Good afternoon, everyone, and welcome to the First Solar's Second Quarter 2014 Earnings Call. This call is being webcast live on the Investors 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 call over to David Brady, Vice President of Treasury and Investor Relations for First Solar Incorporated. Mr. Brady, you may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its financial results for the second quarter. 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 provide a technology update and a review of our projects bookings and opportunities year-to-date then Mark will discuss our second quarter results in detail and provide an update for 2014 guidance. 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. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management’s current expectations. We encourage you to review the Safe Harbor statements contained in the press release and the slides published today for a more complete description. It is now my pleasure to introduce our Jim Hughes, Chief Executive Officer. Jim?

Thanks, David. Good afternoon and thank you for joining us for our second quarter 2014 earnings call. Today we announced the new world record for CdTe cell efficiency of 21%. A milestone certified at the Newport Lab and documented in NREL’s best research cell efficiencies. This is a fantastic achievement on the part of (inaudible) and his R&D team. This breaks our previous record of 20.4% that we announced in February and represents the seventh update to CdTe cell efficiencies since 2011. It also exceeds the multi crystal and silicon record of 20.4% set ten years ago and the current CdTe’s record at 20.9%. We stated at our recent analyst day that our target research cell efficiencies by the end of 2015 is 22% and this new record puts us well on our way to meeting this goal. Switching to the module. In Q2 our average efficiency increased 0.5% to 14%, our biggest increase in efficiency in a single quarter since becoming a public company. To put the extends of this achievement in perspective, the total increase in our module efficiency last year was 0.5% and we achieved this in a single quarter. Furthermore early in Q4, we expect our lead line efficiency to be 14.6%. It is this acceleration and efficiency improvements that enabled us to begin penetrating phase constrained markets such as distributed C&I including rooftop. Although easy to compare conversion efficiency is a narrow major of module performance; energy yield produced is a superior matrix. We introduced the concept of energy density at the analyst day, which is energy yield per meter square and in addition to the conversion efficiency this incorporates several other factors to drive the energy produced by the module including temperature, humidity and shade tolerant. As Raffi explained previously CdTe technology has advantages…

Thanks, Jim, and good afternoon. Turning to slide 12, I’ll begin by highlighting our operational performance for the second quarter. Production in the quarter was 447 megawatts DC, an increase of 1% on a sequential basis and 15% year-over-year due to higher module efficiency and throughput improvements on a same number of production lines. Our factory capacity utilization was 80% down two percentage points from the prior quarter. Factory utilization was down sequentially as we finished the fleetwide rollout of our new Series 3 Black module in back contact technology, which facilitated the record quarterly efficiency gains Jim referenced. The average efficiency of our module was 14% in the second quarter which is up 50 basis points quarter-over-quarter and a 100 basis points higher year-over-year. Continuing the trend over the last several quarters, our efficiency improvements remains steadfast in July with our lead line and fleet average increasing from our June exit. Furthermore as a reference a roadmap for the end of Q3 slash the first part of October will have our lead line operating at 14.6% efficiency, which is a primary driver of the sequential improvement in energy density as Jim referenced. Lastly, our module cost per watt continues to decline driven by both efficiency and material costs improvements. Now, moving to the P&L portion of the presentation on slide 13, second quarter net sales were $544 million, compared to $950 billion last quarter. The decrease is due primarily to revenue recognition on the Campo Verde project in the prior quarter partially offsetting the 130 megawatt AC Campo Verde project with the sale of 50 megawatt AC Macho Springs projects in Q2. The revenue recognition for both of these projects was on a completed contract phases. Relative to projects was ongoing revenue recognition AVSR and Desert Sunlight revenue was…

We’ll take our first question from Ben Kallo.

Hi, thanks for taking my question. First of all, as far as the guidance goes in the back half, could you discuss your visibility there the lumpiness of the business? And then second, you talked about YieldCos and market conditions, could you just talk about what decision process is right now with the successful YieldCos we’ve seen? I’ll stop there. Thanks guys.

Yes. I’ll do the guidance discussion. So Ben really, there is not any really significant unknown dependency in the second half of the year. So if you look at it from a book and bill perspective, we’re not at the highest dependency of new orders that have to be booked and bill between now and the end of the quarter or at the end of the year there is really no significant dependency from that perspective. The only dependency is just timing associated with a couple of the key projects that I mentioned. As we see each of those projects right now, we’re comfortable with the timeline of recognizing the completion of those projects and the associated revenue earning and cash flows, but we just wanted to highlight it as such so that as you know the business can be lumpy and unanticipated events could occur. So, we thought it was prudent to highlight that. In terms of the YieldCos, I'll let Jim make some comments around that.

I mean, I think the statement fairly stands on its own. The reference to market conditions is just really acknowledging that we're, they're going to be dramatic changes in market conditions, industrial appetite, obviously that could impact us narrowing, closing on a final decision. But the statement is pretty clear as to the timing of us getting to finish line on the decision making process.

We'll go next to Patrick Jobin with Credit Suisse.

Yes, hi. Thanks for taking the question and congratulations on the efficiency progress. A few quick questions, firstly you mentioned the inverter issue and causing to slip to Q3. Just want a little more color around that, and any cost associated with that? And then secondly back on the YieldCo question. How are you thinking about necessarily decision go, no go, but the amount of projects if you could put into YieldCo looking out over the next few years? Thank you.

Well first on the Desert Sunlight inverter issue. It is a very esoteric engineering issue that manifested itself only when the plant came up to full power. There is an engineering solution that can be implemented. It is not material to the company as a whole, but delay was primarily in a green documentation to cover it with the customer and it’s not something that we're particularly alarmed about. It's sometime when you bring these very large plants up to full power, you have issues of almost resonance between the inverters that manifest themselves. We've seen it with other classes of inverters in the past. It just requires some engineering hours and it’s not something we're particularly concerned about. And on the YieldCo, in terms of details, one we haven't reach the decision and two, I don't think we're prepared to discuss details other than to say, we're obviously close observers of the marketplace. We know what characteristic it takes to have a successful offering and a company that trades successfully in the marketplace and it's not something we would even be considering unless we felt we have the capability to deliver those characteristics.

And I think Jim referenced this even on our Analyst Day when you look at our project pipeline, it's not a question of capability of having the project and the pipeline and then we just highlighted, we've added more to the pipeline over this last quarter. So, the capabilities there is just to completing our analysis and conclusion around strategic fit and the direction we want to go.

We'll go next to Shahriar Pourreza with Citi.

Hey Jim and Mark. Just a quick two part question here outside from asking a question on YieldCo. The efficiencies on your sales are increasing at a real rapid pace. I'm sort of wondering if you could just give us sort of refreshed view on you can take the average efficiencies for crystal and silicon panels, what is the LCOE stand when you compare yourself to crystal and silicon and thin film. And then the second part of my question is, is that clearly we're starting to see the end of some very large RFP announcements in states like the Carolinas, Georgia, several states, non-traditional coal burning states. Can you maybe just give a little bit of an update if possible and if you're gaining any traction on some of these other states that should be announcing large scale utility RFPs?

Let me start with the second half of your question and then I'll hand up to Mark for the first part. In terms of the activities in primarily the Southeast and United States, I think we're in the heat of the battle right now and we'll begin to have a little more visibility as we move over the next probably 60 days to 120 days, but we're certainly very active as within a new market, we have a lot of learning to do in terms of what the winning combination is going to be. And we have very good partnerships and deep relationships that we're working in that region. So, we're cautiously optimistic, but I think a lot of detail will play out over the next 60 days to 120 days. And we often get two opportunities to look at the business, one during the sort of developer RFP stage and then two as a module and EPC supplier on the back end. So, we expect to be busy with all of those activities, for an extended period of time.

On the efficiency and relative impact of kind of our cell technology as Jim indicated in his comments is our cell efficiency is now above both (inaudible) as well as crystal silicon. And as you know Shahriar the relative advantage of our temperature co-efficient creating greater separation from that standpoint. So if you look at the entitlement from the cell level couple that with our advantage in efficiency as well as other aspects such as humidity and other environments where we performed better than our competition, we clearly will be at an entitlement level that is superior to our competitor relative to capability. The slide that we have in the presentation as far as the energy density is the probably the best near term process where we are. And as that slide shows Jim indicated as we step from call it 12% to 13% disadvantage as we sit today and we exit the year around 5% build on energy density and then it starts to expand beyond that where it become advantageous it will be on 2015 that’s directly correlated to all the improvements that we have been talking about. We haven’t given a specific LCE entitlement relative to that roadmap but it’s clearly the understanding of our capability and competitiveness of our technology.

We’ll go next to James Medvedeff with Cowen and Company.

Good afternoon and congratulations on the conversion efficiency that’s a big number.

Thank you.

Thank you.

Let’s see here, can you say how much revenue was deferred or was not recognized that maybe had originally been expected to be recognized?

No, I mean we haven’t given revenue guidance and obviously, but we’re not going to say how much was deferred. But clearly it was a meaningful amount, if you want to look at it as a percentage of relative expectation we realized about a third of what we were anticipating to recognize that is the third of what we anticipated to recognized in the quarter and that drove a meaningful impact around earnings. But again it’s a timing issue, there is no lot economics it’s a matter of revenue and earnings falling out to the second quarter as we’ll see that realization in the third quarter.

We’ll go next to Paul Coster with JPMorgan.

Yes, hi. This is Mark Strauss on for Paul. Thanks for taking our questions. I just wanted to see if you could comment on I understand it’s pretty early but any changes in the competitive environment in the U.S. just given some of the preliminary terrace that have been put on the Chinese guys?

I think it’s way too early to say that we’ve seen any changes in the competitive environment, as you probably know we were not a party to the trade case and have not focused on it as being a particularly strong driver of our business. The last imposition, our competition found efficient way to work around the duties fairly quickly and it's not in clear the main that they won't find the ways to work around many. So we continue to believe that we have to be prepared to compete on a fairly unassisted straight up basis in that how we run the business, still. I don't really, I can't really say that we've seen an impact today.

We'll go next to Stephen Chin of UBS.

Hi guys. Congrats on the strong booking for the quarter.

Thank you.

I think the first question just around the margin expansion. So it's good to see margins taking higher. Was the emphasize for this higher ASPs Q2, kind of lower cost of capital you're seeing indeed projects finance, equity purchase market. And how does that differentiate it's mean yourself to follow-up projects and your third-party booking, our margin, are you also seeing margins expand there was these stable. What is your outlook for the two going forward?

Yes. We think it's a two pieces of that. And so clearly when you think about our self developed projects, we've been highlighted a little bit of this in the Analyst Day that cost of capital clearly has become a more competitive. Strategic are getting more comfortable with the risk profile of the PB assets and therefore becoming more competitive as they think about the rolling us to acquire projects and but therefore reflects in cost of capital subject. So we're seeing that to our searching we're continuing to see now even with some of the (inaudible) market or others concerned potentially that yieldcos will be alternative avenues to monetize those projects you are seeing others become more competitive and particularly for large utilities projects that people want to acquire. On the EPC side we really don’t necessarily see when we compete on a third party see that the cost of capital accretion largely goes to the owner or developer of the project, but our technology the only real comparison our technology has increased or is highlighted in kind of the slide that we show. So as we price forward third party EPC agreements we are seeing better margin realization which is more indicative of the capability and the strength of the technology and the cost curve that we have been able to achieve versus cost of capital advantages that EPC provider may capture in the marketplace.

We will go next to Brian Lee with Goldman Sachs.

Hey guys thanks for taking the questions. I guess first off Mark you mentioned during your prepared remarks growing more assets on the balance sheet. How many megawatts does that comprise today that are completed and how much would you expect that to be by the end of 2014? And then my follow up would be just generally on yieldcos. You sort of alluded to this but wondering how you guys are thinking about the emergence of yieldcos impacting pricing in the project acquisition environment and then in what sort of timeframe if are not already seeing it today you might expect this to see that impact? Thanks.

So the way I would look at it Brian. If you look at it across in our portfolio of project opportunities that has not been sold yet, it’s approximately 1.5 gigawatts of opportunities that we have. It go across various time line. Some of that is near-term actively either completed held on balance sheet or in some form of construction or development and I would say look at about 600 megawatts, we fall into that category. The others would have duty days that are in kind of the ‘16 timeline and then we have a couple of 100 megawatt that go beyond that. So, when you look across that portfolio of assets and then the inherent cash flows that are embedded in those assets, you have more than above cash flows to not only do your initial launch, but to have a pretty attractive development pipeline that sits behind those assets and we're continuing to compete on a day-to-day basis the asset, the pipeline of opportunity. So, the question is do we have the capability. I think we highlighted that in the Analyst Day last year or this year I should say that we clearly do, when you see our filing that comes tomorrow you will see the summary of the projects that adds ups about 1.5 gig. And so yes, the capability is clearly there more or less our own internal assessment of what the right strategic fit direction we want to go.

We'll go next to Sven Eenmaa with Stifel.

Yes, thanks for taking my question. Just want to ask about reduced production guidance, introduction of new models, modules this year. Do you guys expect to increase your efficiency road map in next year and forward based on the mix change here?

The reduction in guidance this year is due to downtime associated with the implementation of some of the elements up road map that were provided to investors at our recent Analyst Day. Some of it is because we have accelerated or broadened the roll out programs beyond what we originally would have anticipated. It isn't change to the overall technology road map. The numbers we have presented at the last Analyst Day remain our most recent guidance in terms of our technology road map going forward. It's really more just a change, sudden change in the timing of some of the roll out that impacted the total production for this year. As you begin to roll the technology across your production lines you may see opportunities to perhaps do things a little more simultaneously and the trade office,, you get the efficiency benefit earlier. But you lose a little bit of production in the process and we’re constantly doing a cross benefit analysis to compare the various ways to roll that technology across our production line and then that impact to this year was a reduction of 100 megawatts. But it’s not any big change, it’s basically on schedule with what we’ve disclosed at the last Analyst Day, it doesn’t reflect any sort of major deviation from that plan.

We’ll go next to Aditya Satghare with FBR Capital Markets.

Thank you. Two questions please from my side. So, firstly, could you just talk about the market environment in two international markets which you’re active in, Japan and Chile and maybe for the contrast between the environment of self developed projects versus the third party modules?

Sure. So let’s start with Chile it’s a little bit simpler. So, the only thing wrong with the Chilean market is transition constraints in overall market size otherwise it’s a very robust market. So we expect an early position in the market with the projects that we’re currently pursuing, most of that activity for us is self developed. We do have some third party negotiations that are underway, but the largest percentage is self-developed. The market will continue to grow but at a measured pace primarily because the overall size of the electricity system is modest and you are reaching a point where you will hit transmission constraints ultimately those constraints will be relieved but that requires the investment and construction but they show infrastructure. So it's a nice little market, but it is constrained in terms of its total impact by the overall size of the market, but we’re very happy with what we’ve got accomplished and we’ll continue to have a presence in that market. Japan is a more complicated and dramatically larger market. There are multiple channels that we can pursue. You have the so called mega solar or the large utility scale projects, you have the smaller scale distributed projects and then you have the very small scale distributed rooftop projects spanning both residential, commercial and industrial and then the mega solar. We have multiple efforts underway on the mega solar, we’re both pursuing our own development efforts, we’re also working alongside of third-party developers on a partnership basis and there are multiple of those partnerships that we’re pursuing or are actively engaged in. On the more distributed side, we’ve been looking to work with channel partners, the most notable of which is the XSOL announcement that we recently made, signing distribution deal with them for a total of 100 megawatts with 20 megawatts of that being take or pay. So we're beginning to penetrate the various channel that are available to us. We've also have a commitment with JX Nippon on the TetraSun product, which is commencing production this year out of Malaysia. So we had a multitude of efforts underway in the Japanese market and that is a very large market that we expect to see strong growth out of for many years to come. There are certainly steps being taken to rain in the FIT. That’s not unexpected; it has served its purpose in terms of generating early activity. We have taken a long term view of the market and believe that solar is going to be an important part of the energy mix long after the FIT fades away simply because it is very competitive with their alternative forms of energy. So, we see it as a very steady growth opportunity for many years in the future and that’s kind of how we think about Japan.

We will go next to Colin Rusch with Northland Capital Markets.

Great. Thanks so much. Can you just help us reconcile side seven and eight? It looks like you had some nice bookings post 2Q with 700 megawatts or so. But when you go to slide eight, you were looking at the year-to-date additions, not really changing so much post 2Q, so you just walk us through are there some debookings that are happening, is there some pricing dynamics there? And then as a follow up, I would love to just get an update on the combined solar and diesel generation sell-through, how that’s looking at this point?

Sure. So, on the combined solar and diesel sell-through we continue to have lots of good activity talking to a large number of potential customers, also talking to the technology partners on the diesel side because we don’t anticipate getting into the diesel business. We’ll want to have a partner for that aspect of it. Those sales are a very long cycle sale but just generally you are dealing with a customer that has a record self generation of electricity as a critical component of some industrial or production process i.e. mining companies or remote industrial locations. And we think the sales cycle will include small pilot projects that demonstrate the technology and demonstrate the reliability and availability of the technology and then you will be able to grow the business as you move forward. We've moved from conversations and theoretical discussions to beginning to discuss specific pilots and we remain pretty confident that it's going to be an attractive business, but it is a very long sales cycle and we're still at the early stages of that cycle.0

The other question, the slide seven versus slide eight, what we did in slide seven is that we just showed discretely because I think people asked the question before about of the total bookings that we show because we do take the bookings up until the time of the earnings call, but how much of that in the specific quarter, how much was after the quarter. So, slide seven just says okay within the boundaries of Q2, we booked 500 megawatts. And then after that, we've booked another 700 megawatts. So, those two are broken out. On slide eight, we just didn't break it out, we just showed combined 1.2 gigawatts, translates to 1.6 billion of revenue. So, it's just slightly different way of our presentation, but the way you should look at and if you want to compare it to that 0.5 and 0.7 that in aggregate adds up to 1.6 billion of revenue as I add to the pipeline.

Yes. And 400 megawatts in Q1, so, the 500…

Yes.

So, the 500 includes that 400.

Yes.

We'll go next to Ben Kallo with Robert W. Baird.

Hey, thanks for the follow-up. I think that it's probably one of the best periods you’ve had from bookings. Could you just update us, is it something we should expect going forward; is there an acceleration in your pipeline as you guys develop these things parallel or how should we think about going forward?

I think you should think that it's a very good period and we certainly hope it’s representative of a trend but we’ve seen quarter-to-quarter variability in the activity and it’s not always easy to predict. We tend to look at the combination of metrics that we provide to you guys to together appeal for how the business is trending. And as you’ve seen over the last year and half that opportunities pipeline has grown; I think it’s doubled over the last 18 months or so. And I think we’re beginning to see as the full cycle flows out that much larger set of opportunities is beginning to translate into bookings which is what you would expect. I don’t want to promise a steady rhythm because it’s simply not the nature of the business, but I think it is indicative of that we’re beginning to convert that very large pipeline is beginning to filter through down to the finish line and we’re seeing higher activity levels as a result. It’s also in part generated by we’re broadening our applicable market as our technology evolves and as conversion efficiency increases, opportunities that would have been where we would not have been competitive because of space constraints or other elements that required a greater efficiency, we’re beginning to compete effectively in those -- in that addressable market. That also generates an overall higher level of activity which some of which translates through into bookings.

We’ll go next to Krish Sankar with Bank of America Merrill Lynch.

Yes, hi. Thanks for taking my question. I had a couple of them. By the way first, congrats on the great cell efficiency improvement. Along the path, as cad-tell technology improves, I am kind of curious, do you have any update on TetraSun and what are your plans for the technology? And then my second question is not to bore you with another YieldCo question but if you do decide to go on the top become to the non-solar projects or really to look out that solar? Thank you very much.

First on TetraSun, TetraSun remains on track as for the kind of the business plan that we outlined for investors at our Analyst Day, we're working on commencing production in Malaysia, the initial market remains Japan through along which (inaudible) we are booking at opportunities across a variety of other markets and we continue to see a roll and opportunity for TetraSun in highly space constraint circumstances or very high deal circumstances or at a very high efficiencies are work incrementally higher costs associated with TetraSun. But there is no doubt that the success we've had on that front has taken pressure off of the need to move TetraSun at a very rapid pace. So it remains on traction is continuing to be pursued along the business line that we outlined. But the distance between the two technologies has unquestionably narrowed and that takes a little bit of the sense of urgency out of it at quite frankly. But we're fully committed and spending lots of time in R&D dollars and marketing dollars on not only developing the technology, but finding the appropriate channels where we can take advantage of the unique characteristics of that product. And then on the yieldco its way through with comments on assets other than our own and assets outside of solar, we need to get the finish line on whether we want to consider it with our core assets before we address those questions.

We'll go next to Vishal Shah with Deutsche Bank.

Hi thanks for taking my question. As you were evaluating a yieldco decision I am assuming you have been approached by other yieldco companies to take a look at some of these projects that you have on balance sheet, just relative to say six ago where do you think pricing is today for some of these projects is it up 20%, 30%? And has that changed the outlook for developers looking at some of these projects over the next two, three years I mean are you seeing an increasing risk appetite and as a result of that a greater amount of activity in the U.S. and global markets? And just secondly when you think about the 21% efficiency cell what kind of cost per watt would that translate into and when can you start manufacturing that technology? Thank you very much.

Let me start with the last first, with respect to the 21% technology as I referenced in my opening comments it’s right on the glide slope that we laid out in our last Analyst Day with respect to our technology roadmap and all the comment that we are going to provide about cost per watt is contained in that analyst day presentation, so I would reference you to that presentation Vish nothing unexpected in the announcement, it’s merely confirmation that we are executing the roadmap that we set forth earlier this year. And then with respect to other yieldcos and impact on pricing in the marketplace those that have been following the company since I joined, I have been talking about yieldcos and the cost of capital within the sector relative to other competing forms of generation for nearly two years now and everything that has played out has been pretty much as I expected. There is no reason that an investor should or would differentiate between the cash flows is coming off, of the fully contracted power plant versus a wind plant versus a thermal plant. In many respects, it's actually safer and more stable class of assets than those others. So, we have seen a steady and consistent reduction in capital cost for the sector for completed projects that obviously increases the value of any project these cash flows are contracted at one given level of profit capital and it's certainly has allowed developers in the marketplace that are bidding for PPAs to bid a more aggressive cost of capital and assume that they can maintain the development margin for themselves given that cost of capital. So, it translates through the entire value chain all the way and a great deal if not all the benefit ultimately ends up in the hands of the customers, also really the customers have the utilities that contract for the power. So, it has resulted in a steady lower in a way and cost of generated solar power for the customer and that's not a surprise that's something we have been talking about for a year and half. And we think that it's appropriate and puts solar into that position to compete as a main stream participant in the overall generation mix particularly in North America.

We'll take our final question from Edwin Mok with Needham and Company. Edwin Mok - Needham & Company: Great. Thanks for squeezing me. So my question is on mid to late stake options if you had to laid out there, how much was that is international versus U.S.? And then my quick follow-up just on the question regarding the Chinese tariff, the Chinese module and how that has impact to market we’ve heard from some other company talking about EPCTA still in project construction as a result those tariff have you seen that in the marketplace will that create opportunity for you to build on some of those projects?

We have not seen any evidence of that in the marketplace and whether we will, I simply don’t know maybe we will just have to see what happens.

On the first one in terms of mid to late stage and then what is the mix of that by geography we don’t break that out per say. But I think the best way to look at it is a relatively diverse mix. I think one of the things we did highlighted in the call was that included in that mid to late stage 1.3 gigawatts was our Luz del Norte project in Chile which is a 141 megawatt DC, so as again they ramp a large scale project that sits in the late mid to late stage project portfolio and one which we near-term. So it’s a good mix, great thing we’ve been adding to our BD capacity and PD capacity on a global basis. We’ve been able to penetrate a number of new markets and pipelines are being very robust in those markets and you’re starting to see some of that mid to late stage pipeline that we referenced.