Q2 2026 First Solar Inc Earnings Call

July 30, 2026

Speaker #1: Good afternoon, and welcome to First Solar's second quarter 2026 earnings conference call. This call is being webcast live on the investor section of First Solar's website, at investor.firstsolar.com.

Speaker #1: All participants are in a listen-only mode, and please note that today's call is being recorded. I would now like to turn the conference over to your host, Byron Jeffers, Head of Investor Relations.

Speaker #1: Good afternoon, and welcome to First Solar's second quarter 2026 earnings conference call. This call is being webcast live on the Investors section of First Solar's website, at investor.firstsolar.com.

Speaker #2: Good afternoon. And thank you for joining First Solar's second quarter 2026 earnings call. With me today are Mark Whitmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer.

Speaker #1: All participants are in listen-only mode, and please note that today's call is being recorded. I would now like to turn the conference over to your host, Byron Jeffers, Head of Investor Relations.

Speaker #2: Mark will begin with second quarter highlights, followed by Alex, and then we'll open the line for questions. Today's discussion contains forward-looking statements, actual results may differ materially due to risks and uncertainties as described in our earnings press release, and other SEC filings and the earnings material available at investor.firstsolar.com.

Speaker #2: Good afternoon. And thank you for joining First Solar's second quarter 2026 earnings call. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer.

Speaker #2: We undertake no obligation to update these statements due to new information or future events. We will also reference certain non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures, are in our earnings press release, and presentation.

Speaker #2: Mark will begin with second quarter highlights, followed by Alex, and then we'll open the line for questions. Today's discussion contains forward-looking statements. Actual results may differ materially due to risks and uncertainties as described in our earnings press release, other SEC filings, and the earnings material available at investor.firstsolar.com.

Speaker #2: This non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with US GAAP.

Speaker #2: With that, I will turn it over to Mark.

Speaker #2: We undertake no obligation to update these statements due to new information or future events. We will also reference certain non-GAAP financial measures; reconciliations to the most directly comparable GAAP measures are in our earnings press release and presentation.

Speaker #3: Thank you, and good afternoon. Beginning on slide 4, we delivered both record second quarter and first half sales volume, and improved financial performance relative to the prior year.

Speaker #3: During the quarter, we generated over $1 billion in net sales, expanded gross margin to approximately 57%, and delivered strong adjusted EBITDA performance. We also surpassed an important milestone for First Solar, exceeding $100 gigawatts of cumulative module sales globally.

Speaker #2: This non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP.

Speaker #2: With that, I will turn it over to Mark.

Speaker #3: Thank you, and good afternoon. Beginning on slide 4, we delivered both record second-quarter and first-half sales volume, and improved financial performance relative to the prior year.

Speaker #3: We view this as a reflection of the trust customers have placed in First Solar over the more than 2.5 decades and the durability of our technology and manufacturing platform.

Speaker #3: We entered the quarter with approximately 45.1 gigawatts of contract backlog. We delivered with deliveries extending through the end of the decade, demonstrating the demand for our demonstrated technology platform, domestic manufacturing footprint, and delivery certainty.

Speaker #3: We view this as a reflection of the trust customers have placed in First Solar over more than 25 years, and the durability of our technology and manufacturing platform.

Speaker #3: Turning to manufacturing, our US facilities continue to operate at high utilization rates during the quarter. In South Carolina, the first phase of the finishing facility remains on track to begin production in the second half of 2026, with equipment installations progressing as expected.

Speaker #3: We ended the quarter with approximately 45.1 gigawatts of contracted backlog, with deliveries extending through the end of the decade. This demonstrates the demand for our proven technology platform, domestic manufacturing footprint, and delivery certainty.

Speaker #3: For the second phase, we now expect completion in mid-2027, while the revised time reflects a number of factors associated with optimizing the facility's launch and also enables the earlier incorporation of pure technology.

Speaker #3: We are pleased with the performance of Pure, with both high-volume manufacturing at our Perrysburg facility and performance data from field deployments across multiple climates exceeding expectations.

Speaker #3: For the second phase, we now expect completion in mid-2027, while the revised timing reflects a number of factors associated with optimizing the facility's launch and also enables the earlier incorporation of cure technology.

Speaker #3: We believe incorporating the technology closer to the onset of the facility's commercial launch will simplify execution and accelerate value realization and enhance customer value and the facility's long-term financial performance.

Speaker #3: We are pleased with the performance of Cure, with both high-volume manufacturing at our Perrysburg facility and performance data from field deployments across multiple climates exceeding expectations.

Speaker #3: Once completed, the South Carolina facility is expected to provide up to $3.5 gigawatts of finishing capacity for modules initiated at our international manufacturing sites, giving us greater flexibility to optimize our supply chain flexibility while also optimizing freight tariff, domestic content, and section 45ax economics.

Speaker #3: We believe incorporating the technology closer to the onset of the facility's commercial launch will simplify execution, accelerate value realization, and enhance customer value and the facility's long-term financial performance.

Speaker #3: With respect to our international manufacturing fleet, production planning and utilization levels in Malaysia and Vietnam continue to be influenced by US market demand drivers and economics including the pending section 232 polysilicon and derivative investigation and tariffs.

Speaker #3: We expect greater policy clarity will help inform the long-term operating profile for the approximately $1.8 gigawatts of fully finished international capacity that remains available.

Speaker #3: With respect to our international manufacturing fleet, production planning and utilization levels in Malaysia and Vietnam continue to be influenced by U.S. market demand drivers and economics, including the pending Section 232 polysilicon and derivative investigation and tariffs.

Speaker #3: After accounting for capacity being used to produce semi-finished product destined for our new South Carolina finishing line. A note on manufacturing optimization and allocation: approximately 41 gigawatts of our 45 gigawatt backlog includes some form of domestic content requirement.

Speaker #3: We expect greater policy clarity will help inform the long-term operating profile for the approximately 1.8 gigawatts of fully finished international capacity that remains available.

Speaker #3: These requirements vary significantly and range from requiring exclusive supply from US fully integrated factories to blending US-made supply with both fully integrated domestic factories as well as product from our upcoming South Carolina finishing line, to a domestic content points requirement which is factory-agnostic allowing blending of product from across our global fleet.

Speaker #3: After accounting for capacity being used to produce semi-finished product destined for our new South Carolina finishing line—a note on manufacturing optimization and allocation.

Speaker #3: Approximately 41 gigawatts of our 45-gigawatt backlog includes some form of domestic content requirement. These requirements vary significantly and range from requiring exclusive supply from U.S. fully integrated factories, to blending U.S.-made supply with both fully integrated domestic factories as well as product from our upcoming South Carolina finishing line, to a domestic content points requirement which is factory-agnostic, allowing blending of product from across our global fleet.

Speaker #3: We therefore continually balance and refine our module supply and demand allocation across the fleet to meet customer contractual obligations, optimize factory throughput, and optimize gross margin.

Speaker #3: This typically means that over a period of time we will seek to maximize production and. Firstly, from our fully integrated US factories; secondly, from our South Carolina finishing line; and thirdly, from our international facilities.

Speaker #3: As it relates to perovskites, we continue to advance our development program for this potentially significant technology platform. Our previously announced development line continues to progress to process improved efficiency and reliability attributes on smaller form factor modules while our Series 6 form factor pilot line remains on schedule and is expected to reach operational readiness in the first half of 2027.

Speaker #3: This typically means that, over a period of time, we will seek to maximize production and sales, firstly from our fully integrated U.S. factories, secondly from our South Carolina finishing line, and thirdly from our international facilities.

Speaker #3: Our continued progress has given us confidence as we continue to invest substantial capital in our efforts to realize the commercialization of perovskites. Earlier today, we published our latest corporate responsibility report reinforcing our conviction that how and where solar technology is made matters.

Speaker #3: As it relates to perovskites, we continue to advance our development program for this potentially significant technology platform. Our previously announced development line continues to progress to process improved efficiency and reliability attributes on smaller form factor modules, while our Series 6 form factor pilot line remains on schedule and is expected to reach operational readiness in the first half of 2027.

Speaker #3: The report details how we create enduring value by developing sourcing, manufacturing, and recycling solar modules domestically. Supporting jobs and communities strengthening industrial capacity and help ensure the benefits are realized locally.

Speaker #3: Our continued progress has given us confidence as we continue to invest substantial capital in our efforts to realize the commercialization of perovskites. Earlier today, we published our latest corporate responsibility report, reinforcing our conviction that how and where solar technology is made matters.

Speaker #3: It also highlights our continued focus on responsible manufacturing, supply chain transparency, workforce development, and resource efficiency. The report reflects the effectiveness of a business model where corporate responsibility isn't a construct but the default.

Speaker #3: The report details how we create enduring value by developing, sourcing, manufacturing, and recycling solar modules domestically; supporting jobs in communities, strengthening industrial capacity, and helping ensure the benefits are realized locally.

Speaker #3: Before turning the call over to Alex, I want to briefly address the market and policy environment and how it is informing our commercial approach.

Speaker #3: The underlying drivers for utility-scale solar remain intact. Including load growth, data center development, electrification, aging generation assets, and the need for affordable, scalable new capacity.

Speaker #3: The policy landscape continues to evolve particularly as it relates to pending outcome for the section 232 polysilicon and derivatives investigation as well as final fiat regulations.

Speaker #3: Before turning the call over to Alex, I want to briefly address the market and policy environment and how it is informing our commercial approach.

Speaker #3: In this environment, we continue to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term bookings volume. Relative to the beginning of the year, we are seeing increased customer engagement and as policy clarity improves, we believe first solar remains well positioned to capitalize on these opportunities.

Speaker #3: The policy landscape continues to evolve, particularly as it relates to the pending outcome for the Section 232 polysilicon and derivatives investigation, as well as final FIAC regulations.

Speaker #3: With that, I'll now turn the call over to Alex to discuss our bookings, financial results, and outlook.

Speaker #3: In this environment, we continue to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term bookings volume. Relative to the beginning of the year, we are seeing increased customer engagement, and as policy clarity improves, we believe First Solar remains well positioned to capitalize on these opportunities.

Speaker #2: Thanks, Mark. Beginning on slide 5, as of June 30, 2026, our contracted backlog totals 45.1 gigawatts with an aggregate transaction value of $13.6 billion.

Speaker #2: Exclusive of technology adjusters, we're scheduled deliveries extending through 2030. Early this month, Cypress Creek Energy broke ground on the Steel River Energy Center in Arkansas, a project utilizing first solar modules and previously included in our contracted backlog.

Speaker #3: With that, I'll now turn the call over to Alex to discuss our bookings, financial results, and outlook.

Speaker #2: The initial phase is expected to provide approximately $1.6 gigawatts of solar generation capacity and $1.9 gigawatt-hours of battery storage to support Google's growing energy needs, with the opportunity for future expansion.

Speaker #2: Thanks, Mark. Beginning on slide 5, as of June 30, 2026, our contracted backlog totals 45.1 gigawatts with an aggregate transaction value of $13.6 billion.

Speaker #2: Exclusive of technology adjusters. We're scheduled deliveries extending through 2030. Early this month, Cypress Creek Energy broke ground on the Steel River Energy Center in Arkansas, a project utilizing first solar modules and previously included in our contracted backlog.

Speaker #2: Since our last earnings call, we've recorded approximately $1.9 gigawatts of additional US gross bookings at an average selling price of approximately $36 cents per watt, inclusive of applicable technology adjusters.

Speaker #2: While near-term customer activity continues to be influenced by the current policy environment discussed by Mark, our fully integrated domestic manufacturing fleet remains substantially committed through 2028, providing a high degree of volume and pricing visibility.

Speaker #2: Given the limited amount of uncommitted domestic capacity available over the next several years, we continue to be disciplined in evaluating incremental contracting opportunities. We also initiated our first customer notifications related to contractual cure adjusters during the translate cure's performance benefits from potential ASP adjusters into backlog value and future revenue realization.

Speaker #2: Since our last earnings call, we've recorded approximately 1.9 gigawatts of additional U.S. gross bookings at an average selling price of approximately $0.36 per watt, inclusive of applicable technology adjusters.

Speaker #2: We expect the contribution from these adjusters to increase as cure deployment expands across our contracted portfolio. As a reminder, we expect limited ASP upside from cure sales in 2026, largely as a function of contractual notification deadlines relative to the timing of decision to recommence cure production.

Speaker #2: Turn to India, our guidance continues to assume production is largely sold domestically in a short cycle book-and-bill market, with the factory operating at a high utilization rate.

Speaker #2: An important milestone at the beginning is to translate CURE's performance benefits from potential ASP adjusters into backlog value and future revenue realization. We expect the contribution from these adjusters to increase as CURE deployment expands across our contracted portfolio.

Speaker #2: India gross bookings during the first half of the year totals approximately $1.1 gigawatts and average selling price of approximately $20 cents per watt. Given the shorter contracting cycle of the domestic India market, booking economics generally provide a reasonable indicator of near-term revenue realization, subject to normal foreign currency bookings.

Speaker #2: As a reminder, we expect limited ASP upside from Cure sales in 2026, largely as a function of contractual notification deadlines relative to the timing of the decision to recommence Cure production.

Speaker #2: Turning to India, our guidance continues to assume production is largely sold domestically in a short-cycle, book-and-bill market, with the factory operating at a high utilization rate.

Speaker #2: Turn to slide 6. Net sales for the second quarter were approximately $1.06 billion, a decrease of approximately 4% year over year. Decrease was primarily driven by lower revenue associated with customer contract terminations recognized in the prior year period, partially offset by higher module volume sold.

Speaker #2: India gross bookings during the first half of the year totals approximately $1.1 gigawatts, an average selling price of approximately $0.20 per watt. Given the shorter contracting cycle of the domestic India market, booking economics generally provide a reasonable indicator of near-term revenue realization, subject to normal foreign currency bookings.

Speaker #2: Gross margin was approximately $57%, an increase of approximately 12 percentage points compared to the second quarter of 2025. The increase was primarily driven by an estimated $89 million net IEPA tariff-related benefits, a higher mix of modules qualifying for section 45X tax credits, and lower logistics costs.

Speaker #2: Turning to slide 6, net sales for the second quarter were approximately $1.06 billion, a decrease of approximately 4% year-over-year. The decrease was primarily driven by lower revenue associated with customer contract terminations recognized in the prior-year period, partially offset by higher module volume sold.

Speaker #2: The net IEPA tariff-related benefit reflects our current estimate of expected recoveries related to commercial obligations and other tariff-related considerations, and remains subject to refinement as additional information becomes available.

Speaker #2: Gross margin was approximately 57%, an increase of approximately 12 percentage points compared to the second quarter of 2025. The increase was primarily driven by an estimated $89 million in net IEPA tariff-related benefits, a higher mix of modules qualifying for Section 45X tax credits, and lower logistics costs.

Speaker #2: These benefits were partially offset by lower termination-related revenue and higher duties and tariffs. While logistics costs improved year over year, the quarter included higher over-the-road freight costs, driven by overall capacity tightening and volatility in diesel costs.

Speaker #2: These impacts were partially offset by higher sales rate recovery. Operating expenses were approximately $155 million, including $76 million of R&D expense. R&D increased year over year primarily affecting continued investment in perovskite development and the impairment of certain R&D equipment that is no longer expected to be used as part of our technology roadmap.

Speaker #2: The net IEPA tariff-related benefit reflects our current estimate of expected recoveries related to commercial obligations and other tariff-related considerations and remains subject to refinement as additional information becomes available.

Speaker #2: These benefits were partially offset by lower termination-related revenue and higher duties and tariffs. While logistics costs improved year over year, the quarter included higher over-the-road freight costs driven by overall capacity tightening and volatility in diesel costs.

Speaker #2: Net income was $423 million, up approximately 24% year over year. Adjusted EBITDA was $644 million, above the high end of our previously communicated Q2 preview range, with an adjusted EBITDA margin of 61%.

Speaker #2: These impacts were partially offset by higher sales rate recovery. Operating expenses were approximately $155 million, including $76 million of R&D expense. R&D increased year over year, primarily reflecting continued investment in perovskite development and the impairment of certain R&D equipment that is no longer expected to be used as part of our technology roadmap.

Speaker #2: Moving to slide 7, we ended the quarter with approximately $1.7 billion of net cash, providing substantial balance sheet strength and financial flexibility while remaining within our targeted long-term cash range of $1.5 to $2 billion.

Speaker #2: Operating cash outflows year-to-date were $360 million, reflecting first half working capital dynamics, an improved compared to outflows of $458 million during the first half of 2025.

Speaker #2: First half capital expenditures were $280 million, primarily supporting our South Carolina finishing facility and technology investments. We completed the full prepayment of our India DST loan during the quarter.

Speaker #2: Moving to slide 7, we ended the quarter with approximately $1.7 billion of net cash, providing substantial balance sheet strength and financial flexibility, while remaining within our targeted long-term cash range of $1.5 to $2 billion.

Speaker #2: Turn to slide 8. Our fully 2026 guidance remains unchanged. With that said, our guidance now assumes a net tariff impact of $60 to $80 million, with updates including the previously mentioned net IEPA recovery and the assumption of section 301 tariffs in the second half of the year.

Speaker #2: Operating cash outflows year to date were $360 million, reflecting first-half working capital dynamics, and improved compared to outflows of $458 million during the first half of 2025.

Speaker #2: First-half capital expenditures were $280 million, primarily supporting our South Carolina finishing facility and technology investments. We completed the full prepayment of our India DSC loan during the quarter.

Speaker #2: We also forecast offsetting updates between production startup expense and R&D expense, as well as incremental freight costs due to certain non-recoverable domestic freight expenses above our previously assumed forecast, largely driven by changes in module delivery locations.

Speaker #2: Turning to slide 8, our full-year 2026 guidance remains unchanged. With that said, our guidance now assumes a net tariff impact of $60 to $80 million, with updates including the previously mentioned net IEPA recovery and the assumption of Section 301 tariffs in the second half of the year.

Speaker #2: A note: in some cases, domestic freight costs are now approaching international shipping economics. For the third quarter, we expect volume sold between $3.9 and $4.5 gigawatts, an adjusted EBITDA between $600 and $25 and $775 million.

Speaker #2: Summary of our first half performance from reaffirmed outlook reflects the strength of our strategy of reshoring and scaling domestic manufacturing, progressing our technology roadmap, and maintaining a selective approach to new bookings in light of key pending trade and policy determinations.

Speaker #2: This was largely driven by changes in module delivery locations. And note, in some cases, domestic freight costs are now approaching international shipping economics. For the third quarter, we expect volume sold between 3.9 and 4.5 gigawatts, and adjusted EBITDA between $625 million and $775 million.

Speaker #2: As we look ahead, our priorities remain unchanged. We remain focused on disciplined execution, serving our customers, advancing our technology roadmap, managing capital prudently, and maintaining financial flexibility.

Speaker #2: And with that, operator, please open the line to questions.

Speaker #2: Summary of our first-half performance from reaffirmed outlook reflects the strength of our strategy of reassuring and scaling domestic manufacturing, progressing our technology roadmap, and maintaining a selective approach to new bookings in light of key pending trade and policy determinations.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #2: If we look ahead, our priorities remain unchanged: staying focused on disciplined execution, serving our customers, advancing our technology roadmap, managing capital prudently, and maintaining financial flexibility.

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question. To allow for optimum sound quality, if you are muted locally, please remember to unmute your device.

Speaker #2: And with that, operator, please open the line for questions.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of John Wyndham with UBS. John, your line is now open; please go ahead.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #2: Perfect. Thanks. Hey, congratulations on the result, and I appreciate you taking the questions. So obviously, the FCC had a ruling about solar inverters a couple days ago.

Speaker #2: And I think on one side, it goes along to show how serious the government is in promoting domestic content within especially electrical equipment hardware, which is obviously a very good for you given your position in domestic solar modules.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of John Wyndham with UBS. John, your line is now open. Please go ahead.

Speaker #2: But just curious if you have any early thoughts on potential impact on broader solar installations and the ability to work around the industry to work around that provision.

Speaker #2: Perfect. Thanks. Hey, congratulations on the result, and appreciate you taking the questions. So obviously, the FCC had a ruling about solar inverters a couple days ago.

Speaker #2: Thank you so much.

Speaker #2: And I think, on one side, it goes along to show how serious the government is in promoting domestic content within, especially, electrical equipment hardware, which is obviously very good for you given your position in domestic solar modules.

Speaker #3: Yeah. Thanks, John. So I think it continues the theme of our US government trying to ensure that we don't have any over-reliance on adversarial countries.

Speaker #3: And obviously, China being one of them in particular. I think the good thing about this is that the industry has started to get ahead of trying to find domestic supply chains, comprehensive domestic supply chains.

Speaker #2: But just curious if you have any early thoughts on potential impact on broader solar installations and the ability for the industry to work around that provision.

Speaker #3: We obviously were at an early industry leader in that regard of reshoring manufacturing and creating a supply chain here in the US for our US across all components of equipment suppliers.

Speaker #2: Thank you so much.

Speaker #3: Yeah, thanks, John. So I think it continues the theme of our U.S. government trying to ensure that we don't have any over-reliance on adversarial countries.

Speaker #3: All the way up even to trying to find localizations for the battery supply chain as much as you can. So I don't see it being a constraint near term.

Speaker #3: And obviously, China being one of them in particular. I think the good thing about this is that the industry has started to get ahead of trying to find comprehensive domestic supply chains.

Speaker #3: I think the current models that have been shipping into the US will continue to be allowed to be shipped into the US. I do think there is a theme or a message there, though, that that scrutiny may be stepped up as we move forward.

Speaker #3: And we obviously were an early industry leader in that regard of reshoring manufacturing and creating a supply chain here in the U.S. for our U.S. operations.

Speaker #3: You're seeing this now really across all components of equipment suppliers. All the way up even to trying to find localization for the battery supply chain as much as you can.

Speaker #3: But I think it just sends another great signal to domestic manufacturers. If, look, we need to move forward, we need to domestic, create domestic supply chains, resiliency to enable not only the solar industry to thrive, but really all of industries that, as we reindustrialize to the US economy, right?

Speaker #3: So I don't see it being a constraint near-term. I think the current models that have been shipping into the U.S. will continue to be allowed to be shipped into the U.S.

Speaker #3: So again, I think it's a good indicator of a continued theme and message that this administration has, and we fully support it.

Speaker #3: I do think there is a theme or a message there, though, that that scrutiny may be stepped up as we move forward. But I think it just sends another great signal to domestic manufacturers of, look, we need to move forward.

Speaker #1: Your next question comes from the line of Brian Lee with Goldman Sachs & Co. Brian, your line is now open; please go ahead.

Speaker #3: We need to create domestic supply chains and resiliency to enable not only the solar industry to thrive, but really all industries, as we reindustrialize the US economy, right?

Speaker #4: Hey, guys. Thanks for taking the questions. Just had two I guess, first, on this Google Steel River project, appreciate you guys commenting on that.

Speaker #3: So, again, I think it's a good indicator of a continued theme and message that this administration has, and we fully support it.

Speaker #4: I might have missed it, but how much of the $1.9 gigawatts in US gross bookings came from that one project in the quarter? And then how much more bookings potential exists on that project site?

Speaker #1: Your next question comes from the line of Brian Lee with Goldman Sachs & Co. Brian, your line is now open; please go ahead.

Speaker #4: And then your bigger picture, maybe speak to how you're seeing general interest from that hyperscaler data center community. And then second question I have is just kind of the customary latest thoughts, timing, visibility into section 232, how you're viewing the potential for floor prices in the $0.40 per watt or higher range, and then how quickly do you move on your bookings funnel and Southeast Asia strategy once you get clarity on this presumably hopefully in the next few months?

Speaker #4: Hey, guys. Thanks for taking the questions. Just had two, I guess. First, on this Google Steel River project—appreciate you guys commenting on that.

Speaker #4: I might have missed it, but how much of the $1.9 gigawatts in U.S. gross bookings came from that one project in the quarter? And then, how much more bookings potential exists on that project site?

Speaker #4: And your bigger picture, maybe speak to how you're seeing general interest from that hyperscaler data center community. And then second question I have is just, kind of the customary latest thoughts, timing, visibility, intersection 232, how you're viewing the potential for floor prices in the 40-cent per watt or higher range, and then how quickly do you move on your bookings funnel and Southeast Asia strategy once you get clarity on this?

Speaker #4: Thanks, guys.

Speaker #3: All right, Brian. I'll try to take kind of the first two and then Alice talk maybe a little bit about the views of Southeast Asia.

Speaker #3: So make sure it's clear on the project that we announced with our partner that we've supplied models to for Cypress Creek. That is already in our bookings.

Speaker #3: Okay? So that was just the highlight. The great project, if you actually look at some of the more recent announcements that have been made, over the last several weeks, I think you kind of see a theme there.

Speaker #4: Presumably, hopefully in the next few months. Thanks, guys.

Speaker #3: All right, Brian. I'll try to take kind of the first two, and then Alice can talk maybe a little bit about the use of Southeast Asia.

Speaker #3: You've got a very large project with Cypress, the one that we've referenced, that will be phase one of kind of called the $1.6 gigawatts.

Speaker #3: So make sure it's clear, on the project that we announced with our partner that we supplied modules to for Cypress Creek, that is already in our bookings.

Speaker #3: Then it goes to phase two, which will be about two and a half gigs. So that's a very large project, and I think the battery component of that as well is going to be north of the two gigawatts megawatt-hours from the battery standpoint.

Speaker #3: Okay? So that was just the highlight—the great project. If you actually look at some of the more recent announcements that have been made over the last several weeks, I think you kind of see a theme there.

Speaker #3: Really important strategic project. It's there to support Google. We have two other projects that have been announced over the last couple of weeks. One with TerraGen, which was about $1.4 gigawatts.

Speaker #3: You've got a very large project with Cypress, the one that we've referenced, that will be phase one of kind of called the 1.6 gigawatts.

Speaker #3: And then we had another one with Panamete, which was another gig plus. So those three projects that have been announced recently are about five gigawatts of capacity.

Speaker #3: The Panamete, part of the Panamete volume was actually announced last quarter. So when we did the announcements last quarter around bookings volumes, I think we had in totals around 1.4.

Speaker #3: Panamete was actually included in that volume. But I think it's a great message that the demands there half of that volume of that five gigawatts I referenced is directly communicated and tied to Google as a hyperscaler.

Speaker #3: And then we had another one with Panamete, which was another gig plus. So those three projects that have been announced recently are about five gigawatts of capacity.

Speaker #3: The other two and a half gigs, they haven't disclosed the counterparties, but if you look at the verbiage around the announcements on that, they'll reference a very large corporate account, one of the largest companies in the US, you can kind of get a sense of the likelihood of who that counterparty is going to be for that project.

Speaker #3: The Panamete, part of the Panamete volume, was actually announced last quarter. So when we did the announcements last quarter around bookings volumes, which I think we had in totals around $1.4 billion, the Panamete was actually included in that volume.

Speaker #3: But I think it's a great message that the demand's there. Half of that volume—of that 5 gigawatts I referenced—is directly communicated and tied to Google as a hyperscaler.

Speaker #3: So strong demand for continued demand for hyperscalers really strong relationships and partnerships with First Solar to support those types of strategic projects that are really kind of thrive on the importance of certainty, right?

Speaker #3: The other two and a half gigs—they haven't disclosed the counterparties—but if you look at the verbiage around the announcements on that, they'll reference a very large corporate account, one of the largest companies in the U.S. You can kind of get a sense of the likelihood of who that counterparty is going to be for that project.

Speaker #3: Those projects are strategic. They're important. They obviously include storage as reflected in the Cypress Creek project. As I've always said, the first thing you need to do is you're building out your projects and de-risking is that you need to make sure that you have a reliable partner who can make sure those photons become electrons.

Speaker #3: So, strong demand for continued growth from hyperscalers. Really strong relationships and partnerships with First Solar to support those types of strategic projects that really thrive on the importance of certainty, right?

Speaker #3: Without that, the whole project is going to be set at risk. And we can deliver that certainty and that great technology and that reliability.

Speaker #3: So we're seeing that in the marketplace and continued strong interest driven by as currently still someone insatiable demand from hyperscalers. As it relates to 232, I'll take the pricing piece and then Alice will talk to kind of how we thread that into our views around Southeast Asia.

Speaker #3: Look, it's still there's still a lot of views out there. I think everybody has a view of how the construct may be. With minimum import price and maybe with a tariff on top of that, there's some views of whether there's quotas or not.

Speaker #3: Without that, the whole project is going to be set at risk. And we can deliver that certainty, and that great technology, and that reliability.

Speaker #3: All I can say is still evolving. And we do believe it'll be constructive. I don't want to give kind of our internal read of what we think is potentially could be because there's still a lot of moving pieces.

Speaker #3: Look, there are still a lot of views out there. I think everybody has an opinion about how the construct may be, with a minimum import price and maybe with a tariff on top of that. There are also some views about whether there will be quotas or not.

Speaker #3: I can say that we're still in constant contact with the appropriate parties at USTR and Commerce to continue to bring our voice into the conversation.

Speaker #3: And we're still optimistic that the outcome will be constructive. And we've used it as a reason to be disciplined and we'll see what happens once it's finally announced.

Speaker #3: All I can say is it's still evolving. And we do believe it'll be constructive. I don't want to give kind of our internal read of what we think is potentially could be because there's still a lot of moving pieces.

Speaker #3: And there's demand that's still sitting there on the sidelines. If you look at our cadence and our minimum around our bookings, just here in the month of July, we booked almost two gigawatts in the US at very good prices as Alex indicated.

Speaker #3: I can say that we're still in constant contact with the appropriate parties at USTR and Commerce to continue to bring our voice into the conversation.

Speaker #3: There's about two more gigawatts north of two gigawatts that sits into a contract that's subject to CP. And then I've got another two gigawatts of active conversations with customers that there's a high probability we can close through by the end of the year.

Speaker #3: And we're still optimistic that the outcome will be constructive. We've used it as a reason to be disciplined, and we'll see what happens once it's finally announced.

Speaker #3: And there's demand that's still sitting there on the sidelines. If you look at our cadence and our momentum around our bookings, just here in the month of July, we booked almost 2 gigawatts in the U.S. at very good prices, as Alex indicated.

Speaker #3: So we'll see how much that gets further catalyzed by decision around 232.

Speaker #2: Brian, as it relates to Southeast Asia capacity, we talked on the last couple of calls around looking at this a bit like an option.

Speaker #2: So we're running somewhere around 30 million dollars quarter of underutilization associated with running Southeast Asia manufacturing well below its theoretical capacity. So after that.

Speaker #3: There's about two-plus gigawatts, north of two gigawatts, that sits under a contract that's subject to CP. And then I've got another two gigawatts of active conversations with customers, where there's a high probability we can close through by the end of the year.

Speaker #2: Cash, about half non-cash. Given that we've been holding through the first half of the year, making a decision on the long-term future there pending the outcome of 232, it makes sense to continue to do that.

Speaker #3: So we'll see how much that gets further catalyzed by decision around 232.

Speaker #2: So I'd still view this as we're waiting for the outcome of that policy. And just to frame the amount, if you were to go back and look at the slides we put out in our February call, it shows you nameplate capacity and production.

Speaker #2: Brian, as it relates to Southeast Asia capacity, we talked on the last couple of calls around looking at this a bit like an option.

Speaker #2: So we're running somewhere around $30 million per quarter of underutilization associated with running Southeast Asia manufacturing well below its theoretical capacity. About half of that's cash, about half non-cash.

Speaker #2: So we originally had about seven gigawatts of total capacity sitting in Malaysia, Vietnam, about half of that is going to be dedicated to production that will feed our new finishing line in South Carolina.

Speaker #2: Given that we've been holding through the first half of the year, making a decision on the long-term future there pending the outcome of the 232, it makes sense to continue to do that.

Speaker #2: So there's about three and a half gigawatts left of that. We did take out some tools to bring them over to the US to reuse in our perovskite work.

Speaker #2: So I'd still view this as—we're waiting for the outcome of that policy. And just to frame the amount, if you were to go back and look at the slides we put out in our February call, it shows you nameplate capacity and production.

Speaker #2: So ultimately, it leaves us with about 1.8 gigawatts of end-to-end fully finished capacity that we could ramp up across Malaysia, Vietnam. So it's about that 1.8 that we're talking about.

Speaker #2: We're thinking we're holding a decision on pending the outcome of the 232.

Speaker #1: Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is now open. Please go ahead.

Speaker #2: So there's about three and a half gigawatts left of that. We did take out some tools to bring them over to the US to reuse in our perovskite work.

Speaker #2: So, ultimately, it leaves us with about 1.8 gigawatts of end-to-end, fully finished capacity that we could ramp up across Malaysia and Vietnam. So it's about that 1.8 that we're talking about.

Speaker #4: Thanks. Good evening. Maybe just going back to section 232, obviously, there's a lot in play. And I recognize that. But we've heard and you mentioned the potential for waivers or quotas being allowed for certain domestic cell producers that could exempt them from some of these policy changes.

Speaker #2: We're thinking we're holding a decision pending the outcome of the 232.

Speaker #1: Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is now open. Please go ahead.

Speaker #4: I guess I'm just curious, conceptually, from your perspective, if some of these waivers are granted, do you think that could mute some of the price upside from section 232?

Speaker #4: Thanks. Good evening. Maybe just going back to Section 232, obviously, there's a lot in play, and I recognize that. But we've heard—and you mentioned—the potential for waivers or quotas being allowed for certain domestic cell producers that could exempt them from some of these policy changes.

Speaker #4: Or do you still see a constructive supply-demand setup just trying to think conceptually how you think about that?

Speaker #3: I mean, obviously, any modifications versus 100% restriction will create some potential dilutive impact to the strategic intent of the 232. It also depends on if there is a waiver or some type of quota, some type I mean, how big is it?

Speaker #4: I guess I'm just curious, conceptually, from your perspective, if some of these waivers are granted, do you think that could mute some of the price upside from section 232?

Speaker #4: Or do you still see a constructive supply-demand setup? I'm just trying to think conceptually about how you approach that.

Speaker #3: And does it scale down over time? I mean, is it something that is implemented initially and then. Then we'll walk down to maybe complete elimination of it.

Speaker #3: So it's hard to give you a great insight to the impact. Clearly, we're advocating to try to minimize any of those impacts. And as well as they should only be limited duration to the extent that they're enabled or allowed at all.

Speaker #3: We really want to create a domestic supply chain. And any type of workaround that you get will disincentivize the investments that need to be made here in the US, right, to scale up those capabilities.

Speaker #3: And does it scale down over time? I mean, is it something that is implemented initially and then will walk down to maybe complete elimination of it?

Speaker #3: So it's hard to give you great insight into the impact. Clearly, we're not—we're advocating to try to minimize any of those impacts.

Speaker #3: And I think it's much easier for people to understand the policy environment with certainty versus creating uncertainty by waivers or quotas and those types of things that they can create.

Speaker #3: And as well as they should only be a limited duration to the extent that they're enabled or allowed at all. We really want to create a domestic supply chain.

Speaker #3: So we'll have to wait and see. We're firm in our positions that we don't believe that they should be allowed. But we'll have to see how the final outcome is.

Speaker #3: And any type of workaround that you give will disincentivize the investments that need to be made here in the US, right, to scale up those capabilities.

Speaker #2: And there's some history here too. If you look back at the section 201 tariffs, and the exemption was put in place by facial technology, it was clear that that exemption effectively gutted that provision.

Speaker #2: So I think the administration has seen how those exemptions can effectively undermine what they're trying to do. If there's a belief that the 232 provides a need around the national security interest, it doesn't make a lot of sense to have a carve-out or a quota piece associated with a national security interest provision.

Speaker #3: So we'll have to wait and see. We're firm in our positions that we don't believe that they should be allowed. But we'll have to see how the final outcome is.

Speaker #2: And there's some history here too. If you look back at the Section 201 tariffs, and the exemption that was put in place by facial technology, it was clear that that exemption effectively gutted that provision.

Speaker #4: Got it. That makes sense. And then if we say that section 232 goes through, you get some kind of reasonable outcome. Positive outcome. You kind of mentioned that there's four gigawatts, it sounds like, four gigawatts plus of kind of potential pending deals for the second half.

Speaker #4: But do you get the sense that there's more demand sitting on the sidelines that's waiting for policy clarity and once we get clarity, you could see that number move up significantly higher?

Speaker #4: Got it. That makes sense. And then, if we say that Section 232 goes through, you get some kind of reasonable outcome—positive outcome. You kind of mentioned that there's 4 gigawatts, it sounds like, 4 gigawatts plus, of potential pending deals for the second half.

Speaker #4: And then just a point of clarification, I guess, again, if section 232 goes through, you get a good outcome. On the Southeast Asia, capacity, would you bring that volume into the US as finished products, or would it come through as unfinished and you would expand your US finishing line?

Speaker #4: But do you get the sense that there's more demand sitting on the sidelines that's waiting for policy clarity, and once we get clarity, you could see that number move up significantly higher?

Speaker #3: So I guess on the 232 and on that Alex takes the other question around how we think through Southeast Asia and whether it comes in as finished or partially finished in order to expand capacity for finishing here in the US.

Speaker #4: And then, just a point of clarification, I guess. Again, if Section 232 goes through, you get a good outcome. On the Southeast Asia capacity, would you bring that volume into the US as finished products, or would it come through as unfinished and you would expand your US finishing line?

Speaker #3: I'll let Alex take that one. On the there clearly are customers that are sitting on the sidelines. There is absolutely no doubt about that.

Speaker #3: And even some of these that will even some of the stuff subject to CP is somewhat tethered to posting of security. So one of the challenges that, especially as you get longer dated in and in terms of contracting some of this volume, and we are really trying to enforce having cash liquid security against new bookings.

Speaker #3: So I guess on the 232, and I'll let Alex take the other question. Around how we think through Southeast Asia and whether it comes in as finished or partially finished in order to expand capacity for finishing here in the US.

Speaker #3: I'll let Alex take that one. On the there clearly are customers that are sitting on the sidelines. There is absolutely no doubt about that.

Speaker #3: That's been a priority of ours. In some cases, some of the counterparties can't post the required security now. They're working towards having that available and the extent that the security is posted then kind of closes out on some of the CPs.

Speaker #3: And even some of these that will even some of the stuff subject to CP is somewhat tethered to hosting of security. So one of the challenges that, especially as you get longer dated in and in terms of contracting some of this volume, and we are really trying to enforce having cash liquid security against new bookings.

Speaker #3: So that's a piece of it. But there's clearly people sitting on the sidelines waiting to see what happens. We have a couple of counterparties that are they're hedging.

Speaker #3: They're waiting. They know that the risk is that ASPs may go up. But at this point in time, they're trying to wait and see how it plays out and again, just kind of the conversation last time, are there quotas or not?

Speaker #3: And what are the options they have? And so forth. So that's all being the it's in the mix right now. And as we've always said, the best thing for this industry is we just have clarity and certainty.

Speaker #3: So that's a piece of it. But there's clearly people sitting on the sidelines, waiting to see what happens. We have a couple of counterparties that are— they're hedging.

Speaker #3: And 232, we just really need a decision on that because we can all understand how we move forward.

Speaker #2: And it relates to what we could do with the Southeast Asia facilities. We could bring fully finished product in subject to demand and pricing in the US.

Speaker #2: It's not only a function of whether 232 sits or also a function of where other tariff provisions sit. So right now, we have a section 301 that's just gone into effect replacing section 122 tariffs that were in effect for the first half of this year.

Speaker #3: And what are the options they have, and so forth? So that's all in the mix right now. And as we've always said, the best thing for this industry is if we just have clarity and certainty.

Speaker #3: And 232, we just really need a decision on that because we can all understand how we move forward.

Speaker #2: Those relate to forced labor. There is still risk around a 301 relating to excess capacity. So that investigation is ongoing. Pending the outcome of that, obviously, we'll determine what the total tariff impact could be then to product coming in from Malaysia, Vietnam.

Speaker #2: And it relates to what we could do with the Southeast Asia facilities. We could bring fully finished product in, subject to demand and pricing in the U.S.

Speaker #2: We could bring some of it in as semi-finished whipshare product and finish it in our existing US facilities. There's a limited amount, probably in the couple of hundred megawatt range of incremental capacity at our finishing lines across existing fleet in Ohio.

Speaker #2: So we could do a little bit of that. But it's not effective to run Malaysia at low throughput, as you're seeing with the underutilization costs we're having this year.

Speaker #2: So really, what we're looking for is an ability to run that factory at close to full capacity. So then either it's selling fully finished international product subject to where tariffs end up, or there is the potential to build another finishing line in the US that's subject again to finding available site with power and the time it would take to build that out.

Speaker #2: We could bring some of it in as semi-finished whipshare product and finish it in our existing US facilities. There's a limited amount, probably in the couple hundred megawatt range of incremental capacity at our finishing lines across existing fleet in Ohio.

Speaker #2: So I think that's less likely, but it is still an option.

Speaker #2: So we could do a little bit of that, but it's not effective to run Malaysia at low throughput, as you're seeing with the underutilization costs we're having this year.

Speaker #1: Your next question comes from the line of Julian Dimalin Smith with Jefferies LLC. Julian, your line is now open. Please go ahead.

Speaker #5: Thank you, operator. Good afternoon, team. Appreciate the opportunity. Quickly, actually, to follow up on that last line of thinking on bookings. How do you think about the Safe Harbor having played into the latest quarter here?

Speaker #5: Obviously, July 4 being a relevant threshold. And also, again, that being a leading indicator for future sales into the later part of the decade.

Speaker #2: So I think that's less likely, but it is still an option.

Speaker #1: Your next question comes from the line of Julian Dimalin Smith with Jefferies LLC. Julian, your line is now open. Please go ahead.

Speaker #5: How are you thinking about that? Obviously, that's a big part of your open book. What are you thinking in terms of having Safe Harbor your initial customer conversations?

Speaker #5: And then as a follow-up on what you were just alluding to there, can you elaborate a little bit more around the permutations and the timeline for that remaining piece in Southeast Asia?

Speaker #5: I know it's a little bit of just an extension of the logic you were just delineating there, but can you expand a little bit on the timeline?

Speaker #5: Obviously, July 4 being a relevant threshold. And also, again, that being a leading indicator for future sales into the later part of the decade.

Speaker #5: It sounds like it's not that far off that you'll make a decision. Let me put it more bluntly.

Speaker #5: How are you thinking about that? Obviously, that's a big part of your open book. What are you thinking in terms of having Safe Harbor in your initial customer conversations?

Speaker #2: Maybe I'll just take that one. On the Southeast Asia, we're really waiting for the outcome of the 232. We would expect to evaluate that and have a view shortly thereafter.

Speaker #2: It doesn't necessarily mean that we will have an immediate action plan that relates to, say, a shutdown or a full capacity. But once we have a sense for where the policy is that allows us to evaluate it, it will take a little bit of time, though.

Speaker #5: I know it's a little bit of just an extension of the logic you were just delineating there, but can you expand a little bit on the timeline?

Speaker #5: It sounds like it's not that far off that you'll make a decision. Let me put it more bluntly.

Speaker #2: We want to make sure whatever policy comes through, we understand it and our customers also have a chance to evaluate it. And we can have discussions around whether there's a view of long-term offtake potential from those facilities.

Speaker #2: Maybe I'll just take that one and on the Southeast Asia, we're really waiting for the outcome of the 232. We would expect to evaluate that and have a view shortly thereafter.

Speaker #3: Yeah. And then on the I just want to make sure a couple of things. The bookings that we were reporting, most of the bookings that we reported at 1.9 in the US volume, I think almost all of that was outside of the quarter close.

Speaker #3: So most of that happened in July, which would also have been outside of the Safe Harbor date. And most everyone has Safe Harbor with transformers.

Speaker #2: It will take a little bit of time, though. We want to make sure that whatever policy comes through, we understand it, and our customers also have a chance to evaluate it.

Speaker #2: And we can have discussions around whether there's a view of long-term offtake potential from those facilities.

Speaker #3: There's really no Safe Harboring. I know there was a I don't know. It was like maybe 10 days left in the quarter where there was a ruling that was made that the decision that came out in August of the prior year where it said that you eliminated the ability to use module or 5% capex rule to Safe Harbor.

Speaker #3: Yeah. And then on the I just want to make sure a couple of things. The bookings that we're reporting, most of the bookings that we reported 1.9 in US volume, I think almost all of that was outside of the quarter close.

Speaker #3: So most of that happened in July, which would also have been outside of the Safe Harbor date. And most everyone has Safe Harbor with transformers.

Speaker #3: There was a ruling by one of the courts that came out, I think. I don't know. Somewhere like June 20th. I think it was hardly any time left in the quarter.

Speaker #3: And that theory, you could use assuming that that wasn't challenged, theory, you could use modules to potentially Safe Harbor projects. But I mean, that was really not an opportunity.

Speaker #3: It just happened way too late. And most people had already Safe Harbored with the inverters or transformers, excuse me, anyways. But as you go forward, it is an important component, especially for anything that was Safe Harbored.

Speaker #3: There was a ruling by one of the courts that came out, I think I don't know, somewhere like June 20th. I think it was hardly any time left in the quarter.

Speaker #3: If you Safe Harbored the first half of this year, with the ability to COD out in the 2030, there are stricter requirements from a FEOC standpoint that the project level that have to be met that I think positions us well to serve that demand as you get out into 29 and 30 for when those projects most likely could be commissioned.

Speaker #3: And that theory, you could use assuming that that wasn't challenged, the theory you could use modules to potentially Safe Harbor projects. But I mean, that was really not an opportunity.

Speaker #3: It just happened way too late, and most people had already safe harbored with the inverters or transformers—excuse me—anyways. But as you go forward, it is an important component, especially for anything that was safe harbored.

Speaker #3: Plus, the other thing I would say is we are seeing there's a lot of kind of rigid interpretations a little bit. And there are some people that are interpreting that even if something was Safe Harbored let's say in the second half of '25, that if you do anything with a change order or let's say you move something from an MSA to a PAPO, or until a PAPO, a purchase order, excuse me, is actually generated, you have to always be mindful of is there a restriction that you could have to comply with from a regulatory foreign entity perspective.

Speaker #3: If you Safe Harbored the first half of this year, with ability to COD out in the 2030, there are stricter requirements from a FEOC standpoint that the project level that has to be met that I think physicians as well to serve that demand, as you get out into 29 and 30 for when those projects most likely could be commissioned.

Speaker #3: Plus, the other thing I would say is we are seeing there's a lot of kind of rigid interpretations, a little bit, and there are some people that are interpreting that even if something was Safe Harbored, let's say in the second half of '25, that if you do anything with a change order, or let's assume you move something from an MSA to a PAPO—or until a PAPO, a purchase order, excuse me, is actually generated—you have to always be mindful of: is there a restriction that you could have to comply with from a regulatory or foreign entity perspective?

Speaker #3: So there's a lot of very conservative, which is rightfully so. People want to be airtight and not taking any risk to jeopardize either ITC or PTC.

Speaker #3: And I think there's a view towards maybe being overly conservative advice they're getting from tax counsel and others. And I think that's if I was in their situation, I clearly would do that as well.

Speaker #3: I don't want to put anything at risk. So that Safe Harbor and those requirements under 48E as it relates to FEOC restrictions or requirements, I think will continue to play well for us as we look to book out through the end of this decade.

Speaker #3: So there's a lot of very conservative approaches, which is rightfully so. People want to be airtight and not take any risk to jeopardize either their ITC or PTC.

Speaker #1: Your next question comes from the line of Philip Shen with Ross Capital Partners. Phil, your line is now open. Please go ahead.

Speaker #3: I don't want to put anything at risk. So that Safe Harbor and those requirements under 48E, as it relates to FEOC restrictions or requirements, I think will continue to play well for us as we look to book out through the end of this decade.

Speaker #5: Hey, guys. Thanks for taking my questions. Just wanted to follow up on the 232 specifically on timing. We've been thinking it's August, but we've seen a bunch of delays.

Speaker #5: The issue is if it slips past August, then we go into September. And then that gets closer to the midterms. Then there's a chance that decision could be on that.

Speaker #1: Your next question comes from the line of Philip Shen with Ross Capital Partners. Phil, your line is now open. Please go ahead.

Speaker #5: Our base is still August, but want to contact who is in touch commerce USTR has shared that from a priority authorization standpoint.

Speaker #5: Hey, guys. Thanks for taking my questions. Just wanted to follow up on the 232 specifically on timing. We've been thinking it's August, but we've seen a bunch of delays.

Speaker #3: Phil, we're really having a hard time we're having a real hard time breaking up.

Speaker #5: The issue is if it slips past August, then we go into September. And then that gets closer to the midterms, then there's a chance that decision push on that.

Speaker #5: Okay. How is it? Is this better?

Speaker #3: Yeah. It's right again because it was really hard to get that.

Speaker #5: Mark? Yeah. Okay. So talking about the 232, is all much better? Okay. And anyway, we've been thinking it's August, but there's a chance that the 232 come out in September or beyond.

Speaker #5: Our base is still August, but want to contact who is in touch commerce has shared that from a priority authorization standpoint.

Speaker #3: Phil, we're really having a hard time we're having a real hard time to breaking up.

Speaker #5: Some of the contact leave that the US and the may not be have the policy 232 front and center. And so what's your view based on the folks that you guys are in touch with that this should be August, or do you think there's a greater probability that this could slip into the fall or even beyond?

Speaker #5: Okay. How is it? Is this better?

Speaker #3: Yeah.

Speaker #2: It's right again because it was really hard to get that. It was.

Speaker #5: Mark.

Speaker #3: Yes.

Speaker #5: Yeah. Okay.

Speaker #2: Yeah. Go ahead.

Speaker #5: So, talking about the 232, is all much better? Okay. And anyway, we've been thinking it's August, but there's a chance that the 232 could come out in September or beyond.

Speaker #5: Thanks.

Speaker #3: No, I think I got your question. Look, we share look, there's I know there's a lot that's in the mix. And what the administration is trying to evaluate when this is implemented.

Speaker #5: Some of our contacts believe that one of us in the admin may not have policy 232 front and center. And so, what's your view, based on the folks that you guys are in touch with, on whether this should be August? Or do you think there's a greater probability that this could slip into the fall or even beyond?

Speaker #3: And we also want to make sure they do what is implemented is achieves the strategic intent and the spirit of what it was set out to do.

Speaker #3: So we are patient. We continue to be engaged. We are anxious as well as you are and others. And as I indicated, the industry really needs the certainty of understanding.

Speaker #5: Thanks.

Speaker #3: Phil, I think I got your question. Look, we share—look, there's—I know there's a lot that's in the mix, and what the administration is trying to evaluate when this is implemented.

Speaker #3: I can't give you any level of conviction, maybe more than what you have right now. We are still getting signal that decisions will be made.

Speaker #3: And we also want to make sure they do what is implemented is achieves the strategic intent and the spirit of what it was set out to do.

Speaker #3: There are meetings that are being had that would indicate they're close to making a decision. But we also want to make sure that this is done right.

Speaker #3: So, we are patient. We continue to be engaged. We are anxious, as well as you and others. And as I indicated, the industry really needs the certainty of understanding.

Speaker #3: And so to give you some sense of on my level of confidence and in August or whether we still September, I can't really give you a strong view on that.

Speaker #3: I can just tell you we want this to be implemented with the achieving the strategic intent and spirit of what it was set out to do.

Speaker #3: I can't give you any level of conviction, maybe more than what you have right now. We are still getting signal that decisions will be made.

Speaker #3: And that's the most important thing. And we're going to continue to be engaged with the administration to ensure that that happens.

Speaker #3: There are meetings that are being had that would indicate they're close to making a decision. But we also want to make sure that this is done right.

Speaker #1: Your next question comes from the line of Colin Rush with Oppenheimer & Co. Your line is now open. Please go ahead.

Speaker #3: And so to give you some sense of on my level of confidence and in August or whether we still September, I can't really give you a strong view on that.

Speaker #3: Thanks so much. And you guys, are there opportunities for you to reduce input costs on the US manufacturing? And can you talk a little bit about the supply chain and how that's evolving?

Speaker #3: I can just tell you, we want this to be implemented while achieving the strategic intent and spirit of what it was set out to do.

Speaker #3: And that's the most important thing. We're going to continue to be engaged with the administration to ensure that happens.

Speaker #3: I know you'd had some discussions with glass makers around capacity expansion and the capital needs that they have. But just curious about how you might be able to look at that trend on a multi-year basis.

Speaker #1: Your next question comes from the line of Colin Rush with Oppenheimer & Co. Your line is now open. Please go ahead.

Speaker #4: Yeah. Colin, I mean,

Speaker #3: it's a challenging we're still in this and especially in the US, as you see more reshoring pressure on commodities, the data centers being built out and things.

Speaker #2: Thank you so much. And for you guys, are there opportunities to reduce input costs for U.S. manufacturing? And can you talk a little bit about the supply chain and how that's evolving?

Speaker #2: I know you'd had some discussions with glass makers around a capacity expansion and the capital needs that they had, but just curious about how you might be able to look at that trend on a multi-year basis.

Speaker #3: Obviously, as you would expect, steel, aluminum, copper, we don't use silver. But obviously, our competitors do. I mean, there's just a lot of pressure.

Speaker #3: Yeah. Colin, I mean, it's a challenging we're still in this and especially in the US, as you see more reshoring pressure on commodities. The data center is being built out.

Speaker #3: Those but you can look at fuel costs and you can look at what's happened in the Middle East and I see that as more of transnational nature.

Speaker #3: And in theory, once that's resolved, then I think we'll see much more competitive fuel prices and what have you. The electricity prices and some of the locations which we operate, we're dealing with some of those same adverse impacts that others are.

Speaker #3: I mean, things obviously as you would expect, steel, aluminum, copper, we don't use silver, but obviously our competitors do. I mean, there's just a lot of pressure.

Speaker #3: So we're in a pretty challenging rising commodity cost environment. Now, are we able to do things like drive more throughput through our operations? Absolutely.

Speaker #3: Those but you can look at fuel costs and you can look at what's happened in the Middle East and I see that as more of transnational nature and they're once that's resolved, then I think we'll see much more competitive fuel prices and what have you.

Speaker #3: We're focusing on continuing to do that. Are we finding ways to create further automation and capabilities that can reduce labor costs? So there's levers that we're focused on.

Speaker #3: The electricity prices and some of the locations which we operate, we're dealing with some of those same adverse impacts that others are. So we're in a pretty challenging rising commodity cost environment.

Speaker #3: And there's some redesign of the product that we're looking at and trying to take costs out of the back rails of the frame. We continue to look at glass and thickness and other things that we could do from that standpoint.

Speaker #3: Now, are we able to do things like drive more throughput through our operations? Absolutely. We're focusing on continuing to do that. Are we finding ways to create further automation and capabilities that can reduce labor costs?

Speaker #3: But it's a pretty challenging environment from a commodity cost standpoint. And our ability to get a lot of costs out, I think, is probably one of the most challenging times that we've been in.

Speaker #3: Now, I will say that when you look at it on the cost per watt, not necessarily on cost per module, the great thing about cure is that we have the opportunity to drive the efficiency up.

Speaker #3: So there's levers that we're focused on. And there's some redesign of the product that we're looking at and trying to take costs out of the back rails of the frame and continue to look at glass and thickness and other things that we could do from that standpoint.

Speaker #3: So as we drive the efficiency up, as we go from kind of where we are right now and add another 10, 15, 20, 30 watts, that'll help the CPW numbers, right, cost per watt numbers, which is important, right?

Speaker #3: But it's a pretty challenging environment from a commodity cost standpoint. And our ability to get a lot of costs out, I think, is probably facing one of the most challenging times that we've been in.

Speaker #3: We need to drive that number down. And then the ASPs, the value uplift, because of the energy attributes and the higher efficiency and cure, then that drives to an entitlement for higher ASPs and the like.

Speaker #3: Now, I will say that when you look at it on the cost per watt, not necessarily on cost per module, the great thing about Cure is that we have the opportunity to drive the efficiency up.

Speaker #3: So that's what we're focused on. And we're never going to give up on the input costs. We got to do the best we can to get costs out.

Speaker #3: So as we drive the efficiency up, as we go from kind of where we are right now and add another 10, 15, 20, 30 watts, that'll help the CPW numbers, right?

Speaker #3: But it is a pretty challenging environment right now.

Speaker #2: Colin, I'd also say that the potential for use the balance sheet to work with suppliers who are looking at expansion or needing funding is an option there.

Speaker #3: Cost per watt numbers, which is important, right? We need to drive that number down. And then the ASPs, the value uplift, because of the energy attributes and the higher efficiency of Cure, then that drives to an autonomy for higher ASPs and the like.

Speaker #2: We could try and leverage our position of financial strength to get forward pricing that makes more sense that has to be done at the right risk premium risk profile.

Speaker #2: And then the other thing I'd say is outside of just bill of material costs, obviously, we're having a challenging time around period costs going from cost per watt produced over to cost per watt sold.

Speaker #3: So that's what we're focused on. And we're never going to give up on the input costs. We got to do the best we can to get costs out.

Speaker #3: But it is a pretty challenging environment right now.

Speaker #2: So again, we're seeing freight challenges as relates to cost of trucking. And I think I mentioned in the prepared remarks that we're seeing costs now to deliver product from Perrysburg over to the West Coast of the US.

Speaker #2: Colin, I'd also say that the potential to use the balance sheet to work with suppliers who are looking at expansion or needing funding is an option there.

Speaker #2: We could try and leverage our position of financial strength to get forward pricing that makes more sense that has to be done at the right risk premium risk profile.

Speaker #2: They're equivalent of delivering product from Asia to the West Coast of the US. So continue to look how we can optimize our domestic transport routes freight and try and optimize between factories so that we can reduce those costs to greater extent possible.

Speaker #2: And then the other thing I'd say is outside of just bill of material costs, obviously we're having a challenging time around period costs going from cost per watt produced over to cost per watt sold.

Speaker #2: So again, we're seeing freight challenges as it relates to the cost of trucking. And I think I mentioned in the prepared remarks that we're seeing costs now to deliver product from Perrysburg over to the West Coast of the US.

Speaker #1: Our final question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is now open. Please go ahead.

Speaker #4: Hi. Good afternoon. Thank you for taking my question. I actually wanted to come back on the last question regarding M&A. And I think you just alluded a little bit to it.

Speaker #4: But can you expand a little bit? What are you targeting with the current balance sheet that you have? And kind of felt like you were mentioning that you could use M&A to maybe help manage the input costs.

Speaker #1: Our final question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is now open. Please go ahead.

Speaker #4: But where else do you see maybe an option or a possibility for First Solar?

Speaker #4: Hi, good afternoon. Thank you for taking my question. I actually want you to come back on the last question regarding M&A. And I think you just added it a little bit to it.

Speaker #2: So when we talk about uses of cash, M&A is something that's been on the list for us for a long time. Generally, we focus more on the working capital reserve piece and then growing capacity and replicating technology.

Speaker #4: But can you expand a little bit? What are you targeting with the current balance sheet that you have? It kind of felt like you were mentioning that you could use M&A to maybe help manage the input costs, but where else do you see maybe an option or a possibility for First Solar?

Speaker #2: That's where the company's been if you look over the last decade or so. We've also put more money into R&D and I think when you think about M&A, the obvious area for us to expand into would be, do we spend more on technology and technology-adjacent things, which could either be companies.

Speaker #2: It could be buying teams. It could be buying intellectual property. Anything that could accelerate the technology transition we see going forward as we invest a lot into potential perovskite development.

Speaker #2: So I think there's options there. We're also taking a look at things that are adjacent to technology, but we want to do it with a disciplined focus around where do we see opportunities where we have a skill set that we can bring.

Speaker #2: So something where we look at our strengths in high-volume thin-film manufacturing at very high throughput efficiency. How can we leverage that set of skills and take it into an adjacent product?

Speaker #2: It could be buying teams. It could be buying intellectual property—anything that could accelerate the technology transition we see going forward, as we invest a lot into potential perovskite development.

Speaker #2: But also look at the overall market environment we'll be playing in. We compete in a challenging industry where the vast majority of our competitors are Chinese and tend to play by a different set of rules.

Speaker #2: So as we think about how we could move into adjacent areas across M&A, want to evaluate what is the competitive landscape look like? What does the market that we would be accessing look like?

Speaker #2: So, something where we look at our strengths in high-volume thin-film manufacturing at very high throughput and efficiency. How can we leverage that set of skills and take it into an adjacent product?

Speaker #2: What does the policy environment look like? So we are starting to look through that. Clearly, given our position in the industry, a lot of stuff comes across our desk and has done over the last 10 years or so.

Speaker #2: We haven't done a lot on the M&A side. So we are more willing to do that. We're more open to it, but we want to make sure we do it with a disciplined focus.

Speaker #2: As we think about how we could move into adjacent areas across M&A, we want to evaluate: What does the competitive landscape look like? What does the market that we would be accessing look like?

Speaker #2: We haven't done a lot on the M&A side. So we are more willing to do that. We're more open to it, but we want to make sure we do it with a disciplined focus.

Q2 2026 First Solar Inc Earnings Call

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