Good afternoon, and thank you for joining First Solar's second quarter 2026 earnings call. With me today are Mark Widmar, Chief Executive Officer, and Alex Bradley, Chief Financial Officer.

Mark will begin with second quarter highlights, followed by Alex, and then we'll open the line for questions. Today's discussion contains forward-looking statements.

Actual results may differ materially due to risks and uncertainties as described in our earnings press release and other SEC filings and the earnings material available at investor.firstsolar.com. We undertake no obligation to update these statements due to new information or future events.

We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are in our earnings press release and presentation.

This non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with US GAAP. With that, I will turn it over to Mark.

Thank you and good afternoon. Beginning on slide 4, we delivered both record second quarter and first half sales volume and improved financial performance relative to the prior year.

During the quarter, we generated over $1 billion in net sales, expanded gross margin to approximately 57%, and delivered strong adjusted EBITDA performance. We also surpassed an important milestone for First Solar, exceeding 100 GW of cumulative module sales globally.

We view this as a reflection of the trust customers have placed in First Solar over the more than two and a half decades and the durability of our technology and manufacturing platform. We ended the quarter with approximately 45.1 GW of contracted backlog with deliveries extending through the end of the decade, demonstrating the demand for our differentiated technology platform, domestic manufacturing footprint, and delivery certainty.

Turning to manufacturing, our US facilities continue to operate at high utilization rates during the quarter. In South Carolina, the first phase of the finishing facility remains on track to begin production in the second half of 2026, with equipment installations progressing as expected.

For the second phase, we now expect completion in mid-2027. While the revised timing reflects a number of factors associated with optimizing the facility's launch, it also enables the earlier incorporation of CuRe technology.

We are pleased with the performance of CuRe, with both high-volume manufacturing at our Perrysburg facility and performance data from field deployments across multiple climates exceeding expectations. We believe incorporating the technology closer to the onset of the facility's commercial launch will simplify execution, accelerate value realization, and enhance customer value and the facility's long-term financial performance.

Once completed, the South Carolina facility is expected to provide up to 3.5 GW of finishing capacity for modules initiated at our international manufacturing sites, giving us greater flexibility to optimize our supply chain flexibility while also optimizing freight, tariff, domestic content, and Section 45X economics. With respect to our international manufacturing fleet, production planning and utilization levels in Malaysia and Vietnam continue to be influenced by US market demand drivers and economics, including the pending Section 232 polysilicon and derivative investigation and tariffs.

We expect greater policy clarity will help inform the long-term operating profile for the approximately 1.8 GW of fully finished international capacity that remains available, after accounting for capacity being used to produce semi-finished product destined for our new South Carolina finishing line. A note on manufacturing optimization and allocation: approximately 41 GW of our 45 GW backlog includes some form of domestic content requirement.

These requirements vary significantly and range from requiring exclusive supply from US fully integrated factories, to blending US-made supply with both fully integrated domestic factories as well as product from our upcoming South Carolina finishing line, to a domestic content points requirement which is factory-agnostic, allowing blending of product from across our global fleet. We therefore continually balance and refine our module supply and demand allocation across the fleet to meet customer contractual obligations, optimize factory throughput, and optimize gross margin.

This typically means that over a period of time, we will seek to maximize production and sales firstly from our fully integrated US factories, secondly from our South Carolina finishing line, and thirdly from our international facilities. As relates to perovskites, we continue to advance our development program for this potentially significant technology platform.

Our previously announced development line continues to progress to process improved efficiency and reliability attributes on smaller form factor modules, while our Series 6 form factor pilot line remains on schedule and is expected to reach operational readiness in the first half of 2027. Our continued progress has given us confidence as we continue to invest substantial capital in our efforts to realize the commercialization of perovskites.

Earlier today, we published our latest Corporate Responsibility Report, reinforcing our conviction that how and where solar technology is made matters. The report details how we create enduring value by developing, sourcing, manufacturing, and recycling solar modules domestically, supporting jobs and communities, strengthening industrial capacity, and help ensure that benefits are realized locally.

It also highlights our continued focus on responsible manufacturing, supply chain transparency, workforce development, and resource efficiency. The report reflects the effectiveness of a business model where corporate responsibility isn't a construct, but the default.

Before turning the call over to Alex, I want to briefly address the market and policy environment and how it is informing our commercial approach. The underlying drivers for utility-scale solar remain intact, including load growth, data center development, electrification, aging generation assets, and the need for affordable, scalable new capacity.

The policy landscape continues to evolve, particularly as it relates to pending outcome for the Section 232 polysilicon and derivatives investigation, as well as final FEOC regulations. In this environment, we continue to prioritize pricing, contract quality, appropriate risk allocation, and long-term value over short-term booking volume.

Relative to the beginning of the year, we are seeing increased customer engagement, and as policy clarity improves, we believe First Solar remains well-positioned to capitalize on these opportunities. With that, I will now turn the call over to Alex to discuss our bookings, financial results, and outlook.

Thanks, Mark. Beginning on slide 5, as of June 30, 2026, our contracted backlog totals 45.1 GW with an aggregate transaction value of $13.6 billion, exclusive of technology adjusters, with scheduled deliveries extending through 2030.

Earlier this month, Cypress Creek Renewables broke ground on the Steel River Energy Center in Arkansas, a project utilizing First Solar modules and previously included in our contracted backlog. The initial phase is expected to provide approximately 1.6 GW of solar generation capacity and 1.9 GWh of battery storage to support Google's growing energy needs, with the opportunity for future expansion.

Since our last earnings call, we've recorded approximately 1.9 GW of additional US gross bookings at an average selling price of approximately 36 cents per watt, inclusive of applicable technology adjusters. While near-term customer activity continues to be influenced by the current policy environment discussed by Mark, our fully integrated domestic manufacturing fleet remains substantially committed through 2028, providing a high degree of volume and pricing visibility.

Given the limited amount of uncommitted domestic capacity available in the next several years, we continue to be disciplined in evaluating incremental contracting opportunities. We also initiated our first customer notifications related to contractual CuRe adjusters during the quarter, an important milestone in beginning to translate CuRe's performance benefits from potential ASP adjusters into backlog value and future revenue realization.

We expect the contribution from these adjusters to increase as CuRe deployment expands across our contracted portfolio. As a reminder, we expect limited ASP upside from CuRe sales in 2026, largely as a function of contractual notification deadlines relative to the timing of the decision to recommence CuRe production.

Turning to India, our guidance continues to assume production is largely sold domestically in a short-cycle book-and-build market, with the factory operating at a high utilization rate. India gross bookings during the first half of the year totaled approximately 1.1 GW at an average selling price of approximately 20 cents per watt.

Given the shorter contracting cycle of the domestic India market, booking economics generally provide a reasonable indicator of near-term revenue realization, subject to normal foreign currency fluctuations. Turning to slide 6, net sales for the second quarter were approximately $1.06 billion, a decrease of approximately 4% year-over-year.

The decrease was primarily driven by lower revenue associated with customer contract terminations recognized in the prior year period, partially offset by higher module volumes sold. Gross margin was approximately 57%, an increase of approximately 12 percentage points compared to the second quarter of 2025.

The increase was primarily driven by an estimated $89 million net IEEPA tariff-related benefit, higher mix of modules qualifying for Section 45X tax credits, and lower logistics costs. The net IEEPA tariff-related benefit reflects our current estimate of expected recoveries, related commercial obligations, and other tariff-related considerations that remain subject to refinement as additional information becomes available.

These benefits were partially offset by lower termination-related revenue and higher duties and tariffs. While logistics costs improved year-over-year, the quarter includes higher over-the-road freight costs driven by overall capacity tightening and volatility in diesel costs.

These impacts were partially offset by higher sales freight recovery. Operating expenses were approximately $155 million, including $76 million of R&D expense.

R&D increased year-over-year, primarily reflecting continued investment in perovskite development and the impairment of certain R&D equipment that is no longer expected to be used as part of our technology roadmap. Net income was $423 million, up approximately 24% year-over-year.

Adjusted EBITDA was $644 million, above the high end of our previously communicated Q2 preview range, with an adjusted EBITDA margin of 61%. Moving to slide 7, we ended the quarter with approximately $1.7 billion of net cash, providing substantial balance sheet strength and financial flexibility, while remaining within our targeted long-term cash range of $1.5 to $2 billion.

Operating cash outflows year-to-date were $360 million, reflecting first half working capital dynamics, and improved compared to outflows of $458 million during the first half of 2025. First half capital expenditures were $280 million, primarily supporting our South Carolina finishing facility and technology investments.

We completed the full prepayment of our India DFC loan during the quarter. Turning to slide 8, our full year 2026 guidance remains unchanged.

With that said, our guidance now assumes a net tariff impact of $60 to $80 million, with updates including the previously mentioned net IEEPA recovery and the assumption of Section 301 tariffs in the second half of the year. We also forecast offsetting updates between production start-up expense and R&D expense, as well as incremental freight costs due to certain non-recoverable domestic freight expenses above our previously assumed forecast, largely driven by changes in module delivery locations.

Note, in some cases domestic freight costs are now approaching international shipping economics. For the third quarter, we expect volume sold between 3.9 and 4.5 GW and adjusted EBITDA between $625 and $775 million.

In summary, our first half performance and reaffirmed outlook reflect the strength of our strategy of reshoring and scaling domestic manufacturing, progressing our technology roadmap, and maintaining a selective approach to new bookings in light of key pending trade and policy determinations. As we look ahead, our priorities remain unchanged.

We remain focused on disciplined execution, serving our customers, advancing our technology roadmap, managing capital prudently, and maintaining financial flexibility. With that, operator, please open the lines for questions.

Perfect. Thanks.

Hey, congratulations on the result, and appreciate you taking the questions. Obviously the FCC had a ruling about solar inverters a couple days ago.

I think on one side, it goes a long to show how serious the government is in promoting domestic content within especially electrical equipment, the hardware, which is obviously a very good for you given your position in domestic solar modules. Just curious if you have any early thoughts on potential impact on broader solar installations and the industry to work around that provision.

Thank you so much.

Thanks, John. Look, I think it continues the theme of our US government trying to ensure that we don't have any overreliance on adversarial countries and obviously China being one of them in particular.

I think the good thing about this is that the industry has started to get ahead of trying to find comprehensive domestic supply chains. Now we obviously were an early industry leader in that regard of reshoring manufacturing and creating a supply chain here in the US for our US operations.

You're seeing this now really across all components of equipment suppliers all the way up even to trying to find localizations for the battery supply chain as much as you can. I don't see it being a constraint near-term.

I think the current models that have been shipped into the US will continue to be allowed to be shipped into the US. I do think there is a theme or a message there, though, that that scrutiny may be stepped up as we move forward.

I think it just sends another great signal to domestic manufacturers that, look, we need to move forward. We need create domestic supply chains resiliency to enable not only the solar industry to thrive, but really all of industries as we reindustrialize the US economy, right?

Again, I think it's a good indicator of a continued theme and message that this administration has, and we fully support it.

Hey, guys, thanks for taking the questions. Just had two.

I guess first, on this Google Steel River project, appreciate you guys commenting on that. I might have missed it, but how much of the 1.9 GW in US gross bookings came from that one project in the quarter?

Then how much more bookings potential exists on that project's site? Then, bigger picture, maybe speak to how you're seeing general interest from that hyperscaler data center community.

Then second question I have is just kind of the customary latest thoughts, timing, visibility into Section 232, how you're viewing the potential for floor prices in the 40 cent per watt or higher range, and then how quickly do you move on your bookings funnel and Southeast Asia strategy once you get clarity on this, presumably, hopefully, in the next few months? Thanks, guys.

All right, Brian, I'll I'll tend to take kind of the the first two, and and Alex can talk maybe a little bit about the news of Southeast Asia. Make make sure it it's clear on the project that we announced with our partner that we supplied modules to for Cypress Creek, that is already in our bookings.

That was just to highlight, it's a great project. If you actually look at some of the more more recent announcements that have been made over the last several several weeks, I think you kind of see a theme there.

You've got a very large project with Cypress, the one that we referenced that's it will be phase one of kind of call it the 1.6 GW, then it goes to phase two, which will be about 2.5 gigs. That's a very large project, and I think the the battery component of of that as well is going to be, north of 2 GW megawatt-hours from the battery standpoint.

Really important strategic projects there to support Google. We have two other projects that have been announced over the last couple of weeks.

One with Terragen, which was about 1.4 4 GW. Then we then we had another one with Panaman, which was another gig-plus.

Those three projects that have been announced recently are about 5 GW of capacity. The Panaman, part of the Panaman volume was actually announced last quarter.

When we did the announcement last week last quarter around bookings volume, which I think we had in total is around 1.4, Panaman was actually included in in that volume. I think it's a great message that, the demand's there.

Half of that volume and that 5 GW I referenced is is directly communicated and tied to Google as a hyperscaler. The other 2.5 gigs, they haven't disclosed the counterparties, but if you look at the verbiage around the announcements on that, they'll reference a very large corporate account, one of the largest company companies in the US.

You can kind of get a sense of, the likelihood of who that counter counterparty's going to be for that for that project. Strong demand, for continued demand for hyperscalers, really strong relations and partnerships with First Solar to support those types of strategic projects that really kind of thrive on the importance of certainty.

Right? Those projects are strategic, they're important.

They obviously include storage that is is is reflected in the Cypress Creek project. As I've always said, the first thing you need to do is you're building out your project and de-risking is that you need to make sure that you have a reliable partner who can make sure those photons become electrons.

Without that, the whole project's then put to sit at risk, and we can deliver that certainty and that great technology and that reliability. We're seeing that into into the marketplace and and continued strong interest but driven by and as currently still somewhat insatiable demand for for hyperscalers.

As relates to 232, I'll take the pricing piece and then Alex can talk to how we translate that into our views around Southeast Asia. Look, it's still still there's still a lot of views out there.

I think everybody has has a view of how the construct may be with minimum floor price, maybe with a tariff on top of that. There's some views of whether there's quotas or not.

Like all's I can say is it's it's still still evolving, and we do believe it'll be constructive. I don't want to give kind of a our internal read of what we think it potentially could be because there's still a lot of moving pieces.

I can say that we're still in constant contact with the appropriate parties at USTR and Commerce to continue to bring our voice into the conversation. We're still optimistic that the outcome will be constructive.

We've used it as a reason to be disciplined, and and we'll see what happens once it's finally announced. There's there's demand that's still sitting there on the on the sidelines.

If you look at our cadence and our momentum of around our bookings, just here in the month of July, we've booked almost 2 GW in in in the US at very good prices, as Alex indicated. There's about 2 more GW, north of 2 GW that sits into a contract that's subject to CP, and then we've got another 2 GW of active conversations with customers that, there's a high probability we can close through by the end of the year.

We'll see how much that gets more further catalyzed by the decision on 232.

Brian, as relates to Southeast Asia capacity, we talked on the last couple of calls around looking at this a bit like an option. We're running somewhere around $30 million a quarter of underutilization associated with running Southeast Asia manufacturing well below its theoretical capacity.

About half of that's cash, about half non-cash. Given that we've been holding through the first half of the year, making a decision on the long-term future there pending the outcome of the 232, it makes sense to continue to do that.

I'd still view this as we're waiting for the outcome of that policy. Just to frame the amount, if you were to go back and look at the slides we put out in our February call, it shows you nameplate capacity of production.

We originally had about 7 GW of total capacity sitting in Malaysia, Vietnam. About half of that is going to be dedicated to production that will feed our new finishing line in South Carolina, there's about 3.5 GW left.

Of that, we did take out some tools, bring them over to the US to reuse in our perovskite work. Really ultimately leaves us with about 1.8 GW of end-to-end fully finished capacity that we could ramp up across Malaysia, Vietnam.

It's about that 1.8 that we're holding a decision on pending the outcome of the 232.

Thanks. Good evening.

Maybe just going back to Section 232, obviously, there's a lot in play, and I recognize that. We've heard and you mentioned the potential for waivers or quotas being allowed for certain domestic cell producers that could exempt them from some of these policy changes.

I guess I'm just curious conceptually, from your perspective, if some of these waivers are granted, do you think that could mute some of the price upside from Section 232? Or do you still see a constructive supply-demand setup just trying to think conceptually how you think about that?

Obviously any modifications versus 100% restrictions will create some potential dilutive impact to the strategic intent of the 232. It also depends on if there is a waiver of some type or a quota of some type, how big is it, and does it scale down over time?

Is it something that is put in initially and then we'll walk down to maybe a complete elimination of it? It's hard to give you a great insight to the impact.

Clearly, we're advocating to try to minimize any of those impacts, and as well as they should only be a limited duration to the extent that they're enabled or allowed at all. We really want to create a domestic supply chain, and any type of workarounds that you give will disincentivize the investments that need to be made here in the US, right, to scale up those capabilities.

I think it's much easier for people to understand the policy and environment with certainty versus creating uncertainty by waivers and quotas and those types of things that they can create. We'll have to wait and see.

We're firm in our positions that we don't believe that they should be allowed. We'll have to see how the final outcome is.

There's some history here, too. If you look back at the Section 201 tariffs and the exemption that was put in place for bifacial technology, it was clear that that exemption effectively gutted that provision.

I think the administration has seen how those exemptions can effectively undermine what they're trying to do. If there's a belief that the 232 provides a need around the national security interest, it doesn't make a lot of sense to have a carve-out or a quota piece associated with a national security interest provision.

Got it. That makes sense.

Then if we say that Section 232 goes through, you get some kind of positive outcome, you kind of mentioned that there's 4 GW, it sounds like 4 GW-plus of kind of potential pending deals for the second half, but do you get the sense that there's more demand sitting on the sidelines that's waiting for policy clarity? Once we get clarity, you could see that number move up significantly higher?

Then just a point of clarification, I guess again if Section 232 goes through, you get a good outcome, on the Southeast Asia capacity, would you bring that volume into the US as finished products, or would it come through as unfinished and you would expand your US finishing line?

I guess on the 232, and I'll let Alex take the other question around how we think through Southeast Asia and whether it comes in as finished or partially finished in order to expand capacity for finishing here in the US. I'll let Alex take that one.

There clearly are customers that are sitting on the sidelines. There is absolutely no doubt about that.

Even some of the stuff subject to CP is somewhat tethered to posting of security. One of the challenges that especially as you get longer-dated and in terms of contracting some of this volume, we are really trying to enforce having cash, liquid security against new bookings.

That's been a priority of ours. In some cases, some of the counterparties can't post the required security now, but working towards having that available.

They say that the security is posted then it kind of closes out on some of the CPs. That's a piece of it.

There's clearly people sitting on the sidelines waiting to see what happens. We have a couple of counterparties that are, they're hedging, they're waiting.

They know that the risk is the ASPs may go up. At this point in time, they're trying to wait and see how it plays out and again, just kind of conversation last time, are there quotas or not and what are the options they have and so forth.

That's all in the mix right now. As we've always said, the best thing for this industry is we just have clarity and certainty, and 232, we just really need a decision on that because then we can all stand up and move forward.

As it relates to what we could do with the Southeast Asia facilities, we could bring fully finished product in, subject to demand and pricing in the US. It's not only a function of where the 232 sits, it's also a function of where other tariff provisions sit.

Right now we have a Section 301 that's just gone into effect, replacing the Section 122 tariffs that were in effect for the first half of this year. Those relate to forced labor.

There is still a risk around a 301 relating to excess capacity, so that investigation is ongoing. Pending the outcome of that will obviously determine what the total tariff impact could be then to product coming in from Malaysia, Vietnam.

We could bring some of it in as semi-finished WIP share product and finish it in our existing US facilities as a limited amount, probably in the couple hundred megawatt range of incremental capacity at our finishing lines across existing fleet in Ohio. We could do a little bit of that, but it's not effective to run Malaysia at a low throughput, as you're seeing with the underutilization cost this year.

Really what we're looking for is an ability to run that factory at close to full capacity. Then either it's selling fully finished international product subject to where tariffs end up, or there is the potential to build another finishing line in the US, that's subject again to finding available site with power and the time it would take to build that out.

I think that's less likely, but it is still an option.

Thank you, operator. Good afternoon, team.

Appreciate the opportunity. Quickly, actually, to follow up on that last line of thinking on bookings.

How do you think about the safe harbor having played into the latest quarter here, obviously July 4 being a relevant threshold, and also again, that being a leading indicator for future sales into the later part of the decade? How are you thinking about that?

Obviously, that's a big part of your open book. What are you thinking in terms of having safe harbored your initial customer conversations?

Then as a follow-up on what you were just alluding to there, can you elaborate a little bit more around the permutations and the timeline for that remaining piece in Southeast Asia? I know it's a little bit of just an extension of the logic you were just delineating there, but can you expand a little bit on the timeline?

It sounds like it's not that far off that you'll make a decision. Let me put it more bluntly.

Maybe I'll just take that one. On Southeast Asia, we're really waiting for the outcome of the 232.

We would expect to evaluate that and have a view shortly thereafter. It doesn't necessarily mean that we will have an immediate action plan that relates to, say, a shutdown or a full capacity, but once we have a sense of where the policy is, that allows us to evaluate it.

It will take a little bit of time, though. We want to make sure whatever policy comes through, we understand it and our customers also have a chance to evaluate it, and we can have discussions around whether there's a view of long-term offtake potential from those facilities.

Then I just want to make sure a couple of things. Most of the bookings that we recorded 1.9 in the US volume, I think almost all of that was outside of the quarter close.

Most of that happened in July, which would also have been outside of the safe harbor date. Most everyone has safe harbored with transformers.

I know there was maybe 10 days left in the quarter where there was a ruling that was made that the decision that came out in August of the prior year where it said that eliminated the ability to use module or 5% CapEx rule to safe harbor. There was a ruling by one of the courts that came out, I think, I don't know, somewhere June 20th and there was hardly any time left in the quarter, and in that theory you could use, assuming that that wasn't challenged, that you could use modules to potentially safe harbor projects.

That was really not an opportunity. It just happened way too late, and most people had already safe harbored with transformers anyways.

As you go forward, it is an important component, especially for anything that was safe harbored. If you safe harbored in the first half of this year, with the ability to COD out into 2030, there are stricter requirements from a FEOC standpoint at the project level that have to be met that I think positions us well to serve that demand as you get out into '29 and '30 for when those projects most likely could be commissioned.

Plus, the other thing I would say is we are seeing there's a lot of kind of rigid interpretations a little bit. There are some people that are interpreting that even if something was safe harbored, let's say the second half of '25, that if you do anything with a change order or assuming something from a MSA to a PAPA, or until First Solar is actually generated, you have to always be mindful of is there a restriction that you could have to comply with from a foreign entity perspective.

There's a lot of very conservative, which is rightfully so. People want to be airtight and not taking any risks to jeopardize their either ITC or PTC.

I think there's a view towards maybe being overly conservative with advice they're getting from tax counsel and others, and I think that's if I was in their situation, I clearly would do that as well. I don't want to put anything at risk.

There's that safe harbor and those requirements under 48D as it relates to FEOC restrictions or requirements, I think will continue to play well for us as we look out through the end of this decade.

Hey, guys, thanks for taking my questions. Just wanted to follow up on the 232, specifically on timing.

We've been thinking it's August, but we've seen a bunch of delays. The issue is if it slips past August, then we go into September and then that gets closer to the midterms, and then there's a chance that the decision gets pushed on that.

Our base is still August, but one of our contacts who is in touch with Commerce, USTR has shared that from a party or organization standpoint—

Phil, we're having a real hard time. You're breaking up.

Okay. Is this better?

Yes.

Try it again, because it was really hard to get that. It was

Mark?

Yes.

Okay.

Go ahead, Phil.

Talking about the 232, is this much better? Okay.

Anyway, we've been thinking it's August, but there's a chance that the 232 could come out in September or beyond. Some of our contacts believe that the White House and the administration may not have the 232 front and center.

What's your view based on the folks that you guys are in touch with, that this should be August, or do you think there's a greater probability that this could slip into the fall or even beyond? Thanks.

Philip, I think I got your question. Look, we're we we share that there's I know there's a lot that's in the mix and what the administration's trying to to evaluate when when this is implemented.

We also want to make sure they do and what it what is implemented is it achieves the strategic intent of and the spirit of what it was set out to do. We are patient.

We we continue to be engaged. We are anxious as well, as you are and others.

As I indicated, the industry really needs the certainty of understanding. I can't give you any level of conviction maybe more than what you have right now.

We are still getting signaled that, decisions will be made. There are meetings that are being had that would indicate they're close to making a decision, but, we also want to make sure that this is done right.

To give you some sense of, my level of confidence in in August or whether it waits till till September, I can't really give you a strong view on that. I can just tell you we want this to be implemented with the achieving strategic intent, the spirit of what it was set out to do, and that's, that's the most important thing.

We're going to continue to be engaged with the administration to ensure that that happens.

Thanks so much. Guys, are there opportunities for you to reduce input costs on the US manufacturing?

Can you talk a little bit about the supply chain and how that's evolving? I know you've had some discussions with glassmakers around capacity expansion and the capital needs that they had, but just curious about how you might be able to look at that trend on a multi-year basis.

Colin, we're still in this and especially in the US, as you see more reshoring, pressure on commodities, the data centers being built out, everything's, obviously as you would expect, steel, aluminum, copper. We don't use silver, but obviously our competitors do.

There's just a lot of pressure. You can look at fuel costs.

You can look at what's happened in the Middle East, and I see that as more transitory in nature, and in theory, once that's resolved, then I think we'll see much more competitive fuel prices and what have you. The electricity prices, in some of the locations in which we operate, we're dealing with some of those same adverse impacts that others are.

We're in a pretty challenging, rising commodity costs environment. Now, are we able to do things like drive more throughput through our operations?

Absolutely, we're focused on continuing to do that. Are we finding ways to create further automation and capabilities that can reduce labor costs?

There's levers that we're focused on. There's some redesign of the product that we're looking at and trying to take costs out of the back rails of the frame.

We continue to look at glass and thickness and other things that we could do from that standpoint. It's a pretty challenging environment from a commodity cost standpoint, and our ability to get a lot of costs out, I think, is probably one of the most challenging times that we've been in.

Now, I will say that when you look at it on a cost-per-watt, not necessarily a cost-per-module, the great thing about CuRe is that we have the opportunity to drive the efficiency up. As we drive the efficiency up, as we go from kind of where we are right now and add another 10, 15, 20, 30 watts, that'll help the CPW numbers, right, cost-per-watt numbers, which is important, right?

We need to drive that number down. Then the ASP, the value uplift because of the energy attributes and the higher efficiency of CuRe, that drives to the entitlement for higher ASPs and the like.

That's what we're focused on, and we're never going to give up on the input costs. We got to do the best we can to get costs out, but it is a pretty challenging environment right now.

I'd also say there's the potential to use the balance sheet to work with suppliers who are looking at expansion, needing funding. It's an option there.

We could try and leverage our position of financial strength to get forward pricing that makes more sense, that has to be done at the right risk premium risk profile. Then the other thing I'd say is outside of just bill of material costs, obviously we're having a challenging time around period costs going from cost per produced over to cost per watt sold.

Again, we're seeing freight challenges as relates to cost of trucking, and I think I mentioned in the prepared remarks that we're seeing costs now to deliver product from Perrysburg over to the West Coast of the US, the equivalent of delivering product from Asia to the West Coast of the US. Continue to look how we can optimize our domestic transport routes, freight, try and optimize between factories so that we can reduce those costs to the greatest extent possible.

Hey, good afternoon. Thank you for taking my question.

I actually want to come back on the last question regarding M&A, and I think you just alluded a little bit to it. Can you extend a little bit what are you targeting with the current balance sheet that you have and kind of like you were mentioning that you could use M&A to maybe help manage the input costs, but what else do you see maybe an option or another possibility for First Solar?

When we talk about uses of cash, M&A is something that's been on the list for us for a long time. Generally, we've focused more on the working capital reserve piece and then growing capacity and replicating technology.

That's where the company's been, if you look over the last decade or so. We've also put more money into R&D, and I think when you think about M&A, the obvious area for us to expand into would be do we spend more on technology and technology-adjacent things, which could either be companies, it could be buying teams, it could be buying intellectual property, anything that could accelerate the technology transition we see going forward as we invest a lot into potential perovskite development.

I think there's options there. We're also taking a look at things that are adjacent to technology, but we want to do it with a disciplined focus around where do we see opportunities where we have a skill set that we can bring.

For something where we look at our strength in high-volume thin film manufacturing and very high throughput and efficiency, how can we leverage that set of skills and take it into an adjacent product, but also look at the overall market environment we'd be playing in. We compete in a challenging industry where the vast majority of our competitors are Chinese and tend to play by a different set of rules.

As we think about how we could move into adjacent areas across M&A, want to evaluate what does the competitive landscape look like, what does the market that we would be accessing look like, what does the policy environment look like. We are starting to look through that.

Clearly, given our position in the industry, a lot of stuff comes across our desk and has done over the last 10 years or so. We haven't done a lot on the M&A side.

Today, we are more willing to do that. We're more open to it, but we want to make sure we do it with a disciplined focus.