Good afternoon, everyone and welcome to First Solar's Third Quarter 2017 Earnings Call. This call is being webcast live on the Investor Section of First Solar's website at 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 conference over to Steve Haymore, for our First Solar Investor Relations. Mr. Haymore, you may begin.

Thank you, Ashley. Good afternoon, everyone and thank you for joining us. Today, the company issued a press release announcing its third quarter financial results. A copy of the press release and associated presentation are available on the Investors section of 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 and technology update then Alex will discuss our financial results for the quarter and provide updated guidance for 2017. We will then open up the call for questions. Most of the financial numbers reported and discussed on today's call are based on U.S. Generally Accepted Accounting Principles. In the few cases where we report non-GAAP measures such as free cash flow, adjusted operating expenses, adjusted operating income or non-GAAP EPS, we have reconciled the non-GAAP measures to the corresponding GAAP measures at the back of our presentation. Please note this call will include forward-looking statements that involve risks and uncertainties that could cause actual the results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in today's press release and presentation for a more complete description. It's now my pleasure to introduce Mark Widmar, Chief Executive Officer. Mark?

Thanks, Steve. Good afternoon and thank you for joining us today. I'll begin by highlighting some of our third quarter financial and operational results. Firstly, we achieved record quarterly net bookings of 4.5 gigawatt DC, which brings our year-to-date net bookings to 6.7 gigawatts. The strong bookings demonstrates the tremendous customer acceptance of our Series 6 product and the impact of market factors that are leading to an acceleration of procurement timing by certain customers. Our financial results for the quarter were also strong with revenue of over $1 billion and EPS of $1.95, driven by the sale of both our California Flats and Cuyama projects. Turning to slide 4. Our Series 6 transition continues to progress according to plan and remains on schedule. We are now more than halfway through our 18-month Series 6 journey which we started in November of 2016. I am very pleased with the impressive results the team has delivered so far. At our Ohio factory, the frontend of our Series 6 line is now almost completely installed and most of the equipment is operational and in various phases of acceptance testing. We are also beginning the significant milestone as we run glass through the core semiconductor equipment including the CADTEL coater (03:10). At our Malaysia factory yesterday, our first vapor transport deposition coater arrived on site. And the process of installing the tools will ramp up in the coming weeks with the added benefit of the learnings from our Ohio factory. While we'll save further updates until our Analyst Day on December 5, we continue to be excited by our progress. Before continuing further, I'll briefly comment on the trade case. As we have said in the past, we're not a party to the proceedings, which excludes thin film. However, we did recently make…

Thanks, Mark. Before providing an update on our performance for the quarter, I'd like to highlight our 2017 Analyst Day which will take place on Tuesday, December 5, beginning at 10:30 AM Eastern Time. The event will be webcasted live, and will include an update from our executive management team on strategic priorities related to our technology and capacity roadmaps, progress we're making in key markets, and our latest business outlook. There'll be a link to a live webcast of the event available at the Investor Relations section of our website, and our executive management team looks forward to the opportunity to provide you with the latest updates on our business. Starting on slide 10, I'll start by discussing our third quarter operational highlights. Module production increased slightly in the third quarter to 527 megawatts DC, an increase of 3% from the prior quarter. Production was 32% lower year-over-year resulting from Series 4 lines ramped down to make way for Series 6 production. Capacity utilization, which excludes the lines taken out of service, was 98% compared to 99% in the prior quarter and 97% in Q3 of the prior year. The full fleet conversion efficiency improved to 17% in the third quarter, a 10 basis point increase quarter-over-quarter and a 50 basis point improvement year-over-year. Module conversion efficiency on our best line was unchanged versus the prior quarter at 17% but improved 40 basis points year-over-year. As we've indicated previously, we expect the Series 4 fleet average efficiency to level off near our current 17% efficiency as future technology improvement and investment are focused on Series 6. Continuing to slide 11. I'll discuss some of the income statement highlights for the third quarter, including some non-GAAP measures such as adjusted operating expenses, adjusted operating income, non-GAAP earnings per share and…

Thank you. We will take our first question from Philip Shen with ROTH Capital Partners. Please go ahead.

Hey, guys. Thanks for the questions. Congrats on the bookings. What are the key factors influencing whether or not you book the remaining gigawatt of Series 4? Can you describe also the terms of the Series 4 contracts for delivery in 2018? Our checks are coming back with – that you guys have meaningful cancellation fees. And then finally, given the flexibility of some of your contracts to ship either Series 4 or 6, what is the potential number of megawatts of Series 6 modules that could be sold in 2018? Thank you.

All right, Phil, I'll try to take those as best as I can. At first off, as it relates to decision points as it relates to continuing the production of the Series 4. We're continuing to evaluate the options and alternatives that we do have. One of the primary things (26:39) which we said is we won't do anything that's going to compromise our transition to Series 6. First and foremost, that's the most important thing that we need to do. And any decisions we make, we'll make sure that we preserve the original committed-to Series 6 production schedule as we highlighted for 2018 and 2019. Look, as we've created optionality within the – these contracts, it's given us the flexibility. As we indicated, about half of the volume that we have booked allows us to either fulfill those contracts with Series 6 and Series 4. If you take the 4.5 gigawatts in net bookings, it would highlight then that there's a meaningful portion of that that would be – potentially could be served with Series 6, which would then give you an indication that most of the volume through 2019 could be contracted with Series 6, assuming we made – did not make a decision to extend Series 4 production. Some of the contracts also go out to 2020, so I'm going to make sure that that's highlighted as well. The volumes go out that far. Also though remember that 2018 volume for Series 6 largely was consumed within our own development assets already. So most of that Series 6 shipment profile is mainly going to sit within 2019 and in 2020. Have we put provisions within those contracts, especially those that have mainly focused on Series 4, but also we've incorporated similar provisions in our Series 6 agreements, as we book that far out, we do want to make sure that there's – the contracts are an obligation by both parties to perform. There's implications for us if we don't perform and there's implications to our customers for whatever reason, if the contracts or the purchase orders were terminated. And so it's protecting both people's interest to ensure long-term fulfillment against those contracts. Again, we're going out much further on module sales than we would historically and so we have included certain provisions within our contracts that would protect both our interest and I guess also make sure that our customers' interests are protected relative to our ability to perform and deliver against those obligations.

Great. That's helpful. And if it's possible, is it – can you give us a sense for the gigawatts in 2018, 2019 and 2020? Is it possible to give us a sense of that mix at all, Mark?

No, we're not breaking out the detail. I think the way to look at there's 7.4 gigawatts now that as you think about the balance of this year going out into 2018, 2019 and 2020, so that's a tremendous amount of volume that has been contracted at this point in time. As we said the 3.6 that has been originally identified in our production plan that is sold through at this point in time, so that entire volume has been sold through. And if you remember, this year we'll end up producing another – the run rate would indicate about 500 megawatts this year. Then what we had indicated for next year was a gigawatt of Series 4 effective and a gigawatt of Series 6. So that incremental gigawatt of – for that we could produce with Series 4 next year, it could take Series 4 production up to 2 gigawatts next year. Look, we'll have to make a decision, as we indicated in our prepared comments by the end of the year. We're looking at various events that could inform our views around that and the ability to fulfill those contracts and what's the best product mix to do that with, and I would expect to have a lot more information, as we indicated in our prepared remarks in the Analyst Day in the first part of December.

And we'll take our next question from Jeff Osborne with Cowen & Company. Jeffrey Osborne - Cowen & Co. LLC: Yeah. I heard you – thanks for the question. Alex, if I heard you right, I think on the startup costs you mentioned that there would be a Vietnam-related start-up cost. Can you just talk about what that's for?

As I think we talked about on our last call we have an old factory in Vietnam that was built but never commissioned, and as part of the optionality that we're keeping around continuing our Series 4, we are moving to use that factory for Series 6. So as we do that there'll be start-up costs associated with bringing that up in the same way they would be with taking the existing Perrysburg and Malaysia facilities over from Series 4 to Series 6.

Yeah. I think as Alex indicated, what we said in our last earnings call that are effectively third Series 6 plant was going to be in Malaysia. We've made a decision now to move that to Vietnam, and what that provides now, is this gigawatt of optionality that we're referring to around Series 4. We could continue to produce more Series 4 in Malaysia for an extended period of time. That's a decision that we're still evaluating but making that decision to go to Vietnam has freed up some optionality around Series 4 production in KLM, Malaysia.

And we'll take our next question from Brian Lee with Goldman Sachs. Brian Lee - Goldman Sachs & Co. LLC: Hey, guys. Thanks for taking the questions. I have two. So first off, given the record bookings, is there a strategy that involves accelerating CapEx in Series 6 as opposed to just keeping Series 4 online longer or maybe potentially doing both in a parallel track? Just thinking or just trying to get a sense of how you're thinking about the Series 6 out-year ramp, given the initial demand seems to be pushing lead times out here. And then just as a follow-up, I'll squeeze this in now. On the margin trajectory, if we look at components it's been pretty consistent here in the past couple quarters in the high-teens which makes sense given the pricing stability in the market. If we take your prior comments around end of life margins for Series 4, it sounded like the first half of 2018, we'd see much lower gross margins than where you're tracking at today. If you do the 1 gigawatt optional Series 4 volume moving through the next couple of years, is it fair to assume though that 1 gigawatt optional volume would be in the range, margin-wise of what you're seeing today, as opposed to the end of life commentary you've made in the past? Thanks, guys.

All right. I'll take the Series 6 acceleration comment and let Alex take the margin comment .Look, Series 6, at least in the near-term, if we roll through what previously highlighted by almost a year ago I guess, when did our guidance call, that we would roll out and ramp to about 3.5 gigawatts or so of production by the end of 2019 with an exit rate that would be north of that number, call it 4 gigawatts. The ability to do anything within that timeframe is largely constrained by lead time from our equipment manufacturers. So anything to really accelerate Series 6 within that window, call it over the next 8 to 10 quarters I guess, it would be very, very difficult. But when you go beyond that, as we think about in the 2020 and into 2021, there could be some optionality and some decisions that we could make around acceleration. But the problem is, it's why there's kind of simultaneous equations here, but the constraint still to get to Series 6 is the ramp down to Series 4. And so we have to play through that equation and that mix, we've got to solve and what we think is the right production profile for Series 4 and then that'll sort of give us the parameters and the goalposts I guess that we can make a decision around Series 6. So there's multiple constraints near term, it's the equipment lead time. Alternatively, there was also the transition from 4, and how much longer we choose to continue to run Series 4 in order to potentially look at options around the timing of accelerating Series 6. But to the extent there was optionality, it would be out in the 2020 timeframe.

Yeah. And Brian, on the margin point, so we have previously indicated that we are not spending money on improving the efficiency of Series 4. Our competitors are not standing still and we expected the Series 4 to be added to most challenged, just before we start production. So as we moved into 2018 under the current plan. Competitors won't stand still and at that point, we would have our most challenging gross margins. As Mark mentioned in his prepared remarks, we have seen an acceleration of procurement in the U.S. And we've also seen a relatively tight Tier 1 supply demand market globally based on the current dynamics mostly in China. And that's had a stabilizing impact on pricing in the near-term. So in the near-term, that's why you're seeing margins hold up. I would also say that if we do extend the Series 4 production beyond our current plan in 2018, we would only do so if we have acceptable margins to us. So I think you can assume you would see a similar margin profile going forward into 2018.

And we'll take our next question from Colin Rusch with Oppenheimer. Colin Rusch - Oppenheimer & Co., Inc.: Thanks so much, guys. Can you talk a little bit about the pricing mechanisms in these contracts? I appreciate that you've got teeth in it for both sides. But is pricing fixed on these forward bookings here, and how should we think about that?

Yeah. So, they're very similar to bookings that we've had historically, right? So, there is a fixed price associated. There's fixed price from Series 4. There's a fixed price from Series 6. Now, we do have, this will primarily relate more to Series 6 because there's not going to be a significant difference of bin availability for Series 4. But we do have provisions in our contracts that would give us what we refer to as bin adder or price adjusters such that if we ship them a higher watt panel, then there's a price increase associated with that. But these are fixed prices that go out for an extended period of time, as we've indicated. They potentially have some bin adders, more that will be in the Series 6. There'll be some in Series 4 as well. But think of them as firm fixed prices, obligations by both parties to perform and implications to the extent that those parties do not perform.

And we'll take our next question from Krish Sankar with Bank of America Merrill Lynch.

Yeah. This is Chirag Odhav on for Krish. Can you guys generally see higher marginal prices leading towards lower IRRs for the project business? Do you expect this to make things a little less attractive for future projects?

So if I look at the IRRs we're seeing in the market today, I think you have to look at the total underwriting assumptions in it (37:32). So the IRR headline number itself has stayed, I think relatively resilient despite potential headwinds around tax reform and interest rates and other things. So I think we're seeing IRR stay relatively stable. If I look to whether the module pricing is impacting those, clearly, the model is pretty simple, right? You've got your input costs, your revenue stream, and your return on capital. So if you change one of those, you're going to have an impact on one or other of the remaining two. So I think, clearly, there's going to be some impact. I think if you look at the increase in pricing we are seeing on the module side, it is not significant to the point where it's going to have hugely detrimental impact on IRRs. And depending on when your project was bid and the assumptions that you used at the time around forecast, interest rates, yield curves, cost of tax equity, other operating expenses, merchant curves (38:31) and other things, I think the general level of increase in module pricing is still allowing viable projects today.

Yeah. I think the thing to remember, too, is that I think the module represents something close to about 20% of the overall LCOE. And so, it is a small component relative to the other 80% when you aggregate everything else up. So it shouldn't have a significant impact, but the reality is what was the assumption that was used when those PPAs were bid. If there were assumptions that module prices were going to fall very quickly and that there was an assumption of a continued oversupplied industry, that therefore, people would be selling at or below cash costs in order to liquidate inventory. Where pricing is now settling to, could have a more impactful impact to somebody's return expectations because of a very aggressive assumption they had when they bid into a particular power price. But on a normalized basis, if you're just looking at the delta from where module prices were at the low to where they are now, it's not going to have a significant impact. But if you were taking a low point and then further assuming price erosion against it, you could have a more significant impact from that standpoint.

And we'll take our next question from Vishal Shah with Deutsche Bank.

Yeah. Hi. Thanks for taking my question. Mark, what percentage of your bookings historically have been module plus bookings? I appreciate the comments you made about negotiations you've had with some of your existing customers. So, should we assume 30%, 40% of these bookings would eventually get converted to module plus or could that be a smaller number? And then also, what percentage of your bookings are with some of the utility customers and corporate buyers versus some of the smaller developers and distributors that could potentially negotiate, renegotiate on pricing? Thank you.

So, in terms of – I guess what I'll throw into the bucket for – when you say module plus, I'll throw in kind of EPC and O&M services into that discussion. As we indicated in the call, there's multiple hundreds of megawatts of opportunity against the bookings that we've recognized that we could capture additional services for OEM and EPC in particular. And what's happened is that there's obviously a desire, we're constrained, and there's a desire to lock up on module prices as quickly as possible. We're still in negotiations with some of our customers that would include additional scope beyond just the module. But it's a relatively significant number. But there's a lot of work still to be done to determine whether or not we can capture something beyond just the module side of the equation. So we'll work through that. As it relates to the C&I bookings, what we said in the call, I guess, 400 megawatts or so of module sales that were related to a customer – commercial industrial customer. There's 800 megawatts of late-stage negotiations against the 2-gigawatts of systems business that we highlighted that is for C&I. That segment of the market is relatively robust. We're seeing a lot of activity there and really, it plays strongly to First Solar's capabilities and brand strength, bankability, balance sheet strength, the buying decision-maker there I would align more to utility who's looking for utility owned generation. We're not selling into a developer who's only looking to develop and then sell down the asset as quickly as possible and not thinking about total lifecycle cost of ownership and performance and those types of things. We're selling to a much more sophisticated informed buyer that can clearly understand the differentiation capabilities that First Solar can provide them. So it's a very exciting segment of the market and one that we expect to continue to grow.

And Vishal, you mentioned small developers that could renegotiate. I just want to reiterate that the contracts we signed today are firm obligations on both sides with penalties for failure to perform on both sides. So regardless of size of developer, we have taken bookings with contractual terms that we think will hold on, on both sides. There had been security deposits paid. So I don't see a significant risk of renegotiation.

And we'll take our next question from Edwin Mok with Needham & Company. Y. Edwin Mok - Needham & Co. LLC: Hi, guys. Thanks for taking my questions. First, mainly my questions are on bookings, right? So I guess first, if I remember, you guys are targeting around 2 gigawatt next year and maybe a little more than 3 gigawatt in 2019. So does that mean that you're fully booked out for 2020 since you mentioned that your bookings stretch out to 2020? And how – maybe the other way to ask is how linear is that booking? And then just quickly in terms of converting those projects from third-party module to lighting (43:43) systems sales. Does that mean that as you are successfully doing that, there could be pretty meaningful upside to this 1 gigawatt target – per year target that you laid out?

Sure. So, I guess on the bookings side – and then I'll let Alex take the second one. Well, if you take – what we said in the November of last year, we have about 2 gigawatts in 2018 – 2 gigawatts in 2018, about 3.5 gigawatts in 2019, and then you got a run rate number that gets you to about 4 gigawatts in 2020, right? So you've got 5.4 gigawatts plus 4 gigawatts, so that's 9.5 gigawatts over those years. 2 gigawatts, 3.5 gigawatts and 4 gigawatts plus you still have 500 megawatts or so this year. And so you can add that into that number. So you're starting to get to a number north of 9 gigawatts. And what we said is that we contracted 7.4 gigawatts, is what we still have left, right. So I would tell you that assuming nothing else changes, assuming we do nothing on Series 4 and adding incremental capacity, assuming we don't do anything to try to accelerate some Series 6 into 2020, then we've got somewhere in the range of 2 gigawatts left to sell over that horizon. I mean that's kind of what the pure sense of the map will tell you. And that's the kind of backdrop of analysis that we're looking at right now, to look at various scenarios and determine what is the best thing to do to best meet the needs of our customers as well as drive to the optimal financial results. And the one thing I want to continue to remind people on is that variable contribution margin flows through to accretive EPS expansion. Right? So, we've said before, we showed you a slide last year, refer to those slides we showed you in the last guidance call, right, that we can leverage fixed cost in our manufacturing but more importantly, in our OpEx. So as you think about that contribution volume flow-through, it's going to flow through to a very attractive EPS impact, not only because of the fixed cost structure and their manufacturing OpEx but as most of you also know, we have a very efficient tax rate. And so, a lot of that incremental contribution margin flows through almost 100% to EPS expansion. So we're looking at all options. As you know, it's very complicated, a lot has happened very quickly, and we'll share more of that information and what our views are around that in the Analyst Day in December.

And Edwin, on the gigawatt of systems business and the upside there. So we mentioned before that we're tracking to about 1 gigawatt a year on average of systems business, the self-development, and third-party EPC work. It's possible that in 2018, we may be under that average as we are looking to optimize our self-development platform for Series 6. However, in the near-term, if you look today towards that gigawatt, we're about two-thirds of the way there for 2018 today. There are a lot of opportunities, as Mark said, to bring that 2018 number up to the 1 gigawatt given this recent accelerated procurement dynamic where modules are being locked in ahead of other services around EPC and O&M. If we can bring that beyond the 1 gigawatt, we're very happy to do that, and we'll continue to work as opportunities in both 2018 and then beyond into 2019 and 2020.

Yeah. And I think the other thing, too, is that this is – obviously, it's a very impactful decision, strategic long-term in nature. I think our assessment around that and the rationale on how we think through that, to me, is better communicated in a forum such as the Analyst Day, right? So we can give more detailed, thorough discussion, quality of discussion around that. And so, I know everybody is going to continue to sort of ask the same question, but at this point in time as we've indicated, we are who we are. We'll give you more information in December.

And we'll take our next question from Cindy Motz with Williams Capital Group. Please go ahead.

Hi. Congrats on the quarter. Thanks for taking my question. Well, I was going to rephrase that 2018 guidance another way, but I guess we will get it at the Analyst Day. So – but would it be fair to say that just everything you've been talking about, Mark and Alex, just the demand you're seeing from utilities and I guess C&I. And I was going to ask you about community solar, how that's going, about that you're feeling like better about 2018 and then also, in general, I was thinking about the sustainability thing you said that people are coming to First Solar because of the sustainability metrics and everything. Is that just overseas or is it in the U.S. as well? And then I had one follow up. Thanks.

Yeah. First of all, I guess I'll take the sustainability question first is that it is – it's really – it's impactful and it's driving where it really hits and resonates extremely well is with large scale commercial, industrial customers in particular, all right? I mean, their whole intended objective is obviously to focus on clean renewable energy and not only for their own consumption, but they're also looking at that from the standpoint of their supply chain. So some of our customers are actually making the requirements to have flow-through into their supply chain and using that as a criteria that they're making supplier decisions around. And so when our sustainability efforts come through and we highlight the benefits that we can provide to the environment, it really resonates extremely well with the number of our large scale commercial industrial customers. And sometimes that even get us into the table and into the discussion. It's just that concept in and of itself is sort of facilitating some conversations with our customers. The international side though we highlighted, the tender process that was done in France and it is more impactful. And actually I was over in Europe recently speaking at a conference and that even some of the other European countries are even looking at that as the criteria. And I think it may evolve deeper into other regions of the world and it's something that we think is, needs to be taken in consideration because when you look at the payback period relative to our technology, compared to other technologies, it's a much quicker, faster payback and if you really focus around (50:14) reducing greenhouse gas emissions. It's a better solution and way of doing that.

Okay.

Yeah. On the – Sorry, Cindy, so on the utilities seeing like community solar demand, I think as we mentioned in our scripted comments, there's over 800 megawatts of projects with corporate customers in that list. So, as Mark said, the sustainability is very helpful and we're seeing that drive the C&I interest – significant interest across the board for utility as well. There's a lot of interest in getting solar in – a lot of people have targets for end of decade and across the IPP space and the developer space is seeing interest to get in ahead of ITC expiree. So across the board, utilities, C&I communities, all of us seeing a lot of activity and a lot of driving force.

And we'll take our final question from Joseph Osha with JMP Securities.

Hey. I made it. Thank you. If you look at your production plans for 2018 and 2019, what you've just said about Vietnam, the 3.5 gigawatts and so forth, it seems as if there might be room for a greenfield fab in here somewhere. I'm just curious as to your reaction to that statement and whether there might – that might be part of the planning process. Thank you.

You know, we're looking at all options, and as we go further out into the horizon, that type of option does come into play more so than near-term. Near-term is the fastest way to get more Series 6, just use the existing brownfield that we already have. But as you go further into the horizon, a greenfield or a modified greenfield, it could be an expansion to one of our existing facilities. It could be a new building to – in Vietnam or it could be a new building in Malaysia or it could be a new building in Perrysburg, right, so it's an attachment to an existing manufacturing operation. It would probably be the priorities in how we would think through it, but clearly that's part of the decision making that we're evaluating, but again those would be situated further out in the horizon in 2020 and beyond.

And this concludes today's question-and-answer session, as well as the First Solar's Q3 2017 financial results call. Thank you for your participation and you may now disconnect.