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

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

Thank you and good afternoon. Beginning on slide four, we delivered both record second quarter and first half sales volume and improved financial performance relative to the prior year. During the quarter, we generated over $1 billion in net sales, expanded gross margin to approximately 57%, and delivered strong adjusted EBITDA performance. We also surpassed an important milestone for First Solar, exceeding 100 gigawatts of cumulative module sales globally. We view this as a reflection of the trust customers have placed in First Solar over the more than two and a half decades, and the durability of our technology and manufacturing platform. We entered the quarter with approximately 45.1 gigawatts of contract backlog. we delivered with deliveries extending through the end of the decade demonstrating the demand for our differentiated technology platform domestic manufacturing footprint and delivery certainty turning to manufacturing our u.s facilities continue to operate at high utilization rates during the quarter in south carolina the first stage of the finishing facility remains on track to begin production in the second half of 2026 with equipment installations progressing as expected for the second phase we now expect completion in mid-2027 while the revised time reflects a number of factors associated with optimizing the facility's launch it also enables the earlier incorporation of cure technology we are pleased with the performance of cure with both high volume manufacturing at our Perrysburg facility and performance data from field deployments across multiple climates exceeding expectations. We believe incorporating the technology closer to the onset of the facility's commercial launch will simplify execution, accelerate value realization, and enhance customer value and the facility's long-term financial performance. Once completed, the South Carolina facility is expected to provide up to 3.5 gigawatts of finishing capacity for modules initiated at our international manufacturing sites, giving us greater flexibility to optimize our supply chain flexibility while also optimizing freight, tariff, domestic content, and Section 45X economics. With respect to our international manufacturing fleet, production planning and utilization levels in Malaysia and Vietnam continue to be influenced by U.S. market demand drivers and economics, including the pending Section 232 polysilicon and derivative investigation and tariffs we expect greater policy clarity will help inform the long-term operating profile for the approximately 1.8 gigawatts of fully finished international capacity that remains available after accounting for capacity being used to produce semi-finished product destined for our new south carolina finishing line a note on manufacturing optimization and allocation approximately 41 gigawatts of our 45 gigawatt backlog includes some form of domestic content requirement these requirements vary significantly and range from requiring exclusive supply from u.s fully integrated factories to blending u.s made supply with both fully integrated domestic factories as well as product from our upcoming south carolina finishing line to a domestic content 10 points requirement, which is factory agnostic, allowing blending of product from across our global fleet. We therefore continually balance and refine our module supply and demand allocation across the fleet to meet customer contractual obligations, optimize factory throughput, and optimize gross margin. This typically means that over a period of time, we will seek to maximize production and sales firstly from our fully integrated u.s factories secondly from our south carolina finishing line and thirdly from our international facilities as it relates to perovskites we continue to advance our development program for this potentially significant technology platform our previously announced development line continues to progress to process improved efficiency and reliability attributes on smaller form factor modules while our series 6 form factor pilot line remains on schedule and is expected to reach operational readiness in the first half of 2027. our continued progress has given us confidence as we continue to invest substantial capital in our efforts to realize the commercialization of perovskites earlier today we published our latest corporate responsibility report reinforcing our conviction that how and where solar technology is made matters the report details how we create enduring value by developing sourcing manufacturing and recycling solar modules domestically supporting jobs and communities strengthening industrial capacity and help ensure the benefits are realized locally it also highlights our continued focused on responsible manufacturing supply chain transparency workforce development and resource efficiency the report reflects the effectiveness of a business model where corporate responsibility isn't a construct but the default before turning the call of alex i want to briefly address the market and policy environment and how it is informing our commercial approach the underlying drivers for utility scale solar remain intact including low growth data center development electrification aging generation assets and the need for affordable scalable new capacity the policy landscape continues to evolve particularly as it relates to pending outcome for the section 232 polysilicon and derivatives investigation as well as final fiat regulations In this environment, we continue to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term bookings volume. Relative to the beginning of the year, we are seeing increased customer engagement, and as policy clarity improves, we believe First Solar remains well-positioned to capitalize on these opportunities. With that, I'll now turn the call up to Alex to discuss our bookings, financial results, and outlook.

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

We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of John Wyndham with UBS. John, your line is now open. Please go ahead.

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

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

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

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

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

Brian, as it relates to Southeast Asia capacity, we talked on the last couple of calls around looking at this a bit like an option. So we're running somewhere around $30 million quarter of underutilization associated with running Southeast Asia manufacturing well below its theoretical capacity. About half of that's cash, about half non-cash. Given that we've been holding through the first half of the year, making a decision on the long-term future that pending the outcome of the 232. It makes sense to continue to do that. So I'd still view this as we're waiting for the outcome of that policy. And just to frame the amount, if you were to go back and look at the slides we put out in our February call, it shows you nameplate capacity of production. So we originally had about seven gigawatts of total capacity sitting in Malaysia, Vietnam. About half of that is going to be dedicated to production that will feed our new finishing line in South Carolina. So there's about three and a half gigawatts left. Of that, we did take out some tools, bring them over to the US to reuse in our perovskite work. So ultimately it leaves us with about 1.8 gigawatts of end-to-end fully finished capacity that we could ramp up across Malaysia, Vietnam. So it's about that 1.8 that we're talking about. We're holding a decision on pending the outcome of the 232.

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

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

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

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

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

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

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

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

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

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

Yeah, and then on the – I just want to make sure a couple of things. the bookings that we were reporting, most of the bookings that we reported 1.9 in U.S. volume, I think almost all of that was outside of the quarter close, so most of that happened in July, which would also have been outside of the safe harbor date, and most everyone has safe harbor with, you know, transformers. You know, there's really no safe harbor, you know, I know there was a, you know, I don't know, it was like maybe 10 days left in the quarter where there was a ruling that was made that the decision, you know, that came out in August, you know, of the prior year where it said that, you know, you eliminated the ability to use modular 5% CapEx rule to safe harbor. there was a ruling by one of the uh courts that came out i think i don't know somewhere like june 20th that was hardly any time left in the quarter and that in that theory you could use you know assuming that that wasn't challenged there you could use you know modules to potentially save harbor projects but i mean that was really not an opportunity it just happened way too late and most people had already saved harvard with with the um uh inverters or transformers excuse me anyways um but you know as you go forward it is it is an important component especially for anything that was safe harbor if you save harvard the first half of this year uh you know with ability to cod even out in the 2030 you know there are stricter requirements from a fiat standpoint at the project level that have to be met um that i think positions us well um to serve that demand as you as you get out into 29 and 30 for when those projects most likely could be commissioned Plus, the other thing I would say is we are seeing there's a lot of kind of rigid interpretations a little bit. And there are some people that are interpreting that even if something was safe harbored, you know, let's say in the second half of 25, that if you do anything with a change order or let's assume you move something from a MSA to a PAPO or until a PAPO, a purchase order, excuse me, is actually generated, you have to always be mindful of is there a restriction that you could have to comply with from a primitive foreign entity perspective. So there's a lot of like very conservative, which is right. So people want to be, you know, airtight and not taking any risk to jeopardize their either ITC or PTC. And I think there's a view towards maybe being overly conservative, you know, advice they're getting from tax counsel and others. And I think that if I was in their situation, I clearly would do that as well. I don't want to put anything at risk. So there's that, you know, safe harbor and those requirements under 40 ADE as it relates to, you know, fiat restrictions or requirements, I think will continue to play well for us as we look to book out through the end of this decade.

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

Hey, guys. Thanks for taking my questions. Just wanted to follow up on the 232, specifically on timing. We've been thinking it's August, but we've seen a bunch of delays. The issue is if it slips past August, then we go into September, and then that gets closer to the midterms, then there's a chance that decision could push on that uh our base is still honest but one of the contacts who is in touch commerce str has shared uh that you know party organization standpoint phil we're really having a hard time we're having a real hard time you're breaking you're breaking up how is this better yeah try it again because it was really hard to get that yes Okay. Yeah, go ahead. So talking about the 2-3-2 result, and anyway, we've been seeing it's August, but there's a fact that the 2-3-2 come out in September or beyond, some of the contacts see that, you know, the us and the I can not be, you know, I have the Holly 2-3-2 front and center. And so what's your what's your view based on the folks that you guys are in touch with that this should be August? Or do you think there's a greater probability that this could slip into the fall or even beyond? Thanks.

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

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

Thanks so much. You know, guys, are there opportunities for you to reduce input costs on the U.S. manufacturing?

And can you talk a little bit about the supply chain and how that's evolving i know you've had um you know some some discussions with class glassmakers around a capacity expansion and and the capital needs that they had but just curious about how you might be able to look at that trend on a multi-year basis yeah uh colin i mean it's it's a challenging um you know we're still in this and especially in the us as you see more reshoring um you know pressure on commodities um you know the data centers being built out i mean things obviously as you would expect steel we have copper um you know we don't use silver but but uh obviously our competitors do i mean there's just a lot of pressure um you know those but you can look at fuel costs you can look at what's happened in the middle east and And I see that as more transdisciplinary in nature. And once that's resolved, I think we'll see much more competitive fuel prices and what have you. The electricity prices, you know, in some of the locations in which we operate, we're dealing with some of those same adverse impacts that others are. So we're in a pretty challenging rising commodity cost environment. Now, are we able to do things like drive more throughput through our operations? Absolutely. We're focusing on continuing to do that. Are we finding ways to create further automation and capabilities that can reduce labor costs? So there's levers that we're focused on. There's some redesign of the product that we're looking at and trying to take costs out of the back rails of the frame. We continue to look at glass and thickness and other things that we could do from that standpoint. But it's a pretty challenging environment from a commodity cost standpoint and our ability to get a lot of cloth that I think is probably one of the most challenging times that we've Now, I will say that when you look at a cost per watt, not necessarily a cost per module, the great thing about cure is that we have the opportunity to drive the efficiency up so as we you know drive the efficiency up you know as we go from kind of where we are right now and add another you know 10 15 20 30 watts that'll help the cpw numbers right cost per watt numbers which is important right we need to drive that number down and then the asp the value uplift because of the energy attributes of the higher efficiency and cure then that drives to an entitlement for higher ASPs and the like. So that's what we're focused on. And we're never going to give up on the input costs. We got to do the best we can to get cost out, but it is a pretty challenging environment right now.

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

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

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

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

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