First Solar, Inc. (FSLR) Q4 2014 Earnings Report, Transcript and Summary

Good afternoon, everyone, and welcome to First Solar's Fourth 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, Inc. Mr. Brady, you may begin. David Brady - Vice President-Treasury & Investor Relations: 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 fourth quarter and full year 2014. 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 business and technology update, then Mark will discuss our fourth quarter financial results in detail and provide guidance for the first quarter of 2015. 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 Jim Hughes, Chief Executive Officer. Jim? James Alton Hughes - Chief Executive Officer & Director: Thanks, David. Good afternoon and thank you for joining us for our fourth quarter 2014 earnings call. Let me begin by addressing the announcement made yesterday that we are in advanced negotiations with SunPower to form a joint YieldCo vehicle to which we expect to contribute a portfolio of selected solar generation assets. Upon the execution of a master formation agreement, the parties intend to file a registration statement with the SEC for an initial public offering of the YieldCo. Completion of the joint venture and IPO is subject to the execution of definitive documentation and board and regulatory approval. We cannot say any more about the transaction at this time, and we will not be taking any questions on the subject in our Q&A session today. We expect to file a public S-1 this quarter, which will provide additional details on this proposed transaction. However, I do want to emphasize the strategic value of this decision to First Solar shareholders. We have undertaken a careful study of the strategic options available and have determined that this is the best course of action to maximize project and shareholder returns in the long-term. This combination brings together the two leading and most bankable companies in the solar industry with a combined installed base of 16 gigawatts, the strongest balance sheets in the sector and combined strength in utility scale and distributed generation as well as a broad geographical base. Lastly, as a result of this announcement, the 2015 target we provided at our prior Analyst Day is no longer applicable. Until we have clarity on the creation of a joint YieldCo with SunPower, we do not believe it is meaningful to provide full year 2015 guidance. Moreover, as a result of this potential transaction, we have decided to delay an Analyst Day at this time. We will continue to evaluate holding an Analyst Day later this year. Now, for an update on our technology. First, as we announced earlier this month, we have set yet another new world record for CadTel cell efficiency of 21.5%. This latest milestone certified at the Newport Lab and documented in NREL Best Research Cell Efficiencies exceeds our previous records of 21%. We have now increased our record cell efficiency by over 400 basis points since mid-2011. This remarkable achievement demonstrates the potential of our CadTel technology and is another tremendous accomplishment by our R&D team. In conjunction with our record cell efficiency, we also announced that our production PV modules have reached a quality and reliability milestone by achieving Atlas 25+ certification following a rigorous series of long-term combined-stress environmental exposure tests. This certification represents some of the most stringent standards available, and demonstrates that the progress in our module technology is not only in efficiency improvements, but also in quality and reliability. We continue to see the advancements in our technology manifest in our production module efficiency. Our full fleet average conversion efficiency for the fourth quarter was 14.4%, a 20 basis point improvement from the prior quarter and a 100 basis point improvement from the prior year. We now have several lines of production running our latest technology and we are encouraged by the results. So far this month, four of these lines have averaged an impressive 15.8% efficiency. This technology will be rolled out across the fleet over the course of 2015. Switching briefly to our TetraSun product, we have recently begun production of our TetraSun modules at our manufacturing facility in Malaysia. We are encouraged by the performance of the technology, which is being produced with initial cell efficiencies of 20.5%. Our expected capacity for 2015 is approximately 50 megawatts and we will ramp future production levels based on market demand. Let me now turn to slides 5 and 6, which highlight the tremendous progress we made in new bookings in 2014 and during the first two months of 2015. As in the past, this data represents our total business and includes systems, Module Plus and module-only sales. Total bookings for 2014 were 2.5 gigawatts DC, which equates to a book-to-bill ratio of 1.7. This far exceeds the 2 gigawatt DC target we communicated at Analyst Day last year and highlights the momentum in our bookings. Since our last earnings call, we have booked over 1 gigawatt with 726 megawatts recorded prior to the end of 2014 and the remaining 311 megawatts occurring during the first two months of 2015. As a result, our ending outstanding bookings are now at 4 gigawatts DC, an increase of 1.3 gigawatts from where we began 2014. The strength of these bookings and the accelerating demand we have seen in recent months is a testament to the increasing competitiveness of our module technology. The single largest booking in the quarter was the 130 megawatts AC California Flats project. As previously announced, the PPA for this project was signed with Apple and is the largest agreement in the industry to provide solar power to the commercial end user. This 25-year PPA will provide power to Apple's new headquarters, data centers and retail operations in California. This deal signals the growing importance of affordable clean energy to commercial customers. Combined with the previously announced 150 megawatt AC PPA signed with PG&E, the total project stands at 280 megawatts AC. The combined size of the California Flats project represents one of the largest self-developed projects announced in the last several years, highlighting our tremendous strength in utility-scale solar. This past quarter, we continued to demonstrate significant progress in the southeastern United States. We signed agreements with Southern Power to provide EPC services to two projects in Georgia totaling over 210 megawatts AC. The larger of the two, the 130 megawatt AC Taylor project is expected to begin construction in September of this year and achieve COD in late 2016. Additionally, we recently signed a 188 megawatt DC Module Plus deal with Strata Solar to supply projects in North Carolina. All together, our bookings in the southeastern U.S. since mid-2014 now total almost 700 megawatts DC. We also saw strength in our international bookings. In India, we contracted 265 megawatts DC of volume since our last call. As disclosed previously, we were awarded 80 megawatts AC of projects in Andhra Pradesh, India. We have now signed the PPA on these projects and included them in our booking total. The remaining volume booked in the quarter was module-only sales. Underscoring our commitment to the growing solar market in India, we announced last week at RE-Invest a commitment to develop 5 gigawatts of solar projects by 2019. We are excited by the Indian government's vision for solar energy and look forward to helping them achieve these goals. Also, in Turkey, we were encouraged by the results of the recent solar power tender where we secured 19 megawatts AC of connection capacity. Other partners competing with First Solar technology were also successful. While small on relative terms to our overall bookings for the quarter, it is a significant first step in a market with tremendous potential for solar. Turning to outstanding bookings and revenue terms, our expected revenue stands at $7.5 billion, approximately flat compared to the beginning of the year. The increase in megawatts booked was offset by a higher mix of module-only and Module Plus volume, which resulted in the flat revenue bookings, but also is indicative of our efficiency improvements on the competitiveness of our module in the global marketplace. Turning to slide 7, I will now cover our potential bookings opportunities, which now stand at 13.5 gigawatt DC, a slight decrease from 13.7 gigawatts in the prior quarter, primarily due to the conversion of several opportunities to bookings. As a reminder, this represents all potential bookings whether they are self-developed projects, EPC contracts, Module Plus or module-only. Contracted projects are not included in this total. While our total opportunities decreased slightly, we are encouraged by the increase in the size of our mid to late-stage deals, which increased by over 500 megawatts from the prior period. Slide 8 shows the breakdown of demand by geography. Our opportunity set outside of North America stands at 7.5 gigawatts or 56% of the total. One indication of the continued progress we are making in developing international markets is that the vast majority of our roughly 1.5 gigawatts of mid to late-stage deals are outside of North America. And finally, in December, we announced our entry into the residential solar market with a strategic investment in Clean Energy Collective. CEC is the nation's leading developer of community solar and this strategic partnership allows us to develop end-market community solar offerings to residential customers and businesses directly on behalf of client utilities. Community solar is not only a more cost effective solution for customers, but it also significantly expands consumers' access to solar electricity. This allows any power consumer to go solar including those who live in multi-tenant buildings, rent or whose rooftops cannot accommodate solar panels. In contrast to typical residential rooftop installations, which are limited to a fraction of the population due to factors such as income, local radiance and homeownership, virtually anyone can benefit from community solar. Community solar allows an individual to benefit directly from owning part of a solar asset without concern such as an increase in their homeowners insurance problems that arise when their rooftop requires repair or replacement or transferability of residential rooftop leases when they sell their home. For example, a student renting a condo could own panels through a community solar program and take along credit for that solar power even when he moves or just transfer or sell his ownership to a third-party without the need for credit scores. This strategic partnership with CEC allows First Solar to play to the strength of our proven utility scale capabilities, while leveraging the expertise of a leading community solar program operator. As an integral part of our distributed generation strategy, we will provide periodic updates on the progress of this partnership. Now, I'll turn it over to Mark, who will provide detail on our Q4 financial results and discuss guidance for the first quarter of 2015. Mark R. Widmar - Chief Financial & Accounting Officer: Thanks, Jim, and good afternoon. Turning to slide 11, I'll begin by discussing fourth quarter operational performance. Production in the quarter was 509 megawatts DC, an increase of 13% from the prior quarter and 15% higher year-over-year due to the restart of our four manufacturing lines in Malaysia as well as higher module efficiency. Our factory capacity utilization was 84%, up 7 percentage points from the third quarter. Higher factory utilization was also due to the restart of the idle capacity. In the fourth quarter, the average conversion efficiency of our modules was 14.4%, which is up 20 basis points quarter-over-quarter and 100 basis points higher year-over-year. Our best line averaged 14.8% efficiency during the quarter, an increase of approximately 50 basis points from the prior quarter. As Jim mentioned, our best lines are averaging 15.8% for the month of February. The substantial increase in our lead line efficiency continues to highlight the great progress our team is making to deliver our module efficiency roadmap, which effectively is converting our record cell and module accomplishment into reality. We are encouraged by our CadTel entitlement and the relative competitive energy density it can achieve. Moving on to slide 12, I'll discuss the P&L. Net sales for the fourth quarter were just over $1 billion compared to sales of $889 million last quarter. The increase is due to the sale of the Solar Gen project to Southern, initial revenue recognition on Silver State South, higher third-party module sales and various other system projects under construction. This was partially offset by lower revenue from our Desert Sunlight and Topaz projects which both achieved substantial completion in the quarter. As a percentage of total net sales, our system revenue, which includes both our EPC revenue and solar modules used in the system projects, was 92%, a decrease of three percentage points from the prior quarter. The higher mix of third-party module sales was primarily due to recognizing revenue on BELECTRIC's landing project, which at 46 megawatts DC is the largest operating solar farm in the U.K. For 2014, net sales increased to $3.4 billion compared to $3.3 billion in 2013. Relative to our guidance for the quarter, sales were lower due to a partial sale of the Solar Gen project, the timing of some module sales pushed into early 2015, and lower system revenue from weather-related delays. As highlighted in our last earnings call, our guidance assumed we sold 100% of Solar Gen to Southern; however, we noted subject to certain terms and conditions, we had the right to retain a minority interest in the project. In the fourth quarter, we elected to retain a 49% interest in Solar Gen. Gross margin in the fourth quarter was 30.6% compared to 21.3% in the third quarter. The increase was due to a higher profit associated with partial sale of Solar Gen and cost reductions on the Topaz and Desert Sunlight projects. On a full year basis, gross margins decreased 170 basis points to 24.4% from 26.1% in 2013. The lower gross margin was the result of the mix of system projects under construction between the periods. Fourth quarter operating expenses increased to $109 million, primarily due to the higher startup expenses associated with restarting capacity. For the full year 2014, operating expenses were $403 million compared to 2013 operating expenses of $407 million, which excludes $87 million of restructuring and asset impairments. The decrease in operating expenses from 2013 was primarily due to lower depreciation and compensation expenses, partially offset by higher investment in research and development of our CadTel technology. Operating income for the quarter was $199 million compared to $84 million in Q3. The increase was due to higher sequential sales and the increase in gross margins discussed earlier. For the year, operating income was $424 million compared to 2013 operating income of $455 million, which also excludes the $89 million of restructuring and asset impairments. Fourth quarter GAAP net income was $192 million or $1.89 per fully diluted share compared to $0.87 per fully diluted share in the third quarter. Full year earnings per fully diluted share was $3.91 including a $0.26 benefit of a one-time tax item noted in Q3. Excluding this item, full year earnings per share were $3.66. Note that relative to our guidance for the quarter and full year, there were several factors that led to the difference between our actual result and expectations. First, as indicated, we have elected to retain a minority interest in Solar Gen. As a result, a portion of the revenue associated with this project was not recognized in the quarter and contributed to the lower-than-forecasted revenue. Gross margin and operating income exceeded the guidance for the quarter due to the higher-than-expected profits associated with Solar Gen and significant project cost savings on our Desert Sunlight and Topaz projects. The resulting earnings were significantly higher than the $2.80 per share which was the upper end of our full year guidance due to the aforementioned factors and a lower-than-expected tax rate, which resulted from a favorable mix of jurisdictional income. Putting the results into context for the year, excluding the $0.26 per share one-time tax item we highlighted in Q3, our full year earnings would have been $3.66. The difference between the $3.66 and the $2.80 guidance is attributed to an additional $0.26 from the lower-than-expected tax rate in Q4, with the remaining difference approximately $0.60 due to our better-than-expected gross margin. This highlights the strength of our execution from our core business and the project cost savings achieved. Turning to slide 13, I will review the balance sheet and cash flow summary. Cash and marketable securities increased by approximately $876 million to $2 billion. Our net cash position nearly doubled to just under $1.8 billion. The increase in cash resulted primarily from the sale of Solar Gen as well as the collection of retention payments on our Desert Sunlight and Topaz projects. We anticipate that our cash position will continue to have large fluctuations quarter-to-quarter as we continue to construct some projects on balance sheet. Our net working capital including the change in non-current project assets and excluding cash and marketable securities, decreased by approximately $845 million from the prior quarter. The decrease was due to the reduction in unbilled accounts receivables from the collection of cash retention on Topaz and Desert Sunlight, a decrease in deferred project cost from the sale of Solar Gen and a reduction in trade AR. These items were partially offset by an increase in inventories. Total debt during the quarter decreased slightly to $217 million. Of this total, $75 million is project level debt associated with our Luz del Norte project in Chile. Cash flow from operations was $928 million compared to cash flow used in operations of $47 million in Q3. Free cash flow was $858 million compared to negative free cash flow of $107 million in the prior quarter. Capital expenditures totaled approximately $73 million, a slight increase from $71 million in the prior quarter. Depreciation for the quarter was $62 million compared to $60 million in the prior quarter. Turning to slide 14, I will now discuss our guidance for the first quarter of 2015. Note that given the announcement regarding the proposed YieldCo formation, we are holding off on providing full year guidance at this time. Specific to the quarter, our anticipated financial results is being impacted as we hold projects, build them on balance sheet for the potential YieldCo creation previously mentioned. While we believe this path will create long-term project and shareholder value, in the near-term, it will result in lower financial results than if we had sold these projects to a third-party. Our abbreviated financial guidance for the first quarter is as follows: net sales in the range of $550 million to $650 million, a loss of $0.25 to $0.35 per fully diluted share, cash used in operations expected to be between $400 million and $500 million. The sequentially lower revenue earnings and operating cash flow is due to two main factors. First, in the fourth quarter, we sold a partial interest in Solar Gen and achieved substantial completion on our Topaz and Desert Sunlight projects. In addition, we are constructing several projects on balance sheet in Q1. We expect to complete nearly 200 megawatts in the quarter where we will not recognize any revenue. Now, moving on to slide 15, I'd like to summarize our progress during the past quarter and past year. First, we continue to demonstrate the enormous potential of our CadTel technology. We set another new cell record efficiency of 21.5%, positioning us firmly on track to meet the 22% target we set last year. In addition, our efficiency continues to improve rapidly. Our lead line efficiency improved to 14.8% in Q4, which is 90 basis points improvement from the prior year. We've had tremendous progress in our new bookings with 2.5 gigawatts contracted during the year. We set a target of 2 gigawatts to book for the year and we have exceeded that goal. Our book-to-bill ratio for the year was 1.7, allowing us to replenish our pipeline. From a financial standpoint, we exceeded both our earnings per share and operating cash flow guidance. Finally, we believe the announced joint YieldCo with SunPower is the best avenue to achieve to help provide access to sustainable, competitive cost of capital, which should ultimately provide enhanced value to the First Solar shareholders. With that, we conclude our prepared remarks and open the call for questions. Operator?

Thank you. We'll go first to Ben Kallo with Robert W. Baird. Ben J. Kallo - Robert W. Baird & Co., Inc. (Broker): Great. Thanks for taking my question. Congratulations on the quarter and the partnership. First on the bookings, could you just talk about what caused the strength in bookings? And maybe if you could give us some color on what your targets are. You had a 2-gigawatt in 2014 and how we should think about that heading into 2015? And then putting that together with efficiency and what that is helping you guys with and if it's helping you guys get back on rooftop or how should we think about that? James Alton Hughes - Chief Executive Officer & Director: Thanks, Ben. First, I don't think we're in a position to be able to provide you any guidance on the bookings outlook for 2015 at this time. But generally, the strength in 2014 was relatively broad-based and it's a consistent pattern that we're seeing across broad swaths of our business where as costs continue to come down, we're seeing greater and greater adoption rates and what's particularly encouraging is a lot of this adoption is driven not by any policy impetus, but more by a recognition that utility-scale solar represents a compelling value opportunity. So we've seen the growth in the market outside of California in the United States particularly the southeast United States continue to see strong activity in that region in Texas, in the western United States, in North America. As identified, we continue to see a lot of strong activity in India. We've had our initial success in Turkey and expect to see momentum there. We've had continued drum beat of activity in Europe. It's not gigantic but it continues to roll along. And so we've just seen sort of a broad-based, a lot of the seeds that we planted over the last two and a half years starting to take root and generate opportunities for us. So it's really been broad-based. Obviously, as the efficiency continues to improve, particularly the most recent efficiency improvements and bear in mind that we've been competing in the market with the knowledge of where our efficiency was going to get to. So what we're seeing come off the production line now is what we've been competing with for the last 12 months. And obviously, as we are now roughly at parity from a temperature adjusted energy density standpoint, it just dramatically increases our ability to compete and dramatically increases the entitlement we have to compete and to margin at the end of the day. So the two go – we believe the two go hand-in-hand. There's broad overall pretty good health across the solar sector. And then we, as an individual company, are doing well because we continue to have such success in advancing our technology.

We'll go next to Paul Coster with JPMorgan.

Yeah, two questions. One for Jim, one for Mark. Jim, one of your competitors today talked about how selling projects would become the exception, not the rule. Now that you're moving in the direction of a YieldCo, can you talk about the relative priority of selling versus EPC versus module business versus, of course, holding for your own benefit? And then the second question really for Mark is, are you in a position to share with us what the current megawatts on the balance sheet is and the approximate cash deal (27:30) on an annualized basis that falls out of those megawatts? Thank you. James Alton Hughes - Chief Executive Officer & Director: Right. So first, with respect to anything associated with YieldCo, SEC rules don't allow us to really make any comment. In terms of the various product lines, module, Module Plus, EPC and system, we don't have a preference as much as we look for what is our most potent weapon in each marketplace in which we operate. What is it that the customer wants in each marketplace? We have different customers with different needs. Some customers have self-execution capability and they want to buy a module and we're happy to supply them. Other customers want to own the facility but they really want someone to handle the full turnkey EPC execution. And then there's a spectrum in between those two that is the Module Plus in AC Power Block offerings where the customer doesn't want to own and they want to be provided with power, obviously, that flows out of our development business. And we will choose to monetize those development assets in the manner that provides the greatest long-term value for our shareholders the same philosophy we've had for the last two and a half years. There's nothing that's going to change with respect to that analysis. Mark R. Widmar - Chief Financial & Accounting Officer: As Jim indicated, especially, Paul, on the last question around what is the cash flows that falls out of the projects, we can't provide any color around that. But what I can say is that we have a 20-megawatt project on the balance sheet in Maryland that we've actually had on our balance sheet for a while. We just noted that we retained a 49% interest in Solar Gen, and that's 150-megawatt AC project. And we're building a couple hundred megawatts on balance sheet right now. Those are the statements that we've made. So that's the level of detail that I can provide at this point in time. As it relates to any information relative to the cash flow associated with those projects, we can't provide that at this time.

Okay. Thank you. I'll hop back on in line.

We'll go next to Patrick Jobin with Credit Suisse. Patrick S. Jobin - Credit Suisse Securities (USA) LLC (Broker): Hey. Thanks for taking the question and congrats on the partnership. The first question, just thinking about the wholesale commercial PPA you announced recently, can you maybe talk to us about that segment in particular if it offers any different competitive environment versus traditional utility-based PPA? And then my second question for Mark, just thinking about what the gross margin or revenue impact was in the quarter for selling Solar Gen 2, just so we can understand that impact. Thanks, guys. James Alton Hughes - Chief Executive Officer & Director: Sure. With respect to the Apple PPA on California Flats, there's a great deal of similarities with these large commercial transactions as compared to a traditional utility transaction. And there are some significant differences. So companies like this are very savvy and sophisticated procurers of their energy. They are as in-depth and as thorough as any utility would be. I will say that perhaps the largest difference is that they are satisfying whatever they have determined their priorities and needs to be as a company, whereas a utility is working to a regulatory standard or a prudent utility standard. There can be some nuanced differences between the two approaches as a result of that. But by and large, it's the same teams executing the two segments. It's the same product. It's just the commercial relationship and the priorities that the customers may have a bit of a nuisance to it. But we think you'll see more of it as we move forward in time. We think you'll see it expands to other geographies and obviously we're very excited about the deal. Mark R. Widmar - Chief Financial & Accounting Officer: Relative to Solar Gen, we won't provide the specific as it relates to the revenue and the gross margin. What I can say is that relative to the guidance, the fact that as we indicated, we actually retained 49% of the interest in Solar Gen, I think you could infer that the revenue miss relative to the guidance largely was attributed to that. Relative to gross margin and as we indicated, operationally we were about $0.60 better than what we had initially guided towards. The best way I would paint that is think of it about half of it was better margin realization on Solar Gen, which is a combination of better value. Again, indicative of cost capitals in the market as well as more – lower cost to construct. So there's cost savings. And then the other half of that $0.60 was largely associated with cost savings that we realized on Desert Sunlight and Topaz. Patrick S. Jobin - Credit Suisse Securities (USA) LLC (Broker): Thank you.

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

Yes. Hi. Thanks for taking my question. Maybe, Mark, you can talk a little about your expectations of project completion for the rest of the year? How we should be thinking about the pipeline of projects and the bookings that you have and the (32:53) looking at right now given your cost, input cost structure and maybe you're looking – are you passing on some of the cost savings to your customers? Thank you. Mark R. Widmar - Chief Financial & Accounting Officer: Vishal, I'm not sure I understood the first. The first one's trying to understand kind of the earnings impact of the timing of the sale of our projects? Just trying to make sure, can you repeat it, please?

No, I'm just trying to understand how many – how should we think about the linearity of project completions for the rest of the year? I know you said 200 megawatts will be completed in Q1. How we should be thinking about the rest of the year, given your backlog and the bookings ramp that you've seen in the fourth quarter? And then where do you think the PPA environment is right now with the improved cost structure? Mark R. Widmar - Chief Financial & Accounting Officer: So I guess the best way to point you to and obviously we disclosed this in our K as well, so that you can look at the projects that have PPA dates or – excuse me, COD dates with 2015. And those would include Lost Hills and North Star and Kingbird as an example, right? So those are going to be the projects, which will be achieving COD this year and will ultimately recognize revenue on. It will be lumpy the same way that – I can't give you a profile of how that flows through the year. The construction of the activity will be relatively linear not only for those projects but for the projects that we are constructing with CODs in 2016. However, the revenue associated with that and the cash flows associated will be relatively lumpy based on the CODs that are achieved. So I think the best way to think about it we're constructing a couple hundred megawatts on balance sheet. If you look at our aggregate pipeline of north of a gigawatt that will be achieved COD between now and the end of 2016, that's the kind of cadence and kind of rhythm that we're on right now in terms of the monthly profile of 100 megawatts or so of construction of self-developed assets. Around the PPA environment, we're not going to provide any color on that at this point in time.

Okay. Thank you.

We'll go next to Brian Lee with Goldman Sachs. Brian K. Lee - Goldman Sachs & Co.: Hey, guys. Thanks for taking the questions. I have two. First off, could you provide some color on how you're thinking about the impact to cash flow economics at a high level on projects post-ITC starting in 2017 versus the levels that you're generating at now? I guess one of your peers suggested recently that it would be 20% to 30% lower, but would be curious to hear your take. And then secondly, if I look at the implied bookings, ASP this quarter or quarter-to-date, it suggests about $1 a watt which is – it's lower than what you've been at for the past several quarters here. So wondering how much of that is being driven by mix here in the near-term versus just cost deflation on a like-for-like project basis. And also if there's any international embedded in that mix that's having an impact? Thanks. Mark R. Widmar - Chief Financial & Accounting Officer: So on the cash flow and the economics post the ITC, I mean the simple math says the ITC if it steps down from 30% to 10%, I mean obviously that's going to drive down the overall economics of the project now. Now, you get a partial offset of that because you can recover a little bit more makers back, because the makers is – you take half of the ITC delta and you reduce your maker's basis by that. So instead of taking a 15% delta, now you've taken a 5% delta. So you get a little bit more makers back, but again, that's spread out over five years. But what we would say is that, obviously, it's going to make the economics more challenging, however, when you look at our roadmap and the entitlement of where our installed cost is going, driven by the improvement of our module efficiency, higher energy density, and overall reductions that we're driving across our balance of systems, we'll be better positioned than most to compete in that type of environment. So, yes, economics will become a little bit more challenging, but when you couple that with an aggressive cost reduction roadmap that we're on the journey of delivering again, we feel that we will be able to realize comparable economics post the ITC as we are pre-ITC especially if we get into the 2018 and 2019 timeline. So we think we are pretty well-positioned from that. As it relates to the bookings ASP, you've got to remember one of the things that Jim indicated in the first quarter. I think we booked a little less than 200 megawatts with Strata, which was included in that number. That's mainly module-only, right? So when you do the math, you got to remember that that mix of what came through in that 300 megawatts or so and the year-to-date bookings number was highly impacted as a result of that. Now, the other thing I would say about Strata, I think it's important it relates back to the comment that Jim answered or the question that Jim answered at the very front was around the relative competitiveness of our technology. That's a new customer for us. Now, Strata obviously has installed hundreds of megawatts. What we've been able to do is displace other mainly Chinese module suppliers that they have historically relied upon. That we've been able with the overall increased competitiveness in our technology, developing the strong relationship with the customer, and then strength of our balance sheet and overall bankability, we've been able to penetrate an account that we historically have not had a presence in which I think is a great testament to the accomplishment of our BD team as well as our technology. But that's the thing you've got to keep in perspective as it relates to the first quarter. It is somewhat skewed down because of the high mix of module-only sales.

We'll go next to Sven Eenmaa with Stifel. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Yes, hi. Thanks for taking my question. First, I wanted to ask in terms of the full year 2015, what are your expectations on the total systems built? How many megawatts do you guys intend to complete in the year? Mark R. Widmar - Chief Financial & Accounting Officer: I guess, the best way to say that is you can look at our disclosure tomorrow in the Q. And as I indicated, we've got north of a gigawatt of volume that has to achieve COD by the end of 2016. It largely is going to be relatively linear. I mean we're going to have to construct that in a relatively linear basis in order to deliver against that amount of megawatts between now and 2016. We're not going to provide the specifics as it relates to what happens this year versus what's going to happen next year but given the timeline that we're up against, I think it's pretty prudent to understand that it's going be relatively linear. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Got it. And then the second question I had is in terms of the first quarter guidance, can you provide any color on the gross margin expectations? Mark R. Widmar - Chief Financial & Accounting Officer: No. I mean, we didn't provide the specifics around that and we're not going to provide that at this point in time.

We'll go next to Andrew Hughes with Bank of America Merrill Lynch.

Hey, guys. Thanks for taking the question. One on India, it sounds like the opportunity to date has been a mix of modules and projects. Curious on the 5 gigawatt pipeline there, is that all fully developed projects? Is there EPC or module-only in there? And also to the extent that it is projects, could you give us a sense of sort of what the balance of systems cost is in India? We've heard some indications from others that it's really quite low and just curious what you guys are seeing. James Alton Hughes - Chief Executive Officer & Director: On India, the 5 gigawatt number is a development number, so that's a project number, not Module Plus or EPC. And with respect to balance of system, I won't give you a specific number but that generally to date has been a fixed tilt market. And it has been a market with a localized supply chain. So as you would expect in those circumstances, you do get lower cost balance of systems as a result of those factors.

Great. And then just on the TetraSun update, thanks for that, any thought as to slowing that down? Or is it taking a slow trajectory as you achieves such great cell efficiency on the CadTel side? And how you sort of judge those tradeoffs in improving an incumbent technology versus trying to ramp the newcomer? James Alton Hughes - Chief Executive Officer & Director: Well, we have made a specific commitment to the TetraSun that will take us to 100 megawatts, slightly more than 100 megawatts of levelized production when we get it fully ramped up. I think for the time-being, our focus is on let's turn it into a real product. We've got to get through the normal ramp, we've got to get the modules certified in the marketplace, we've got to get a chance with real customers to see what that product looks like. As I've often said, there are nuances to each of the products in the marketplace in terms of operating conditions that they may perform better in, their specific electrical characteristics, their form factor and size characteristics and we think we've always said that there is a place for the higher efficiency product in the marketplace and in our product mix. What we have said we wouldn't understand until we got further down the road is where does the line – do we draw the line between the dominance of the CadTel product versus the dominance of a high efficiency low cost TetraSun module? And we will continue to evaluate where that line is as we move forward with both products over time. Obviously, the better we do with CadTel, the more it's going to encroach upon market opportunities that might otherwise be a TetraSun market. But we have high hopes for the TetraSun technology also and we believe that we can drive improvements in that technology over time also. So they both have a place in our staple of technologies. And as we move forward in time, we'll continuously evaluate the results we're getting with each.

We'll go next to Edwin Mok with Needham & Company. Edwin Mok - Needham & Co. LLC: Hi. Thanks for taking my questions. So beyond Solar Gen 2, do you have any other large contractor project that you might have opportunity to retain partial ownership, much like that? That's my first question. And then, relate to the 15.8% efficiency number that you guys have laid out, how do you guys think about the cost per watt of those modules at that efficiency level versus some of the well-known cost per watt of the crystalline silicon Chinese solar manufacturers? James Alton Hughes - Chief Executive Officer & Director: I'll take your second question first and then let Mark go back to the first one. On cost per watt, we ceased to provide cost per watt information couple of Analyst Day ago because we basically viewed it as commercially sensitive proprietary information. If you go back to older presentations, you can track the relationship between efficiency and cost per watt that used to be contained in those presentations. Now, we are making progress in areas other than just efficiency, but you can at least get some sort of ballpark of the impact by going back and looking at those old presentations and that's all the guidance I can provide you. Mark R. Widmar - Chief Financial & Accounting Officer: As it relates to large projects and our ability to do something similar as we did with Solar Gen, yeah, we have a number of large projects. I mean one of them is the one Jim referenced is the 280-megawatt combined between Apple and PG&E that we have in California Flats. We also announced a couple quarters ago Tribal Solar (45:00), which is another 300-megawatt project. We have Stateline, which is a 300-megawatt project. So we have just between those three projects close to a gigawatt of large projects. Those will be highly sought after assets and we will look to do and monetize those assets in the most efficient manner as possible and to optimize the value. So you could see us replicate that structure as we did with Solar Gen on other assets in the future.

We'll go next to Mahesh Sanganeria with RBC Capital Markets.

Hi. This is Joe (45:36) in for Mahesh. Thanks for taking my questions. When I look at guidance, if my math is correct, it seems like gross margin is only about 10%, which is much lower. And I understand that there are larger percentage of module sales, as well as the retention of the project. But just can you talk about why it seems margin is much lower? Mark R. Widmar - Chief Financial & Accounting Officer: Yes. I'm assuming you're referring to – you walked into an estimate for the first quarter. We didn't provide guidance for gross margin for the first quarter. So however, just to give you an indication of an expectation is the gross margins should be lower in the first quarter relative to the fourth quarter. I think that's an accurate way to look at it. And it's largely reflective of – we – the margin that we'll realize on module-only and EPC will be lower. And so that'll weigh on the results for the first quarter, because we won't be selling any of our self-developed projects. Again, as we indicated, we'll be constructing them on balance sheet. But just think of it from that perspective and it's more of a timing issue, right? So think of it also as it's going to adversely impact the first quarter. We may have a little bit of an impact on the second quarter. When we get into the second half of the year, and assuming a successful launch of the YieldCo, it becomes less of an issue. So think of this as an impact for the first half of the year that allows us to position a portfolio that we can leverage into a YieldCo platform. And then after that, you'll see kind of the normal business structure and performance that we've had historically.

We'll go next to Tyler Frank with Robert W. Baird. Tyler Charles Frank - Robert W. Baird & Co., Inc. (Private Wealth Management): Hi, guys. Thanks for taking the question. Real quickly on projects such as Solar Gen where you retain a 49% ownership, is there anything in those contracts precluding you from selling that project later, for example, selling that to a YieldCo? Mark R. Widmar - Chief Financial & Accounting Officer: Yes. I don't want to get into specifics, but let's just say we structured those contracts in such a way that it allows us optimal flexibility. Tyler Charles Frank - Robert W. Baird & Co., Inc. (Private Wealth Management): Okay, great. And then, we saw the announcement that you committed to constructing roughly 5 gigawatts of projects in India. Can you elaborate on that and just give us a little bit of framework on what you think the timing will be like, and how we should think about those projects over the next few years? James Alton Hughes - Chief Executive Officer & Director: So that, the India statement was made in connection with the big government of India program to build 100 gigawatts by 2020. So our commitment would occur over that timeframe. I don't think we are far enough along to provide any kind of visibility as to what the project size or the rate at which that gets done. We're looking at a whole variety of projects in India, some modestly-sized and some much larger. The government is also – all of the developers came in and have put on the table our commitments to the market. The government has a number of reforms that they need to undertake to facilitate that business. And we'll have greater visibility as the new government begins to put those reforms in place. So it's a rapidly changing, rapidly developing market. We believe that the opportunity is real and significant. But it's way too early to talk about any kind of specifics.