Good afternoon everyone and welcome to First Solar’s Fourth Quarter 2021 Earnings Call. This call is being webcast live on the Investors Section of First Solar’s website at investor.firstsolar.com. At this time, all participants are in a listen-only mode. As a reminder, today’s call is being recorded. I would now like to turn the call over to Mitch Ennis from First Solar Investor Relations. Mr. Ennis, you may begin.

Thank you. Good afternoon everyone and thank you for joining us. Today the company issued a press release announcing its fourth quarter and full year 2021 financial results as well as its guidance for 2022 [phonetic]. A copy of the press release and associated presentation are available on First Solar’s website at investor.firstsolar.com. With me today are Mark Widmar, Chief Executive Officer; and Alex Bradley, Chief Financial Officer. Mark will begin by providing a business update. Alex will then discuss our financial results for the fourth quarter and full year 2021. Following his remarks, Mark will provide a business and strategy outlook. Alex will then discuss our financial guidance for 2022. 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 including among other risks and uncertainties the severity and duration of the effects of the COVID-19 pandemic. We encourage you to review the safe harbor statements contained in today’s press release and presentation for a more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer. Mark?

Thank you, Mitch. Good afternoon and thank you for joining us today. I would like to begin by expressing my gratitude to the entire First Solar team for their hard work and perseverance in a year where much of the solar manufacturing industry faced supply chain, logistics, cost, and pandemic-related challenges. Despite these dynamics, we have continued to scale our manufacturing capacity and adapt our business model in a constantly evolving market. Through our points of differentiation, which include our cad-tel thin-film module technology, a vertically integrated continuous manufacturing process, a strong balance sheet and a commitment to the principles of responsible solar, we have traded a growth-oriented business model, which we believe positions us to be successful over the long term. While Alex will provide a more comprehensive overview of our 2021 financial results, I would like to highlight that our full year EPS results of $4.38 per diluted share came in above the midpoint or guidance range we provided at this time during our third quarter earnings call. Of note this EPS result, despite an unprecedented challenging freight environment is also solidly within the original guidance range we provided last February. Beginning on slide three, I’ll highlight some of our key 2021 accomplishments, which we believe positions us for sustainable growth. To begin, we had an excellent year from a commercial perspective securing a record 17.5 gigawatts of net bookings in 2021, more than double our prior annual record. This momentum has carried into 2022 with 4.8 gigawatts of net bookings year today, which brings our total since the previous earnings calls to 11.8 gigawatts. As we secure this very significant volume for delivery into the future, we have been employing a contracting strategy which enables our customers to benefit from the evolution of our product and technology…

Thanks Mark. And before discussing our financials results for the quarter and full year 2021, I’ll first provide an update on our segment reporting. With potential sale of our Japan product development and O&M platform, the revenue and margin opportunities outside of our core modules business lie largely with a relatively small pool of existing O&M contracts outside of Japan in North America, power generating assets for projects that we previously developed, and any legacy obligations as a result of our prior systems activities. Accordingly, we’ve changed our reportable segments to align with our internal reporting structure and long-term strategic plan. Going forward, our module business will represent our only reportable segment but for comparative purposes, the prospective module segment is fully comparable to prior periods. Any revenue or margin associated with activities or historically calculated with our systems business are now presented as other in our segment. Starting on Slide 5, I’ll cover the income statement highlights the first quarter and full year 2021, which was presented in this manner. Net sales in the fourth quarter were 907 million, an increase to 324 million compared to the prior quarter. This was primarily a result of the sale of three projects in Japan and increased module volume sold in Q4. For the full year 2021, net sales were 2.9 billion compared to 2.7 billion in 2020. Relative to our guidance expectations, net sales were within but towards the lower end of our guidance range, due to delays in module sales, revenue recognition, as a result of the aforementioned freight and logistics challenges. Gross margin was 27% in the fourth quarter versus 21% in the third quarter. For the full year 2021, gross margin was 25%, which is unchanged from the prior year. 2021 guidance assume the completion of two project…

Thank you, Alex. Turning to slide seven, I would like to begin by providing an update on our CuRe program. Over five years ago, we announced the acceleration of our Series 6 transition, which transformed our manufacturing process and significantly increased our module wattage. While the outcome of the Series 6 program has been a great success, as reflected by our record 22 gigawatt backlog as of the end of 2021, it is easy to lose sight of the initial challenges we faced when scaling high volume manufacturing with respect to module wattage, throughput and manufacturing yield. Through persistence, resilience and ingenuity, our manufacturing associates methodically resolved these challenges, enabling Series 6 to be the success as is today. Looking forward, CuRe represents an anticipated enhancement to our module performance, which is expected to increase efficiency and lifecycle energy. On the November earnings call, we indicated that we had demonstrated CuRe’s for performance entitlements in a lab setting and are working to realize the entitlement in high volume manufacturing conditions. As a result, we have revised our integration schedule to lead line implementation by the end of Q1 2022 with fleet-wide replication timing to be determined upon completion of the lead line. Since the previous earnings call, we have conducted a series of CuRe runs on high volume production lines in Ohio. And while the trends are for improving module wattage and degradation appear favorable, we are still working to realize the full performance entitlement in high volume manufacturing conditions. Over the coming weeks, we intend to conduct further testing, which we believe will informed our views on lead line implementation timing. Again, this lead line implementation timing will in turn inform fleet-wide replication timing. As highlighted on our Q2 2021 earnings call, our technology team continues to create new…

Thanks Mark. Before discussing ‘22 financial guidance, I’d like to provide an update on our cost roadmap. As initially presented our February 2021 guidance call, we forecasted the year end 2020 to year end 2021 cost watt produce reduction of 11%. In November, we revised our reduction assumption to 5% based on increased inbound freight could last [phonetic] aluminum and adhesive costs a final year-over-year reduction in payment of 6% to 7%. So, of note, the 5% difference between our original assumption and our year end result remains a headwind in 2022 and is expected to impact full year 2022 cost per watt by approximately a $0.01. On a cost per watt sold basis, our original year-over-year forecast reduction of 8% was revised to 3% in November, and our final full year result cost per watt sold remained flat year-over-year. This is despite a year-over-year increase in sales freight per watt of 70%. Excluding the effect of the sales rate, our cost of watts sold declined by approximately 8% for the same period. Looking at 2022, from a glass perspective, we’ve largely stabilized this cost through long-term predominantly fixed price agreements with domestic suppliers that have economic benefits, as we achieve high levels of production. On the Q3 2021 earnings call, we highlighted COVID-related delays impact the startup timing of new glass facilities to support our Malaysia and Vietnam sites. In addition to competitive pricing, the facility is expected to reduce the cost of inbound freight for our international sites. Given recent improvement in the COVID situation in Southeast Asia, we anticipate this new facility will commence production and begin benefiting cost per watt in the first half of this year. The race to aluminum, we anticipate framing costs will be elevated relative to historical norms. We highlighted during our…

[Operator Instructions] Our first question is from Philip Shen with ROTH Capital Partners.

Hi, everyone. Thanks for taking my questions. First one is on pricing. As you think through your pricing for ‘22 and ‘23 with the backdrop of the contracting strategy and the recent bookings, do you think the blended pricing in ‘22 could be possibly $0.30 or higher or do you expect both ‘22 and ‘23 to be in the high $0.20 per watt? And also was wondering if you could speak to what the expected margins might be for ‘23, especially as you drive some cost down in ‘23, maybe some of the headwinds abates a touch and then your pricing can stay relatively flattish? And then finally talked about new products in your OpEx investment, through some of your work, it seems like you might be exploring some eg and resi solar opportunities, so I was wondering if you might be able to talk through whether or not you see some concrete opportunities there? Could that be a new product for you as you roll out the new plant in Ohio? And if so, what kind of volume could that be? It is a nice market with healthy ASPs, so any color there would be very helpful. Thanks.

Alright, so, Phil, I guess, on the pricing, there’s a little bit of potential pricing upside in 2022, but not overly significant to the extent that the sales, there are about 30% of the volume we have in 2022, has some sales rate adjustments, which will appropriately take -- comply with the obligations under the contract and, therefore, adjust if the cost is above the capital, which we agree to, so that could impact it. If we are able to, for example, improve the temp coefficient on our current product, then there’s potentially some opportunity that can be monetized in 2022 but there’s not a significant increase in ASP opportunities off of what you see. And I think the contracted backlog that will show up in the K is going to be somewhere right around I think $0.27 or something like that. And that relates to the 22 gigawatts or so that we do have contracted. As you go into 2023, I will take that, look, I what I said in the call is that, essentially, the ASPs are relatively flat; I think we’re down about three tenths of a cent or something like that in ‘23 relative to ‘22. But there’s about $0.03 of adjustment, there’s a penny or a little bit north of a penny on the sales rate, I want to make sure that’s understood. Again, our pricing includes not only the module but the delivery of the module, so if you think about what our pricing or net pricing is today, at least for the module, you take cost $0.27 or so which is in the K at the average, and you pull $0.05 out of that. So that effectively says that our net module pricing is about $0.22. If you do that same analysis for…

So just one thing to add on the ‘22 to ‘23 on top of the ASP and cost indication that Mark gave is that when you get into ‘23, we’re going to have call it one or two gigawatts of Series 7 come on line. As we indicated that Series 7 has an ASP entitlements, as you can assume, already reflected in the backlog in some cases, but in some cases, it may not be and maybe some upside from that. It also has a $0.01 to $0.02 cost advantage based on [indiscernible] sales freight. So you are going to get the benefit of that coming through as well in 2023.

Thank you. Our next question is from Joseph Osha with Guggenheim Partners.

Hello, gentlemen, congratulations on continuing to represent American solar manufacturing so well. Two questions for you. First, I’m wondering, given the relatively recent shift in policy, we’ve seen the vis-à-vis 201 in the bifacial exemptions. Have you seen that manifest in terms of pricing conversation for your more recent bookings? And then secondly, Mark, I – perhaps you could clarify, obviously, you’re sort of pushing forward with Ohio, but I think I heard some comments in the vis-à-vis in 2023 and some maybe fluidity to the plans there, depending on policy. If so, if you could clarify that, that would be great.

Yeah. On the other policy, just in general, around 201 and clearly, we were disappointed with the bifacial exemption that was provided. The reality is, for me, the way I look at this, the model has many different attributes but every module basically takes photons and electrons. And how you choose to do that, we talk about our attributes a lot, we talk about our spectral response and our ability to be damaged as relates to moisture in the air and humidity. We talk about our temperature coefficient, we talk about our shading response as an example. Those are all attributes, which take advantage of your technology beyond just the labeled watts and turning photons into electrons and bifaciality is nothing more than that. It is just another attribute that allows for additional energy generated from a module that takes photons and makes electrons. So there to me is no common sense rational reason why bifacial modules would be exempt. It’d be no different than if somebody to any attribute, it could be long-term degradation, our long-term degradation where you could say that, if you have a long-term degradation rate that’s below x, then you’d be exempt from the 201 duties, which, to me wouldn’t make any sense, nor does the bifacial exemption in itself make any sense. As it relates to our customers, our customers, they value that the relationship with First Solar. They value our willingness to deliver and to honor our contracts and to stand by them in times they were challenged in right now. And that’s why we refer to our customers as partners, and we partner in times of when things are going well and when things are more are more challenging, right. We’re going to work together and we’ll find solutions that we can…

Thank you. Our next question is from Keith Stanley with Wolfe Research.

Hi. Thank you. First, just some clarifications on the 2022 guidance and appreciate the detail you’ve given. Much of the Japan and O&M [phonetic] business operations contribute to earnings for the year separate from the gain you’ve noted and I just want to confirm the year-end cash balance includes the planned sales.

Yeah, so there’s very limited assumed contribution from the O&M business and the Japan business, the assumption is we wouldn’t sell any assets this year, all of that will be reflected in the sale of the business and come through in the gain on sale. So you’re seeing that full number be 270 to 290 and there’s about an additional 10 million value associated with the sale of the O&M business. We’re seeing limited addition of ongoing revenue and earnings. For the time that we keep that business we view that begin -- that gets all lumped in to gain on the sale. From a cash perspective, yes, the assumption is the value and the cash from that sale is in the cash number a year end.

Perfect, thank you. And our next question is from J.B. Lowe with Citi.

Hi, Mark and Alex. Question was, Mark, you mentioned previously about your 2023 ASPs being down about 0.003, but on a net basis from freight, it would be up about $0.01. I’m just wondering if you could just walk through the puts and takes of that piece. And then my other question was just on, given what we have seen so far out of Europe, in terms of responses to the ongoing crisis over there, have you -- I know it is only few days or the like, have you guys been engaging with customers in Europe potentially? I mean this goes kind of to the expansion question. But even ahead of that, have you been engaging any further with customers in, I guess, new or unexpected places, since this all started? Thanks.

So on the ASP, the way we look at it, again, there’s about 30% of our contracts in 2022 that have some freight adjuster. Again, just to put it back in perspective, to look at where we were a year ago, in Q1 of 2021, sales freight we reported in our number was about $0.025. So we’ve gone from $0.025 in Q1 of last year to $0.05 a lot. So we didn’t really -- and we generally have assumed historically around $0.02 that’s kind of what our implied assumption is, that’s what it’s been historically and as we continue to drive lots up, it dilutes the average freight balance, it improved [indiscernible] a lot and everything else. So we saw this dramatic shift starts to happen in kind of Q2 of 2021, so we started modifying our contracts such that we weren’t carrying that entire freight risk. And so there’re adjusters, now not all of the benefits that just flow into ‘22, they flow -- they start to flow into a much higher percentage, about 70% or so. At ‘23, we’ll have freight adjuster and really everything forward from ‘23 will have some form of freight adjuster associated with them. So when you think about it, you got $0.05 as a headwind in this year’s results that you’re going to recover some nominal amount back from the customer and so you will see some adjustments to ASP as we progress throughout the year, maybe it ends up being about a penny and a half, somewhere -- or excuse me about a half a penny. So you’re going to see our ASP will trend up from what’s in our backlog right now as these sales rate adjusters are reflected for 2022 shipments. But we do that same math and looking how…

Thank you. Our next question is from Ben Kallo with Baird.

Hi. Thanks for taking my question. Has any of this the freight costs doubling, has that changed any of your thoughts around doing long-term contracts, as you look out into ‘24? And can you talk to us about how you’re selling products from India? Is it more localized when you get out that far? And then my third question and final question is just can you talk to us about going to bifacial and how you make that decision and what it means on both ASP and a cost perspective? Thank you.

Yeah, so let -- one thing before, Ben, as we get to your question I want to go back to the last question asked about Europe and were we seeing anything about Europe. There’s been an – and I left to answer, I just answered the ASP. As it relates to Europe, there’s been -- we’ve had ongoing discussions with Europe and Europe is evolving in their journey similar to what we saw in India, as well as what we’re seeing here in the US around creating domestic capabilities around manufacturing. So we are engaged, we have some -- we’ve had conversations in Europe around manufacturing there. So it’s one of the opportunities that we are evaluating along with the US and India, for example, for any further expansion, we got to cover that one. So then on our freight costs, again, what we’re doing, just think of it, I’m telling the customer that our base price is X, and we’ll take $0.025. So as we go into volumes and go on into ‘24 and ‘25, any volatility to that number really results in a variable ASP, so that it stays at $0.05 cents, as I go out into 2024 and 2025, there’ll be an incremental ASP such that our customer will actually then covered that incremental sales rate cost, so largely ours is fixed at $0.025. We think that’s a manageable position to take as we contract forward and our partners see it the same way that there should be some element of risk sharing, and given the uncertainty of what’s going on in the market, and who knows how long it will continue. So I do think that we’ve come to a reasonable balance approach around how we’re thinking about sales freight and how we’re contracting as we…

Thank you, presenters. That’s all the time that we have for today. This concludes today’s conference. Thank you again for your participation and have a wonderful day. You may all disconnect.