Good day, everyone, and welcome to First Solar's Third Quarter 2012 Earnings Call. This call is being webcast live on the investors section of First Solar's website at firstsolar.com. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. David Brady, Vice President of Treasury and Investor Relations for First Solar Inc. Mr. Brady, you may begin, sir.

Thank you, Joyce. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its financial results for the third quarter of 2012. A copy of the press release and the presentation are available on the Investors section of First Solar's website at firstsolar.com. With me today are Jim Hughes, Chief Executive Officer; and Mark Widmar, Chief Financial Officer. Jim will outline many of the developments we've made in sustainable markets and provide update from our forecast in volume of business and some of our technological advancements. Mark will review third quarter financial results and update guidance for 2012. 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, we provide a reconciliation to GAAP equivalent at the back of our presentation. Please note that during the course of this call, the company will make projections and other comments that are forward-looking statements within the meaning of the federal securities laws. The forward-looking statements in this call are based on current information and expectations, are subject to uncertainties and changes in circumstances and do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially from those statements, including the risks as described in the company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission. First Solar assumes no obligation to update any forward-looking information contained in this call or with respect to the announcements described herein. It is now my pleasure to introduce Jim Hughes, Chief Executive Officer. Jim?

Thanks, David, and welcome to our third quarter 2012 earnings call. First off, I would like to apologize for any inconvenience caused by the delay in this call from yesterday to today. Given the broad impact on the Atlantic coast area and our own need to assess any impacts on First Solar operations as a result of Hurricane Sandy, we felt the delay was prudent. Secondly, I would like to extend the sympathies and support of the First Solar team to all of those individuals and families impacted by the hurricane. As a long time resident of the Texas Gulf Coast prior to joining First Solar, I well understand the vast devastation that such a storm can make. We have a number of facilities in operations in the impacted area and fortunately, we do not believe that any of our personnel suffered any injuries. Our Bridgewater, New Jersey engineering center has reopened for business with no damage. Unfortunately, we do have several construction sites impacted and we are assessing any potential damage and related impacts on the projects. At this time, we believe the impact will primarily be timing related and will not involve any material loss for the company. Mark will cover this later in this review of our financial results and guidance. As has been the case for the last several earnings calls, the solar industry remains challenged. We have seen an increasing number of production cuts, capacity reductions and bankruptcies. However, we do see signs of stabilization and a generally better feel to the marketplace although this is largely anecdotal and intangible in nature today. In particular, developments in the sustainable markets that we are targeting continue to be very encouraging and together with good levels of continuing activity in our traditional markets has allowed the company…

Okay. Thanks, Jim, and good afternoon. Starting with operations on Slide 11. In Q3, we produced 490 megawatts, up 33% from Q2. This equates to running our factories at 83% of their capacity, up from 63% in Q2. As mentioned in the second quarter call, this plant increase was in response to stronger demand, in addition the high-utilization rate was partially driven by the benefit of completed upgrades on various lines in Perrysburg and Malaysia. During Q4, we plan to run our plants at approximately 90% to 95% capacity utilization, thus continuing to minimize underutilization headwinds. Note as previously announced, the Frankfurt Oder manufacturing facility will continue production until the end of this year and then it will be shut down permanently. Model manufacturing cost per watt in the third quarter, excluding our German plant, was $0.67. On a comparable basis, module manufacturing cost per watt was down $0.05 quarter-over-quarter. This sequential decrease is primarily due to the lower plant underutilization cost and higher module efficiency. Had our plants operated at a full production for the entire quarter, our module manufacturing cost per watt would have been $0.64. Assuming full utilization under our best plant is manufacturing modules at a cost of $0.62 per plant, which on the year-on-year basis is $0.10 lower. As we exit the year, our consolidated manufacturing cost and our best line cost per watt are forecasted to be $0.64 and $0.61, respectively. This is $0.01 lower than our previous estimate for our consolidated cost per watt and $0.02 better than our previous estimate for our best line cost per watt. The average line conversion efficiency of our module was 12.7% in the third quarter, which is up 0.9 percentage points year-over-year and up 0.1 percentage point quarter-over-quarter. We achieved this average efficiency 1 quarter sooner…

[Operator Instructions] We'll take our first question from Stephen Chin with UBS.

Jim and Mark, just a question on the $8.9 billion backlog. I appreciate you sharing that update. Just curious what percentage of that do you think you can turn in 2013 and what is the sales backlog that you're going to try to plan to manage the business through next year?

Stephen, let's wait until February then we go to that level of detail around guidance. I mean, I think you have to think about what we said in the script was with the first half of next year is firming up pretty nicely relative to our production plan. We just need to get better inside onto next year and the second half of the year, and we'll give you more color around that in February.

We'll take our next question from Sanjay Shrestha with Lazard.

Mark, I just want to clarify. I think you said that you collected about a meaningful spend of cash from AVSR and Topaz in the month of October. Is that correct?

Yes. So that the increase and they are largely was driven by those 2 projects of which the cash came in the month of October.

We'll take our next question from Amir Rozwadowski with Barclays.

Just following up on the prior question on that sort of $8.9 billion in revenue backlog, I was wondering if you could give us any update in terms of what sort of -- broadly sort of the margin structure you guys are seeing? I mean, you have provided sort of longer-term guidance before. And I just wanted to see if there's any variation now that you've sort of built -- sort of what that expectation is around that $8.9 billion?

That -- we have not provided any sort of information or detail on the margin structure of that. And frankly, I'm not sure that's something that we would be willing to do. Suffice it to say, I think everybody understands that with general industry conditions, there is definitely pressure on margins. And new business that we are booking today is clearly not at the same margin levels as historical business. I don't think there is much mystery about that dynamic occurring in the industry. The importance of this information was there was a great sense earlier in the year that overall activity levels have collapsed to de minimis levels. And that simply has not been the case, and we thought it was important to let people know and allow people to understand that we continue to move along at a fairly robust clip in terms of overall activity levels. We'll live with that -- sort of the detail on margin becoming evident as it rolls into recognized revenue and profitability of the business.

We'll take our next question from Brian Lee with Goldman Sachs.

Another one on the expected revenue. Can you talk about the composition of the $9.4 billion that you had entering the year versus the $8.9 billion that you're currently at, at the end of 3Q? I guess I'm wondering how much is modules versus contracted projects versus unsold projects. And are there any non-PPA projects embedded in these numbers?

So the -- if you look at the data as of the end of Q3, $5.3 billion of that is associated with contracted sold projects, okay, systems related business. The other portion is there are some module-associated transactions that we've announced here recently in deals that have come through India comes to mind as a few transactions that we referenced during the call. And then we have included PPA business that is not yet sold, okay. So that's -- so if you look at our normal schedule, we say PPA sold, PPA not sold. It's holistic and it covers both of those pieces, and then it also would include orders that we have recently booked for module-only sales and some of the announcements that we referenced during the call.

And just to follow up on that, one of the dynamics that you will see in these new markets is -- let's take India, for example. A lot of our early activity in India has been module-only sales. That's in part because we're still building our organization and building our on-the-ground capabilities with respect to the systems side of the business. We will also be cautious about how big a project we are willing to undertake in these new markets until we have the level of experience behind this. The best example for that is Australia, where we initially started with a small 10-megawatt project. And once we have built our supply chain relationships and had a clear understanding of labor cost and operating conditions in that market, we will then be able to step up to much larger projects. So as we get our feet on the ground in these new markets, you will see a shift of revenue mix from module only to a more fulsome, more integrated sale over time. So that will impact -- while we're not disclosing in detail, that will impact what the composition of that overall backlog looks like.

And just to make sure, I mean, as you would anticipate, too, by definition, I would describe what is in that $8.9 billion. The vast majority of the revenue value is related to systems.

We'll take our next question from Joseph Osha with Bank of America Merrill Lynch.

Could you help us understand a little bit as you make improvements on the efficiency side, how we should think about balance of systems cost and how that trends through next year?

So what we've said before, I mean, if you look at the relationship between balance of system and the module, think of it as an installed cost perspective, when you have 1/10 of a point improvement efficiency, it's normally going to give you a little bit over $0.01 of benefit to the installed cost.

And the other thing, just to point out and remind people, you -- a lot of people will take the nameplate capacity of the panels, the nameplate conversion efficiency, and do very simple balance of system penalty calculations. And that is a gross and inappropriate oversimplification of how the actual design and performance prediction of the system comes together. So in a very moderate climate, we will have a greater balance of system penalty than we will in a hot desert climate. So you cannot -- you simply can't look at very simple calculations and say, "Here's the balance of system penalty." That penalty -- so-called penalty will be different depending on the exact site conditions of every particular plant.

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

I just wanted to follow up on the revenue expectations you laid out on $1.8 billion of additions [Audio Gap] with strong growth market and what percentages of the market makes?

Vishal, you're breaking up there. Can you please repeat the question?

Okay. I'm just trying to understand what percentage of the $1.8 billion of backlog additions this year came from the U.S. versus from new markets like the Middle East and India? And then you had mentioned earlier, I believe, last year that you expected $3 billion of gross receipts from backlog at that time, which was about 2.9 gigawatts. I'm assuming your revenue composition is similar this time. Can you give us a sense of what kind of gross receipts you expect from the $9.4 billion of backlog?

So on the gross receipts side. The way we highlighted that before was $3.4 billion as it related to anticipated receipt between now and the end of 2014. If you look at what's progressed since that point in time, we gave you that data in April. Really, that's at the end of the first quarter. If you profile that $3.4 billion and if you actually look at the activity that's happened over the last couple of quarters, effectively, that $3.4 billion is all still in front of us between now and the end of 2014. So over the next 9 quarters, you will start to realize that $3.4 billion. Part of it is because this project activity that we've been talking about, a number of the projects we still in our backlog are cash receipts upon substantial completion or financial close, right. So that activity will happen even here in Q4 or Q1. So that will kind of drain some of that working capital that we've got tied up on the balance sheet. But the way -- the best way to think of it, that $3.4 billion is still in front of us and in large will happen over the next 9 quarters. In terms of the bookings and that $1.8 billion revenue-wise, about 1/3 or so of it is actually we'd target as more sustainable markets. It depends on where you classify the U.S., but if you think about the traditional how we're evaluating sustainable markets, about 1/3 is targeted there and other 2/3 is here in North America.

We will take our next question from is Smitti Srethapramote with Morgan Stanley.

Since you presented your target of 3 gigawatts of sales into sustainable markets in 2016 polysilicon pricing and crystalline silicon pricing have continued to collapse faster than I think the most observers had expected. Just wondering if your view on the target has evolved as price of competitive products have fallen.

No, it hasn't. We are very comfortable with our competitiveness at a cost level versus the silicon product. Obviously, their long-term willingness to price at nonprofitable levels impacts the overall market conditions. But one of the things that people need to recognize, a lot of the really distressed silicon pricing is going into the distributed rooftop market. And we simply don't compete in that market. That's a -- there is less brand loyalty. There is less focus on the long-term warranty and long-term power prediction. There is less focus on the bankability in that market, and so that impacts the overall value proposition. Our focus is on a grid-connected utility scale markets and in particular, a big focus on projects that are attracting debt finance and low cost of capital, which impacts sales DOE and we have a very significant market share. I don't have the exact figures, but Bloomberg put some numbers out that showed a fairly dominant market share on our part into debt-financed projects. So it's hard to generalize. We really view the -- a very bifurcated market of the distributed rooftop market largely sold through the retailers and integrators versus the grid-connected market. And so we have not changed our view. We still have the same view of overall PV market size in 2015, 2016, and we still are comfortable with the market share that our business plan projections represents in the context of that overall demand.

And really, what I would say is just that I don't think there's been any change in the trajectory of polysilicon or return to where it's going relative to our estimates when we actually gave our guidance. We believe it's going to be somewhere between $15 and $20. I mean, and it will stay that way for at least the foreseeable future and that's how we think about the competitiveness of our crystalline silicon technology that we go head to head with on a day-to-day basis. So I don't think anything has changed from that perspective.

We'll take our next question from Chris Blansett with JPMorgan. Christopher Blansett - JP Morgan Chase & Co, Research Division: I just want to get a feel for how many megawatts of your 3-gigawatt pipeline you've already recognized revenue on? And then I wanted to ask secondly about the project delays you're experiencing and does this change the subsidy schemes are going to be applied under, willing to go to an ITC versus an ITC cash grant?

In terms of the revenue recognized against the systems business on a megawatt-equivalent basis, I think it's 687 megawatts or something.

626.

626 megawatts on a megawatt-equivalent basis.

And then on the subsidy question, with respect to ITC versus ITC cash grant, I've said this at a number of industry events and in a number of forums. I believe that a broad spectrum of tax benefits are going to get put on the table following the election irrespective of who wins, and I think there will be a robust debate of tax provisions that benefit traditional fossil fuels and tax provisions that benefit renewable including solar. Our position as a company and my position as an individual has long been we want fair and equitable treatment. We want a level playing field. We believe our product needs to make sense economically on fundamentals given a level playing field. Exactly how that debate plays out and what the overall cost structure and tax structure of the industry, including marginal rates, looks like, there is too many moving pieces for me to predict that. But I have an extreme degree of confidence in the overall competitiveness of solar as a part of the generation mix irrespective of where that debate falls out. So it's not something that we view as particularly -- it's an important part of -- that we pay attention to it as part of our business process, but we don't view it as a live-or-die proposition with respect to the industry generally or with respect to First Solar in particular.

We'll take our next question from Satya Kumar with Crédit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: I was wondering just to clarify on the prior question if you can give a sense of how many megawatts. Either AC or DC is fine. So it's your book on a year-to-date basis and your systems business that I can sort of compare apples-to-apples with the 626 number. And how those 2 would sort of look for Q4? I know what you are going keep making revenue in Q4, but I would love to get an update on the expected bookings in the Q4.

So Satya, go back to the first question. You want to understand the number of megawatts related to systems business that we booked for the first half or first 3 quarters of this year? Satya Kumar - Crédit Suisse AG, Research Division: That's right.

Yes, we haven't broken up that detail but I mean, it's not that hard to go back and look at the announcements. We've highlighted them on Slide 6 of the presentation and you can go back and sort of -- or excuse me, not 6, what's slide was that actually?

Slide 5.

Slide 5 of the presentation. That's kind of the listing. Typically, when we announce a project, a systems project, we'll -- it's communicated externally. So I think you have externally available information for the most part to try to at least approximate that, but we have not provided the breakout of the 2.

We'll take our next question from Rob Stone with Cowen and Company.

I wonder if you could just put a little more color on how you're thinking about the margin trend for the fourth quarter since you'll be recognizing a big mix of project stuff and having higher utilization.

In terms of the overall margins for -- on bookings for the quarter, is that was your question is about?

What the influence of making progress on some big projects. You factory utilization. Margins were better than expected this quarter since your cost per watt went down. I'm just wondering how you see the mix and cost utilization trend that's affecting overall margins in the fourth quarter.

So I mean, what we said in the utilization for the fourth quarter is we're going to be running around 90% to 95%, which largely eliminates most of the headwind, right. So if you look at our -- we said $0.64 on a fully utilized basis, but you should use that as kind of a barometer and say, "Okay, we're going to be trending closer to that number because we'll be running for the most part at a -- on a fully utilized basis." So you're going to get $0.01 or $0.02 benefit sequentially with the incremental utilization and then you'll get a little bit of benefit on the efficiency, as we indicated will exit the year around 12.8%. So the -- we'll see a trajectory that it shows that a more improved profile on the cost per watt. We highlighted that on a fully utilized basis and we said, "I think our best plant would be operating around $0.61." So the trajectory continues to move in that direction, and we will take that momentum and we'll move into 2013. And as we indicated in the script that it will be below $0.60 as we trend towards the latter half of 2013.

And our final question will come from Kelly Dougherty with Macquarie.

I just wanted to think about, as you're entering some of these new markets and special ones that have more challenging finance and backstops, are you seeing increased competition from the Chinese -- I mean, do you know what they look like from a balance sheet standpoint? But we see the Chinese saying -- supporting them as they enter some new markets. So I'm just wondering how that plays into the whole competitive mix, especially markets like Chile and things like that that have harder financing?

So again, Jim already alluded to that and I think if you really think about the strength of First Solar, it relates to the bankability and actually was having a conversation with BDN [ph] in Chile just yesterday and she emphasized that point and the importance of that. It's a key differentiator of our ability, the quality of our balance sheet, reliability, ability to spend, our reputation, the same amount of product with our reputation. It's a differentiator in markets like Chile. And when most customers are evaluating -- even though they may have financial backing that is attractive, when you actually look at their financial condition and essentially technically insolvent, knowing that they're going to have to stand behind the performance of an asset for 20 or 25 years in a utility scale type of environment, it's very challenging for them to compete with First Solar given the strength of our balance sheet and reliability and reputation.

And we'll take our final question from Ben Kallo with Robert Baird. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: I just want to get a sense of how many projects were in -- that are involved in the lower end of your operating cash flow, just to see the risk around that?

There is 4 projects. I sort of referenced them in the script when I mentioned that part of the reason our project assets had gone up is because of 3 projects I referenced in Canada and 1 project in Maryland. I mean, those are the projects right now that are subject to potential movement relating to -- once we better assess the impact of Hurricane Sandy. That's not just on the site. It's actually on the supply chain as well because some of our suppliers for those projects are in the impacted area and we've got to make sure that they -- it doesn't -- going to create any disruption to them, their ability to supply us materials that we'll need in order to complete those projects.

And the other thing, just to further clarify, the impact can be in the arena of your available labor force either because direct impacts upon the laborers and their ability to get to work versus their need to take care of their families. Also, in particular, electricians that we may see -- a marshaling of electricians to deal with the massive system damage that's been done and there is -- and additionally, there is -- as power is restored, having been through this in the Gulf Coast, you will discover damage at the building level that will have to be repaired. And so we're just being cautious and prudent, recognizing that we could see impacts that delay us for a number of weeks on the projects that are in that region. We're calling on the same trades that are going to be necessary to restore systems in the impacted area. So it's not so much. I mean, there is some direct impact on our ability to access the site, water on the site, issues such as that. But it's also a broader impact upon the entire infrastructure, including the availability of labor, including the ability of our vendors to perform or the need for our vendors to redirect resources to critical restoration activity. So it's just we're in the middle of an area that's been impacted, and we're trying to reflect caution until we better understand how that's going to flow through to us. As Mark said, we believe it's -- this will largely play out as timing impacts to us, not as ultimate value impact to us.

And the one thing, just as I referenced in the script, that essentially, those projects have to reach substantial completion in order for a financial close to happen. Substantial completion also includes connection to the grid, right? And so new connections are not going to be prioritized over the issues they've got to restore existing power, right? So we're already starting to see where we initially had scheduled activities. Things are starting to slip. We don't have a commitment right now around the ability to get a project in particular connected as we initially thought we did because it's the uncertainty of what's going on right now.

And that does conclude today's conference. We thank you for your participation.