Q4 2023 First Solar Inc.Earnings Call

Operator: Good afternoon, everyone, and welcome to First Solar's fourth quarter and full year 2023 earnings and 2024 financial guidance call. This call is being webcast live on the investor section of First Solar's website at investor.firstsolar.com. At this time, all participants are in a listen-only mode.

Good afternoon, everyone and welcome to the first solar fourth quarter and full year 2023 earnings and 2024 financial guidance call. This call is being webcast live on the investors section of $1st Web site at Investor Dot first solar dotcom.

At this time all participants are in a listen only mode. As a reminder, today's call is being recorded I would now like to turn the call over to Mr. Richard Roberto from first solar Investor.

Operator: As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Richard Romero from First Solar Investor Relations. Richard, you may begin.

Richard Roberto: Relations Richard you may begin.

Richard Romero: Good afternoon, and thank you for joining us. Today, the company issued a press release announcing its fourth quarter and full year 2023 financial results, as well as guidance for 2024. A copy of the press release and associated presentations are available on First Solar's website at investor.firstsolar.com. Also with me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer.

Richard Roberto: Good afternoon, and thank you for joining us.

Richard Roberto: Today, the company issued a press release announcing its fourth quarter and full year 2023 financial results as well as guidance for 2024.

Richard Roberto: A copy of the press release and associated presentation are.

Richard Roberto: Available on first <unk> website at Investor first solar Dot com.

Richard Roberto: With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley Chief Financial Officer.

Richard Roberto: Mike will provide a business update and outlook for 2020 for.

Richard Romero: Mark will provide a business update and outlook for 2024. Alex will discuss our financial results for the fourth quarter and full year 2023, as well as our financial guidance for 2024. Following their remarks, we will open the call for questions.

Alexander R. Bradley: Alex will discuss our financial results for the fourth quarter and full year 2023, as well as our financial guidance for 2024.

Alexander R. Bradley: Following their remarks, we will open the call for questions.

Richard Romero: Please note this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in today's press release and presentation for a more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer. Thank you, Richard.

Alexander R. Bradley: Please note. This call will include forward looking statements that involve risks and uncertainties.

Alexander R. Bradley: Could cause actual results to differ materially from management's current expectations.

Alexander R. Bradley: We encourage you to review the Safe Harbor statements contained in today's press release.

Alexander R. Bradley: And presentation for a more complete description.

Alexander R. Bradley: It is now my pleasure to introduce Mark Widmar, Chief Executive Officer.

Mark R. Widmar: Thank you Richard good afternoon, and thank you for joining us today.

Mark R. Widmar: Good afternoon, and thank you for joining us today. I would like to start by noting that this month marks the 25th anniversary of First Solar's founding, making us one of the oldest and most experienced solar module manufacturers in the world. This is a remarkable milestone in a journey that has positioned us as the Western Hemisphere's leading solar module technology and manufacturing company. Although we're not the only American solar manufacturer to come into existence at the end of the last century, we're the only one of scale to remain today. However, this is not simply a story of survival but one about the value of long-term strategic decision-making underpinned by differentiated technology and business model driving value creation for our shareholders and our partners. It is a story of innovation, values, competitiveness, and perseverance. And we are proud of our work towards leading the world's sustainable energy future. As our journey continues,

Mark R. Widmar: I would like to start by noting that this month marks the 25th anniversary of first solar sounding making us one of the oldest and most experienced solar module manufacturers in the world.

Mark R. Widmar: This is a remarkable milestone and a journey that has positioned us as the western hemisphere is leading solar module technology and manufacturing company.

Mark R. Widmar: Well, we're not the only American solar manufacturer to come into existence at the end of the last century, where they only want to scale to remain today.

Mark R. Widmar: However, this is not simply a story of survival, but one about the value of long term strategic decision, making underpinned by differentiated technology and business model.

Mark R. Widmar: Diving value creation for our shareholders and our partners.

Ours is a story of innovation values competitiveness and perseverance and we are proud of our work towards leading the world sustainable energy future.

Mark R. Widmar: As our journey continues few years have been as consequential to our long term growth strategy as 2023.

Mark R. Widmar: Few years have been as consequential to our long-term growth strategy as 2023. Over the past year, we expanded manufacturing capacity, mobilized at our latest announced facility in Louisiana, produced and shipped a record volume of modules, expanded our contracted backlog to historic levels, and increased R&D investment, and continue to evolve our technology and product roadmap. Let's review the key accomplishments of 2023, beginning with slide three.

Mark R. Widmar: Over the past year, we expanded manufacturing capacity.

Mark R. Widmar: Mobile is that our latest announced facility in Louisiana.

Mark R. Widmar: Produced and shipped a record volume of modules.

Mark R. Widmar: <unk> expanded our contracted backlog to historic levels.

Mark R. Widmar: And increased R&D investment.

Mark R. Widmar: And continue to evolve our technology and product roadmap.

Mark R. Widmar: Let's review the key accomplishments in 2023.

Mark R. Widmar: Beginning with slide three.

Mark R. Widmar: From a commercial perspective, 2023 continues momentum established in 2022, as long-term multi-year procurement continues to drive demand. We added 10 new customers and secured 28.3 gigawatts of net bookings at a base ASP of over 30 cents per watt. Despite industry macro challenges such as global oversupply and pricing volatility, we continue to see strong mid- to long-term demand, especially in the United States, as evidenced by 2.3 gigawatts of net booking since the previous earnings call at an ASP of 31.8 cents per watt, excluding adjustments, or 33.4 cents per watt, assuming the realization of our technology adders. Our total contracted backlog now stands at 80.1 giga Well, Alex will provide a comprehensive overview of our 2023 financial results.

Mark R. Widmar: From a commercial perspective 2023 continued momentum established in 2022 as.

Mark R. Widmar: As long term multi year procurement continue to drive demand.

Mark R. Widmar: We added 10, new customers and secured 28, three gigawatts of net bookings at a base ASP of over 30 per watt.

Mark R. Widmar: Despite industry macro challenges such as global oversupply and pricing volatility we continue to see strong mid to long term demand.

Mark R. Widmar: Especially in the United States.

As shown with two three gigawatts of net bookings since the previous earnings call at an ASP of.

Mark R. Widmar: $31 eight per watt excluding adjusters.

Mark R. Widmar: Or 33 four per watt, assuming the realization of our technology adders.

Mark R. Widmar: Our total contracted backlog now stands at $80, one gigawatts order stretching to the end of this decade.

Mark R. Widmar: While Alex will provide a comprehensive overview of our 2023 financial results.

Mark R. Widmar: Our full-year EPS came in at $7.74, which is above the midpoint of our initial and Q3 2023 guidance range and included the impact of the sale of our Section 45X tax credits and the impairment of our investment in cubic PV. These items, neither of which were included in our Q3 2023 guidance range, adversely impacted our full-year EPS by approximately $0.48 per watt.

Our full year EPS came in at $7 74.

Mark R. Widmar: Which is above the midpoint of our initial and Q3 2023 guidance ranges.

Mark R. Widmar: And included the impact of the sale of our section 45 ex tax credits and the impairment of our investment in cubic PV.

Mark R. Widmar: These items neither of which were included in our Q3 2023 guidance ranges adversely impacted our full year EPS by approximately 48 per watt.

Mark R. Widmar: From a manufacturing perspective, we produced a record 12.1 gigawatts in 2023, representing a 33% increase in production over 2022. As a result, we have now surpassed 60 gigawatts of cumulative production since we first began commercial manufacturing in 2002. This growth was driven by manufacturing excellence at our Series 6 factories, which produced 9.7 gigawatts in 2023, an increase of 600 megawatts compared to 2022, and the successful ramping of our new Series 7 factories in the U.S. and India, which combined to produce more than 2.4 gigawatts in 2023. Our top production bin for Series 6 was 475 watts, and our top production bin for Series 7 was 545 We remain committed to progressing our technology and product roadmap in 2023, having recently achieved 22.6 percent World Record Cattell Research Conversion Efficiency based on our CURE technology and launched the first bifacial thin-film solar panel.

Mark R. Widmar: From a manufacturing perspective, we produced a record $12 one gigawatts in 2023.

Mark R. Widmar: Representing a 33% increase in production over 2022.

As a result, we have now surpassed 60 gigawatts of cumulative production since we first began commercial manufacturing in 2002.

This growth was driven by manufacturing excellence at our series six factories, which produced $9 seven Gigawatts in 2023 and.

Mark R. Widmar: An increase of 600 megawatts compared to 2022.

Mark R. Widmar: And the successful ramping of our new series seven factories in the U S and India.

Mark R. Widmar: Which combined to produce more than two four gigawatts in 2023.

Mark R. Widmar: Our top production been for series six was 475 watts and our production been four series seven was 545 watts.

Mark R. Widmar: We remain committed to progressing our technology and product roadmap in 2023, having recently achieved a 22, 6%.

Mark R. Widmar: World record CAD Tel research conversion efficiency based on our core technology.

And launched the first bifacial thin film solar panel.

Mark R. Widmar: In addition, we successfully completed our manufacturing readiness trial under our CURE program in the fourth quarter of 2023, and we expect to begin manufacturing modules powered by this technology at our lead line in Perrysburg in the fourth quarter of 2024. It's vital that our supply chain and logistics operations keep pace with our manufacturing expansion plans, and we've made meaningful progress on this front in 2023.

Mark R. Widmar: In addition, we successfully completed our manufacturing readiness trial under our care program in the fourth quarter of 2023 and.

Mark R. Widmar: And expect to begin manufacturing modules powered by this technology at our lead line in Perrysburg in the fourth quarter of 2024.

Mark R. Widmar: It's vital that our supply chain and logistics operations keep pace with our manufacturing expansion plans and.

Mark R. Widmar: And we've made meaningful progress on this front in 2023.

Mark R. Widmar: Key achievements include entering into agreements with Vitro to supply American-made front and back glass for our manufacturing operations in the U.S. and with Amco and ICE Industries to supply steel back rails for our facilities in Alabama and Louisiana. We also signed agreements with Sengalbane to supply the back glass for our modules in India, regarding growth We exit the year with 16.6 gigawatts of nameplate capacity, which marks an increase of 6.8 gigawatts from 2022.

Mark R. Widmar: Key achievements, including.

Mark R. Widmar: And entering into agreements with vitro to supply American made front and back glass.

Mark R. Widmar: For our manufacturing operations in the U S.

Mark R. Widmar: And with Aimco and ice industries to supply steel back rails for our facilities in Alabama and Louisiana.

Mark R. Widmar: We also signed agreements with single bank to supply the backlash for our modules in India.

Mark R. Widmar: Regarding growth, we exited the year with $16 six gigawatts of nameplate capacity.

Mark R. Widmar: This marks an increase of six eight gigawatts from 2022.

Mark R. Widmar: Driven by the commencement of operations at our Series 6 factories in Ohio and Indiana, and 20 excuse me, India. In 2023, we announced a 1.1 billion investment in a new manufacturing facility in Louisiana, which is expected to add 3.5 gigawatts to our nameplate capacity in 2026. When combined with our Alabama facility and Ohio manufacturing footprint expansions, both of which are in progress, we expect 2026 year-end nameplate capacity of approximately 14 gigawatts domestically, with another 11 gigawatts internationally for a global nameplate capacity of approximately 25 gigawatts. We also continue to invest in our technology with our R&D Innovation Center and a perovskite development line, both under construction in Ohio. These facilities are expected to commence operations in the first half and second half of 2024, respectively. Additionally, in 2023, we acquired Evolar, a European leader in perovskite technology, and assisted its transition of its laboratory in Sweden to become our first R&D facility in Europe.

Mark R. Widmar: Driven by the commencement of operations at our series six factories in Ohio and Indiana.

Mark R. Widmar: In 2000, excuse me in India in 2023, we announced a $1 1 billion investment.

Mark R. Widmar: And our new manufacturing facility in Louisiana.

Mark R. Widmar: Which is expected to add three five gigawatts to our nameplate capacity in 2026.

Mark R. Widmar: When combined with our Alabama facility in Ohio manufacturing footprint expansion, both of which are in progress. We expect 2026 yearend nameplate capacity of approximately 14 gigawatts domestically with another 11 gigawatts internationally for our global nameplate capacity of approximately 25 gigawatts.

Mark R. Widmar: We also continue to invest in our technology with our R&D innovation Center and our prostate development line both on a construction in Ohio.

Mark R. Widmar: These facilities are expected to commence operations in the first half and second half of 2024, respectively.

Mark R. Widmar: Additionally, in 2023, we acquired Ebola.

Mark R. Widmar: European leader in <unk> technology.

Mark R. Widmar: And as this transition its laboratory in Sweden to become our first R&D facility in Europe.

Mark R. Widmar: These and other investments in R&D allow us to accelerate the cycles of innovation we believe are necessary to extend our leadership in thin-film solar technology. Turning to slide four, as of year-end 2022, our contracted backlog totaled 61.4 gigawatts, with an aggregate value of $17.7 billion, or approximately $0.288 per watt. Through year-end 2023, we entered into an additional 28.3 gigawatts of contracts and an average ASP of 30.5 cents per watt, after accounting for sales of 11.4 gigawatts in 2023. We begin 2024 with a total contracted backlog of 78.3 gigawatts with an aggregate value of 23.3 billion or approximately 29.8 cents per watt. Since the end of 2023, we have entered into an additional 1.8 gigawatts of contracts, resulting in a total backlog of 80.1 gigawatts. These most recent bookings have an average ASP of 31.9 cents per watt pre-adjuster or 33.9 cents per watt if contract technology adjusters are realized.

Mark R. Widmar: These and other investments in R&D allow us to accelerate the cycles of innovation, we believe are necessary to extend our leadership in thin film solar technology.

Mark R. Widmar: Turning to slide four as.

Mark R. Widmar: As of year end 2022, our contracted backlog totaled 61, four gigawatts with an aggregate value of $17 7 billion or approximately $28 eight per watt.

Mark R. Widmar: Through year end 2023, we entered into an additional 28 three gigawatts of contracts at an average ASP of <unk> 35 per watt.

Mark R. Widmar: After accounting for sales of 11, four gigawatts in 2023.

Mark R. Widmar: We began 2024 with a total contracted backlog of 78, three gigawatts with an aggregate value of $23 3 billion or approximately $29 eight per watt.

Mark R. Widmar: Since the end of 2023, we have entered into an additional one eight gigawatts of contracts, resulting in a total backlog of 81 gigawatts.

Mark R. Widmar: These most recent bookings haven't average ASP.

Mark R. Widmar: Of $31 nine per watt pre adjuster.

Mark R. Widmar: Or 33 nine per watt if contract technology gestures are realized.

Mark R. Widmar: Additionally, we have received security against 206 megawatts of previously signed contracts in India, which now move these volumes from contracted subject to conditions precedent grouping within our future opportunities pipeline to our bookings backlog.

Alexander R. Bradley: Additionally, we have received security against 206 megawatts of previously signed contracts in India, which now move these volumes from contracted subject to conditions precedent grouping within our future opportunities pipeline to our bookings backlog. Additionally, a substantial portion of our overall backlog includes the opportunity to increase base ASPs through the application of adjustments. If we're able to realize achievements within our current technology roadmap, as is the expected timing for delivery of the product, as of the end of the fourth quarter, we had approximately 39.1 gigawatts of contracted volume with these adjusters, which if fully utilized, realized, excuse me, could result in additional revenue of approximately $0.5 billion, or approximately one cent per watt, the majority of which would be realized between 2025 and 2027.

Mark R. Widmar: A substantial portion of our overall backlog includes the opportunity to increase base asps through the application.

Mark R. Widmar: Patients have adjusters.

Mark R. Widmar: We're able to realize achievements within our current technology roadmap as is the expected timing for delivery of the product.

Mark R. Widmar: As of the end of the fourth quarter, we had approximately $39 one gigawatts of contracted volume with these adjusters.

Mark R. Widmar: If fully utilized realize excuse me could result in additional revenue.

Mark R. Widmar: Approximately <unk> 5 billion.

Mark R. Widmar: Or approximately <unk> <unk> per watt.

Mark R. Widmar: The majority of which will be realized between 2025 and 2027. This.

Alexander R. Bradley: This amount does not include potential adjustments, which are generally applicable to total contracted backlog, both related to the ultimate module bin delivered to the customer, which may adjust the ASP under the sales contract upward or downward or for increases in sales rate or applicable aluminum or steel commodity price changes. I'll now turn the call over to Alex, who will discuss our Q4 and full year 2023 results. Thanks Mark.

Mark R. Widmar: This amount does not include the potential adjustments, which are generally applicable to total contracted backlog.

Mark R. Widmar: <unk> related to the ultimate module been delivered to the customer.

Mark R. Widmar: Which may adjust the ASP under the sales contract upward or downward or for increases in sales rate or applicable aluminum or steel commodity price changes.

I'll now turn the call over to Alex who will discuss our Q4 and full year 2023 results.

Mark R. Widmar: Okay.

Alexander R. Bradley: Thanks Marc.

Alexander R. Bradley: Starting on slide five, I'll cover our financial results for the fourth quarter and full year 2023. Net sales in the fourth quarter were $1.2 billion, an increase of $0.4 billion compared to the prior quarter. The increase in net sales was driven by higher volumes sold, including higher net sales of Series 7 modules that we continue to ramp production at our new facility in our. For the full year 2023, net sales of 3.3 billion compared to 2.6 billion in the prior year. This increase was driven by $0.9 billion of higher module net sales, resulting from increases in both volume sold and ASPs, which was partially offset by $0.2 billion of lower revenue from our residual business operation, primarily related to the sale of our Luz del Norte project and the price, based on our vertically integrated differentiated manufacturing model.

Alexander R. Bradley: Starting on slide five I will cover our financial results for the fourth quarter and full year 2023.

Alexander R. Bradley: Net sales in the fourth quarter were $1 2 billion increase of <unk> 4 billion compared to the prior quarter.

Alexander R. Bradley: The increase in net sales was driven by higher volumes sold including higher net sales of series seven modules, we continue to ramp production at our new facility in Ohio.

Alexander R. Bradley: For the full year 2023, net sales were $3 3 billion compared to $2 6 billion in the prior year.

Alexander R. Bradley: This increase was driven by low point $9 billion of higher module net sales, resulting from increases in both volumes sold and ASP.

Alexander R. Bradley: This was partially offset by <unk> $2 billion of lower revenue from our residual business operations, primarily related to the sale of our <unk> project in the prior year.

Alexander R. Bradley: Based on our vertically integrated differentiated manufacturing model in the current form factor modules.

Alexander R. Bradley: The current form factor of our module... And we expect to qualify for Section 45X tax credits of approximately 17 cents per watch, each module produced in the US and sold to a third party, which is recognized as a reduction to the cost of sales and the period of sales. In December, we entered into an agreement with Pfizer, which resulted in the sale of approximately $687 million.

Alexander R. Bradley: We expect to qualify the section 45 ex tax credits of approximately 17 cents per watt each module produced in the U S and sold to a third party.

Alexander R. Bradley: Which is recognized as a reduction to cost of sales in the period of sale.

Alexander R. Bradley: In December we entered into an agreement with Pfizer, which resulted in the sale of approximately $687 million for 2023 section 45 ex tax credits.

Alexander R. Bradley: 2033 Section 45X Tax Credit, for expected aggregate cash proceeds of $659 million. Received an initial $336 million of cash proceeds in January, with the remainder expected by the end of April 2024. In connection with this transaction, we recognize the valuation adjustment of $28 million within cost of sales during the fourth quarter to reduce the carrying value of the credits to the amount expected to be received from the transaction. In the fourth quarter of the full year 2023, we recognized $229 million and $659 million, respectively, for Section 45x tax credits, including the effects of the aforementioned. Gross margin was 43% in the fourth quarter, compared to 47% in the third quarter This decrease was primarily attributable to the adjustment associated with the sale of our Section 45X tax credit.

Alexander R. Bradley: Our expected aggregate cash proceeds of $659 million.

Alexander R. Bradley: We received an initial $336 million of cash proceeds in January with the remainder expected by the end of April 2024.

Alexander R. Bradley: In connection with this transaction, we recognized a valuation adjustment of $28 million within cost of sales during the fourth quarter to reduce the carrying value of the credits to the amounts expected to be received from the transaction.

Alexander R. Bradley: For the fourth quarter and full year 2023, we recognized $229 million and $659 million respectively. The section 40 by next tax credits, including the effects of the aforementioned adjustments.

Alexander R. Bradley: Gross margin was 43% in the fourth quarter compared to 47% in the third quarter.

Alexander R. Bradley: This decrease was primarily attributable to the adjustment associated with the sale of our section 40 by next tax credits.

Alexander R. Bradley: A higher mix of modules sold from our non-U.S. factories, which do not qualify for Section 45X tax credits, and the write-off of certain legacy production materials, partially offset by continued module cost reduction. For the full year 2023, gross margin was 39% compared to 3% in the prior year. The increase in growth margin was primarily due to the recognition of Section 45X tax credits, a decrease in sales rates, emerging detention charges, an increase in module ASPs, continued module cost reduction, and the net impairment and sale of our Luton North Sea Project in the prior year. Partially offset by increased under-utilization costs charged in the period in which they are incurred, associated with factory ramps and twin towers. The ramp charges were $16 million in the fourth quarter compared to $25 million in the third quarter.

Alexander R. Bradley: A higher mix of module sold from our non U S factories, which do not qualify that section pullbacks tax credits.

Alexander R. Bradley: And the write off of certain legacy production materials, partially offset by continued module cost reductions.

Alexander R. Bradley: For the full year 2023, gross margin was 39% compared to 3% in the prior year.

Alexander R. Bradley: The increase in gross margin was primarily due to the recognition of section 45 ex tax credits a decrease in sales rates demurrage and detention charges.

An increase in module asps.

Alexander R. Bradley: Continued module cost reductions on.

Alexander R. Bradley: And the net impairment and sale of our <unk> project in the prior year.

Alexander R. Bradley: Partially offset by increase in the utilization costs charged in the period in which they are incurred associated with factory ramped in 2023.

Alexander R. Bradley: The ramp charges of $16 million in the fourth quarter compared to $25 million in the third quarter.

Alexander R. Bradley: Our ramp costs for the full year 2023 were £89 million, compared to £7 million in the prior quarter. Our 2023 ramp costs were primarily attributable to our new Series 7 factories in Ohio and India. SG&A R&D and production startup expenses totaled $111 million in the fourth quarter, an increase of approximately $7 million relative to the prior quarter. This increase is primarily driven by fees associated with the sale of our 2023 Section 21x tax credit and Increase in Incentive Company, are still set by lower-than-expected credit losses, resulting from improved collections of accounts receivable. For the full year 2023, SG&A R& As a reminder, we recorded a litigation loss of $36 million during the second quarter related to our legacy system.

Alexander R. Bradley: Ill ramp costs for the full year, 2023% to 89 million to $7 million in the prior quarter.

Alexander R. Bradley: By 2033 ramp costs were primarily attributable to our new series seven factories in Ohio in India.

Alexander R. Bradley: SG&A R&D and production startup expenses totaled $111 million in the fourth quarter, an increase of approximately $7 million relative to the prior quarter.

Alexander R. Bradley: This increase was primarily driven by fees associated with the sale of our 2023 section fully by next tax credits.

Alexander R. Bradley: An increase in incentive compensation.

Alexander R. Bradley: Offset by lower than expected credit losses, resulting from improved collections of accounts receivable.

Alexander R. Bradley: For the full year 2023, SG&A R&D and production startup expenses, along with litigation losses were $450 million compared to $351 million in the prior year.

Alexander R. Bradley: As a reminder, we recorded a litigation loss of $36 million during the second quarter that relates to a legacy systems business.

Alexander R. Bradley: The remaining operating expense increase of $63 million was primarily attributable to higher employee compensation due to additional headcount by a professional fee associated with litigation. Implementation of a New Enterprise Resource Planning System, Sale of our 23.3 section 45X tax credit, Thank you very much. Our fourth-quarter operating income was $398 million, which included depreciation, amortization, and accretion of $90 million, ramp costs of $16 million, and costs associated with the sale of our 2023 Section 20X tax credits of $35 million. Legacy Systems Related Income $7 million, Production started at an expense of $10 million, and Sharebase Compensation Expense of $11M. Our full year 2023 operating income was $857 million. This includes depreciation, amortization, and accretion of $308 million, ramp costs of $89 million, costs associated with the sale of our 2023 Section 5.0x tax credits of $35 million, and Legacy Systems business related costs of $7 million. Production startup expenses of $65 million; share base compensation expense of $34 million. In the fourth quarter, we took a $23 million impairment associated with a strategic investment in cubic PV.

Alexander R. Bradley: The remaining operating expense increase of $63 million was primarily attributable to higher employee compensation due to additional head count.

Alexander R. Bradley: Higher professional fees associated with litigation.

Alexander R. Bradley: The implementation of a new enterprise resource planning system, the sale of our 2023 section for the Quebec tax credits.

Alexander R. Bradley: And higher material and module testing costs for our research and development activities.

Our fourth quarter operating income was 398 million, which included depreciation amortization and accretion of $90 million ramp.

Alexander R. Bradley: <unk> cost of $16 million.

Alexander R. Bradley: Costs associated with the sale of our 2023 ex Quebec tax credits of $35 million.

Alexander R. Bradley: Legacy systems related income of $7 million production startup expense of $10 million and share based compensation expense of $11 million.

Alexander R. Bradley: Our full year 2023 operating income was $857 million.

Alexander R. Bradley: This includes depreciation and amortization accretion of $308 million ramp costs at 89 million cost associated with the sale of Alto <unk> III sexual pleasure next tax credits of $35 million.

Alexander R. Bradley: Legacy systems business related costs of $7 million.

Alexander R. Bradley: Production startup expense of 65 million.

Alexander R. Bradley: Share based compensation expense of $34 million.

Alexander R. Bradley: For the fourth quarter, we took a $23 million impairment associated with a strategic investment in cubic PV.

Alexander R. Bradley: Our investment thesis is anchor to that continuing development work on perovskite tandem technologies.

Alexander R. Bradley: Our investment thesis is anchored to their continuing development work on perovskites and tandem technology. Outside of our investment thesis, they had planned to develop domestic silicon wafer manufacturing capacity. However, this plan was recently abandoned due to surging construction costs and declining wafer prices. Triggered and impaired

Alexander R. Bradley: Outside of our investment thesis as they had planned to develop domestic silicon wafer manufacturing capacity.

Alexander R. Bradley: This fine was recently abandoned due to surge in construction costs and declining wafer prices, which triggered an impairment.

Alexander R. Bradley: Interest income in the fourth quarter was $24 million roughly the same as the prior quarter and interest income for the full year 2023 was $98 million, an increase of 64 million compared to the prior year.

Alexander R. Bradley: Interest income in the fourth quarter was 24 million, roughly the same as the prior quarter, and interest income for the full year 2023 was 98 million, an increase of 64 million compared to the prior year, primarily due to high interest rates on our cash and marketable security. We're recording an income tax expense of $27 million in the fourth quarter and $61 million for the full year. Fourth quarter income for diluted shares was $3.25 compared to $2.50 in the prior quarter.

Alexander R. Bradley: Primarily due to higher interest rates on our cash and marketable securities.

Alexander R. Bradley: We recorded an income tax expense of $27 million in the fourth quarter and $61 million for the full year.

Alexander R. Bradley: Fourth quarter income per diluted share was <unk> 25, compared to $2 50 in the prior quarter.

Alexander R. Bradley: Full year 2023 income per diluted share was $7 74 compared to a loss per diluted share 41 in 2022.

Alexander R. Bradley: Next turn to slide six discuss select balance sheet items and summary cash flow information.

Alexander R. Bradley: The aggregate balance of our cash cash equivalents restricted cash restricted cash equivalents in marketable securities was $2 1 billion at the end of the year, an increase of <unk> 3 billion from the prior quarter and a decrease of <unk> 5 billion from the prior year.

Alexander R. Bradley: The full year 2023 income for diluted share was $7.74 compared to a loss for diluted share of $0.41 in 2020. Next, turn to slide 6, and discuss Select Balance Sheet Items and Summary Cash Flow. The aggregate balance of our cash, cash equivalents, restricted cash, restricted cash equivalents, and marketable securities was $2.1 billion at the end of the year, an increase of 0.3 billion from the prior quarter and a decrease of 0.5 billion from the prior year. Our year-end net cash position, which includes the aforementioned balance, left debt, was $1.6 billion, an increase of $0.3 billion from the prior quarter and a decrease of $0.8 billion from the prior year.

Alexander R. Bradley: Our year end net cash position, which includes the aforementioned balances less debt was $1 6 billion, an increase of <unk> 3 billion from the prior quarter and a decrease of <unk> 8 billion from the prior year.

Alexander R. Bradley: The increase in our net cash balance in the fourth quarter was primarily driven by module segment operating cash flows, including advanced payments received from future module sales, partially offset by capital expenditures associated with our new plant under construction in Alabama, Louisiana and India.

Alexander R. Bradley: Decrease in our net cash balance for the full year 2023 was primarily due to capital expenditures, partially offset by module segment operating cash flow.

Alexander R. Bradley: Cash flow from operations was $602 million in 2023 compared to 873 million in 2022.

Alexander R. Bradley: The increase in our net cash balance in the fourth quarter was primarily driven by module segment operating cash flows, including advance payments received from future module sales, partially offset by capital expenditures associated with our new plants under construction in Alabama, Louisiana, and India. The decrease in our net cash balance to the full year 2023 was primarily due to capital advantages, partially offset by module segment operating cash flows. Cash flows from operations were $602 million in 2023 compared to $873 million in 2022. This increase is primarily driven by higher operating expenditures in support of our ongoing manufacturing expansion and lower advance payments received for future module sales, partially offset by higher cash receipts from modules sold during the year. Capital expenditures were $347 million in the fourth quarter, compared to $286 million in the third quarter.

Alexander R. Bradley: This decrease was primarily driven by higher operating expenditures in support of our ongoing manufacturing expansion and lower advanced payments received for future module sales, partially offset by higher cash receipts from module sold during the year.

Alexander R. Bradley: Capital expenditures were $347 million in the fourth quarter compared to $286 million in the third quarter.

Alexander R. Bradley: Capital expenditures were $1 4 billion in 2023, but did not one 9 billion for 2022 now.

Alexander R. Bradley: I'll now turn the call back to Mark to provide a business and strategy update alright. Thank you Alex.

Mark R. Widmar: A word about overall market conditions in the policy environment.

Mark R. Widmar: As we enter 2024, while we continue to operate from a position of strength leveraging our points of differentiation and strong contracted backlog the continuation of Chinese subsidization and dumping practices has caused a significant collapse in cell and module pricing.

Mark R. Widmar: Last month, Marburger European module and cell manufacturer.

Mark R. Widmar: Announced that deteriorating market conditions in Europe, resulting from such practices is forcing them to prepare for shedding shuttering module Assembly in Germany.

Mark R. Widmar: Capital expenditures were $1.4 billion in 2023, compared to $0.9 billion in 2022. Now it's time to go back to Mark to provide a business strategy. All right. Thank you, Alex.

Mark R. Widmar: Simplifying the challenges to the stated goal of creating a self sustaining renewable manufacturing industry.

In India sudden and significant reduction in sell pricing and the non domestic content market segment has blunted the efficacy of the country's measures to address Chinese supply chain imports the storting market pricing in the country.

Mark R. Widmar: A word about overall market conditions and the policy environment. As we enter 2024, while we continue to operate from a position of strength, leveraging our points of differentiation and strong contracted backlog, the continuation of Chinese subsidization and dumping practices has caused a significant collapse in selling and model prices. Last month, Mayerberger, a European module and cell manufacturer, announced that deteriorating market conditions in Europe resulting from such practices are forcing them to prepare for shuttering module assembly in Germany, exemplifying the challenges to the EU's stated goal of creating a self-sustaining renewable manufacturing industry.

Mark R. Widmar: And disincentivize the ability of local suppliers to help achieve India's ambition to create.

Mark R. Widmar: Broad domestic manufacturing to service domestic market.

Mark R. Widmar: And here in the U S. Notwithstanding the U S Department of Commerce's General determination of Antidumping, and countervailing duty circumvention by for Southeast Asia countries.

Mark R. Widmar: Our continued record level of cell and module and imports from these regions.

Mark R. Widmar: In India, a sudden and significant reduction in cell pricing and the non-domestic content market segment has blunted the efficacy of the country's measures to address Chinese supply chain imports, distorting market pricing in the country and disincentivizing the ability of local suppliers to help achieve India's ambition to create. Broad domestic manufacturing to service domestic customers, and here in the U.S., notwithstanding the U.S. Department of Commerce's general determination of anti-dumping and countervailing duty circumvention by four Southeast Asian countries, the continued record level of cell and module imports from these regions poses a threat to the current administration's ambitions of scaling and securing a robust onshore solar manufacturing base. In light of the current and forecasted state of oversupply in these markets and the resulting headwinds to the ability of domestic manufacturers to scale, we call upon governments and policymakers to either reinforce the measures already enacted or move expeditiously to take action. For instance, here in the U.S., we have long taken the position that the Section 201 Safeguard Bifacial Exemption simply opened the door for a multi-gigawatt-scale crystalline silicon product to have unfettered access to the American solar market. Threatening the U.S.

Mark R. Widmar: Poses a threat to the current administration's ambitions of scaling and securing a robust onshore solar manufacturing base.

Mark R. Widmar: In light of the current and forecasted state state of oversupply in these markets.

Mark R. Widmar: And the resulting headwinds to the ability of domestic manufacturers to scale.

Mark R. Widmar: We call upon governments and policymakers to either reinforced the measures already enacted our move expeditiously to take action.

Mark R. Widmar: For instance, here in the U S. We have long taken the position that the section 201, safeguard bifacial exemption simply opening the door for a multi gigawatt scale crystalline silicon products to have unfettered access to the American solar market.

Mark R. Widmar: Threatening U S solar manufacturing indeed.

Mark R. Widmar: Indeed, a recent report released by the U S International Trade Commission noted that a number of commoners.

Mark R. Widmar: Cited the bifacial exclusion along with the 2022 executive order temporary blocking the U S Department of Commerce for imposing new tariffs on solar imports from Cambodia, Malaysia, Thailand, and Vietnam as leading to increased availability of foreign made solar panels.

Mark R. Widmar: We therefore advocate as the administration undergoes its current evaluation of the 201 tariffs.

Mark R. Widmar: That it closes this market distorting bifacial exemption, which has been exploited to eviscerate. The intent of these measures to safeguard the domestic industry.

Mark R. Widmar: Solar Manufacturing Indeed, a recent report released by the U.S. International Trade Commission noted that a number of commoners cited the bifacial exclusion, along with the 2022 executive order temporarily blocking the U.S. Department of Commerce for imposing new tariffs on solar imports from Cambodia, Malaysia, Thailand, and Vietnam, as leading to the increased availability of foreign-made solar panels. We therefore advocate, as the administration undergoes its current evaluation of the 201, that it closes this market distorting facial exemption, which has been exploited to eviscerate the intent of these measures to safeguard the domestic industry.

Mark R. Widmar: In addition, with respect to the weaker forced Labor Prevention Act, which addresses the scourge of utilizing.

Mark R. Widmar: Forced labor within the solar supply chain.

Mark R. Widmar: We similarly advocate for custom and border protection to utilize all of the tools in his toolbox to ensure.

Mark R. Widmar: Our comprehensive enforcement strategy of law already on the books and to ensure that regardless of which port product is shipped into the legal requirements in place are consistently enforced.

Mark R. Widmar: In India, while the approved list of module manufacturers or al Mmm has been effective and incentivizing domestic manufacturing investment pauses in the application of this law and the related impact to domestic pricing.

Mark R. Widmar: In addition, with respect to the Uyghur Forced Labor Prevention Act, which addresses the scourge of forced labor within the solar supply chain, we similarly advocate for Customs and Border Protection to utilize all of the tools in this toolbox to ensure a comprehensive enforcement strategy of laws already on the books and to ensure that regardless of which port product is shipped into, the legal requirements in place are consistently enforced. In India, while the Approved List of Module Manufacturers, or ALMM, has been effective in incentivizing domestic manufacturing investment, pauses in the application of this law and the related impacts on domestic pricing have put progress at risk. We are heartened that the ALM waivers currently in place are expected to expire at the end of Q1, and we would encourage the federal government of India to not grant such waivers in the future and to also consider expanding the ALMM equivalent requirements to cell manufacturing.

Mark R. Widmar: Progress at risk.

Mark R. Widmar: We are heartened that the ALLL waivers currently in place are expected to expire at the end of Q1.

Mark R. Widmar: And we would encourage the federal government of India to not grant such waivers in the future.

Mark R. Widmar: And to also consider expanding the album equivalent requirements to cell manufacturing.

These actions, we believe will foster India's ambitions of reducing their dependency on the Chinese solar supply chain and in our view incentivize further capital investment in this country.

Mark R. Widmar: Turning to you while we are pleased with this month's recent development to establish the net zero industry Act.

Mark R. Widmar: Which will prioritize permitting and funding for technologies deemed necessary to help the EU achieve its goal of making the region climate neutral by 2050 much work remains to be done.

Mark R. Widmar: These actions, we believe, will foster India's ambitions to reduce its dependency on the Chinese solar supply chain and, in our view, incentivize further capital investment in this country. Turning to the EU, while we are pleased with this month's recent development to establish the Net Zero Industry Act, which will prioritize permitting and funding for technologies deemed necessary to help the EU achieve its goal of making the region climate neutral by 2050, much work remains to be done. As we have continuously stated, investment in local manufacturing can only scale when sufficient measures are in place to ensure a long-term consistent level playing field. Such measures require addressing loopholes in trade policies that create the current situation where an oversupply of Chinese modules is being sold at artificially low prices, as well as the harmful impacts of the use of forced labor.

Mark R. Widmar: As we have continuously stated investment in local manufacturing can only scale when sufficient measures are in place to ensure a long term consistent level playing field.

Mark R. Widmar: Such measures require addressing loopholes and trade policies that create the current situation, where an oversupply of Chinese modules is being sold at artificially low prices as.

Mark R. Widmar: As well as the harmful impacts of the use of force flavor.

Mark R. Widmar: First solar has demonstrated the benefits to domestic economies and communities of establishing local solar manufacturing.

Mark R. Widmar: This is illustrated by an economic impact study commissioned by US and conducted by the University of Louisiana in Lafayette that was released yesterday.

Mark R. Widmar: The study found that first solar supported over 16000 direct indirect and induced jobs across the U S. In 2023.

Mark R. Widmar: First Solar has demonstrated the benefits to domestic economies and communities of establishing local solar manufacturing. This is illustrated by an economic impact study commissioned by us and conducted by the University of Louisiana at Lafayette that was released yesterday. This study found that First Solar supported over 16,000 direct, indirect, and induced jobs across the U.S. in 2023. This excludes an additional 5,800 construction-related jobs tied to our capital investments in 2020, as we scale to an expected 14 gigawatts of annual nameplate capacity in the U.S. The analysis forecasts that First Solar's operations alone will support approximately 30,000 direct, indirect, and ancillary jobs across the country by 2026, representing approximately $2.8 billion in annual labor income and $10 billion in total economic output to the 2026 U.S. economy.

Mark R. Widmar: This excludes an additional 5800 construction related jobs tied to our capital investments in 2023.

Mark R. Widmar: As we scale to unexpected 14 gigawatts of annual nameplate capacity in the U S. The analysis forecast that first solar has operations alone will support approximately 30000 direct indirect and induced jobs across the country by 2026.

Mark R. Widmar: Representing approximately $2 8 billion in annual labor income and $10 billion in total economic output to the 2026 U S economy.

Mark R. Widmar: This study estimates that every first solar job excluding construction.

Mark R. Widmar: Supported six jobs in 2023.

Mark R. Widmar: And this ratio is forecasted to increase to seven three jobs by 2026.

Mark R. Widmar: We believe this data defines intangible terms the value of that domestic solar manufacturing delivers to the U S economy.

Mark R. Widmar: This study estimates that every first solar job, excluding construction, supported six jobs in 2023, and this ratio is forecasted to increase to 7.3 jobs by 2026. We believe this data defines, in tangible terms, the value that domestic solar manufacturing delivers to the U.S. economy and should provide a basis for bipartisan political support to establish and maintain the policies and trade measures necessary to provide a domestic solar supply chain and a level playing field. We now turn to slide 7 to examine our pipeline.

Mark R. Widmar: And should provide a basis for bipartisan political support to establish and maintain the policies and trade measures necessary to provide a domestic solar supply chain and a level playing field.

Mark R. Widmar: We now turn to slide seven to examine our pipeline.

Mark R. Widmar: Despite the current oversupply of Chinese modules, and loopholes and trade policies in our key markets our pipeline of potential bookings remained robust as reflected on slide seven.

Mark R. Widmar: Total bookings opportunity stands at $66 five gigawatts, an increase of approximately 600 megawatts since the previous quarter.

Mark R. Widmar: Despite the current oversupply of Chinese modules and loopholes in trade policies in our key markets, our pipeline of potential bookings remains robust, as reflected on slide 7. Total bookings opportunity stands at 66.5 gigawatts, an increase of approximately 600 megawatts since the previous quarter. Our mid- to late-stage opportunities decreased by approximately 500 megawatts to 32 gigawatts and included 23.2 gigawatts in North America, 8.5 gigawatts in India, and 0.3 gigawatts in the EU.

Mark R. Widmar: Our mid to late stage opportunities decreased by approximately 500 megawatts to 32 Gigawatts and includes $23 two gigawatts here in North America.

Eight five gigawatts in India, and <unk> three gigawatts in the EU.

Mark R. Widmar: Included within our mid to late stage pipeline, our three eight gigawatts of opportunities that have contracted subject to CP President's.

Mark R. Widmar: Which includes one one gigawatts in India.

Mark R. Widmar: Given the shorter timeframe between contracting and product delivery in India relative to other markets. We would not expect the same multiyear contracted commitments that we're currently seeing in the United States.

Mark R. Widmar: Included within our mid- to late-stage pipeline are 3.8 gigawatts of opportunities that have contracted subject to CP president, which includes 1.1 gigawatts in India. Given the shorter time frame between contracting and product delivery in India, relative to other markets, we would not expect the same multi-year contracted commitments that we are currently seeing in the United States. As a reminder, signed contracts in India are not recognized as bookings until we have received full security against the off- Turning to slide 8, we are pleased with our progress of our Ohio capacity expansions and new Alabama manufacturing facilities, which are expected to be completed and begin commercial shipments in the first and second halves of the year respectively. Once these projects are completed, we expect to exit 2024 with over 21 gigawatts of global nameplate capacity, approximately half of which is forecasted to be local in the U.S. Our new Louisiana facility is also on track and is expected to commence commercial operations in late 2025, bringing our expected total nameplate capacity to over 25 gigawatts by the end of 2026 with 14 gigawatts in the U.S. As a reflection of this expansion roadmap and continued optimization of the existing fleet.

Mark R. Widmar: As a reminder signed contracts in India are not recognized as bookings until we have received full security against the offtake.

Mark R. Widmar: Turning to slide eight we are pleased with our progress of our Ohio capacity expansions and new Alabama manufacturing facility.

Mark R. Widmar: Which are expected to be completed and began commercial shipments in the first and second half of the year respectively.

Mark R. Widmar: Once these projects are completed we expect to exit 2024 with over 21 Gigawatts of global nameplate capacity.

Mark R. Widmar: Approximately half of which is forecasted to be local in the U S.

Mark R. Widmar: Our new Louisiana facility is also on track and is expected to commence commercial operations in late 2025 breaking.

Mark R. Widmar: Bringing our expected total nameplate capacity to over 25 Gigawatts by the end of 2026 with 14 Gigawatts in the U S.

Mark R. Widmar: As a reflection of this expansion roadmap and continued optimization of the existing fleet.

Mark R. Widmar: We have summarized our expected exit nameplate capacity and production for 2024 through 2026 on this slide.

Our strategic expansion of manufacturing capacity in the U S, which is supported by an extensive domestic value chain enables our customers efforts to begin from the to benefit from the ITC and production tax credit domestic content bonuses under the inflation reduction.

Mark R. Widmar: <unk>.

Mark R. Widmar: The resulting demand for first solar as American made solar technologies combined with the eligibility of our vertically integrated manufacturing facilities for section 45 ex tax credits is expected to contribute significantly to our financial performance in the coming years.

Mark R. Widmar: We have summarized our expected exit nameplate capacity and production for 2024 through 2026 on this slide. Our strategic expansion of manufacturing capacity in the U.S., which is supported by an extensive domestic value chain, enables our customers' efforts to benefit from the ITC and production tax credit domestic content bonuses under the Inflation Reduction Act. The resulting demand for First Solar's American-made solar technologies, combined with the eligibility of our vertically integrated manufacturing facilities for Section 45X tax credits, is expected to contribute significantly to our financial performance in the coming year. In addition to progressing our manufacturing expansion plans, we expect 2024 to be a foundational year from the point of view of accelerating R&D efforts in pursuit of our goal to develop and commercialize the next generation of photovoltaics.

Mark R. Widmar: In addition to progressing our manufacturing expansion plans, we expect 2024 to be a foundational year from the point of view of accelerating our R&D efforts in pursuit of our goal to develop and commercialize the next generation of photovoltaics.

Mark R. Widmar: As previously noted in addition to a new process development line, we expect to commission.

Mark R. Widmar: Our Ohio, R&D Innovation Center this year.

Mark R. Widmar: Located near our existing Perrysburg manufacturing facility.

Mark R. Widmar: And covering an area of approximately one 3 million square feet.

It will feature a high tech pilot manufacturing line, allowing for the production of full sized prototypes of thin film in tandem PV modules.

Mark R. Widmar: As previously noted, in addition to a new perovskite development line, we expect to commission our Ohio R&D Innovation Center this year, located near our existing Perrysburg manufacturing facility and covering an area of approximately 1.3 million square feet. It will feature a high-tech pilot manufacturing line allowing for the production of full-size prototypes of thin film and tandem PV modules. This center will allow us to create an R&D sandbox separate from our manufacturing operations, which we expect will accelerate without taking manufacturing mission-critical tools offline, which would impact throughput and cost. To close, as I mentioned at our recent Analyst Day, we established a goal to exit this decade stronger than we entered it. Reflecting on our progress.

Mark R. Widmar: This center.

Mark R. Widmar: Allow us to create an R&D sandbox separate from our manufacturing operations, which we expect will accelerate without taking manufacturing mission critical tools offline.

Mark R. Widmar: Which would impact throughput and cost.

Mark R. Widmar: To close as I mentioned at our recent analyst day.

Mark R. Widmar: We established a goal to exit this decade stronger than we entered it.

Mark R. Widmar: Reflecting on our progress.

Mark R. Widmar: We entered we ended 2023 and a stronger position than we began it with a record contracted backlog a significant pipeline of booking opportunities and continued robust demand in our core markets. Despite some of the current policy landscape challenges.

Mark R. Widmar: We enter 2024 with new capacity of our most advantaged series seven product coming online increase R&D investment and capabilities and continued momentum across the business driven by our focus on our points of differentiation and our balanced business model focused on growth liquidity and profitability.

Alexander R. Bradley: We ended 2023 in a stronger position than we began it, with a record contracted backlog, a significant pipeline of booking opportunities, and continued robust demand in our core markets, despite some of the current policy landscape challenges. We enter 2024 with new capacity of our most advantaged Series 7 product coming online, increased R&D investment and capabilities, and continued momentum across the business, driven by a focus on our points of differentiation and a balanced business model focused on growth, liquidity, and profitability. And now I'll turn the call over to Alex, who will discuss our 2024 outlook and guidance. Thanks Mark.

Mark R. Widmar: I'll now turn the call over to Alex who will discuss our 2020 for outlook and guidance.

Alexander R. Bradley: Thanks, Mark before discussing our financial guidance I'd like to reiterate three themes from our recent analyst day.

Alexander R. Bradley: Thanks to our growth and investment thesis our approach to our backlog and bookings.

Alexander R. Bradley: On our expansion into India.

Alexander R. Bradley: Firstly from a growth and investment thesis perspective, we continue to focus on differentiation and are guided by an approach to a business model that balances growth profitability and liquidity.

Alexander R. Bradley: This decision, making framework informs our long term strategic direction.

Alexander R. Bradley: The guided our strategy to exit the systems business at the end of the last decade and significantly expand our module manufacturing business evidenced in a doubling of nameplate capacity from 2021 to 2023 and the forecasted increase in nameplate capacity of over 50% from 2023 to 2026.

Alexander R. Bradley: Before discussing our financial guidance, I'd like to reiterate three themes from our recent analyst day related to our growth and investment thesis, our approach to our backlog and bookings, and our expansion into India. Firstly, from a growth and investment perspective, we continue to focus on differentiation and are guided by an approach to our business model that balances growth, profitability, and liquidity. This decision-making framework informs our long-term strategic direction. It guided our strategy to exit the systems business at the end of the last decade and significantly expand our module manufacturing business, evidenced by a doubling of nameplate capacity from 2021 to 2023 and the forecasted increase in nameplate capacity of over 50% from 2023 to 2026. This scaling capacity is supported by optionality in our R&D roadmap, across energy attributes including efficiency, degradation, temperature coefficient, and bifaciality. We've gone from deploying prototypes of early bifacial CAD cell modules in a test facility in 2021.

Alexander R. Bradley: The scale and capacity is supported by Optionality in our R&D roadmap across energy attributes, including efficiency degradation temperature coefficient and <unk>.

Alexander R. Bradley: We've gone from deploying prototypes with early bifacial cantel modules in a test facility in 2021 to converting our lead line at the end of 2023.

Alexander R. Bradley: With commercial deployment across a significant portion of our fleet plan for 2024.

Additionally, in the fourth quarter of 2024, we expect it to be in production of our first commercial cure modules on our lead line in Ohio.

Alexander R. Bradley: So relates to contracting this volume we continued to prioritize certainty.

Alexander R. Bradley: Our reported backlog, which includes the U S and rest of the world bookings with our typical contractual security provisions, but excludes contracts signed in India and less backed by a 100% liquid security.

Alexander R. Bradley: Made up of two types of contracts.

Alexander R. Bradley: Those relate to a specific asset or project.

Alexander R. Bradley: Frameworks, which are typically larger multi year, and therefore, often have less certainty of delivery timing.

Alexander R. Bradley: Converting our lead line at the end of 2023, commercial deployment across a significant portion of our fleet plans for 2024. Additionally, in the fourth quarter of 2024, we expect to be in production of our first commercial cure modules on our lead line in Ohio. As it relates to contracting this volume, we continue to prioritise certain... Our reported backlog, which includes U.S. and rest of the world bookings, with our typical contractual security provisions, which excludes contracts signed in India and less backed by 100% liquid security? is made of two types of contracts: those related to a specific asset or project.

Alexander R. Bradley: Common across these contracts a fixed price structure, which may include adjusted for technology improvements and which typically include adjustments have been class freight risk in commodities.

Alexander R. Bradley: As of December 31, 2023, approximately 95% of the megawatts and our backlog at some form of freight protection and.

Approximately 85% at some form of steel and aluminium commodity cost protection.

Alexander R. Bradley: Okay.

Alexander R. Bradley: As a reminder, limited number of our contracts contain a termination for convenience provision often related to customer regulatory requirement.

Alexander R. Bradley: Or is a portion of large multi year framework.

Alexander R. Bradley: Which generally requires substantial advance notice to be invoked features a contractually required termination payments to us.

Alexander R. Bradley: This payment is generally set at a substantial percentage of the contract value and backstopped by some form of security.

Alexander R. Bradley: As of today's call the percentage of megawatts in our contracted backlog and had a termination for convenience clause.

Alexander R. Bradley: Frameworks, which are typically larger, multi-year, and therefore often have less certainty of delivery. Common across these contracts is a fixed price structure, which may include adjustments to reflect technological improvements, which typically include adjusters for Benz Class, Freight Risk, and Commodity. As of December 31, 2023, approximately 95% of the megawatts in our backlog had some form of freight protection, and approximately 85% had some form of steel and or aluminum commodity.

Alexander R. Bradley: With an associated termination payment obligation is roughly equivalent to that given at our analyst day in September of 2023.

Alexander R. Bradley: Note given this provision is one of many deal terms that is negotiated with our customers in the process of a module sale, we do not expect to provide updates on this metric.

Alexander R. Bradley: On our earnings call in February of 2022, we stated that as we significantly increased our nameplate capacity.

Alexander R. Bradley: We believe that this anticipated growth would generate significant contribution margin to drive operating margin expansion.

Alexander R. Bradley: In 2023 that thesis was validated as we saw significant year over year operating margin expansion.

Alexander R. Bradley: As a reminder, a limited number of our contracts contain a termination for convenience provision, often related to customer regulatory requirements, or the portion of a large multi-year framework generally requires substantial advance notice to be invoked, which features a contractually required termination payment to us. This payment is generally set at a substantial percentage of the contract value and is backstopped by some form of security. As of today's call, the percentage of megawatts in our contract is backlog and has a termination for convenience clause, with an associated termination payment obligation, roughly equivalent to that given on our analyst day in September of 2023. Note, given this provision is one of many deal terms that is negotiated with our customers in the process of a module sale, we do not expect to provide updates on this matter.

Alexander R. Bradley: As we continue our capacity growth, we expect to continue to see operating margin expansion in 2024 as reflected in our guidance provided today.

Alexander R. Bradley: Okay.

Alexander R. Bradley: Secondly, as it relates to our contracted backlog, excluding India, we remain cumulatively oversold through 2026.

Alexander R. Bradley: As over allocation positioned deliberate.

Alexander R. Bradley: It provides us resilience.

Alexander R. Bradley: Certain timing of delivery inherent in some of our larger framework contracts.

Alexander R. Bradley: The natural tendency for delay in the project development process as.

Alexander R. Bradley: As well as the potential for incremental supply as we startup and ramp in factories.

Alexander R. Bradley: The further out the delivery timeframe the more comfortable we are with over allocation.

Alexander R. Bradley: The closer we get to delivery dates and as we enter any given year and undertake our annual planning process.

Alexander R. Bradley: We look to ensure that demand is able to be met with available supply.

Alexander R. Bradley: As of late Q4, 2033, we have not seen significant customer requests for schedule changes beyond the typical daily and weekly bouncing that occurs in our supply demand forecast.

Alexander R. Bradley: Okay.

Alexander R. Bradley: On our earnings call in February of 2022, we stated that as we significantly increased our nameplate capacity, we believe that this anticipated growth would generate significant contribution margin to drive operating margin expansion. In 2023, that thesis was validated as we saw significant year-over-year operating margin expansion. As we continue our capacity growth, we expect to continue to see operating margin expansion in 2024, as reflected in our guidance provided today. Secondly, as it relates to our contracted backlog, excluding India, we remain cumulatively oversold through 2020. This over-allocation position is deliberate and provides us with resilience to the uncertain timing of delivery inherent in some of our larger framework contracts.

Alexander R. Bradley: As we concluded our planning process for 2024 through the first few months of the year, we have seen some requests from customers to shift delivery volume timing out as a function of project development delays.

As we stated previously including at our Analyst day, we will work with our customers to optimize their project schedules.

Alexander R. Bradley: <unk> moving delivery dates in the short and medium term where possible.

Alexander R. Bradley: Balanced by the constraints of our production and shipment needs, including selling our full production in 2020 for which we continue to expect to do.

Alexander R. Bradley: Our contract provisions underlie and govern these relationships and discussions.

Alexander R. Bradley: In certain situations our approach to overselling could expose us contractually should we be unable to manage over allocated position.

Alexander R. Bradley: This is where the strength of our longstanding customer relationships is key.

Alexander R. Bradley: Riding flexibility not just for our customers, but also often for first solar delivery timelines.

Alexander R. Bradley: Given our supply demand balancing so far and our ability in the near term to supply modules from India to the U S. We do not forecast any damages associated with over allocation in 2024.

Alexander R. Bradley: The natural tendency for delay in the project development process, as well as the potential for incremental supply as we start up and ramp up new factories. The further out the delivery time frame, the more comfortable we are with over allocation. The closer we get to delivery dates and as we enter any given year and undertake our annual planning process, the more we look to ensure that demand is able to be met with available supply. As of late Q4 2023, we have not seen significant customer requests for schedule changes.

Alexander R. Bradley: And tax provisions also protect us in the event of long term customer issues or disputes.

Alexander R. Bradley: For example, we were recently notified by a corporate customer where they are.

Alexander R. Bradley: Experienced significantly they are experiencing significant delays to that project.

Alexander R. Bradley: And based on this and our current position of financial distress. They do not intend to take delivery of 381 megawatts of modules scheduled for delivery in 2024.

We are working with its customers to optimize the outcome for both the customer and first solar but in this and other similar circumstances, we will continue to enforce our contractual rights to termination penalties or other damages in the event that that contractual breach.

Alexander R. Bradley: As previously discussed on recent earnings calls and at our Analyst Day, We believe our approach to forward contracting has been validated in the pass through multiple pricing and supply demand cycles in the industry.

Alexander R. Bradley: Beyond the typical daily and weekly balancing that occurs in our supply-demand forecast, as we concluded our planning process for 2024 through the first few months of the year, we have seen some requests from customers to shift delivery volume timing out as a function of project development delays. As we stated previously, including on our Analyst Day, we will work with our customers to optimize their project schedule, including moving delivery dates in the short and medium term where possible, balanced by the constraints of our production and shipment needs, including selling our full production in 2024, which we continue to expect. How contractual provisions underlie and govern these relationships and discussions. In certain situations, our approach to overselling could expose us to contractual risk. Should we be unable to manage our over-allocated position?

Alexander R. Bradley: We've also previously stated that we expect the pace of bookings to slow after two record contracting years.

Alexander R. Bradley: Our current backlog cumulatively oversold through 2026, and with bookings extending to the end of the decade.

Alexander R. Bradley: Provides us optionality in periods of pricing and policy uncertainty.

Alexander R. Bradley: Put simply if we did not book any more deals by the end of this year, we would remain sold out two years forward through 2025 and 2026.

We do not expect this to be the case and we will continue to contract with customers, who prioritize long term relationships and value our differentiation as reflected in our two three gigawatts of bookings since the previous earnings call.

Alexander R. Bradley: But given the significant variables in the policy environment that Mark discussed earlier as well as the uncertainty around the 2024 U S presidential and congressional elections and that potential impact on the renewable sector.

Alexander R. Bradley: We expect to take advantage of this position of strength.

Alexander R. Bradley: This is where the strength of our long-standing customer relationships is key, providing flexibility not just for our customers but also often for First Solar delivery timelines. Given our supply and demand balancing so far, and our ability in the near term to supply modules from India to the US, we do not forecast any damages associated with overallocations in 2024. Contractor provisions also protect us in the event of long-term customer issues or disputes. For example, we were recently notified by a corporate customer that they are experiencing significant delays on their project.

Alexander R. Bradley: Highly selective in our contracting in 2024.

Alexander R. Bradley: Finally, as it relates to India from a contracting perspective as of our Q3 earnings call. In October we had one seven gigawatts of signed contracts with our mid to late stage pipeline.

Alexander R. Bradley: As a reminder, signed contracts in India will not be recognized as bookings until we received full security against the offtake.

Alexander R. Bradley: As of today's call that number is one one gigawatts following a 600 megawatt default by a customer who has recently delisted from the New York stock exchange.

Alexander R. Bradley: We are seeking to enforce our contractual rights under this contract and are currently seeking to recover the contractual termination payments owed to us.

Alexander R. Bradley: From an ASP perspective, the temporary suspension of the <unk> policy that Mark discussed earlier is having a short term negative impact on domestic market Asp's and gross margin, which is reflected in our 2020 for guidance.

Alexander R. Bradley: And based on this and their current position of financial distress, they do not intend to take delivery of 381 megawatts of modules scheduled for delivery in 2024. We are working with this customer to optimize the outcome for both the customer and First Solar, but in this and other similar circumstances, we will continue to enforce our contractual rights to termination penalties or other damages in the event of their contractual breach. As previously discussed on recent earnings calls and at our Analyst Day, we believe our approach to forward contracting has been validated in the past through multiple pricing and supply-demand cycles in the industry. We've also previously stated that we expect the pace of bookings to slow after two record contracts.

Alexander R. Bradley: We believe the expected reinstatement of the <unk> at the end of Q1 together with the ability to serve the domestic content market segment, which we are uniquely positioned to address given our vertical integration.

Alexander R. Bradley: As a market opportunity with a gross margin profile, excluding the section 45 ex tax credit benefit comparable to the fleet average given the lower production costs and our Chennai facility.

Speaker Change: So with this context in mind I'll next discuss the assumptions included in our 2024 financial guidance. Please turn to slide nine.

Speaker Change: Yes.

Speaker Change: As referenced in 2023, we have effectively completed the transition back to a module only company.

Speaker Change: We continue to have certain remaining risks liabilities indemnities warranty obligations accounts payable accounts receivable announced cash collection dispute resolution and other legacy environment related to our former systems business.

Alexander R. Bradley: Our current backlog, cumulatively oversold through 2026, with bookings extending to the end of the decade, provides us with optionality in periods of pricing and policy uncertainty. Put simply, if we did not book any more deals by the end of this year, we would remain sold out for two years forward through 2025 and 2026. We do not expect this to be the case, and we will continue to contract with customers who prioritize long-term relationships and value our differentiation, as reflected in our 2.3 gigawatts of booking since the previous earnings call. But, given the significant variables in the policy environment that Mark discussed earlier, as well as the uncertainty around the 2024 U.S. presidential and congressional elections and their potential impact on the renewable sector,

Speaker Change: Consistent with 2023 reporting we no longer provide segment specific guidance.

Speaker Change: Shell in the future note any significant impact from the other segment to our consolidated financials.

Speaker Change: So it relates to growth of factory expansions and upgrades remain on schedule to increase our expected global nameplate capacity to 25 Gigawatts by year end 2026.

Speaker Change: In 2020 for growth related costs are expected to impact operating income by approximately $125 million to $155 million.

Speaker Change: This is comprised of startup expenses of $85 million to $95 million, primarily incurred in connection with our new factory in Alabama, and estimated ramp costs of $40 million to $60 million of our factories in India, Ohio in Alabama.

Speaker Change: We anticipate these expansions upgrades will contribute meaningfully to our production plans in 2025 and beyond.

Speaker Change: Operationally in 2024 were expected to produce 15, 6% to 16 gigawatts of modules.

Speaker Change: From a solar perspective, we expect to sell 15, 6% to $16 three gigawatts of which five 8% to six one gigawatts is produced in the U S.

Alexander R. Bradley: We expect to take advantage of this position of strength, highly selected in our contracting in 2024. Finally, as it relates to India, from a contracting perspective, as of our Q3 earnings call in October, we had 1.7 gigawatts of signed contracts within our NITILATE stage pipeline. As a reminder, signed contracts in India will not be recognised as bookings until we have received full security against the... As of today's call, that number is 1.1 gigawatts, following a 600 megawatt default by a customer who was recently delisted from the New York stock We are seeking to enforce our contractual rights under this contract, and are currently seeking to recover the contractual termination payments owed to- From an ASP perspective, the temporary suspension of the LMM policy that Mark discussed earlier is having a short-term negative impact on domestic market ASPs and gross margin, which is reflected in our 2024 guidance.

Speaker Change: And two to two two gigawatts is assumed to be domestic sales in India.

Speaker Change: For the full year, we expect to recognize a fleet asps sold of approximately $28 <unk> per watt.

Speaker Change: This includes India domestic coal volume.

Speaker Change: Non India based Asps roughly in line with our expectations from our September analyst day at.

Speaker Change: And the benefit of certain technology commodity and freight.

Speaker Change: From a cost perspective full year 2020 forecast what produced is forecast to be in the range of $18 seven to $18 nine per watt.

Approximately 2% to 3% improvement versus 2023.

Speaker Change: This is driven by expected improvements in throughput yield and reduced inbound freight and variable costs as well as the benefit of an increased mix of lower cost India production.

Speaker Change: Partially offset by increased costs related to the rollout of our buy a bifacial products.

Speaker Change: It relates to costs what sold we are forecasting fleet average sales freight warehousing ramp and other period costs of approximately <unk> <unk> per watt.

Alexander R. Bradley: We believe the expected reinstatement of the ALMM at the end of Q1, together with the ability to serve the domestic content market segment, which we are uniquely positioned to address given our vertical integration, provides a market opportunity with a gross margin profile, excluding the Section 45X tax credit benefit, comparable to the fleet average, given the lower production cost and our Chennai facility. With this context in mind, I'll next discuss the assumptions included in our 2024 financial guidance. Please turn to slide nine.

Speaker Change: Resulting in a full year 'twenty 'twenty four cosport solid reduction approximately 7% versus the prior year.

Speaker Change: As mentioned at our analyst day, approximately three quarters of the cost of our module is de risked given approximately one third of the cost is fixed approximately two thirds of the variable costs are subject to for contracting long term agreements will have contractual mechanisms to pass costs through to our customers in the event that these cost to change materially.

Speaker Change: Additionally, over 95% of our backlog has some form of sales rate protection, leading to significant gross margin visibility.

From a capital structure perspective, our strong balance sheet has been and remains a strategic differentiator, enabling us to both weather periods of volatility as well as providing flexibility to pursue growth opportunities, including funding our series six and 37 growth.

Alexander R. Bradley: As referenced in 2023, we have effectively completed the transition back to a module-only company. However, we continue to have certain remaining risks, liabilities, indemnities, warranty obligations, accounts payable, accounts receivable, earn-outs, cash collection, dispute resolution, and other legacy involvement related to our former systems business. Consistent with 2023 reporting, we no longer provide segment-specific guidance, and will in the future note any significant impact from the other segments to our consolidated financial system. As related to growth, our factory expansions and upgrades remain on schedule to increase our expected global nameplate capacity to 25 gigawatts by year-end 2026. In 2024, growth-related costs are expected to impact operating income by approximately $125 million to $155 million. This comprises startup expenses of $85 to $95 million, primarily incurred in connection with our new factory in Alabama and estimated ramp costs of $40 to $60 million at our factories in India, Ohio, and Alabama.

Speaker Change: We ended 2023 and a strong liquidity position.

Speaker Change: And coupled with forecasted operating cash flows from module sales cash from the sale of our 2023 section 45 ex tax credits and anticipated module to pre made prepayments, we expect to be able to finance, our currently announced capital programs without requiring external financing.

Speaker Change: As it relates to our 2024 section 45 X credits, we are forecasting to elect direct payments and I'll. Therefore, assuming no discount to the value of these credits for a sale to a third party.

Speaker Change: But we will continue to evaluate options and valuations for earlier monetization.

Speaker Change: I will now cover the full year 2020 full guidance ranges on slide 10.

Speaker Change: Our net sales guidance between four four and $4 6 billion.

Speaker Change: Gross margin is expected to be between two and $2 1 billion or approximately 46%, which includes 1% to $1 $35 billion of section 45, ex tax credits and $40 million to $60 million of ramp costs.

Speaker Change: SG&A expenses are expected to total $170 million to $180 million versus $197 million in 2023 demonstrate.

Speaker Change: Demonstrating our ability to leverage our largely fixed operating cost structure, while expanding production.

Speaker Change: R&D expenses are expected to total $200 million to $210 million versus $152 million in 2023.

Alexander R. Bradley: We anticipate these expansions and upgrades will contribute meaningfully to our production plans in 2025 and beyond. Operationally, in 2024, we're expected to produce 15.6 to 16 gigawatts of modules. From a sold perspective, we expect to sell 15.6 to 16.3 gigawatts, of which 5.8 to 6.1 gigawatts is produced in the U.S., and 2 to 2.2 gigawatts is assumed to be domestic sales in India. For the full year, we expect to recognize a fleet ASP sold of approximately 28.2 cents per watt. This includes India Domestic Solar Volume, non-India base ASP roughly in line with our expectations from our September analyst day, and the benefit of certain technology, commodity, and freight. From a cost perspective, fully a 2024 cost watt produced is forecast to be in the range of 18.7 to 18.9 cents per watt.

Speaker Change: R&D expenses are increasing primarily due to commencing operations at our R&D innovation Center and <unk> development line and the expectation of adding head count to our R&D team to further invest and advanced research.

Speaker Change: It is.

Speaker Change: SG&A and R&D expense combined is expected to total $370 million to $390 million.

Speaker Change: Operating expenses, which include 85% to $95 million of production startup expense are expected to be between 455 $485 million.

Speaker Change: Operating income is expected to be between one five and $1 6 billion.

Speaker Change: On an operating margin of approximately 34% to 35%.

Speaker Change: That is inclusive of $125 million to $155 million of combined ramp costs and plant start up expenses.

Speaker Change: And one to $1 35 billion in the section 45 ex tax credits.

Speaker Change: Compared to an operating margin of 26% in 2023 this year over year increase demonstrates how we expect to leverage our business model against the largely fixed SG&A cost structure.

Speaker Change: It shows the value of growth and driving incremental contribution margin and operating margin expansion.

Alexander R. Bradley: Approximately 2 to 3% improvement versus 2023. This is driven by expected improvements in throughput, yield, and reduced inbound freight and variable costs. As well as the benefit of an increased mix of lower cost Indian production, partially offset by increased costs related to the rollout of our bifacial product. As it relates to cost per watt sold, we are forecasting fleet average sales rate, warehousing, ramp, and other period costs of approximately three cents per watt, resulting in a full year 2024 cost per watt solar reduction of approximately 7% versus price.

Speaker Change: Turning to nonoperating items, we expect interest income interest expense and other income to net to 35% to $50 million.

Speaker Change: Full year tax expense is forecast to be $135 million to $150 million.

Speaker Change: This results in a full year 2024 earnings per diluted share guidance range of 13% to $14.

Speaker Change: So from the earnings cadence perspective, we expect a net sales and cost of sales profile. Excluding the benefit of section 45 ex tax credits of approximately 15% in Q1, 25% in Q2 and 60% in the second half of the year.

Speaker Change: We forecast section 45 tax credits of approximately $190 million in Q1 $230 million in Q2 and $600 million in the second half of the year.

Alexander R. Bradley: As mentioned on our analyst day, approximately three-quarters of the cost of our module is de-risked, given that approximately one-third of the cost is fixed. Additionally, approximately two-thirds of the variable costs are subject to forward contracting, long-term agreements, or have contractual mechanisms to pass costs through to our customers in the event that these costs change materially. Additionally, over 95% of our backlog has some form of sales rate, leading to significant gross margin disability. From a capital structure perspective, our strong balance sheet has been and remains a strategic differentiation.

Speaker Change: And then operating expenses profile roughly evenly split across the year. This results in a forecasted operating income and earnings per share profile of approximately 15% in the first quarter, 25% in the second quarter and 60% in the second half of the year.

Speaker Change: Okay.

Speaker Change: Capital expenditures in 2024 are expected to range from $1 70 to $1 9 billion as we progress the construction of our Alabama, Louisiana series seven factories, some aluminum throughput upgrades to the fleet and invest in other R&D related programs.

Alexander R. Bradley: Enabling us to both weather periods of volatility as well as provide flexibility to pursue growth opportunities, including funding our Series 6 and Series 7. We ended 2023 with strong liquidity, coupled with forecasted operating cash flows from module sales, cash from the sale of our 2023 Section 45x tax credits, and anticipated module order pre-payments. We expect to be able to finance our currently announced capital programs without requiring external financing.

Speaker Change: Approximately two thirds of our capex associated with capacity expansion and one quarter relates to R&D Center and technology replication with the remainder mostly related to maintenance and logistics.

Speaker Change: Our year end 2024, net cash balance is anticipated to be between <unk>, nine and $1 2 billion.

Speaker Change: Turning to slide 11, I'll summarize the key messages from today's call.

Speaker Change: Demand has been solid with two three gigawatts of net bookings since the previous earnings call, leading to a contracted backlog of $80 one gigawatts.

Speaker Change: Our opportunity pipeline remains strong the global opportunity 66, five gigawatts, including mid to late stage opportunities 32 Gigawatts.

Alexander R. Bradley: So related to our 2024 Section 45X credits, we are forecasting to elect direct payments and are therefore assuming no discount to the value of these credits for a sale to a third party. But we'll continue to evaluate options and valuations for earlier monitors. I'll now cover the full year 2024 guidance ranges on slide 10. Our net sales guidance is between $4.4 and $4.6 billion. Close margin is expected to be between 2 and 2.1 billion, or approximately 46%, including 1 to 1.05 billion of Section 45X tax credit and $40 to $60 million at Brown.

Speaker Change: We continue to expand our manufacturing capacity exiting 2023 was $16 six gigawatts of nameplate capacity.

Speaker Change: Expect to exit 2026% approximately 25 gigawatts of nameplate capacity, including approximately 14 gigawatts of nameplate capacity in the U S.

Speaker Change: We are as previously announced adding a new dedicated R&D facility in Ohio.

Speaker Change: <unk> to be operational in the first half of 2024.

Speaker Change: Which we believe will allow us to optimize technology improvements with significantly less disruption to our commercial manufacturing lines.

Speaker Change: Earnings per diluted share was <unk> 774 in 2023, including the impact of selling our 2023 section 40, <unk> tax credits and the impairment of our investment in cubic PV above the midpoint of our initial in Q3 updated guidance.

Alexander R. Bradley: SQ&A expenses are expected to total $170 to $180 million versus $197 million in 2023, demonstrating our ability to leverage our largely fixed operating cost structure while expanding production. R&D expenses are expected to total $200 million to $210 million versus $152 million in 2026. R&D expenses are increasing primarily due to the commencement of operations at our R&D Innovation Center and Perovskite development line and the expectation of adding headcount to our R&D team to further invest in advanced research. SG&A and R&D expenses combined are expected to total $370 to $390 million. Total operating expenses, which include $85 to $95 million of production startup expenses, are expected to be between $455 to $485 million.

Speaker Change: The forecasting full year 2024 earnings per diluted share 13% to $14.

Speaker Change: Finally, we ended the year with a cash balance of $1 6 billion net debt and expect to end 2024 with a cash balance of <unk> nine to $1 2 billion net of debt.

Speaker Change: This net cash position together optionality around monetizing our 24 section probably by next tax credits.

Speaker Change: It places us in a position of strength, which to expand our capacity invest in research development and technology improvements and pursue other strategic opportunities as we March forward on our journey to lead the world sustainable energy future.

Speaker Change: With that we conclude our prepared remarks and open the phone questions operator.

Speaker Change: Thank you, Sir and everyone. It is star one if you have a question today, we will take the first question from Moses Sutton BNP Paribas.

Hi, Thanks for taking the question and congrats on the continued price momentum in its execution.

Moses Sutton: Some point should we see bookings I want to say near zero in a given quarter.

Moses Sutton: Simply can't book more full time passes naturally and I think investors kind of think of that or Conversely, you eventually lower that ESP until like 29% range.

Alexander R. Bradley: Operating income is expected to be between $1.5 and $1.6 billion, applying an operating margin of approximately 34% to 35%, and as inclusive of 125 to 155 million of combined ramp costs and plant startup expenses, and 1 to 1.05 billion in Section 45 Act tax. Compared to an operating margin of 26% in 2023, this year-over-year increase demonstrates how we expect to leverage our business model against the largely fixed SG&A cost structure, which shows the value of growth in driving incremental contribution margin and operating margin expansion. Turning to non-operating items, we expect interest income, interest expense, and other income to total $35 to $50 million. Fully attacked expenses are forecast to be $135,000 to $150,000. This results in a full year 2024 earnings to deluded share guidance range of $13 to $14.

Moses Sutton: When all May 30, <unk> was great to see so just curious how that dynamic plays through the year I know you could book some butt.

Moses Sutton: What should we expect.

Moses Sutton: More precisely.

Speaker Change: Yeah. So.

Speaker Change: I'll take that one I guess in terms of as Alex.

Speaker Change: Alex included in his remarks, I mean, our plan is to be patient.

Speaker Change: The opportunities are there you can see is the.

Speaker Change: Our pipeline of opportunities that we represent both mid delayed and obviously the early stage pipeline.

Speaker Change: Separating us from India, Youre going to continue to see bookings in India clearly as we indicated we've got.

Speaker Change: Conversion that'll happen are those contracted subject to CP, so thats going to continue on a cadence that you would expect call.

Speaker Change: Call it.

Speaker Change: Hundreds of megawatts, maybe a gigawatt of any particular quarter.

Speaker Change: Sell through that and are positioned for 2024, so you'll see that momentum continuing.

Speaker Change: As it relates to the U S. Our strategy of being patient is is largely how we're going to engage the market and conversations with our customers.

Alexander R. Bradley: So from an earnings cadence perspective, we expect a net sales and cost of sales profile excluding the benefit of Section 45x tax credits of approximately 15% in Q1, 25% in Q2, and 60% in the second half of the year. We forecast Section 45x tax credits of approximately $190 million in Q1, $230 million in Q2, and $600 million in the second half.

Speaker Change: I am very happy with the bookings that we showed up to this last quarter.

Speaker Change: Great Asps.

Speaker Change: Good Counterparties technology adders associated with it so and feathered into a period of time, that's very constructive for US a lot of that volume goes out into 27, 28, and 29% and touches 30, even.

So from that standpoint.

Alexander R. Bradley: With an operating expenses profile roughly evenly split across the year, this results in a forecasted operating income and earnings-to-share profile of approximately 15% in the first quarter, 25% in the second quarter, and 60% in the second half. Capital expenditures in 2024 are expected to range from 1.7 to 1.9 billion as we progress the construction of our Alabama and Louisiana Series 7 factories. Implement throughput upgrades to the fleet and invest in other R&D-related programs. Approximately two-thirds of our CapEx is associated with capacity expansion, one quarter related to our R&D center and technology replication, with the remainder mostly related to maintenance. Our year-end 2024 net cash balance is anticipated to be between 0.9 and 1.2 billion.

Speaker Change: <unk> got right now.

Speaker Change: We've got a short window between now and the next earnings call. So you could see maybe a period of softness there.

Speaker Change: Side of the volume that we would expect to continue to recognize for India, but I've got the ongoing commercial conversations right now for north of.

Speaker Change: Three gigawatts of bookings here for shipments into the U S that are in late stage negotiations and actually as this call.

Speaker Change: It was ongoing I've got I got a text that about 10% of that now has has been Baltimore reflected in next next earnings call.

Speaker Change: So the momentum there is available to us it's how we choose to engage in our strategy is to try to to maintain.

<unk> delivered an uncertainty that we provide to our customers. There's a lot going on right now when you step back and reflect I mean, theres a whole policy environment of issues that have to be resolved and uncertainty and there is potential.

Alexander R. Bradley: Turning to slide 11, I'll summarize the key messages from today's call. Demand has been solid, with 2.3 gigawatts of networking capacity since the previous earnings call, leading to a contracted backlog of 80.1 gigawatts. Our opportunity pipeline remains strong, with a global opportunity set at 66.5 GW, including mid- to late-stage opportunities of 32 GW. We continue to expand our manufacturing capacity, exiting 2023 with 16.6 gigawatts of nameplate capacity. I expect to exit 2026 with approximately 25 gigawatts of nameplate capacity, including approximately 14 gigawatts of nameplate capacity in the US. We are, as previously announced, adding a new dedicated R&D facility in Ohio, projected to be operational in the first half of 2024, which we believe will allow us to optimize technology improvements with significantly less disruption to our commercial manufacturing. Earnings for Lucidshare were $7.74 in 2023, including the impact of selling our 2023 Section 45X tax credits and the impairment of our investment in cubic PV above the midpoint of our initial NQ3 updated value. We're forecasting full year 2024 earnings for diluted share between $13 to $14.

Speaker Change: Change in the administration, and DC, which Alex highlighted as well.

Speaker Change: If there wasn't.

Speaker Change: Of the Republican administration, how would they choose to engage in there is all kinds of conversations about how they think through IRI sure, but I don't think that there would be any less saline yet on the Chinese and I think they could get more aggressive.

Speaker Change: With potential trade barriers that our customers are concerned about and so they they value the certainty of first solar and looking to derisk their projects as far out as they can go.

Speaker Change: The other thing that's still driving some uncertainty in the marketplace is as you've seen recently with on an IP standpoint, especially as the market has transitioned to top con.

Speaker Change: <unk> has indicated that they have a strong IP position for top gun and theyre going to enforce that IP, you've seen maxion make statements as well that they've got an IP position around top kind of they're also going to enforce and as you know there is a significant transition towards towards dotcom.

Speaker Change: So our customers also have to think through freedom to operate with their counterparties around intellectual properties. So there's a lot that they have to think through and theres a lot of uncertainty outside of engaging with first solar and so we'll be disciplined and measured in our negotiations and but I would not at all be surprised as we finish out this year.

Alexander R. Bradley: Finally, we ended the year with a cash balance of $1.6 billion net of debt and expect to end 2024 with a cash balance of $0.9 to $1.2 billion net of debt. There's net cash position, together with optionality around monetizing our 2024 Section 45x tax credit, places us in a position of strength in which to expand our capacity, invest in research, development, and technology improvement, and a few other strategic opportunities as we march forward And with that, we conclude our plenary remarks and open the call for questions. This is largely how we're going to engage the market in conversations with our customers. I'm very happy with the bookings that we showed up for this last quarter. Great ASPs, good counterparties, and technology adders associated with it and built into a period of time that's very constructive for us. A lot of that volume goes out into 27, 28, and 29, and touches 30 even. I am so happy from that standpoint.

Speaker Change: There will be somewhere around a one to one one to one book to Bill, which will have 16, gigawatts or so it was our shipment profile I wouldn't be surprised if our bookings is somewhat in that Zip code and largely that would fill out our.

Speaker Change: Pocket of opportunity in 2027, so we could exit this year with a comparable backlog that we have right now and potentially have a very solid position going into 2027, continuing to think about how we book out through the end of the decade.

Speaker Change: We will take the next question is from Philip Shen Roth Capital partners.

Philip Shen: Hey, guys. Thanks for taking my questions first one is on pricing.

Philip Shen: Get job on the recent bookings asp's.

Philip Shen: At 32 cents almost and.

Philip Shen: Can you talk through the dynamics influencing that pricing you mentioned, a bunch of it earlier remarks, but I'll.

Philip Shen: I'd love to get a feel for how the customer conversations have been selected last year. It was very much an oversupply kind of price decline environment.

Mark R. Widmar: You know, recently, a lot of this policy activity has kind of swung back in your favor as it relates to greater UFLPA enforcement or the potential for the 2-1-5 facial exemption being removed. Can you just talk through that customer conversation and how that may have inflected recently and then also... Do you expect that pricing momentum to remain steady through 2024, or is there even potential that it could go higher, or do you think there's a risk that it could go lower? The second question here is about the module volume that you talked about.

Philip Shen: Recently, a lot of this policy activity has kind of swung back in your favor as it relates to.

Philip Shen: Greater use opa enforcement or the potential for the deal to one bifacial exemption being removed.

Philip Shen: Can you just talk through that customer.

Philip Shen: Conversation and how that May have inflated recently and then also do you expect that pricing momentum too.

Philip Shen: <unk> remained steady through 'twenty.

Philip Shen: <unk> 24 or is there even potential that it could go higher or do you think if there is a risk that it could go lower the second question here is around module volume that you talked about theres, a customer that can't take delivery of 381 megawatts.

Mark R. Widmar: There's a customer that can't take delivery of 381 megawatts of product. Checks on this suggest there could be as much as one and a half gigawatts floating around. And so how many megawatts do you expect the market to transact in the secondary market, if you will, in 24 hours? So I know it's not your risk, ultimately, but you do have to manage it at some level, and your customers ultimately have to deal with it. But, and yeah, you should have protection, but it's something that can be an issue to understand better as well. So, thanks. Yeah, so let me, I'll start with your second one, then I'll go back to the first one.

Philip Shen: <unk>.

Philip Shen: Product.

Philip Shen: Our checks on this suggests.

Philip Shen: There could be as much as one five gigawatts floating around.

Philip Shen: And so how many megawatts do you expect the market to transact in the secondary market. If you will in 24. So I know, it's not your risk ultimately, but you do have to manage it at some level.

Philip Shen: And your customers ultimately have to deal with it but and yet you should have protections, but it's something that can.

Speaker Change: Ian issue to understand better as well so thanks Mark.

Mark R. Widmar: Yes, So let me I'll start with your second one and then I'll go back to the first one.

Mark R. Widmar: Look, this 380 megawatts is, was to think of it almost as a one-off transaction that I think we booked two, three years ago. I'm trying to remember the exact time frame. It was for, and we specifically stated in the prepared remarks, it was for a corporate customer, who basically was going to use it for self-generation and self-consumption, right? And ultimately, it was looking potentially not just for, but also

Mark R. Widmar: 380 megawatts was to think of it almost as a one off transaction that.

Mark R. Widmar: We booked two three years ago, the exact timeframe.

Speaker Change: Sure and we specifically stated in the prepared remarks, it was for a corporate customer.

Speaker Change: It basically was going to use it for self generation self consumption right.

Mark R. Widmar: And ultimately it was looking potentially not just from.

Mark R. Widmar: It's essentially leverage beyond just the raw form of the electricity generation that it would provide. That customer has gone into some financial challenges that they're having to deal with. And so those megawatts are an obligation to the customer; we'll enforce the rights under the contract. We will also work with the customer to recontract that if that opportunity is available to us. If not, then there is an obligation for them to take delivery of it and then to pay for it.

Mark R. Widmar: Essentially leverage it beyond just the raw form of the electric electricity generation that it would provide.

Mark R. Widmar: That customer has gone into some financial distress and some challenges that they're having to deal with.

Mark R. Widmar: And those megawatts are an obligation to the customer we will enforce our rights under the contract. We will also work with the customer to re contract that if we if that opportunity is available to us. If not then there is an obligation for them to take delivery and then to pay for that.

Mark R. Widmar: The particular project, it is a project that is cited in the state of permitting and, I believe, has an interconnection. That project asset itself is being marketed right now. And we'll see how successful that is. To the extent that that transaction does happen, then the modules will go along with it.

Mark R. Widmar: Particular project it is a project that decided.

Mark R. Widmar: State of permitting and I believe has an interconnection that project asset itself is being marketed right now.

Mark R. Widmar: And we will see how successful that is to the extent that that transaction does happen then the modules will go along with it there'll be the assignment with given our consent and will support that type of concern.

Mark R. Widmar: There'll be an assignment given our consent, and we'll support that type of consent, again, with the spirit of enforcing rights underneath our contract. So that one is that issue. So to the other question, because I know you've asked this a couple of times about markets and a product that's out in the secondary market, there are customers who are challenged right now from a development standpoint as it relates to interconnection positions. It's something that you are very well aware of.

Mark R. Widmar: Again with the spirit of honoring enforcing our rights underneath our contract. So that one is that issue fill it to the other question because I know you've asked a couple of times about markets product that's out in the secondary market. There are customers, who who are challenged right now from a development standpoint as it relates to.

Mark R. Widmar: Acquisitions, it's something that you are very well aware of.

Mark R. Widmar: Our contracts and our customers are aware of the fact that they need to take delivery of those modules. And when I'm talking about this, this is... hundreds of megawatts. This is not a lot of volume in 2024. Their option is to find a warehouse and to put them into a warehouse, or potentially they could look to try to transact with a third party.

Mark R. Widmar: Our contracts and our customers are aware of the fact that they need to take delivery of those models and what I'm talking about this this is.

Mark R. Widmar: Hundreds of megawatts. This is not a lot of volume in 2024.

Mark R. Widmar: There their option is to find a warehouse and to put it into a warehouse or potentially they could look to try to transact with a third party.

Mark R. Widmar: We'll try to find the best possible outcome with our customers. We always have worked in the spirit of, "Let's figure out a solution that can work." So I'm aware of that.

Mark R. Widmar: We'll try to find the right possible outcome with our customers. We always have worked in the spirit of let's figure out a solution that can work.

Mark R. Widmar: So I'm aware of that I don't believe it will have any significant impact on our ability to continue to to book.

Mark R. Widmar: I don't believe it will have any significant impact on our ability to continue to book any volumes that may be available in 2024, given schedule movements and those types of things. But we'll have to keep an eye on it. But I also just want to make sure that the one deal that we talked about was unique in the circumstances and is necessarily reflective of maybe the other opportunities that you're hearing about in the marketplace. As it relates to pricing and ASP and momentum, policy clearly toggles back and forth and trends up and down. And right now, I think there is a lot of uncertainty from that standpoint.

Mark R. Widmar: Any volumes that may be available in 2024, given scheduled movements in those types of things, but let's keep an eye on it but I'll also I just want to make sure that the one deal that we talked about it is unique in its circumstances isn't necessarily reflective of maybe the other opportunities.

Mark R. Widmar: That you are hearing about in the marketplace as it relates to pricing and ASP and momentum.

Mark R. Widmar: Policies clearly.

Mark R. Widmar: Toggles back and forth and trends up and down and right. Now we think there is a lot of uncertainty from that standpoint, but the other thing I want to continue to try to to emphasizes the value of certainty of first solar and the value of our relationship and our value proposition is having a conversation.

Mark R. Widmar: But the other thing I want to continue to try to emphasize is the value of certainty for First Solar and the value of our relationship and our value proposition. I was having a conversation with one of our largest partners just last week, and they couldn't be happier to be partnering with First Solar. The attributes we're talking about, you know, the strength of the technology, and the certainty of First Solar.

Mark R. Widmar: Asian with one of our largest partners just last week.

Mark R. Widmar: And <unk>.

Mark R. Widmar: They couldnt be happier to be partnering with with first solar and its and its the attributes we're talking about.

Mark R. Widmar: The strength of the technology, the certainty of first solar but it also gets into.

Mark R. Widmar: But it also gets into, you know, the responsible solar aspects as well, and our carbon footprint, and our water usage, and our energy payback, and our circular economy. And when you, you know, that's inherent to their value proposition that they're selling to their contracted off-take customers, like data centers, who value that as well. This work that we're doing around economic impact is no different than that. I mean, creating American jobs, I mean, being closely tethered to that, you know, supporting and investing back into America and American manufacturing, and American technology.

Mark R. Widmar: The responsible solar aspects as well and our carbon footprint and our water usage in our energy payback in our circular economy and when is that.

Mark R. Widmar: The inherent to their value proposition that they're selling to their contracted offtake customers like datacenters to value that as well. This work that we're doing around economic impact no different in that I mean, creating American jobs, I mean being closely tethered to that.

Mark R. Widmar: Supporting and investing back into America, and American manufacturing American technology, all of that plays to our strengths and so yes policy environment is helpful. Right now, but these other attributes are almost equally as important in our partner said basically look I know I may have to pay a little bit more for first solar but when I look at the brand and the <unk>.

Mark R. Widmar: All that plays to our strengths. And so, yes, the policy environment is helpful right now, but these other attributes are almost equally as important. And our partner said, basically, look, I know I may have to pay a little bit more for First Solar, but when I look at the brand, and the certainty, and the value proposition that they're creating, we're more than happy to do that. And this is a counterparty that is almost 80-plus percent, 100 percent sole source into First Solar. And we've got a deep relationship and multi-gigawatts of opportunity still in front of us. And I don't see this as a unique one-off.

Mark R. Widmar: Certainty and the value proposition that that they are creating more than happy to do that and this is a counterparty that is almost 80 plus percent, 100% sole source into first solar and we've got a deep relationship and multi gigawatts of opportunities still in front of us.

Mark R. Widmar: I don't see this as a unique one off this is generally the engagement and the conversations that we're having with our customers and Phil you mentioned the pricing would stay steady there's definitely some elasticity of demand relates to pricing, which is why we want to be disciplined and why the position of strength that we put ourselves in is so important we have no need to go out and chase deals.

Mark R. Widmar: This is generally the engagement and conversations that we're having with our customers. And as you mentioned, if the pricing would stay steady, there's definitely some elasticity of demand related to pricing, which is why we want to be disciplined and why the position of strength that we put ourselves in is so important. We have no need to go out and chase deals.

Alexander R. Bradley: As I mentioned on the call, we could book nothing between now and the end of the year and still find ourselves two years forward sold out. If there is uncertainty in the market, we can afford to step back, and therefore, we can manage to some degree some of that price erosion. So we'll continue to work with people that value the attributes the mark brings, and therefore, I think you'll see slower bookings, a lower pace of bookings at prices that we find accessible in the long term. Clearly, if we wanted to sell a lot more and drop prices, that would happen, but that's not the strategy.

Mark R. Widmar: As I mentioned on the call we could book nothing between now and the end of the year. It's still find ourselves two years forward sold out if there is uncertainty in the market, we can afford to step back and therefore, we can manage to some degree some of that price erosion. So we'll continue to work with people that value. The attributes the mark brings and therefore, I think youll see slower bookings.

Mark R. Widmar: Lower pace of bookings at pricing that we find acceptable in the long term clearly if we wanted to sell a lot more and drop pricing that would happen, but that's not the strategy and I think this we just tether back to look if we can achieve a one to one book to Bill this year largely sell through our open position in 2027, I think it would be a great result, and position the company very well as we exit 2024.

Mark R. Widmar: Yeah, and I think if we just tether back to, look, if we can achieve a one-to-one book to bill this year and largely sell through our open position in 2027, I think that would be a great result and position the company very well as we exit 2024. And, everyone, that is all the time we have for questions today. This does conclude today's conference. We would like to thank you all for your participation. You may now disconnect...

Mark R. Widmar: Yeah.

Speaker Change: And everyone that is all the time, we have for questions. Today. This does conclude today's conference I would like to thank you all for your participation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change:

Mark R. Widmar: Yeah.