ahead.

Hey, good afternoon. Thank you for taking my question. I actually want you to come back on the last question regarding M&A, and I think you just added a little bit to it, but can you expand a little bit, what are you targeting with the current balance sheet that you have, and kind of felt like you were mentioning that you could use M&A to maybe help manage the input cost, but where do you see maybe an option or a possibility for First Solar?

So when we talk about use of the cash, M&A is something that's been on the list for us for a long time. Generally, we focus more on the working capital reserve piece and then growing capacity and replicating technology. That's where the company's been, if you look over the last decade or so. We've also put more money into R&D. And I think when you think about M&A, The obvious area for us to expand into would be, do we spend more on technology and technology adjacent things, which could either be companies, it could be buying teams, it could be buying intellectual property, anything that could accelerate the technology transition we see going forward as we invest a lot into potential product development. So I think there's options there. We're also taking a look at things that are adjacent to technology, but we want to do it with a disciplined focus around Where do we see opportunities where we have a skill set that we can bring for something where we look at our strengths in high volume thin film manufacturing, a very high throughput efficiency? How can we leverage that set of skills and take it into an adjacent product, but also look at the overall market environment we're playing in? We compete in a challenging industry where the vast majority of our competitors are Chinese and tend to play by a different set of rules as we think about how we could move into adjacent areas across M&A. I want to evaluate what does the competitive landscape look like? What does the market that we would be accessing look like? What does the policy environment look like? So we are starting to look through that. Clearly, given our position in the industry, a lot of stuff comes across our desk and has done over the last 10 years or so. We haven't done a lot on the M&A side. I'd say we are more willing to do that. We're more open to it, but we want to make sure we do it with a disciplined focus.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.