Hello. Good afternoon, everyone, and welcome to First Solar's Quarter 2023 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 Richard Romero from First Solar Investor Relations. Richard, you may begin.

Good afternoon, and thank you for joining us. Today, the company issued a press release announcing its second quarter 2023 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 provide a business update. Alex will discuss our financial results and provide updated guidance. Following their 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. We encourage you to review the safe harbor statement contained in today's press release and presentation for a more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer.

Thank you, Richard. Good afternoon, and thank you for joining us today. With half of 2023 behind us, we continue to see strength in commercial, operational, and financial foundations, both in 2023 and in the coming years as we continue to grow. The second quarter of the year continued the steady progress established in the first as we ramped up production and delivery of our next-generation Series 7 modules, reinforced our global leadership in thin film PV with a strategic acquisition, and continued our strong bookings and ASP momentum. Moreover, continuing our commitment to sustainable long-term growth, earlier today, we announced that we will invest up to $1.1 billion in building a new, fully vertically-integrated manufacturing facility in the United States, our fifth in the country. Driven by compelling market fundamentals, supportive trade and industrial policies, and robust customer demand, as reflected in our year-to-date bookings, total contracted in backlog and pipeline of mid- to late-stage opportunities, we are pleased to continue to expand and invest in domestic manufacturing in the United States. This new facility is anticipated to be completed and begin production in the first half of 2026. And along with our Alabama facility, currently under construction, we'll produce our Series 7 module, which is expected to be a fully domestic product, as determined by the current guidance issued by the U.S. Department of Treasury. This new investment puts us on track to grow our manufacturing footprint to approximately 14 gigawatts in the U.S. and 25 gigawatts globally by 2026, reaffirming the growth thesis we established in November of 2016. As noted on previous earnings call, the position we are in today is enabled by our point of differentiation. Our unique CadTel semiconductor technology, vertically-integrated manufacturing process, decision to locate manufacturing close to demand and develop robust local supply chains, and unwavering commitments to Responsible Solar, makes us a partner of choice for large sophisticated developers, both in the U.S. and internationally. As reflected by our continuing bookings progress since the previous earnings call, this differentiation continues to be a driver of long-term growth and competitiveness, placing us in a position to exit this decade in a stronger position than we entered it. Beginning on Slide 3, I will share some key highlights from the second quarter. We continue to build on our backlog with 8.9 gigawatts of net bookings since our last earnings call at ASP of $0.293 per watt, excluding adjusters where applicable. Note, for approximately half of this volume, the customer is responsible for the associated freight costs, which are therefore not reflected in booked ASPs. Including typical freight costs, the average ASP across these bookings would increase to over $0.30 per watt. These bookings bring our year-to-date net bookings to 21.1 gigawatts. Our total backlog of future bookings now stands at 78.3 gigawatts, including 48.5 gigawatts of mid- to late-stage opportunities. As it relates to manufacturing, we produced 2.4 gigawatts of Series 6 modules in the second quarter, with an average watt per module of 468, a top bin class of 475 watts and a manufacturing yield of 98%. As noted in Q1 earnings call, our third Ohio factory, which establishes the template for high volume Series 7 manufacturing, began operations in January and is continuing to ramp, demonstrating a manufacturing production capability of up to 13,000 modules per day, which is approximately 84% of nameplate throughput. The factory has produced a total of 425 megawatts in Q2 for a total first half 2023 production of 595 megawatts. The factory recently demonstrated a top module wattage produced of 540 watts, which implies a record production efficiency of 19.3%. We sold 215 megawatts of Series 7 modules in Q2, and are pleased to note that the product is already being deployed in three projects: in Arkansas, Arizona, and Mississippi. Staying on technology, we also announced during the quarter a limited production run of our first bifacial module panels, utilizing an advanced thin film semiconductor. The module, which is undergoing field and laboratory testing, builds on the track record and energy advantaged attributes of First Solar's successful Series 6 monofacial module platform. And we expect to begin lead line commercial production by Q4 2023. Notably, the bifacial model features an innovative transparent back contact, pioneered by First Solar's research and development team. The transparent back contact, in addition to enabling bifacial energy gains, allows infrared wavelengths of light to pass through rather than be absorbed as heat. This is expected to lower the operational temperature of the bifacial module, resulting in higher specific energy yield. We believe that the transparent back contact is a foundational step towards the development of future tandem products. Similarly, our acquisition of Evolar, the European leader in thin film perovskite and CIGS technology, is also expected to accelerate the development of next-generation PV technology, including high efficiency tandem devices by integrating Evolar's know-how with First Solar's existing research and development streams, intellectual property portfolio, and expertise in developing and commercially scaling thin film PV. Moving to Slide 4. We continue to make steady progress at our manufacturing R&D facility expansions. Starting with India, construction of the factory is now complete, and pre-production testing of the installed tools is ongoing, with the first complete module having been produced in June. We expect this facility to begin production by the end of August this year, and when fully ramped at 3.4 gigawatts of annual nameplate manufacturing capacity through our operations. We're also on track to expand and upgrade our Ohio Series 6 factory to achieve an additional aggregate annual throughput of 0.9 gigawatts, with the additional capacity expected to come online in 2024. Similarly, our new Alabama facility is also on schedule for completion by the end of 2024, with commercial operations ramping through 2025. This facility is expected to add 3.5 gigawatts of annual nameplate capacity once fully ramped, increasing our annual nameplate capacity in the U.S. to over 10 gigawatts by 2025. As it relates to our fifth U.S. manufacturing facility announced earlier today, we continue to evaluate siting options based on the availability of suitable land and related infrastructure, proximity to our supply chains, access to skilled labor and other factors, including the availability of state-level incentives. We expect to announce our location decision shortly. Our dedicated R&D facility is also on track with construction well underway and tool sets ordered. As previously noted, this facility will feature a high-tech pilot manufacturing line, allowing for production of full size prototypes of thin film and tandem PV modules. This, we believe, will allow us to optimize our R&D efforts and progress on our technology roadmap with significantly less disruption to our commercial manufacturing lines. Note, since the announcement of the Inflation Reduction Act approximately one year ago, we have committed over $2.8 billion in capital investments into the United States across our existing Ohio manufacturing facilities, a new manufacturing plant in Alabama, a new research and development center in Ohio, and most recently, our fifth U.S. factory announced today. We expect this will result in the creation of approximately 700 new direct jobs as well as multiples of this number in incremental indirect jobs, including across our supply chain. Before we move to the next slide, I would like to take a moment to discuss the policy environment and our key markets. Starting in the United States, we appreciate the work done by the Biden administration to issue IRA-related guidance on Section 48C, direct pay, tax credit transfers, and domestic content. We are pleased with the direct pay regulations issued during the quarter, clarifying that a five-year direct pay period under Section 45X may be elected on a facility-by-facility basis, which will benefit our previously announced factory in Alabama, as well as our new facility announced earlier today. We are actively engaged with the administration and working with our customers to ensure that the guidance, particularly with regards to domestic content, will deliver on the IRA's intent to sustainably grow U.S. manufacturing and reshore a vital clean energy supply chain. Before more specifically on domestic content, we have shared our comments on the current guidance with the administration and are working to provide our customers with the direct cost information needed to enable their ability to benefit from the bonus credit for using U.S.-made content. Our U.S.-produced modules are well positioned to enable our customers to qualify for the domestic content bonus credit due to both our vertically-integrated manufacturing process where the entire module, including the cell, is manufactured in America, and our commitment to investing in domestic supply chains. Today, our U.S. operations use a 100% U.S.-made glass and steel among other components. As it relates to trade, we are awaiting the Department of Commerce's final determination in its investigation of Chinese manufacturers accused of circumventing U.S. anti-dumping and countervailing duties. We believe that the Department's investigation is a step in the right direction and sends a clear signal that the United States remains committed to the rules of international trade law and to trade that is both free and fair. Relatedly, we applaud the role of U.S. Customs and Border Protection in enforcing the Uyghur Forced Labor Protection Act and its transparency in reporting statistics through a public dashboard. Given the significant undertaking required to execute its mandate under the act, we believe the agency needs to be more adequately resourced to ensure the enforcement is extended beyond the handful of high-profile Chinese solar manufacturers currently being scrutinized. The relatively narrow scope of enforcement would effectively allow lesser-known solar panel manufacturers who may source their polysilicon from the Xinjiang region of China to freely export their products into the U.S. without risk of detention. Internationally, we continue to follow policy developments in Europe where the EU is working towards a path to energy self-sufficiency. While we are cautious about the market, given the recent collapse in polysilicon pricing and the impact that irrationally cheap solar panels driven by oversupply and dumping into Europe may have on the political willingness to deliver a comprehensive legislative solution that both levels the playing field and incentivizes domestic manufacturing. While we remain engaged with the EU, we are pleased to see its member states move forward with their own plans to reshore solar manufacturing. Most notably, Germany's Federal Ministry of Economics and Climate Protection recently launched a request for expression of interest in a plan to build approximately 10 gigawatts of vertically-integrated solar manufacturing capacity in the country. The Ministry launched the initiative under Europe's Temporary Crisis and Transition Framework, and we intend to submit a non-binding expression of interest. However, we continue to hold the position that manufacturing CapEx incentives alone are not an adequately sustainable solution with Europe's challenges. If mechanisms are not put in place for domestic manufacturers to have a sustained level playing field for their capital investments, Europe will find it challenging to achieve what the U.S. and India have been able to do in a relatively short period of time. Moving to Slide 5. As of December 31, 2022, our contracted backlog totaled 61.4 gigawatts with an aggregate value of $17.7 billion. Through June 2023, we entered into an additional 13.6 gigawatts of contracted, and recognized 4.7 gigawatts of sold volume, resulting in a total backlog of 70.3 gigawatts with an aggregate value of $20.8 billion, which equates to approximately $0.296 per watt, an increase of $0.08 compared to end-of-year 2022, and $0.028 per watt compared to June 30, 2022. Since the end of the second quarter to date, we have entered into an additional 7.5 gigawatts of contracts, bringing our total backlog to date to a record 77.8 gigawatts. Included in our backlog since the previous earnings call are contracts of approximately 1 gigawatt or more with new customers, capital power development, and Matrix Renewables USA, as well as with a large European customer. We also signed and announced on July 16, a follow-on 5 gigawatt deal with Energix Renewables, a leading Israeli developer and repeat customer; 4 gigawatts of which sits within our bookings and 1 gigawatt of which is contract subject to conditions precedent. In addition, we currently amended a previously booked deal with Energix, increasing the module ASP and committing to providing U.S. modules for 850 megawatts of their projects. Since the announcement of the IRA, we have amended certain existing contracts to provide U.S. manufactured products as well as to supply Series 7 modules in place of Series 6. As a consequence, over the past four quarters up to the end of Q2 2023, we have increased our contracted revenue by $312 million across 9.2 gigawatts or approximately $0.034 per watt. Note, we are still progressing additional amendments associated with providing U.S. manufactured and Series 7 product, which we expect to be reflected in our Q3 contracted revenue backlog. As we previously addressed, a substantial portion of our overall backlog includes the opportunity to increase the base ASP through the application of adjusters, if we're able to realize achievement within our technology roadmap as of the required timing for the delivery of the product. As of the end of the second quarter, we had approximately 36.4 gigawatts of contracted volume. With these adjusters, if fully realized, would result in additional revenue of up to $0.7 billion or approximately $0.02 per watt, the majority of which would be recognized between 2026 and 2027. As previously discussed, this amount does not include potential adjustments, which are generally applicable to the total contracted backlog both for the ultimate module bin delivered to the customer, which may adjust the ASP under the sales contract upwards or downwards, and for increases in sales rate or applicable aluminum or sales commodity price changes. Finally, this amount does not include any remaining potential higher rate domestic content price adjustments in excess of the already amended 9.2 gigawatts referenced above. Our contracted backlog extends into 2030, including our most recent bookings. Excluding India, we are sold out through 2026. Note, some production from India is expected to be used to support U.S. deliveries in 2024 and 2025. As reflected on Slide 6, our pipeline of potential bookings remains robust, with total booking opportunities of 78.3 gigawatts, a decrease of approximately 34 gigawatts since the previous quarter. Our mid- to late-stage opportunities decreased by approximately 24 gigawatts to 48.5 gigawatts and includes 41 gigawatts in North America, 5.5 gigawatts in India, 1.8 gigawatts in the EU, and 0.2 gigawatts across all other geographies. The decreases in total and mid- to late-stage pipeline from Q1 2023 to Q2 2023 are the result of both converting certain opportunities to bookings as well as the removal of certain other opportunities given our sold-out position and diminished available supply. They also reflect a removal of one large multi-gigawatt, multi-year opportunity, where we were unable to come to terms with the customer. As we previously stated, we will continue to forward contract with customers who prioritize long-term relationships and value our differentiation. And given the strength and duration of our current contracted backlog, we will be strategic and selective in our approach to future contracting. Included within our mid- to late-stage pipeline are 6.7 gigawatts of opportunities that are contracts subject to conditions precedent, which include 1.9 gigawatts in India. Given the shorter timeframe between contracting and product delivery in India relative to other markets, we would not expect to see multi-year contracted commitments that we are currently seeing in the United States. As a reminder, signed contracts in India will now be recognized as bookings until we have received full security against the offtake. Moving to Slide 7. While we will release our annual sustainability report in the coming weeks, we'd like to take this opportunity to preview a few highlights with you. As we have consistently noted, our commitment to Responsible Solar is not a tagline but our way of doing business. This commitment is underpinned by the belief that solar should never come at the expense of the environment or human rights, and drives our company's environmental, social and governance strategy and differentiation. It is this commitment that has driven down our greenhouse gas emissions, energy, water and waste intensity per watt produced and increased the percentage of women in our workforce in 2022 relative to the preceding year. Our achievements build on previous year successes, and we have developed a roadmap with additional initiatives to reduce our absolute Scope 1 and Scope 2 greenhouse gas emissions by 34% by 2028 and achieve net-zero emissions relative to 2020 by 2050. Crucially, we also recognize that we cannot get to net zero without a circular economy. And we continue to make progress on building circularity into our next-generation modules and manufacturing processes from raw material sourcing to high-value recycling with closed-loop semiconductor recovery. This is reflected in the fact that the Series 7 modules designed with sustainability in mind and is our most eco-efficient product to date. It's also reflected in the fact that our new facility in India, which is located in a region of high baseline water stress, is designed to be a net-zero water withdrawal PV manufacturing facility, which we believe to be the world's first. As a purpose-driven company, we consistently hold ourselves to a higher standard and proudly set new benchmarks from the hope that by leading by example, others in the solar industry will follow. I'll now turn the call over to Alex, who will discuss our Q2 results.

Thanks, Mark. Starting on Slide 8, I'll cover our financial results for the second quarter. Net sales in the second quarter were $811 million, an increase of $262 million compared to the first quarter. The increase in net sales was primarily driven by strong market demand that led to higher volumes sold, commencement of sales of our next-generation Series 7 modules and an increase in module ASP. Gross margin was 38% in the second quarter compared to 20% in the first quarter. This increase is primarily driven by the increase in module ASPs, lower sales rate costs, and higher volumes of modules produced and sold in the U.S., resulting in additional credits from the Inflation Reduction Act. Based on our differentiated vertically-integrated manufacturing model and the current form factor of our modules, we expect to qualify for a Section 45X credit of approximately $0.17 per watt for each module sold, which is recognized as a reduction to cost of sales in the period of sale. During the second quarter, we recognized $155 million of such credits compared to $70 million in the first quarter. I encourage you to review the safe harbor statements contained in today's press release and presentation and risks related to our receiving the full amount of tax benefit we believe we are entitled to under the IRA. The reduction in our sales freight costs during the quarter reflected improved ocean and land rates, the significant reduction in non-standard charges of container detention and demurrage, as well as a beneficial domestic versus international mix of volumes sold. The lower sales freight costs reduced gross margin by 8 percentage points during the second quarter compared to 15 percentage points in the first quarter. Ramp costs, which include costs associated with operating a new factory below its target utilization and performance levels, were $29 million during the second quarter compared to $19 million in the first quarter. Ramp costs reduced gross margin by 4 percentage points in each of the first and second quarters. Our year-to-date ramp costs are fully attributable to our new Series 7 factory in Ohio, which is expected to reach its initial target operating capacity later this year. We also began to expect incurring ramp costs on our new Series 7 factory in India in the third quarter. SG&A and R&D expenses totaled $83 million in the second quarter, an increase of $8 million compared to the first. This increase was primarily driven by additional investments in our R&D workforce, our R&D testing costs, additional share-based compensation expense and higher professional fees. Production start-up expense, which is included in operating expenses, was $23 million in the second quarter, an increase of approximately $4 million compared to the first quarter. This increase is attributable to higher pre-production costs at our new factory in India, which will be prepared to starting production this quarter. Our second quarter operating results included approximately $8 million of non-module revenue associated with project earn-out payments from our former systems business. We also recorded a litigation loss of $36 million associated with the dispute with the Southern Power Company related to legacy EPC projects in the United States for which we served as the EPC contractor. We are evaluating our options in relation to this litigation. Year-to-date operating loss impact from legacy systems business related activities was approximately $22 million. Our second quarter operating income was $169 million, which included depreciation, amortization and accretion of $72 million, ramp costs of $29 million, production start-up expense of $23 million, legacy systems business-related impact of $28 million and share-based compensation expense of $8 million. We recorded tax expense of $18 million in the second quarter compared to a tax benefit of $7 million in the first quarter. The increase in tax expense was driven by higher pre-tax income and lower tax benefits associated with share-based compensation awards with the majority of these awards vest during the first quarter of each year. The aforementioned items combined led to a second quarter diluted earnings per share of $1.59 compared to $0.40 in the first quarter. And note, growth-related start-up and ramp costs have impacted Q1 and Q2 by $38 million and $53 million, respectively, for a cumulative first half 2023 operating income impact of $91 million. Next on to Slide 9 to discuss select balance sheet items and summary cash flow information. Our cash, cash equivalents, restricted cash, restricted cash equivalents and marketable securities ended the quarter at $1.9 billion compared to $2.3 billion at the end of the prior quarter. This decrease was primarily driven by capital expenditures associated with our new facilities in Ohio, Alabama and India, and payment for our acquisition of Evolar, partially offset by advanced payments received for future module sales and additional drawdown by India credit facility. As it relates to advanced payments, for substantially all contracts in our backlog at the time of booking, we typically require payment security in form of cash deposits, bank guarantees, surety bonds, letters of credit, commercial letters of credit, parent guarantees, targeting up to 20% of the contract value. Cash deposits, which are reflected on our consolidated balance sheet as deferred revenue, totaled approximately $1.5 billion at the end of the quarter and provide a meaningful portion of the financial resources required to fund our existing expansion method. Total debt at the end of the second quarter was $437 million, an increase of $117 million from the first quarter as a result of the loan drawdown under our credit facility for our factory in India. Our net cash position decreased by approximately $0.5 billion to $1.5 billion as a result of the aforementioned factors. Cash flows used in operations were $89 million in the second quarter, primarily due to expansion-related activities. Capital expenditures were $383 million during the period. During the quarter, we secured a five-year revolving credit facility for $1 billion. We're focused on exiting this decade in a stronger position than we entered it, and liquidity is a crucial differentiation we intend to maintain. This facility provides us with the financial headroom and flexibility we need while also balancing our ability to grow in response to demand for our technology. Turning on Slide 10, I'll discuss full year 2023 guidance. As noted on our February guidance call, given the declining impact of our other segments, we stated that we are no longer providing segment-specific guidance, but would note any significant impact to our consolidated financials. As it relates to our legacy systems business, year-to-date, we have seen approximately $20 million of revenue, $14 million of gross profit, and $36 million of litigation losses within operating expenses. As it relates to our module business, we expect to see approximately $40 million improvement in gross profit relative to our prior guidance. Given their size, these combined numbers do not impact our forecasted revenue and gross margin guidance ranges, which remain unchanged. Note, our full year Section 45X tax benefits forecast of $660 million to $710 million is also unchanged. Our operating expenses guidance has increased to $450 million to $475 million to reflect the aforementioned litigation losses. Operating income and earnings per share guidance remain unchanged. I'd like to highlight that in terms of earnings cadence over the second half of the year, we anticipate that volumes sold, revenue, IRA Section 45X benefits will be distributed approximately 40% in the third quarter and 60% in the fourth quarter. With operating expenses approximately evenly split between Q3 and Q4, this implies an expected second half 2023 EPS split of approximately one-third in Q3, two-thirds in Q4. Incremental capital expenditures of approximately $100 million in 2023 associated with our newly announced U.S. factory are offset by a pushout from the timing of approximately $300 million of CapEx associated with equipment upgrades previously assumed in 2023 into early 2024. Our full year 2023 capital expenditures forecast is therefore reduced to $1.7 billion to $1.9 billion. This reduction in forecasted capital expenditures, combined with an expected increase in deposits associated with future bookings, results in an expected $0.3 billion increase in our forecasted year-end net cash balance, which is now $1.5 billion to $1.8 billion. As it relates to our longer-term outlook beyond '23, we plan to hold an Analyst Day at our Ohio campus on September 7 this year, which we will do through a live webcast. Turning to Slide 11, I'll summarize the key messages from today's call. Demand continued to be robust with 21.1 gigawatts of net bookings year-to-date, including 8.9 gigawatts of net bookings since our last earnings call, leading to a record contracted backlog of 77.8 gigawatts. Our continued focus on manufacturing technology excellence resulted in a record quarterly production of 2.8 gigawatts. Our India, Ohio, and Alabama expansions remain on schedule, and we expect to invest an additional $1.1 billion in a new U.S. factory office in the country, which is expected to begin production in the first half of 2026. Cumulatively, in the year since the announcement of the IRA, we committed $2.8 billion of capital spending across manufacturing and R&D in the United States, which we expect will result in the creation of 1,700 direct new jobs and multiples of this number in new indirect jobs. From a technology perspective, we completed a limited production of one of our first bifacial solar panel, utilizing our advanced thin film semiconductor, and acquired Evolar, the European leader in thin film perovskites and CIGS technology. These investments are expected to accelerate our development of next-generation PV technology, including high-efficiency tandem devices. Financially, we earned $1.59 per diluted share, inclusive of a legacy systems business-related litigation loss, and we ended the quarter with a gross cash balance of $1.9 billion or $1.5 billion net of debt, with additional debt capacity of $1 billion under our new revolving credit facility. We are maintaining our revenue and EPS guidance, including forecasted full year earnings per diluted share of $7 to $8. With that, we conclude our prepared remarks and open the call for questions.

Our first question comes from Philip Shen. Philip, please go ahead.

Hi, everyone. Thanks for taking my questions. My first category is about bookings. It seems like your average selling price was strong for bookings, around $0.327. Mark, I believe you mentioned an additional $0.02 in adders. What are your expectations for bookings moving forward? You had a quieter period in Q2, but you ramped up after July 1. Do you anticipate that trend to continue now that you’ve announced new capacity? The second category of questions is related to your availability for 2024. We thought you were sold out for that year, yet in the agreement you announced today, and in other agreements over the past few weeks, it appears you have more booked for 2024. How are you managing that? Did someone cancel their order, or are you operating above 100% utilization? Is there any additional volume available for 2024, and how much is left for 2025? Thanks, everyone.

Yes. I'll address the second question first. The reason we can still commit to certain opportunities in 2024 and 2025 is twofold. Firstly, as I mentioned in my prepared remarks, we will be utilizing our operations in India for U.S. shipments in those years. The demand in the U.S. has been exceptionally strong, and we are restructuring some customer agreements to meet the volume requirements for 2024 and 2025 while also drawing on additional supply from previous years. These arrangements have worked out well for us. Additionally, we have obligations under the incentive package we received in India, which requires us to achieve a certain level of exports. We are now accelerating these exports to align with the first couple of years of production in India to support the U.S. market. Secondly, our Perrysburg Series 7 factory is ramping up successfully, providing some extra capacity that will be available in 2024. We are also expediting some of the upgrades in Ohio that we discussed earlier. As part of our overall strategy, we indicated that we would leverage approximately 0.9 gigawatts of volume to enhance throughput and increase output from our Series 6 factories in Ohio. By pulling forward some of these initiatives, we're creating additional supply sooner than we initially expected. The primary focus is on managing the volumes that we will support out of India, which is performing exceptionally well. However, we see significant opportunities in the U.S. market with attractive average selling prices, and we are strategically using that volume to serve the U.S. market at this time. Regarding bookings, the average selling price was $0.293, which did not account for sales rates for about half of the volume. Including the impact of sales rates, that would increase the average selling price to over 30, possibly in the low 30s. The momentum has been strong despite some activity around the domestic content requirements, which did not hinder our conversion efforts. We had a very productive quarter with conversions, exceeding $300 million from existing volumes now converted for higher average selling prices and to meet domestic content requirements. I also believe the recent announcement of the new factory will boost our supply and potentially accelerate our momentum. In the last quarter, we excluded about 1 gigawatt from the Energix deal due to an option tied to that volume, but if included, it would bring our total to around another 10 gigawatts. We've maintained a solid performance of 10 gigawatts each quarter. If we can sustain this momentum throughout the year, we have the potential to reach around 35 to 40 gigawatts this year, which is a strong outcome considering we're set to ship 12 gigawatts. We're building on our contracted backlog with favorable average selling prices, and overall, we are pleased with our bookings performance.

Thanks, Mark. I want to clarify that your $0.296 is the average selling price for the entire backlog, while the $0.327 I mentioned refers to the average selling price for the new bookings since the first quarter. Is that correct? Just to clarify.

The total backlog at the end of the quarter was approximately 70 gigawatts, with an average ASP of $0.296. The bookings since the last earnings call totaled 8.9 gigawatts, with an ASP of $0.293. However, this figure did not account for a sales rate of half the volume. If we factor in the normal sales rate adjustment, the equivalent ASP would be in the low $0.30s. Those are the figures.

Okay. Got it. Thanks. I'll pass it on.

All right, thank you. And our next question comes from the line of Brian Lee. Brian, please go ahead.

Good afternoon, everyone. Thank you for taking my questions, and congratulations on the announcement of the new factory. I have two questions. First, regarding the domestic content rules that have been in effect since mid-May, what are you conveying about them? There seems to be customer feedback concerning the 40% and 55% thresholds. Will achieving those thresholds mainly involve purchasing Series 7 panels from Alabama and the new site? Additionally, are you anticipating more pricing opportunities from those sites moving forward? If you could provide some specifics on that. Secondly, concerning the new factory, do you have any insights about its progress in the first half of 2026? It's a bit of a detailed question, but is there a possibility to accelerate the timeline, considering you've mentioned a typical two-year build cycle? Could it potentially be operational earlier, perhaps by the end of 2025? Thank you.

Yes. Regarding the domestic content rules, the current definition includes specific components that determine if a module is manufactured in the U.S. and qualifies as a domestic product. We stated earlier that for Series 7, particularly in our new factories, we will fully comply with all those requirements. All identified components will be produced in the U.S. This strategy has been in place for years to establish a local supply chain. Consequently, the full entitlement for the module will be recognized at the project level. There are no other manufacturers who will meet these criteria, and while other companies have announced intentions to manufacture in the U.S., they will likely only produce the cell and very few, if any, will source glass domestically. I have not seen any announcements regarding the availability or contracts for glass in the U.S. We are in a unique position due to strategic partnerships for sourcing our glass, which puts us at an advantage. Our customers are still figuring out the details and have questions, but there is a strong confidence that First Solar offers the best-positioned module to qualify for the domestic content bonus. This is evident in the high volume of conversions we are experiencing, as I mentioned earlier. From a domestic content perspective, we are closely collaborating and being transparent. I know there have been rumors about manufacturers not sharing cost information, but we are certainly willing to do so. Ideally, we would prefer to present the module price from a taxpayer viewpoint, as that would simplify the process compared to the complexities currently involved. We are managing these complexities and are eager to support our partners to help them qualify for the bonus associated with the modules' contribution. They are likely still working out how the tracker and inverter fit into the larger project context. Nonetheless, it's clear to everyone that Series 7 and First Solar, in general, will have a significant advantage over other U.S. manufacturers. As for factory timing, we haven't yet announced a site and are still in the site selection process. The timing for site selection, permitting, site preparation, and ensuring all necessary equipment is ready will ultimately dictate when the manufacturing facility can start operations. While we hope to maintain our previously indicated timeline, if everything goes smoothly, there is potential for acceleration. However, much work remains before we can confirm whether that is feasible.

All right. Thank you. And our next question comes from the line of Joseph Osha. Joseph, please go ahead.

Hi, thank you, everybody. I have two questions. First, I've heard discussions about perovskites and CIGS. Could you provide any insight on when we might see those in shipped products? Additionally, regarding tandem cells or higher-efficiency products, will we see those being used in rooftop installations? I also have one more question. Thank you.

I am quite pleased with the capabilities that Evolar brings to the perovskites segment. Their strengths complement those of our internal team. While we may have different approaches, both are yielding positive results. One major challenge we are all facing is the stability of the device. Efficiency is certainly important, but stability is essential too. Historically, perovskites have struggled with the long-term durability of their devices. Evolar has demonstrated impressive capabilities in CIGS6, achieving sales over 23%. We believe that a tandem technology utilizing thin film layers could reach the market sooner than perovskites at this time. This technology would involve a CadTel top cell paired with a CIGS bottom cell, which would likely offer a higher-efficiency product and broaden our addressable market. This is the reason we are investing in this technology. As a module manufacturing technology company, we aim to be a leader in the field. We excel in thin film devices, and both perovskites and CIGS are part of this thin film semiconductor approach. We will keep improving our capabilities. As for when we can bring these products to market, it's still too early to give a timeframe, as there are several challenges that must be addressed. However, I am encouraged by the platform we have, which is a great complement to our leadership in CadTel. Both technologies can advance our leadership in the field over time.

Thank you. And my quick follow-up, Brian alluded to this a little bit, just stepping back from the just announced factory and thinking more out towards the end of the decade, should we kind of think about 18 months to two years as a reasonable cadence for your ability to add manufacturing given site selection, tools, all this kind of stuff? Or could it be slower or faster?

I think I'd mark it to that two-year cycle. I think that's probably the right timeline. I mean there's other issues that we're running into. It also varies where we're going to go. If we go to India, I would argue potentially, India could a little bit faster. U.S. is running into a number of challenges, especially around construction and timelines to do that, availability of workers, access to energization of the factory. We're still looking at Europe, and it depends on the path we go in Europe. That could also maybe be slightly shorter timeline than where the U.S. is right now. But I think the best way to look at it is kind of a two-year timeframe.

All right, perfect. And our next question comes from the line of Julien Dumoulin-Smith. Julien, please go ahead.

Hey, it's Alex Vrabel stepping in for Julien. I have a question about domestic content again. Mark, you mentioned some of the aspects that still need clarification. Since you've already accounted for some ASP increase in 2024 related to domestic content, is there any possibility of a clawback from the developer if they can't meet these clarifications? Also, I'm curious about the long-term expansion potential in the U.S. Historically, you've captured about a third of the U.S. market, and I understand there are over 70 gigawatts of modules announced in the U.S. How do you view your broader market share prospects in the U.S., and what could that evolve into as we progress towards the latter half of the decade? Thanks.

Regarding the conversions we implemented for 2023, 2024, and 2025, we carefully considered these as potential opportunities based on the contracts we were forming, which indicated domestic content. If certain rules are put in place, we can charge a higher price for domestic products. However, some agreements allow for international options, and we can negotiate increased pricing if customers prefer domestic supply. There are no embedded provisions in those agreements that would lead to adjustments or callbacks. For new volumes we are currently booking, there are requirements for adjustments if we fail to meet our commitments to the customer. For instance, if we promised that our Series 7 product would be domestically manufactured, all components must be produced in the U.S. We have allowed some flexibility in this regard, but failure to manufacture as promised could have consequences. However, we are confident in our ability to meet these requirements, and as long as we fulfill our commitments, there will be no penalties. We have a typical contractual obligation to comply with the representations made about domestic manufacturing, and we are already sourcing most components in the U.S., which minimizes risk.

Got it.

Sorry. I think I cut you off there a little bit. Our next question comes from the line of Vikram Bagri. Vikram, please go ahead.

Hi, there. I was hoping that you could give a little bit more color on the expected increase in module gross profit relative to your prior expectations. Just kind of what's driving that? What are the puts and takes there? How much of that benefit is coming from sales freight versus manufacturing efficiencies?

Yes, it's a combination of factors. We are definitely experiencing a decrease in the sales rate. We anticipated this decline over the year, but it appears to have occurred a bit sooner in Q2 than we expected. More than half of the increase in our module gross profit guidance is linked to an improved sales rate. However, there are some enhancements in the core area compared to our earlier outlook as well. Importantly, we want to clarify that we are not altering our forecast for the Section 45X benefit. Therefore, there is no increase in the cost of goods on the gross profit line resulting from reduced costs due to IRA benefits. It all relates to core production costs and the sales rate.

Got it. Thank you. And just one follow-up. In terms of the mix of deliveries, you mentioned some recent contracts, which have projects in Europe as well as in the U.S. How are you thinking about supplying those? Could we expect any supply coming from the U.S.? And then just how do you think about the pricing dynamic in those markets where ASP is a bit lower than we see domestically?

Yes, we are not currently planning to source anything from the U.S. to Europe. However, there could be specific cases where a contract requires a product from the U.S. due to particular needs for a project. That is not our primary intent; we aim to support Europe from our international factories in Malaysia and Vietnam, which are our two lowest-cost factories until India is fully operational. Once India is up and running, it will take over as our lowest-cost factory. We do have global customers, including major utilities and oil and gas companies, who operate internationally and require products for their projects in the U.S., India, and Europe. They enter into agreements with First Solar, which allows us to source from multiple regions, similar to the Energix deal we announced that included volumes for the U.S., Israel, and potentially Poland. We will need to adjust pricing to remain competitive in those markets compared to other global pricing, but we still expect to achieve a premium. Unlike others who may be offering fire-sale prices, we are not in that situation due to our long-term relationships with strategic partners. For instance, to the best of my knowledge, Energex sources 100% from First Solar regardless of their project locations. However, I must ensure that they can remain competitive in their market, so we will price accordingly.

Okay. Perfect. Thank you so much. And that is all of the questions we have time for today. We would like to thank everyone for taking the time to dial in today. You may now disconnect.