Good afternoon, everyone, and welcome to First Solar’s First Quarter 2015 Earnings Call. This call is being webcast live on the Investor section of First Solar’s Web site at firstsolar.com. At this time, all participants are in a listen-only mode. As a reminder, today’s call is being recorded. I’d like to turn the call over to Steve Haymore, Investor Relations Manager for First Solar, Incorporated. Mr. Haymore, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its financial results for the first quarter of 2015. A copy of the press release and the presentation are available on the Investors section of First Solar’s Web site 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 first quarter financial results in detail and provide guidance for the second 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’s now my pleasure to introduce Jim Hughes, Chief Executive Officer. Jim?

Thanks Steve. Good afternoon and thank you for joining us for our first quarter 2015 earnings call. Let me begin by providing a brief update on our prior announcement regarding our intent to form a joint YieldCo vehicle with SunPower. Since our last earnings call the two parties have filed a public S-1 registration statement with the SEC for the initial public offering of 8point3 Energy Partners. Completion of the IPO is still subject to market factors and regulatory approval but we continue to move forward through the process. Again we cannot say any more about the transaction at this time outside of what is the public S-1 documents. Any questions on the subject in our Q&A session will be directed to the public S-1 filing for answers. Now for an update on technology and manufacturing, our module conversion efficiency continued to improve in the first quarter with our full fleet averaging 14.7% efficiency, an improvement of 30 basis points from Q4. Our lead line efficiency averaged 15.6% for the quarter and 80 basis points improvement quarter-over-quarter and a 140 basis point improvement versus Q1 of ‘14. This improvement is the largest sequential and year-over-year increase in our lead line efficiency in the history of the company. Even more impressive is the recent performance of our lead line which has reached a new milestone for module efficiency of 16.3%. This is truly a remarkable achievement which demonstrates the ability of our research and manufacturing organizations to execute to our roadmap. By the late Q3 we will have rolled out these latest improvement programs across the majority of our fleet. Slide 4 provides an update to our energy density road map, which we first showed at our Analyst Day last year and puts into context the advances in our efficiency. As…

Thanks Jim and good afternoon. Turning to Slide 12, I’ll begin by discussing the first quarter operational performance. Production in the quarter was 540 megawatt DC, an increase of 6% from the prior quarter due to higher module efficiency and improved factory utilization. Production was 22% higher year-over-year due to the upper mentioned factors and the restart of four manufacturing lines in Malaysia. Our package fast utilization was 87%, up 3 percentage points from the fourth quarter. Higher factory utilization Q1 was primarily due to less down time related to upgrades. In the first quarter the average conversion efficiency of our models was 14.7% which is up 30 basis points quarter-over-quarter and a 120 basis points higher year-over-year. Our best line averaged 15.6% efficiency during the quarter an impressive increase of 80 basis points from the prior quarter and a 140 basis points year-over-year. Also as Jim indicated our lead line continues to make remarkable progress as we are now running at 16.3% efficiency. To put this in perspective, a module produce that are on the facility had 16.3% efficiency has a cost-per-watt a low $0.40 excluding sales related cost. Turning to Slide 13, I’ll discuss the P&L. Net sales for the first quarter were 469 million compared to sales of 1 billion last quarter. The lower net sale is due to constructing more projects on balance sheet following our decision to pursue a YieldCo. In addition, the sale of SolarGen in the prior quarter, a higher mix of module only sales in Q1 and delays on several projects in the current quarter resulted in the sequential revenue decline. Relative to our expectations for the quarter net sales were lower due to several factors. First the sale of partial interest in our [indiscernible] project did not close in the first…

Thank you very much. And ladies and gentlemen [Operator Instructions] We will take our first question from Patrick Jobin. Mr. Jobin, please go ahead.

Few questions here, first on gross margins 8.3%, just trying to better understand kind of the mix impacts of the module business versus the system business; I would have thought cost incurred for projects you’re holding wouldn’t be flowing through P&L at this stage. So I’m just trying to understand that in context with the efficiency improvements, then I have a follow up. Thanks.

The margin, for the project -- our self-developed projects that will be contributed to 8.3, correct, those are held on balance sheet and the cost associated with that are on balance sheet, but still does flow through into the systems businesses -- our third-party EPS business. So it’s generally has been lower margin then we self-developed at anticipated, again we’re stepping in EPC contractor versus the actual developer of project. So the margin utilization will be lower on that and then the other balance of it, obviously the margin that we realize today on our module-only sales are lower than obviously the future bookings will represent given the improved competitiveness for technology.

2 megawatts of bookings, how many were systems versus modules? And then any update on TetraSun and ramping that? Thanks.

Yes. We don’t have a breakout of module versus third-party but you can tell that the start of booking we envision is mainly a module-only so that was a big chunk of it. So if you approximate something [indiscernible] of the total is probably reasonable assumption, is module-only the balance will be EPC, I’ll let Jim talk about TetraSun.

TetraSun, we continue to ramp production and complete the qualification and certification of the product and we’ll start to have a product available in the market place over the next several quarters. So it’s for the most part we’re seeing exactly as we anticipated and we’re very happy with the results of the product that’s coming off the production line.

And we’ll take our next question from Ben Kallo with Robert W. Baird.

Good progress on the technology, I guess the question that comes up quite a bit is there is a thought out there is a solar panel is a solar panel and it’s all the commodity. So how do you guys look at your technology improvement in differentiating yourself and how is that show through to the financials and to valuation for Solar?

So, there is certain aspects of the business that are clearly commoditized and you can say sort of a panel is a panel, but in reality what it comes down to is your customer is buying the energy that the panel generates and that’s why we’ve focused in this call and in general we focus in our R&D and in our sales efforts, to focus people on the superior energy generation that you’re going to get out of the product. The standard face value wattage of the panel actually tells you very little about what the panels are actually going to do in the field and the amount of energy that you’re actually going to get from the panel. So in the real world of day-to-day, hand-to-hand that back in sales it’s all about the energy generation of your panel and the cost effectiveness of our product as compared with our competitors is very, very strong. So not only do we now have a product that has greater energy densities than our competition but we have a lower cost structure than our competition so that allows us to be profitable and competitive in the marketplace and that’s how we think about and that’s what we focused on in terms of our research and development and that’s how we -- what we focus on when talking to and selling to customers.

And we’ll take our next question from Vishal Shah of Deutsche Bank.

Jim, I think you guys have mentioned your cost has come down to below [447] per watt, at least for the lead efficiency panels. Can you maybe talk about how that allowing to when business especially with some of the utilities in the U.S. what kind of forward pricing you see in the market place today and how competitive you are versus some of the other players out there, maybe some of the other technologies as well such as wind and coal.

So, let’s talk about solar-on-solar competition first, so quite simply having the lowest cost structure allows you to compete for business, capture that business at a more attractive margin than your competitors. It’s fairly straight forward analysis and formula. It also gives us pricing power to breakup in new markets. It also gives us pricing power to trigger new demand. The overwhelming impact on continuing reduction of prices on a global basis is increasingly utilities and commercial and industrial customers are seeing so with our as an attractive value preposition simply on its own. In the U.S. you had utilities that are increasingly moving towards natural gas as a large portion of the generation fleet and as they due to a forward resource planning fuel diversity generation diversity is an important part of the formula when you look at the prevailing prices in the market today which dependent upon what region of the country can be from anywhere as low as 0.4 or just under that to as high as $0.06 per kilowatt hour, when they look at that on a flat basis for 20 years and compared that to additional natural gas exposure even at today's low gas prices the general view is that makes sense as a portion of our total generation mix. So what you've seen in terms of this fairly large explosion of demand in the Southeastern United States is a result of that calculus, is a result of the market place understanding where pricing has gotten to and recognizing the value that it represents. We’re seeing the same thing internationally, just as one example Dubai originally had plan to carry out a 1 giga watt program over three year to four year time frame the first phase of that program they were so enamored up the pricing that they received that they doubled the size of that ramp and have accelerated the remaining 1 giga watt to this year. So we clearly both in the U.S. and elsewhere we reached a price points where as compared with other sources of generation above just on absolute cost basis on an absence of commodity price risk basis and on a generation diversity basis it’s a very attractive offering.

And will go next to Julien Dumoulin Smith of UBS.

Great. Excellent I wanted ask very briefly here when you think about the contracting cycle to get utility skill deals done in time for the ITC in U.S. what's kind of the last day if you will to get to the contract inked? Is it the second, third or fourth quarter 2015 and as you think about trying to get that full cycle to completion here and get those and work back from that.

I think it's pretty hard to generalize because it's going to depend upon the size of the facility; it's going to depend upon the jurisdiction in what's the facility is located, that set the sort of the permitting and code requirements that you are going to have to meet. So I fully expect that on small utility scale plants; let say it's sub 20 megawatts in size we’re likely to see opportunities to contract volume well into 2016 on the very large multi hundred megawatt projects I would think that we are over the course of the second and third quarter of 2015 we’re probably seeing the end of the opportunities to contract those asset and it will be a pretty linear relationship in between those two extremes. So it all depends -- obviously permitting a facility in one of the counties close to population centers in California is a more daunting task than permitting a facility in [rural] West Texas. So there is a whole host of variables that are going to impact when that cut off starts hitting in terms of the last opportunities that contract and complete the construction within the ITC deadline.

Will go next to Krish Shankar with Bank of America Merrill Lynch.

Thanks for taking my question. I have two of them first one Jim can you talk a little bit about how you seek the PPA prices for utility commercial kind of trend either in Q1 or over the last 6 months how has the trend being? And if you can give some color base in the different geographies that will be very helpful.

So the trends has continued to be down the -- it depend a lot on installation so if you are talking about contracts in the western region in the United States with high levels of installation we have seen prices between let's say $0.04 or just under up to $0.05 and the Southeastern United States are little bit higher due to the installation levels but broadly you are seeing overall power prices below 60 megawatt hour for a new generation of reasonable scale and everybody in the value chain is still making reasonable money at those price levels it just reflects that we all continued to drive cost out of the integrated plant on the module side, on the fixed balance of system side, on the variable balance of system side and on the capital cost side. So that we continued to see those prices come down.

We will go next to Brian Lee of Goldman Sachs.

Hi, guys. Thanks for taking the questions. I have two of them; I’ll try to squeeze both of them in here quickly. First on the conversion efficiency what’s the expected timeline for the lead line to be complete average, is it something to expect to materialize within the 12 months window and then maybe related to that, any reason why the lead line is test to moderate per your comments Jim of decreasing levels. And then the second question I had was on Caterpillar, the announcement there, will the economics on those sales resemble module-only margins and is there any potential recurring from those sales and then any potential quantification of what this could represent in terms of additional volume opportunity for you guys in 2016 and its first full year? Thanks.

Sure. I’ll let Mark tackle your first question.

Yes, so the conversion efficiency, what we basically said this is the vast majority of the lead line improvements will be rolled out over the next couple of quarters. So you will see that happening here over the next quarter which is consistent with how we saw the announcement we made last quarter on our [58%] lead line efficiency, as you can see that starting to impact the current fleet average pretty well. As it relate to the next step function change in the lead line efficiency that there will be a step function by the end of the year but as most of these initiatives are, we generally roll out a change we’ve been trying to stabilize across the fleet and then we look to the next step along the road map. So we’ll see a little bit of movement in the lead line that will be towards Q4 end of the year before we’ll see a dramatic shift moving by.

And then on the Caterpillar transaction, I think you can expect that on this particular transaction the margin certainly initially will look like module-only sales. It’s possible that as we get into the partnership in the business that can morph overtime and we can have a greater scope of participation. But to keep it simple and get the transaction paper the forces has been more along those lines. In terms of the size, the potential market is huge and the Caterpillar dealer network is vast. And I think for us to provide any sort of prediction or guidance as to what the volume could look like I just don’t think we have enough visibility yet. We’ve got to get out in the field and provide training and materials to the network of dealers and then once they begin to engage with their customers I think we’ll have much greater visibility, but I don’t think we have it at this point but the potential addressable market that it represents is vast.

We’ll go next to Sven Eenmaa with Stifel, Nicolaus.

First I want to ask in terms of your 3 giga watts mid to late stage project pipeline, how much of that is for COD days beyond 2016?

I don’t think we have -- we’ve broken that out and provided that information. There is some of it that is beyond 2016 a fair bit of it is, not the majority but I don’t think we can provide any greater specificity in that.

We’ll go next to Edwin Mok of Needham.

First is on the cut incremental point 9 mega -- giga watt of project that you guys spoke -- or shipment that you just booked, since last quarter on your presentation, how much of that is planned to go into your balance sheet as project versus things that you’ve assigned to yourself self. And then my follow-up question is on expense side, with planned joint YieldCo and [fiscal] you’ve mentioned should we expect expense to go up as those projects get -- gone away?

I don’t think I understand your first question correctly is how much of the year-to-date bookings would actually be associated with projects that we’ll construct and then drop down in the YieldCo. So, the only thing I can say right now is that in our public filing is that we’ve identified the initial portfolios of assets and we’ve identified a potential growth of portfolio. We can’t comment anything beyond that, but the current period bookings are not reflective of either the initial portfolio or the [indiscernible] portfolio. So we have yet to determined based off of the opportunities set that we have in the bookings for the first quarter. What the ultimate monetization will be and we will value with that overtime and make the appropriate decision like us. The expense question is, we’ve incurred more transaction expenses in Q1 as you can imagine legal tax accounting other one-offs has the transaction, we’ll continue to incur those cost up until the IPO. Once the IPO launches you shouldn’t think of any incremental expenses being incurred by First Solar and there will be expenses in mandatory service agreements that will be provided to 8point3 Energy Partners, but those will be compensate properly by 8point3 Energy Partners.

We’ll go next to Paul Coster of JPMorgan.

Just quick question, as we move forward I’m expecting the pipeline to shift towards maybe emerging markets little bit more, as that happens and you build a pipeline with projects outside of North America in particular, outside of OECD countries. Are you going to start to hold back projects there as well or are those all build to sell for the time being.

If you look at the filling we did the F1 filing, there are definitions of qualified assets primarily relate to OECD type of countries that could be evaluated and we’ll make those decisions over time if the economics of that look attractive and it's compelling to include into 8point3, we’ll do that; if we think we can capture better economics by monetizing them with local cost of capital available than we potentially will take that path. At this point in time we have the optionality we’ll continue to do that as which makes the most sense to pursue.

Yes. Thank you very much. A question on gross margin, I think you have implied guidance so just like mid or slightly below that the gross margin. I just had a general question on gross margin going forward. I think industry wide we see something that 15% to 20% goal gross margin on the projects and you probably have some headwind from the module, so a low to mid double digit is that a good place to model and also if you can comment on where are you targeting gross margin on the drop downs?

So on gross margin, first up as the gross margin is up sequentially we don't provide the actual gross margin, but if you back into it you’ll show that relative to Q1 will see a sequential increase in gross margin. If you go back and what we said historically is that we anticipate that's the normalize margins for the business overtime will be in that 15% to 20%. So that's not anything that is inconsistent with what we said, now as the module cost continues to improve we may see margins that are outside of that range, at the module only level. But I think it's probably safe to say that 15% to 20% is kind of how we’re currently envisioning the business to evolve overtime. And related to expectations around dropdown of assets into YieldCo and expected return on that, we know not made any comments in that regard nor will in this point in time.

The other comment I want to add is you have to bear in mind if you compare us to other industry participants they don't have an engineering procurement and construction business you’re not going to be able to do a direct comparison we could take a 100 megawatts of module and sell them module only at a very -- what looks like a very attractive gross margin. We can package those same modules into an engineering procurement and construction contract that's at a much lower gross margin percentage but at a much higher total gross margin dollars and so it's very hard to look at our results in the aggregate and make a direct comparison to the other participants that are largely module only sales as opposed to having the significant engineering procurement and construction component.

And will take our final question from Colin Rusch of Northland Capital Markets.

Thanks for squeezing me in guys. Can you talk a little bit about the opportunities to sell into the merchant marketing was a number of projects as you go forward this YieldCo, are you seeing significant opportunities in your pipeline and how should we think about that leaning into the percentage of business going forward?

When you say sell into the merchant market you talking about sell un-contracted power plan on an un-contracted basis, sell to power merchant or are you referring to something than else?

Pardon, me I said emerged.

Did you say emerging okay, sorry my mistake. Alright you address this.

So, there is lots of optionality as we continue to address the best 8point3 Energy Partners and we will look at emerging markets because we have a merchant plans in Chile right now and looking at the best path to monetize that asset that clearly could be a path that says that 8point3 is the best ultimate position of where we would want to monetize that asset. We've got assets in Japan that we’re developing; we’ll be looking at those as well in terms of what is the right answer to do that. So what I would say is it's given us significant optionality, it creates somewhat of a competitive tension so that other when we get them to a point of having to sell down an asset, there is a competitive tension and there is a fallback position and then negotiations concludes, obviously it’s advantageous to us because if we don't believe that market’s willing to pay the proper returns over the value that they are getting from that asset then we obviously have different path choose. So that optionality views are help on our negotiation. So I do see it will involve more time again, if you look at what we’ve included in the S1 it's mainly U.S. assets initially; how overtimes and I think you will start to see some diversification with international market.