Good afternoon everyone and welcome to First Solar's Second Quarter 2020 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investor.firstsolar.com. At this time all participants are in a listen-only mode. As a reminder, today's call is being recorded. I would now like to turn the call over to Mitch Ennis from First Solar Investor Relations. Mr. Ennis, you may begin.

Thank you. Good afternoon everyone and thank you for joining us. Today, the company issued a press release announcing its second quarter 2020 financial results. A copy of the press release and associated presentation are available on First Solar's website at investor.firstsolar.com. With me today are Mark Widmar, Chief Executive Officer; and Alex Bradley, Chief Financial Officer. Mark will begin by providing a business technology update. Alex will then discuss our financial results for the quarter as well as our outlook for 2020. Following the remarks, we will open the call for questions. Please note this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations, including among other risks and uncertainties, the severity and duration of the effects of the COVID-19 pandemic. 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. Mark?

Thank you, Mitch. Good afternoon and thank you for joining us today. We continue to hope each of you are managing well as the pandemic continues. As we emphasized during our May earnings call, our COVID-19 response centers on balancing our top priority of safety with meeting our commitments to our customers. This approach, together with our associates' dedication and the strength of our differentiated business model, enabled us to deliver solid financial results for the second quarter and year-to-date with earnings of $0.35 per share and $1.20 per share respectively. Alex will discuss our results in greater detail. Starting on slide 3 with our module business, we remain pleased with our operational performance, with strong metrics across the board. Year-to-date, we have produced 3.5 gigawatts including 3.3 gigawatts of Series six modules. Fleet-wide capacity utilization has remained over 100% for the months of May, June, and July. The fleet-wide capacity utilization is led by our international factories in Vietnam and Malaysia, which are progressing towards their previously demonstrated capacity utilization peak of 120% of initial design nameplate. Domestically, our Ohio one and two factories experienced 2.5 days of idle production in June, but still achieved respective utilization rates of over 100% and 94% during June. The unplanned downtime was caused by railway logistics constraints, which resulted in a delivery delay of certain bill of materials supply. As a result, we accelerated previously planned factory upgrades from the third quarter to minimize any impact to our full year production plan. On a fleet-wide basis in July, megawatts produced per day was 15.9 megawatts. Manufacturing yield was 96.4%. Average watts per module was 435 watts, and the ARC bin distribution from 430 to 440 modules was 98%. Vietnam had a particularly strong start to the quarter with capacity utilization of 114% and manufacturing yield 100 basis points above the fleet average. We are encouraged by the operational start to the quarter and the momentum it provides to further improve our cost per watt. Regarding our capacity roadmap, we remain on track to commence commercial production at our second Series six factory in Malaysia in the first quarter of 2021. However, third-party equipment installers, as well as our U.S.-based associates, are subject to international travel restrictions as a result of COVID-19. While we continue to work with relevant agencies to support this essential travel in a safe manner, incremental delays resulting from these restrictions may impact the timing of initial production. Since the previous earnings call, we have not experienced any significant operational disruption from our suppliers' inability to maintain manufacturing operations. Much of our ability to mitigate this impact stems from our supply chain strategy, which emphasizes corporate and geographic diversity of supply. In certain situations where we source critical raw materials from a single vendor, we ensure the product can be manufactured in multiple geographies. From a shipping and logistics perspective, the most significant impact to date is the consolidation of shipping routes, which has resulted in constrained capacity. We have factored this into our logistics strategy and are working to mitigate these impacts. Separately, port congestion has recently improved in Europe and the United States, although we continue to monitor this risk. Turning to our systems business on slide four, our EPS results were favorably impacted by the successful sale of our 123-megawatt American Kings project. We are pleased with this result, capturing competitive market value for this project despite capital market dislocation. From an EPC perspective, in July, we declared substantial completion on the last remaining project being constructed by First Solar EPC. This project has experienced a combination of unforeseen weather and COVID-19-related delays and incurred significant additional costs during the quarter, which unfortunately weighed on our Q2 results. Alex will later discuss the P&L impact as well as provide an update on the capital markets for system projects. With regards to our U.S. project development business, as discussed on our Q1 earnings call, COVID-19 had affected the timing of our evaluation of strategic options for the business. However, in June, in collaboration with our financial advisers, we made the determination that the market is now in a better position to evaluate potential partnerships, sales, or other transactions. Accordingly, in June, we formally launched this process. We do not intend to discuss further developments except to the extent the process is concluded or is otherwise deemed appropriate. With regards to our O&M business, during the third quarter of 2019 earnings call, we indicated that we are evaluating the long-term cost structure competitiveness and risk-adjusted returns of the business. In addition, during our fourth quarter 2019 earnings call in February 2020, we discussed that we were continuing to evaluate our O&M strategy to ensure that this business is able to achieve its full enterprise value potential and continued market leadership. Our original entrance into and continued presence in the O&M market was a natural extension of our utility-scale solar development and EPC capabilities. It helped create a vertically integrated systems platform which allowed us to capture an additional profit pool. However, with our transition to a third-party EPC execution model, the increase in the maturity of the U.S. Solar O&M market, and our evaluation of strategic opportunities for our U.S. project development business, the strategic thesis behind our O&M business has changed. From a financial perspective, as we indicated during our December 2017 Analyst Day, our contracted O&M gross margin at the time was above 30%, largely as a function of legacy contracts. We also indicated that we expect the gross margin for new O&M business to decline to a range of 10% to 30% depending on the risk profile and the contract tenure. Relative to this expectation, with increased competitive pressure and declining PPA prices, we have seen new contracts trend towards the lower end of this range. While we have been able to partially offset the impact of this gross margin percentage decline by increasing the scale of our O&M portfolio in order to further optimize the business and maintain our market-leading position, we would need to continue increasing the business scale, as well as enhancing the range of O&M products and service offerings. To justify incremental capital investment in O&M, the financial returns would need to exceed those available from further investment in our module business. Earlier this year, we received a compelling unsolicited offer to acquire our North American O&M business from NovaSource Power Services, a portfolio company of Clairvest Group, a strategic investor who is scaling a market-leading solar O&M platform following their recent acquisition of Sun Power's utility-scale O&M business. We believe their strategy for scaling and growing the business will enable the O&M enterprise to reach its full potential. Accordingly, this week, we signed an agreement to sell our North American O&M business. We believe this transaction captures compelling value, maintains our history of high-quality customer service, and with additional scale and capital, will further enhance the capabilities of the business. Upon closing of this transaction, which is expected by year-end, approximately 220 First Solar O&M associates are expected to join the NovaSource Solar O&M platform. Turning to slide five. I would like to highlight our bookings and shipment activity for the quarter. In this challenging economic environment, demand for our Series six product remains strong. Since the prior earnings call, our net bookings are 0.8 gigawatts. These new bookings include approximately 0.3 gigawatts of third-party module sales and 0.5 gigawatts of systems bookings. In addition, 0.4 gigawatts of these bookings are for delivery in 2022. Despite our success in booking these additional volumes in the U.S., we believe the current uncertainty of tax equity availability for projects scheduled for completion in 2021 and beyond, as well as the uncertain status of the legislative solution such as the ability to receive direct cash payments in place of direct investment tax credits to alleviate this tax equity availability constraint, is a headwind impacting our ability to book certain opportunities in late-stage negotiations. We currently have approximately 0.9 gigawatts of opportunities in late-stage negotiations with terms, pricing, and conditions near final agreement. We believe the current uncertain tax equity environment has contributed to the delays in finalizing these negotiations and accordingly has delayed our ability to book these volumes. Note, although not booked, these volumes are reflected in our late-stage opportunity pipeline. Strong Series six demand coupled with First Solar's strength as a trusted partner underlines our current bookings and late-stage opportunities, which when combined totals 1.7 gigawatts. During the second quarter, we shipped 1.2 gigawatts, which was approximately 300 megawatts below our expectations. Delays in shipments were due to a combination of previously mentioned port congestion, project site labor constraints, and interconnection and financing delays. After accounting for second quarter shipments, our contracted backlog remained strong with future expected shipments of 11.9 gigawatts. Our ability to forward contract module supply creates a position of strength, which enables pricing discipline and helps to mitigate the financial impact of variable spot pricing for solar modules. We remain effectively sold out through 2020 with only two gigawatts left to sell of our expected 2021 supply, with a mid- to late-stage pipeline of 3.8 gigawatts, which includes the previously mentioned 0.9 gigawatts in late-stage negotiations. We have a path to fully contract our 2021 supply plan over the next few quarters. With regards to our systems bookings in July, we were awarded two PPAs for projects located in Ohio and North Carolina that support the clean energy needs of a Fortune 500 company starting in 2023. Separately, the building of the recent PPA we signed with Dow prior to the first quarter earnings call, we continue to see strong demand from corporate customers who are becoming increasingly proactive in reducing their carbon footprints. As America's solar company, we're proud to support the renewable energy objectives of corporations with our Series six technology, which has the lowest carbon and water footprints available in the market today. As a reflection of this sustainability leadership, we are pleased to announce earlier today our commitment to the RE100 initiative, joining the likes of Apple, Facebook, Kellogg, and Microsoft, all customers of clean energy generated by First Solar technology. In joining this initiative, we are targeting powering all of our U.S. operations with 100% renewable energy by 2026 and our global operations by 2028. As shown on slide six, our mid- to late-stage pipeline of opportunities remains robust, and has increased by 0.3 gigawatts despite bookings of 0.8 gigawatts since the prior earnings call. In terms of segment mix, this opportunity pipeline of 7.8 gigawatts includes approximately 7.3 gigawatts of potential module sales with the remaining representing potential systems business opportunities. In terms of geographical breakdown, North America remains the region with the largest number of opportunities at 5.9 gigawatts. Europe represents 1.7 gigawatts and the remainder in Asia Pacific. As a reminder, our mid- to late-stage pipeline reflects those opportunities that each sales could book within the next 12 months and is a subset of a much larger pipeline of opportunities, which totaled 15 gigawatts of opportunities in 2022 and beyond. Turning to slide seven. I would like to provide an update on manufacturing cost and technology outlook. Overall, I'm very pleased with our manufacturing execution, especially in light of the current environment. Much of our ability to thus far mitigate the operational impact of COVID-19 stems from our proprietary manufacturing technology, which enabled us to produce a cad tel module within a single factory in a matter of hours. Our fully integrated manufacturing process is a competitive advantage relative to crystalline silicon technology, which is manufactured over the course of several days across multiple sites. While we have largely mitigated supply chain disruptions to date, the impact of the pandemic experienced in other industries underscores the importance of supply chain diversity. As the only U.S.-based company and only alternative to crystalline silicon technology among the 10 largest solar module manufacturers globally, First Solar provides a domestic supply security and enables United States and global markets to reduce their overreliance on imported and government subsidized panels from China. As we look to the future, we believe a differentiated technology and advantaged cost structure, and a balanced perspective on growth will enable us to continue succeeding in the global marketplace. By the end of 2021, we expect to have eight gigawatts of Series six nameplate capacity across factories in the United States, Malaysia, and Vietnam. Note this capacity is over 120% higher than the original nameplate envisioned when we launched Series six. As we evaluate the potential for future capacity expansions, we may seek to further diversify our manufacturing presence, although we have made no decisions at this time. Several factors in this evaluation include: firstly, geographic proximity to solar demand where First Solar has an energy or competitive advantage and which could mitigate freight-related costs; secondly the ability to export cost-competitively to other markets; thirdly, cost-competitive labor, low energy cost, and low real estate cost; and finally, a cost-competitive supply chain to support the sourcing of raw materials and components. From a cost perspective, we previously indicated during our December 2017 Analyst Day that we expect to reduce our 2020 lead line cost per watt by 40% relative to the Series four 2016 cost per watt. We have achieved this target at our Vietnam manufacturing sites and are on track to do so in Malaysia by the end of the year. Our Series six factory in Vietnam, which to date has been largely unaffected by the COVID-19 pandemic, is a strong leading indicator for the full potential of the entire manufacturing fleet. Secondly, we indicated that despite an increase in the proportion of module volume coming from our higher-cost Ohio factories relative to where we ended up in 2019, we expect our fleet-wide cost per watt to decline approximately 10% over the year. Despite the unforeseen challenges posed by the pandemic, we remain on track to achieve this objective. We continue to believe, there is significant headroom and further enhance our competitiveness in our Series six technology, and we relentlessly challenge ourselves on commercializing the next-generation of disruptive thin film technology. Simply put, we continually strive to accelerate our pace of innovation in pursuit of our near- and mid-term technology objectives. In the near term, we are focused on successfully implementing our copper replacement program in our lead line during the second half of 2021 and fleet-wide during 2022. This implementation is expected to further increase the Series six energy advantage due to increased wattage, significantly reduce long-term degradation, and improve temperature coefficient. Each of these improvements is expected to create value for our customers, which will facilitate Series six bookings in 2022 and 2023 with the module bins increasing from 460 watts to 480 watts over this period. Of note in July, we produced the first copper-replaced Series six modules, which will be utilized for initial preliminary testing and validation. While we remain largely on track for our implementation, COVID-19 and technical challenges remain as risks to the project completion timeline. In the mid-term, we remain focused on achieving our goal of a 500-watt module, which is at a standard test condition glass area efficiency of 20.8%. This technology enhancement will further increase the customer value proposition and cost competitiveness of Series 6. It is important to note, unlike recently announced increases in crystalline silicon wattage made possible through module size increases, the planned Series six wattage increase is expected to be driven by a 15% increase in energy density without changing our module form factor. In other words, we do not see increasing our customers' balance of system or design costs in order to achieve the 500-watt goal. Additionally, the benefits of improved temperature coefficient and significantly reduced long-term degradation, coupled with our continued spectral response advantage, will amplify the benefits of increased energy density and are expected to increase life cycle energy beyond 15% without adding cost to the module device. As shown on slide eight, in support of our near, mid, and long-term goals, we have recently announced a series of changes in our technology and manufacturing senior leadership. Firstly, Markus Gloeckler has been appointed Co-Chief Technology Officer alongside Raffi Garabedian, our CTO since 2012, and will join First Solar's executive leadership team. Markus will drive our Series six platform device and efficiency improvement roadmap. This will enable Raffi to focus on advanced research and development to create the next disruptive cad tel technology beyond Series six. A particular area of focus will be to evaluate moving beyond a single junction device and leverage the high-band gap advantage of cad tel into a multi-junction device. The objective would be to create a market-leading high-efficiency technology that remains energy advantageous. Secondly, as recently announced, Tymen deJong, our Chief Operating Officer, has decided to retire effective April 2021. Tymen has played an essential role in establishing the company's international Series six module manufacturing footprint, with five announced factories currently in production and a sixth on track to commence production during the first quarter of 2021. I'm appreciative of Tymen's invaluable leadership and his many significant contributions to First Solar over the years. Tymen will continue to serve as COO during his eight-month transition period overseeing certain priority projects. In addition, during this transition, Tymen will transfer the majority of his responsibilities to Mike Koralewski, Chief Manufacturing Officer; Kuntal Kumar Verma, Chief Manufacturing Engineering Officer; and Pat Buehler, Chief Quality and Reliability Officer; each of whom will join First Solar's executive leadership team. We believe the addition of Markus, Mike, Kuntal, and Pat to the executive leadership team will enhance our manufacturing, technical, and commercial capabilities and set the company up for continued growth.

Thanks Mark. Starting on slide nine, I'll cover the income statement highlights for the second quarter. Net sales in Q2 were $642 million, an increase of $110 million compared to the prior quarter. The increase was primarily driven by the sale of the American Kings project, partially offset by lower module sale volumes. On a segment basis, as a percentage of total quarterly net sales, our module segment revenue in Q2 was 58% compared to 74% in Q1. Total gross margin was 21% in Q2 compared to 17% in Q1. The systems segment gross margin was 21% in Q2 compared to 11% in Q1, and the increase was primarily driven by increased U.S. project sales and higher seasonal production from our power-generating assets. This was partially offset by $22 million of cost increases stemming from unforeseen weather issues, COVID-19-related delays and other matters related to our final EPC project mentioned by Mark earlier. We intend to pursue recovery of these costs by insurance and other forms of relief. The module segment gross margin was 22% in Q2 compared to 19% in Q1. This increase was driven by a lower cost per watt sold, despite the higher mix of volume from our Ohio factories and a slight increase in ASPs compared to Q1. While our total module segment gross margin for the quarter was adversely impacted by $13 million of Series four-related charges, primarily due to severance, decommissioning and costs associated with reduced manufacturing volumes. Our Series six gross margin was approximately 25% in Q2. This included $3 million of COVID-19-related costs, which reduced our Series six gross margin by approximately 1%. SG&A and R&D expenses totaled $74 million in the second quarter, a decrease of approximately $10 million compared to the prior quarter. Of note, the second quarter total includes $3 million of severance costs, $3 million of impairment charges related to development projects, and $1 million of retention compensation. Start-up expense was $6 million in Q2 compared to $4 million in Q1. In relation to litigation matters, as initially slated on June 3, we entered into an agreement in principle to settle the claims and the opt-out actions of $19 million, resulting in a $6 million litigation loss during the second quarter. We've since entered into a definitive settlement agreement. And while we were confident in the merits of our position, we believe it was in our best interest to conclude this lengthy litigation process and continue our focus on driving the business forward. Separately, the previously disclosed class action settlement agreement received final approval from and was dismissed with prejudice by the court at the end of the second quarter. By entering into the definitive settlement agreement for the opt-out and the class action settlement dismissed with prejudice, the final securities litigation is behind us. Including start-up and litigation losses, total operating expenses were $87 million in the second quarter, a reduction of approximately $2 million compared to the first quarter. Interest income was $4 million in the second quarter, compared to $9 million in Q1. This is primarily driven by a decline in interest rates, which led to a reduction in the yield on our cash and time deposits. We recorded a tax expense of $10 million in the second quarter compared to a tax benefit of $89 million in the first quarter. The increase in tax expense for Q2 is attributable to the discrete tax benefit recognized in Q1, as a result of the CARES Act and higher pretax earnings in Q2. The aforementioned combination of items led to a second quarter earnings per share of $0.35 compared to earnings per share at $0.85 during the first quarter. Next, turning to slide 10. I'll discuss select balance sheet items and summary cash flow information. Our cash and marketable securities and restricted cash balance ended the quarter at $1.6 billion, an increase of approximately $44 million compared to the prior quarter. Total debt at the end of the second quarter was $465 million, a decrease from $472 million at the end of Q1. And as a reminder, all of our outstanding debt continues to be project-related and will come off our balance sheet when the corresponding project is sold. Our net cash position, which includes cash, restricted cash, and marketable securities less debt, increased by approximately $51 million to $1.2 billion. The increase in our net cash balance is primarily related to cash collections on systems projects in the U.S. and operating cash flows from our module segment. This was partially offset by capital expenditures and other working capital changes during the second quarter. Net working capital in Q2, which includes non-current project assets and excludes cash and marketable securities, decreased by $76 million compared to the prior quarter. This decrease was primarily due to the sale of project assets, a decrease in accounts receivable related to our last remaining in-house EPC project, and an increase in current liabilities, which includes accrued litigation losses. Net cash provided by operating activities was $148 million in the second quarter, compared to net cash used in operating activities of $505 million in the prior quarter. Finally, capital expenses were $108 million in the second quarter, which brings our year-to-date total to $221 million as we continue our Series six capacity expansion. Turning to slide 11, I'll next provide an updated perspective on 2020 guidance. As discussed during the May earnings call, we withdrew our full year 2020 guidance that had been provided in February, due to the significant uncertainties resulting from the COVID-19 pandemic. As a follow-up to that decision, I'd like to discuss how each of those uncertainties has evolved. Firstly, the number, intensity, and trajectory of COVID-19 cases has differed across the globe. For example, Vietnam has been relatively fortunate in experiencing national confirmed cases below 1,000. In contrast, the State of Arizona, where First Solar's headquarters is located, has now reached over 180,000 confirmed cases. The outlook for the spread of individual exposure to the pandemic and the related impact on businesses and the economy in general remains very uncertain. Secondly, since the previous earnings call, local, state, and national governments have begun easing certain COVID-19-related restrictions. While we've been committed to operate Series six manufacturing in Ohio, Malaysia, and Vietnam throughout the pandemic, increases in COVID-19 cases have caused some authorities to reimpose certain restrictions, and they may continue to do so or even significantly expand those restrictions. Thirdly, to date we have not experienced any significant operational impact to our manufacturing supply chain, although we continue to monitor this risk. From a logistics perspective, port congestion has recently improved in Europe and the United States. However, the most significant impact still remains the consolidation of shipping routes, which has resulted in constrained capacity. We've incorporated this into our logistics strategy, but to the extent that ports are severely congested or are temporarily shut down, our ability to ship modules and receive inbound raw materials may be adversely impacted. Fourthly, tax equity and debt markets appear intact for high-quality 2020 projects, as demonstrated by our ability to complete the sale of our American Kings project during the quarter. However, tax equity commitments for projects set to achieve commercial operation in 2021 appear uncertain. COVID-19 has caused a number of prominent financial institutions to book record allowances for credit losses during the second quarter, citing significant uncertainty around the path of recovery. This reduction in profitability may reduce the availability of 2021 tax equity capacity or negatively impact its pricing and terms. Our Sun Streams two project, which has not been sold, has an expected completion date in 2021 and will require a tax equity investment during this timeframe to be efficiently monetized. We expect visibility into the 2021 tax equity market to continue to improve. However, to the extent that the tax equity market remains dislocated, we remain strongly supportive of a direct pay legislative solution in place for investment tax credits to alleviate the structural market constraints. Importantly, legislative solutions such as the aforementioned direct cash payment could help mitigate the adverse impact of financing delays resulting from reduced tax equity availability for our third-party module customers. Internationally, the rates to our Japan assets, while we made progress as it relates to the sale processes, completing financing, construction, and executing asset sales is challenging in this environment. We continue to work with relevant counterparties to facilitate the timely success of these project sales. Given the significant uncertainties that remain associated with the pandemic and its effect, we feel it's prudent to continue providing the guidance metrics that we believe are largely within our control or within reasonable line of sight at this time. With these factors in mind, our 2020 guidance is as follows. Our full year 2020 production guidance of 5.7 gigawatts of Series six and 0.3 gigawatts of Series four remains unchanged. We have already achieved our Series four production target, and year-to-date we have produced approximately 3.3 gigawatts of Series six. Now we do not anticipate any further ramp costs in 2020 above the $4 million recorded during the first quarter. Our operating expenses forecast, which includes production start-up expense, has increased by $5 million to a revised range of $345 million to $365 million. While our production start-up expense guidance has decreased by $5 million to a revised range of $45 million to $55 million, this benefit was offset by the previously mentioned $6 million litigation losses and $3 million of impairment charges related to development projects. Additionally, depending on the timing of previously expected IT cost savings during the year, we may track to the higher end of our operating expense guidance range. Finally, our 2020 Series 6 manufacturing CapEx forecast of $450 million to $550 million remains unchanged. As it relates to our module segment, we anticipate sequential improvement in gross margin percentage during the third and fourth quarters. The factors driving this improvement are: firstly, a declining cost per watt, as we've largely ramped manufacturing at our second Ohio factory; secondly, limited revenue recognition from Series 4 during the second half of the year; and finally, limited incremental severance costs expected during the second half of the year. While we achieved a 25% Series 6 gross margin in the second quarter, we expect a relatively flat Series 6 gross margin in the third quarter to a modest decline in ASPs offset by a reduction in cost per watt. While we expect a flat Series 6 gross margin in the third quarter, we anticipate an increase in overall module segment gross margin percentage due to declining Series 4 volumes. In the fourth quarter, we expect Series 6 gross margin expansion of approximately 300 basis points due to a lower cost per watt, increased volume sold, and a more favorable plant mix. As we do not anticipate recognizing any Series 4 revenue in the fourth quarter, we expect our Series 6 gross margin will represent the overall module segment gross margin. Of note, with shipments of approximately 2.5 gigawatts during the first half of the year, our expected shipments profile is incrementally back-weighted to the third and fourth quarters. As we continue to work with our module customers to mitigate impacts from the current pandemic, there remains potential for the timing of module shipments to move across quarters or over year-end with a corresponding impact to revenue and gross margins. Our $1.2 billion net cash position increased by $51 million in the previous quarter. This liquidity position remains a strategic differentiator, which enables us to make proactive and strategic investments in technology, cost, and product leadership during the current market disruption and in the long term. We intend to maintain the strong liquidity position throughout the COVID-19 pandemic. And at this time, we do not expect to draw on our revolving credit facility. Turning to slide 12, I'll summarize the key messages from today's call. Firstly, we had Q2 earnings per share of $0.35 and increased our quarter-end net cash position. Secondly, we achieved fleet-wide capacity utilization over 100% during May, June, and July and have achieved our mid-term cost per watt target of 40% reduction below our 2016 Series 4 costs at our Vietnam factories. Thirdly, demand for our Series 6 technology remains strong, and we have continued success adding to our contracted pipeline with net bookings of 0.8 gigawatts since the prior earnings call and 2.6 gigawatts year-to-date. With a contracted backlog of 11.9 gigawatts, we remain effectively sold out through 2020 and have two gigawatts remaining to sell of our expected 2021 supply. Despite challenges related to the COVID-19 pandemic, we're pleased with our operational and financial performance, achieving results in line with our pre-COVID expectations. Finally, while the significant uncertainty posed by the current pandemic remains, we are updating the guidance provided on our May earnings call, which includes full year 2020 production guidance of approximately 5.9 gigawatts, full year 2020 capital expenditure guidance of $450 million to $550 million, and full year 2020 operating expense guidance of $345 million to $365 million, which includes $45 million to $55 million of start-up expenses. With that, we conclude our prepared remarks and open the call for questions.

Our first question comes from Philip Shen with ROTH Capital Partners. Your line is open.

Hey, everyone. Thanks for taking the questions. For the bookings you've secured since the last earnings call, can you share how much is for delivery in 2021 versus 2022 and 2023? What are the average selling prices for the bookings? I remember you mentioned last quarter that pricing for 2022 and 2023 was still good in the 30s, and your presentation indicated that it remains attractive. I'm curious if you're experiencing any pressure in the later years or if you are still able to maintain that pricing. Additionally, considering the bookings in 2022 and 2023 along with your cost roadmap, what are your expectations for margins? I realize it is a bit in the future, but I wanted to get a sense of whether you expect margins to stay stable during that period or potentially decrease after the Section 201 expires. Do you expect to see any upside in margins?

Yes. I'll discuss the bookings average selling price, and Alex will address the margin question. Regarding bookings since the last earnings call, we have about 0.8 gigawatts, with approximately 400 megawatts coming from our systems business for shipments in 2022, while the remainder is from 2021. Additionally, we want to highlight that we have around 900 megawatts in advanced negotiations. Some are ready to sign a purchase order, while others depend on certain conditions being met or a letter of intent that guarantees the module volume and pricing. We have agreed on pricing for all of this 900 megawatts. However, due to uncertainties related to tax equity availability and any potential legislative changes concerning fixed direct pay structures, customers seem hesitant to finalize firm contracts and are leaving some conditions open to give them the flexibility to secure financing for their projects. These projects are committed, have power purchase agreements, secured sites, and are ready to proceed; they just need to finalize the financing details. If we include these projects, they also have pre-determined average selling prices. Looking at the module-only volume, there's an increase of around 300 to 400 megawatts for 2021, plus that additional 900. All of these figures indicate solid average selling prices. We only have about 2 gigawatts left to book, and our customers recognize this. There is a preference for working with First Solar due to our reliable supply and delivery capabilities. We have customers proactively reaching out to secure supply. If I finalize that 900 megawatts currently in late-stage negotiations, only about 1 gigawatt will remain for 2021. Our customers want to ensure they have that supply secured. Therefore, my average selling prices remain relatively stable, and we are satisfied with them. Additionally, there are two more follow-on orders nearing 1 gigawatt connected to that 900 megawatts being negotiated with separate customers, who are also looking to make further commitments in 2022. As for current pricing, it aligns with what we discussed in the last call. We had a substantial order that carried volumes into 2022, which had pricing starting in the high $2 range and included adjustments based on performance and module degradation. Overall, when comparing last quarter’s bookings to current market engagements for 2022 pricing, we are pleased with how things are developing. Although there are many variables that could change, a resolution regarding tax equity and capacity is necessary as it could impact the market negatively. But when it comes to bookings and relative average selling prices, we are quite satisfied given the current challenging environment.

Yes, regarding the cost and margin aspects, while it's premature to provide specific guidance on gross margin, we previously mentioned our goal of a 10% reduction in costs from 2019 to the end of 2020, and we're currently on track to achieve that. By year-end, we anticipate reaching the 40% cost reduction target for Series 4 that we established back in 2017 in high-volume manufacturing. We actually reached that milestone by midyear at our Vietnam facility and are progressing well in Malaysia as well. It’s important to note that this reduction includes freight and warranty costs when making comparisons. Overall, our cost reduction efforts have been progressing well. In our guidance call back in February, we shared a chart detailing various strategies for reducing costs. A significant element is our CuRe program, which focuses on increasing wattage. Mark mentioned the plan to raise it from 460 to 480 in the '22-'23 timeframe, all while maintaining the same module size. This approach allows us to enhance energy density, unlike some competitors who announce larger nameplate wattages without corresponding efficiency improvements, resulting in much larger modules. The CuRe program is crucial not only for increasing nameplate wattage but also for improving overall degradation and energy profiles. Considering all this, we believe these initiatives will contribute to cost reductions and help alleviate the competitive pressure from bifacial technologies. There are additional levers we are focusing on, such as yield, throughput efficiency, bill of materials, and sales rate. The calculations from our chart confirm that we can significantly reduce costs over the coming years. While I can't provide specific gross margin percentages at this moment, we're feeling confident given Mark's insights into ASPs and our progress on the cost reductions we discussed earlier this year. We are optimistic about where our gross margins will land based on the longer-term bookings.

Our next question comes from Brian Lee with Goldman Sachs. Your line is open.

Hey, guys. Thanks for taking the questions. I guess first one on the gross margins. The sequential improvement for Series six not to get to sort of nickel and dime in here, but is the baseline 25% that you reported this quarter which includes the $3 million of COVID-related costs, are you assuming those costs come off in the back half? And so it's a 300 basis point expansion in Q4 over a clean 26% baseline? And then I guess related to that, are there any more ramp costs embedded in COGS in Q3 and Q4 that further go away in '21?

So as of now there's no ramp costs in Q3, Q4. The only ramp that we saw is $4 million in Q1, and that's the full expected ramp for the year. In terms of the expansion, it's still unknown. I mean, the number we're giving you here assumes we may still have some COVID-related costs impacting us in Q3 and Q4. So I think you can look at it really as a 300 improvement from the 25 as a starting point.

Our next question comes from Michael Weinstein with Credit Suisse. Your line is open.

Hi, guys. Can you hear me right?

Sure.

Okay. Great. You mentioned that Raffi is going to be working on advanced research and development to create the next disruptive technologies beyond Series 6. Is there some preview of that you could talk about at this time? And are there limits to the levels of efficiency that you can get out of the technology?

There's still significant potential for improving efficiency in our cad tel device. Raffi, who has been with the company for about ten years, initially joined our advanced research team and was responsible for exploring alternatives to infill materials like CIGS. He possesses extensive knowledge of various semiconductor devices in photovoltaic applications, including crystalline silicon, Perovskites, cad tel, and CIGS. As we consider what comes after the Series 6 device, one advantage of cad tel is its high band gap, which allows it to capture a substantial portion of the solar spectrum. There are many opportunities for advancements in technology, including in aerospace where they develop single or multi-junction technologies, potentially combining various thin film methods or integrating thin films with crystalline silicon. Raffi will be examining both existing materials and emerging solutions, such as organic PV, and exploring options that could move from single junction to multi-junction devices. His focus will be to assess the landscape of possibilities and determine how we can leverage our current capabilities to evolve our technology further.

Our next question comes from Ben Kallo with Baird. Your line is open.

Hey, guys. Following on the previous question from an analyst, just about costs ramp costs anything associated with Series 4 ramp down? And then number two, how do you sell your O&M business, but then your development business, how do you sell that first before development business just in the market? And then number three, just looking at your exit rate for saying that you have two gigawatts to sell in 2021, what does that assume for your total production because I think it's higher than your nameplate?

I will address the O&M question first and then discuss the 2 gigawatts for 2021 in relation to our supply plan. Following that, Alex can elaborate on ramp costs and decommissioning costs related to Series 4. Regarding the O&M business, since we no longer have EPC capabilities, we will be working with a third party. We have separated the development business from the O&M business because many EPC providers we collaborate with are also interested in providing O&M services. This approach has created competitive tension around development while maintaining O&M, despite using third parties for EPC. EPC providers have guarantees and warranties that they offer post-COD, and many prefer to handle O&M for a strategic duration. The separation of EPC from development has resulted in a natural division between the two areas. While it may seem unusual, it reflects our evolution, and the capabilities in the O&M space have significantly changed over time. When considering strategic options for the systems business, retaining the development business is no longer as critical for O&M capabilities as it was in the past. Nowadays, we prefer to focus on development, get a site to notice to proceed, sign a module agreement, and then step back from the process. Our aim is to maximize value by handing over projects to third-party EPCs and transitioning to long-term owners. Regarding the 2 gigawatts for 2021, we anticipate a nameplate capacity of 8 gigawatts. Our current supply plan stands at about 7.5 gigawatts, and previously, we communicated our expectation to be between 7.3 and 7.7 gigawatts, with the midpoint at 7.5. We're currently tracking towards that, so we have 2 gigawatts remaining out of 7.5, and we have already booked 5.5 gigawatts. I have almost half of that remaining 2 gigawatts in late-stage negotiations, with pricing and terms nearing finalization. Thus, we have a clear path to sell through our 2021 pipeline.

Yes. And Ben, on the ramp side, on the ramp-up, as I mentioned before, $4 million of ramp-up costs for the year fully taken in Q1 than was expected. In terms of ramp-down costs, the majority of those ramp-down costs hit in Q1 and Q2. We'll see a few single-digit million still come through in terms of true decommissioning costs and a little bit of ongoing severance and retention, but the vast majority of that cost has been taken in the first half of the year.

Our next question comes from Eric Lee with Bank of America. Your line is open.

It's Julien here. Hi, good afternoon, everyone. I appreciate it. I wanted to follow up on the backdrop for the systems business. You mentioned that there is pressure, likely trending towards the lower end. Can you elaborate on what is driving that? If I'm understanding correctly, you are specifically referring to tax equity, but I would like to understand what is contributing to that situation today and what your expectations are for its evolution over time. And then secondly, if we can come back to the bookings trajectory, near term, but more importantly longer term, how do you think about signing into 2022 and 2023 given the potential for further tax credit extensions et cetera? Just want to understand is there still pressure to sign into those last couple of years of 30% ITC the way it's structured now?

Yes. I'll start and then you can add your thoughts. To clarify, we previously provided a range of gross margin expectations for the O&M business, which we set at Analyst Day in 2017, indicating it would be between 10% and 30%. Currently, we’ve observed that actual gross margins for O&M have been trending towards the lower end of this range. This is due to increased competition and decreasing PPA prices. As PPA prices continue to decline, everything from modules to inverters and operating expenses has been under pressure to lower costs. This is why we referenced the downward trend in O&M margins, which is partly due to lower PPA prices. Additionally, the availability of tax equity will pose a challenge, as it will primarily support high-quality projects. Due to this constraint, I anticipate pricing will increase, potentially leading to higher PPA prices needed to meet market-clearing prices. I’ll let Alex elaborate more on tax equity and our observations in that area.

Yes. Just one comment on the O&M for the tax equities. I think you've seen margins come down and that's been also commensurate with a risk profile decrease. So if you look at it on a risk-adjusted basis, I think it's still value in that business. But overall, gross margins have come down as owners have started to keep more risk on their side of the ledger. When it comes to tax equity, I think what we're seeing, as we mentioned before in the script, capacity levels for 2020 deals. And that's partly a function of banks firming up their views on capacity for the year and partly a function of them, projects pushing out to the right, which is pretty natural in any given year. You may start to see actual losses crystallize in 2021, and there's uncertainty surrounding that. When you combine this with existing commitments that have been made, you typically encounter constraints in human resources at this time of year, as banks focus on closing deals that need to be finalized by year-end. Currently, there isn't really committed capital available for next year. Additionally, the syndication market has become constrained, affecting players that don’t usually lead deals and have less capacity, which adds more uncertainty and pressure on lead players. From a value perspective regarding Sun Streams 2 and other large high-quality projects from experienced developers, tax equity will ultimately be available for that project. However, we might not secure committed capital until late this year or early next year, which could delay the sale's timing. As Mark mentioned, this could impact pricing or other terms, further affecting value.

And so I think that's one of the constraints for us. And then from our perspective, obviously, we sell modules to customers who also rely on having tax equity to have their projects move ahead. And if we see significant dislocation in the market that could be the difference between those projects moving ahead on schedule being delayed or ultimately even being cancelled. So those impacts us there on the module side of the business as well. And overall, that's why when we look at it we believe a legislative solution here is the best way to deal with a constraint. Unfortunately, if you look at the current draft of the Republican proposal, put out last week it doesn't address this tax equity issue. But there's a long way to go before that bill becomes law. And so our hope is that that provision will be addressed through negotiation and bill reconciliation. Yes. I believe your other question, Julien, was about volumes in 2022 and 2023 and how we view booking that volume in relation to a potential extension of the ITC. Currently, we have just over three gigawatts booked in that timeframe. Additionally, there is about one gigawatt in late negotiations with committed pricing. In total, that gives us around four gigawatts established in that period, compared to approximately 16 gigawatts of supply available during the same time. So, we’re committed to about a quarter of that, whether booked or with pricing commitments. There's still room to grow, and we will remain patient. We want to secure favorable pricing, aware of our cost curve and where we can achieve the best rates. We will play to our strengths, especially considering the human resource requirements and challenges in Texas, including cell cracking problems and difficulties some competitors face in getting projects insured due to rising insurance costs. We have several advantages in the U.S. that we leverage, especially with our new technology and copper replacement product. If we can secure good value for that technology and start locking in some of the volumes during this period, we will certainly pursue that. However, regarding the four gigawatts against the 16 gigawatts of supply, we still have plenty of options left, especially if there is an ITC extension that creates a peak in the curve and potentially a more stable and favorable pricing environment, which we will also take advantage of.

Our final question will come from Colin Rusch with Oppenheimer. Your line is open.

Hi. Thanks so much, guys. Are you seeing the impact of lower cost capital start to creep into any of the PPA bids and some of the project economics at this point? Are you seeing PPA prices come down at all? Are you seeing a little bit of give in some of the project-level economics since you're talking to customers?

What I would say is that you need to remain focused on what you do best and aim to create value. When you find ways to stand out, that’s where you engage. For instance, I see that the PPA price we just established with a major Fortune 500 customer is at a premium compared to current market rates. This is partly because the counterparty wanted to partner with First Solar. They appreciate our sustainability approach, which encompasses the entire lifecycle management of our products, from inception to recycling. Our considerations regarding our CO2 footprint and water usage align well with their values, putting us in a good position to capture greater value. Similarly, we have a significant opportunity with another customer looking to secure over one gigawatt of volume in the coming years. They prefer to work with an American company, value our R&D and manufacturing presence in the U.S., and aren't focused on the lowest module prices. We generate value through our technology and capabilities, and they seek a genuine partnership. We strive to remain disciplined in this approach. Regarding whether the lower cost of debt is positively impacting PPA clearing or assumptions around that, while you have that dynamic, there is still uncertainty in the U.S. regarding tax equity, which I believe balances out. It's likely that spreads may be adjusting slightly as well, leading us back to the initial position we started from. Therefore, I don't think we've yet reached a significant turning point concerning the cost of capital driving lower PPA prices.

This ends our time for the question-and-answer session. This concludes today's conference call. You may now disconnect.