Good afternoon, everyone, and welcome to the First Solar's First Quarter 2018 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investor.firstsolar.com. At this time, all participants are in a listen-only mode. As a reminder, today's call is being recorded. I would now like to turn the call over to Steve Haymore, from First Solar Investor Relations. Mr. Haymore, you may begin.

Thank you, Ashley. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its first quarter financial results. A copy of the press release and associated presentation are available on our website at investor.firstsolar.com. With me today are Mark Widmar, Chief Executive Officer; and Alex Bradley, Chief Financial Officer. Mark will begin by providing a business and technology update. Alex will then discuss our financial results for the quarter and provide updated guidance for 2018. We will then open the call for questions. Most of the financial numbers reported and discussed on today's call are based on U.S. Generally Accepted Accounting Principles. In the few cases where we report non-GAAP measures, such as free cash flow, or non-GAAP EPS, we have reconciled these measures to the corresponding GAAP measures at the back of our presentation. Please note this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in today's press release and presentation for a more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer. Mark?

Thanks, Steve. Good afternoon and thank you for joining us today. Moments ago we issued a press release announcing that First Solar plans to construct a new Series 6 module manufacturing facility in Ohio, which will significantly increase our domestic production capacity. This decision in is in response to the continued strong demand for our Series 6 product and allows us to better address the growing U.S. solar market. Furthermore, it is a strong testament to the competitiveness of U.S. manufacturing within the global landscape. As highlighted on slide 4, this greenfield factory will have a nameplate capacity of 1.2 gigawatts and will be built essentially next to our current manufacturing operations in Ohio. Combined with our existing Series 6 factory in Ohio, which has a nameplate capacity of 600 megawatts, this additional facility will bring the total planned Series 6 production in the U.S. to 1.8 gigawatts and further solidify our position as the largest U.S. solar module manufacturer. We expect production to begin in late 2019 and the factory to be fully ramped by the end of 2020. The total capital expenditures to construct this facility are expected to be approximately $400 million and will be incurred over the next two years. The site selected could accommodate a second factory of equal size and we will continue to monitor market conditions and our relative competitive position as we evaluate the potential for adding additional capacity. There are three major benefits to building a new fully integrated manufacturing facility in the U.S. Firstly, recent U.S. tax reform and the favorable local and national business environment enhance the economic rationale for U.S. manufacturing. Secondly, the lower labor cost per watt of our Series 6 module reduces the labor arbitrage benefit of manufacturing in Malaysia or Vietnam relative to the U.S.…

Thanks, Mark. Turn to slide 10, I'll start by covering the income statement highlights for the first quarter. Net sales in Q1 were $567 million, an increase of $228 million compared to the previous quarter. The increase is due to the sale of 155 megawatts of projects in India, 15 megawatts of projects in Japan and initial revenue recognition from the sale of the Rosamond project in the U.S. It's worth noting that although our first Series 6 modules produced will ship to the second phase of our California Flats project, which was sold in 2017, Rosamond is the first project we sold that will use exclusively Series 6 modules. As mentioned on last quarter's call, there was a potential for loss in Q1 if some or all of these projects did not close. But the execution of these deals was a significant contributor to revenue and earnings for the quarter. First quarter revenue also included $55 million related to the settlement of a California state sales and use tax examination associated with the EPC contracts. As a percentage of total quarterly net sales, our systems revenue in Q1 was 72% as compared to 39% in Q4. Gross margin improved to 30% in the first quarter from 18% in the prior quarter. The higher gross margin was primarily a result of the mix of higher gross profit projects recognized and the settlement of the sales and use tax examination. On a segment basis, our first quarter systems gross margin was 40% and our module gross margin was 6%. The system segment margin was strong as a result of the India, Japan, and U.S. projects sold in Q1. The decline in the module segment gross margin was due to lower Series 4 ASPs associated with supply agreements that were contracted several…

Thank you. And we'll take our next question from Sophie Karp. Please go ahead.

Sophie, are you there? Ashley, if we can go to the next caller then, please.

We'll take our next question from Philip Shen with ROTH Capital Partners. Please go ahead.

Hey, guys. It looks like you're making great progress on the Series 6 ramp-up. When do you expect your first third-party shipments? If you said it in your prepared remarks, sorry if I missed it. I know it's always been kind of perhaps back half of this year, but now that you have a clear line of sight to ship to your own projects, you mentioned something about certifications may slip a few weeks. Does the first shipment to third parties depend on that certification and what was that original deadline and what is that date now? And then shifting to the progress you're making on Series 6, 90% of the modules at more than 400 watts, that's fantastic. Can you give us an update on what you're seeing in terms of the cost structure and progress you're making? Back at the Analyst Day I think at year-end 2016, you talked about 40% lower than Series 4. So, is that very much on target as well? And then finally, how do you expect the bookings to trend with the success that you're having with the Series 6 ramp-up? Thanks.

All right. So a lot there, I'll try to hit on it. As it relate to third-party shipments for Series 6 and again we originally planned the vast majority of the early production was going to go into our own self-developed assets and that's what is happening. The shipments to third-parties really don't start to happen until really the end of the year into the November, December timeframe, where we really start to see any meaningful volume starting to go into third-party shipments. So, again, we've allowed this optionality and flexibility with our own self-developed assets to absorb the volatility potentially around the ramp and potential implications that that may have or even the timing of various certifications. As relates to the certifications, again, to the third-parties I see no impact at all of anything going to third party, but the other thing I just want to put in perspective is that we have historically and we will do it again here, effectively do in-field certification. So, we've done with this before with Series 4 and we have continued to ship, and then do the in-field certification and so the initial shipments that are going out right now to one of our self-developed assets will use that same type of methodology. So, I don't want you to feel like the timing around certification and the fact that it's slipping a little bit really will have any impact – not only won't have any impact to third-party customer shipments because they're further out on the horizon, but even to our own self-developed assets, it won't be an issue from that standpoint. Series 6 volumes are – the cost side of the equation, but for what we're seeing right now with the potential stress points on aluminum, mainly with what's going on…

And we'll take our next question from Sophie Karp with Guggenheim Securities. Please go ahead.

Hello. Good afternoon. Can you hear me now?

Yes, please go ahead.

Hi, guys. Thank you for taking my question. Just to follow-up on the discussion on the bookings, as you continue to book this volumes, how much of a embedded pricing risk is there? Maybe are there different contract types that you're signing and just how much of, I guess, price declines do you anticipate when you think about it?

Well, look, Sophie, the way our contracts are structured, and they have been through the horizon that we've been talking about building the contracted pipeline, is they are firm fixed prices that also become associated with some form of payment security or down payment, whether in the form of an LC or cash, or something along those lines. And they're enforceable and there's obligations of the customer to take and there's obligations of First Solar to perform relative to those contracts. There are not any price adders or deltas, per se, but for a price adder for the bin. So if we contract at a 430 watt module and we deliver a 435 watt module, then there will be a price adder. If we deliver a 425 watt module, there would be a price deduction. That's really the only variability in the ASPs, other than the bin that ultimately is delivered to the customer relative to what was contracted. And there's provisions in the contract to allow for deltas on the contracted bin. It goes up and down. Other than that, there's really no variability into the contracted ASP.

And we'll take our next question from Ben Kallo with Robert W. Baird. Please go ahead. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: Hey, guys. Congratulations. Can you talk a little bit about guidance? I guess you had a big beat breakdown (36:27) compared to where you thought you would be, and so you didn't raise guidance. I know there were some risks there you mentioned, but just how you think about that all. On Series 6, I think, Mark, you were talking about, basically, I mean, like huge bookings, so I think better than everyone expected, with being sold out until 2020. Now, I think the Street can look at that and say, okay, they have nothing left to do. So, I guess, how would you counter that? What are we missing maybe on the margin side or what's the next step? Are you going to expand capacity more? I'm sorry, I always do this to you, but I'll leave it there.

Yes. So, Ben, I'll start with the guidance and Mark will talk about the Series 6. So on the guidance side, we had some upside to the quarter from the settlement of the sales and use tax examination, which was in our suite of risks and opportunities for the year, but not necessarily looked at for being in Q1. So that's an upside. And that's been offset partially by, as I mentioned, we've pushed out the Beryl project. So we're currently in the sale process for that asset and we expect now to close that in 2019. Based on the current position in the sale process, we think we'll meet or potentially exceed our clients' expectations around that project. However, as we've always said, we will look to optimize total project value over making a specific quarter or even a specific year of guidance. And right now, it's looking like we can optimize value on that asset by pushing it out. We've also got a couple of risks for the year. So Mark talked a little bit about the potential impact of Series 6 around the aluminum on the frame. We're also seeing steel, aluminum costs potentially increase across the EPC business as a function of tariffs and then the ancillary impact to the pricing of exempted or non-tariff steel, aluminum as well. And then lastly we have the Ishikawa project in Japan, which has had some schedule challenges related to adverse weather, and then we have a mitigation plan and we still think we have a good path to selling that in 2018. But if you look at all of those in totality, there's a lot of variability in the guidance for the year and we think that keeping the range where it is today gives us some flexibility should we see increase in traffic costs or potentially a slip out of the Ishikawa project into next year. So that's why we're keeping guidance for the year as it is. In terms of the guidance over the year, we guided to the first half that could be about a quarter of the earnings for the year. If you look at the first quarter that we recorded, you take the sales and use tax piece out and the breakeven guidance we are giving for Q2, you go to about that same place. So guidance for the year not changed, still a lot of variability in the year. But we are pretty confident we have a good path to the bottom range of the guidance.

Yeah. I'll add this to the guidance, the thing is, Ben, as you know, we're obviously going to be very prudent as it relates to when do we take up guidance. And I think we're still early in the year and there's a lot of moving pieces and we want to always reserve that optionality as it relates to capturing better value for a development asset by selling it at the optimal time to capture that value equation versus trying to make it fit into a particular quarter or year. So, we're always going to be a little bit more balanced in that regard and we'll see how the year progresses and provide an update around that in our next earnings call. As it relates to Series 6 and, look, we're very happy with the bookings and we've added more capacity now for that reason, and not only for what's contracted, but also for what sits in our development – or excuse me, our mid- to late-stage pipeline at this point in time. We're continuing to add EPC, so we're taking, we showed another 380 megawatts or so this quarter that we booked on top of a module agreement that was already contracted. We have another 500 megawatts of EPC that we'll be able to most likely add to additional volume that we have contracted modules on and we're going to continue to look to that. So that's going to be another adder. Then another piece will be O&M, on all the volume that we're talking about now close to 1 gigawatt, we've added EPC to or will add EPC to here over the next quarter or so. We're also working to add additional O&M to that scope. So another revenue stream and earnings pool that will come on top…

And we'll take our next question from Brian Lee with Goldman Sachs. Please go ahead. Brian Lee - Goldman Sachs & Co. LLC: Hey, guys. Thanks for taking the questions. Maybe, first off, Mark, you seem more constructive on topping the 1 gigawatt in the systems business bogey in recent quarters. I know there is some moving pieces in terms of specific projects this year. But given the recent trends and the EPC traction you're seeing, is that 1 gigawatt bogey still the right target for 2018 – maybe less 2018, but thinking about 2019 and beyond? And then, secondly, on the new Ohio plant, just a couple of modeling specifics, if you could help us out, Alex. The $100 million for this year, fair to assume the other $300 million in CapEx comes in, in 2019. And then at Analyst Day, I think, you guys had said $50 million in start-up and ramp penalty costs in each of 2019 and 2020 related to capacity expansion. How does that change with this new plant for those years? Thanks.

All right. I'll take the systems business question, Brian, and Alex will take the other two. Yeah, look, I'm very happy with where we are right now on the systems business. We've always said that the gigawatt is the target annually and we could trend above that number any given year and we've also said that maybe, over time, as we continue to see more progress maybe the number goes up. And what I'm seeing right now there's clearly a potential that that could happen, especially with what we're seeing in some of the international opportunities, beyond just what we're doing here in the U.S. So I think, the combination of the two says that there could be an additional upside to the systems business as we look over the horizon. And we will be selective. I mean, there is a very unique and specific opportunity set that we're going out after and where we want to position ourself in the market as well as the geographies in which we want to do development, particularly, and our systems business, in general. But subject to kind of those guardrails, I'm very happy with the systems business movement and there could be an opportunity that we'll do better than that over the next few years.

And Brian, on the numbers, so just to clarify, it's $150 million of CapEx increase for this year and $250 million, which we'll spend in 2019, so total approximately $400 million. And on the startup side, we originally, at the Analyst Day, guided to $170 million of both ramp and startup combined in 2018 and about $50 million in 2019. We're adding $10 million to that number for 2018 today, so current guidance is $180 million combined. Now, we haven't updated for 2019 or beyond yet, and we may do so later in the year. But for now, the only update is $10 million addition to 2018.

And we'll take our next question from Colin Rusch with Oppenheimer. Colin Rusch - Oppenheimer & Co., Inc.: Thanks so much. Could you talk a little bit about how many new customers you booked business with this year? How many opportunities you're seeing to actually bid into products that are adding capacity on existing projects? And then, if there are any incentives to offset the incremental expense on Ohio capacity expansion.

Okay. So, Colin, on new customers, we haven't historically reported on that specifically, but what I can tell you just – I'll just use for example some of the announcements that we just made in terms of customers. The Vectren, the first deal that we've done with Vectren, Tampa Electric, which we announced the first deal a quarter or so ago. First time we've done business with Vectren, the U.S. developer that we talked about, 1.2 gigawatt that we've done 700-plus this year and 500-or-so last year. That's essentially a new customer, we really haven't done anything with that customer. When I get out into the international markets, we highlighted volumes in Turkey, which again is a customer that we haven't done a lot of volumes with in the past. Australia had some of the momentum that we got going on in Australia. We're expanding there. Japan, we're expanding there. So when I look at the profile of new customers, while we don't report on it specifically, one of the things that's enabled us to grow the pipeline that we have in terms of contracted bookings as well as the mid- to late-stage is a very diverse customer set and a lot of customers that we have not done business with historically. And part of it is because the excitement that's been created with Series 6. So the product that we have now is looked at as competitively advantaged in the marketplace. And there's even, to some extent, more of a pull versus a push with some of our customers wanting to come to us and work with First Solar because of the technology that we're bringing to market from that standpoint. I didn't understand – I also talked to the incentive question, but you said something about adding capacity. Help me understand that in terms of customer. I thought I heard you say customers adding capacity. I'm not sure of the question. Colin Rusch - Oppenheimer & Co., Inc.: If there's are existing sites where land has been used, what we have started to see a little bit of is folks either replacing modules or adding capacity around those existing sites within existing interconnects. So I'm just wondering if you've seen a significant amount of activity in that.

I mean, we haven't seen a lot of that. We've actually done some of that in some of the international opportunities where we found ways to add incremental DC in certain cases. Clearly, there's opportunities where customers have done development of particular site and the interconnect's been sized to something that's larger than the actual capacity that was being built in the first phase and then gets expanded beyond that. So, those really do happen from time to time. As it relates to any potential repowering, at least from a First Solar perspective, we haven't seen much of that all.

Yeah, Colin, on the Ohio side, so the range of state and county level local incentives, we haven't listed exactly what those are. But they include a range of job creation incentives, training incentives, sales and property tax abatements, most of which have been largely finalized, but have potentially got either local voters or things to completely finalize those. So they're largely in place, and there's a wide range. The other thing I'd say is that one of the reasons we can expand U.S. manufacturing capacity is associated with the lower corporate tax rate, and tax reform. And part of that tax reform has been the ability to immediately expense sales or equipment, so less a direct incentive, but also another reason that's made this more competitive relative to international manufacturing.

Yeah. And what I said in my comments as well, I mean, look, the relative competitiveness of U.S. manufacturing right now is really exciting to me and really to some extent overwhelmingly in terms of its relative position. It's not just the corporate tax rate and incentive and everything else that have been brought to the table, but just the labor productivity and advantages that we can get here in the U.S. relative to what we can see in some of the international markets, and just the general support we can get at the state level or the federal level support with the tax structure or whatever it may be. U.S. manufacturing coupled with our Series 6 product that – less labor content per module, it's very competitive to do U.S. manufacturing right now, and it also helps us reduce the logistics, the freight costs, delivering to customers here in the U.S., our ability to serve our customers more timely and responsiveness around that, and we're very happy about the ability to add more manufacturing capacity in the U.S.

And we'll take our next question from Michael Weinstein with Credit Suisse. Please go ahead. Michael Weinstein - Credit Suisse Securities (USA) LLC: Hi guys. Thanks for taking the question. Could you talk about the state and local incentives and when do you think they might start to flow in for the new factory?

Yeah. So Michael, there is not much update I can give you beyond the range of those, they're in the process of being finalized. But we'll update you further on later call as we get more clarity.

Yeah, the other thing – I mean I would just say, to some extent, some of the incentives that we're getting are comparable to the incentives we would have had when we first started manufacturing in Ohio. And a lot of them will relate to property tax abatements and other reductions that will happen over time. So the numbers, when we're actually able to communicate them, they'll be a large number, but in aggregate. But you also have to look at the timeline of which you'll see the benefit, they'll carry on for many years.

And we'll take our last question from Edwin Mok with Needham & Company. Please go ahead. Edwin Mok - Needham & Company, LLC: Hey, thanks for squeezing me in. So I guess two last questions, first, on the new U.S. capacity, I think you talked about like higher automation for Series 6 and, therefore, lower labor costs. But then I would suspect there may be some higher potential other things that might be higher costs, I guess. Is that what you're thinking about? Is it more costly to produce here or is it less costly to produce here? And then having that additional capacity in U.S., does it help you be more aggressive on bidding for system projects? And then just one quick question on OpEx, if you take up your OpEx start-up costs by $10 million, then you will actually lower your OpEx for the year, right, excluding start-up costs. Is that correct? And kind of to Mark's point about leveraging the model long term, is this like $283 million (52:48) OpEx a level that you think you can sustain even as you ramp to that 7 gigawatt of capacity that you eventually will be selling?

Yes. So I'll let Alex take a handful of them. I will just kind of the first one as it relates to the competitiveness of U.S. manufacturing. Yes, Series 6 is lower labor content per module produced. So that helps relative – and again, you have better labor productivity in the U.S., so a combination of less labor content and then better productivity effectively creates almost a level playing field with our manufacturing in Vietnam and Malaysia. The other thing that we get though is localization of the supply chain. And so having a local supply chain now that we have higher production volumes that we can run through their supply chain, which drives economies of scale to our suppliers which enables them to further reduce their costs, which drivers flow through benefit to First Solar is extremely impactful as well. And you couple that with lower freight cost to deliver to customers. And then the reality is that, yes, while we have a tax holiday in Malaysia, when you look through that holiday period and you look at the normalized U.S. tax rate relative to the normalized Malaysia or Vietnam tax rate, it's favorable from that standpoint. So there's many different aspects that has enhanced the overall competitiveness of U.S. manufacturing. And like I said, we're very happy to be able to expand manufacturing in Ohio.

So, for the Series 6 in Ohio directly impacts our recent bid (54:22) on systems projects. I don't know that having more U.S. manufacturing relative to other international manufacturing changes our ability to be on the systems side. I would say overall Series 6 is a very competitive product and having that product enables us to be more competitive in systems business, be it domestically or internationally. But one of the key things that we talked about OpEx on scale. So, yes, we're going to be up about $10 million of start-up this year, which does mean we are managing our core SG&A effectively that will be down slightly from previous guidance. This year we're going to be running still at around $0.10 per watt of OpEx. And if you look at our growth over time we aim to grow the company at 7-plus gigawatts of capacity without significant increases in OpEx. So, there'll be a minimal increases around some of our variable costs including sales expense. But outside of that, we would look to bring that number down by 50% or more to get down to, call it, a $0.05 per watt of OpEx number out when we're at that kind of 7 gigawatt range. And also remember that when we talk about that OpEx number we're including freight and warranty in that number, which is not the same if you look at most of our competitors. So, to do apples-to-apples comparison, you'd have to strip that out of our number. So, as Mark mentioned, there's clear value in scaling and the benefits of OpEx in the incremental contribution margin that we can get through managing that OpEx profile carefully.

And this does conclude the question-and-answer session and the First Solar's first quarter 2018 earnings call. We thank you all for your participation. And you may now disconnect.