Thank you. Good afternoon, everyone, and thank you for joining us.

Today, the Company issued a press release announcing its fourth quarter and full year 2018 financial results. A copy of the press release and associated presentation are available on First Solar's 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 full year and provide the latest updates around 2019 guidance.

Following their remarks, we'll then have time for questions. 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.

I would like to start by briefly discussing our EPS results for 2018. EPS of $1.36 came in slightly below the low-end of the guidance range we provided at the time of our Q3 earnings call.

While Alex will provide a more comprehensive overview, I wanted to highlight two items that had a material impact on the quarter. Firstly, late in the year we incurred increased EPC costs in order to meet deadlines for certain U.S.

projects. Inclement weather and the late shipments of materials to sites adversely impacted plant construction and project commissioning schedule.

The potential of project completion delay was particularly acute at one of our projects in California. To ensure the project capital structure proceeded as plan, we incurred significant acceleration cost to meet key schedule milestones.

While the project owner shared in a portion of these costs, acceleration cost impacted Q4 results by more than $10 million. Maintaining the strong relationship was a key priority and therefore we made an investment in our partnership and long-term relationship with this customer.

Secondly, in Q4, we continue to make good progress with our Series 6 factory construction start-up and ramp. As a result, we started production at our second Vietnam factory in the first week of this year three months ahead of our original plan and 45 days ahead of our latest expectation.

The continued factory ramp across all sites combined with the earlier-than planned start-up of our second Vietnam factory put pressure on our supply chain to support the accelerated schedule. To maintain continuous operations across the entire fleet, we decided to airfreight certain raw materials to our factory, which adversely impacted the fourth quarter by more than $10 million.

Accelerating the Vietnam start date helps to provide resiliency to our 2019 Series 6 production plan. The production could lead to additional revenue, but more importantly, it creates optionality for downtime investment to increase throughput via tool upgrades or production buffers or to run engineering test articles to increase module efficiency.

Turning to Slide 4, I’ll provide additional comments on 2018. Despite the year where the solar market faced excess capacity and pressure on module pricing, primarily as a result of policy changes in China we are able to make steady progress and strengthen First Solar’s competitive position.

In 2018, we added to our contracted pipeline with strong net bookings of 5.6 gigawatts DC, a greater-than 2 to 1 book-to-ship ratio which provides improved future visibility as we grow our Series 6 production over the coming years. Systems projects were a significant portion of these bookings and we signed 1.3 gigawatt DC of new PPAs last year.

In addition, we added EPC scope to 500 megawatts of previously booked module sales, which combined with our development bookings positions us to meet or exceed our targeted 1 gigawatt per year systems business. Our 2018 bookings were also highlighted the strong demand for utility-scale solar from C&I customers.

Approximately 500 megawatts of our total 1.3 gigawatts of development project bookings where PPA signed with the utilities were corporate customers are the intended consumers of the energy to be generated by these projects. Additionally, this trend has continued into 2019 with our recent booking of a nearly 150 megawatts PPA with a corporate customer.

We expect corporate demand for solar projects to continue to grow in coming years and we believe that our strong reputation and ability to offer turnkey solutions will position us to compete effectively for future opportunities. International wins were a meaningful portion of our 2018 bookings with more than 700 megawatts booked primarily in Europe.

While strong domestic demand for our Series 6 product has limited our ability to support international market opportunities, we expect international bookings to grow as we continue to invest in our regional sales team and add planned Series 6 capacity. 2018 was a record year for O&M bookings as we added nearly 3.5 gigawatts of new business bringing our total O&M fleet under contract to over 11 gigawatts at the end of the year.

We remain encouraged by the opportunities to continue growing O&M and to leverage the fixed cost associated with this business. From a manufacturing perspective, we made progress starting and ramping Series 6 capacity over the course of 2018.

During the year, we started production at three Series 6 factories which collectively manufactured a combined 0.7 gigawatt DC of modules. The production runrate at these factories at the end of 2018 was over 2 gigawatts which is a significant achievement considering initial production did not begin until April.

Construction of our four Series 6 factory was completed in late 2018 and recently started production. Lastly, our fifth factory is under construction and progressing according to plan with an anticipated start of production in January 2020.

To concurrently manage all the activities related to the construction, start-up and ramp of the five different factories with a major undertaking that positions us to meet our strong demand for Series 6 in 2019. Also note is in the late 2018, we reached the 20 gigawatt shipment milestone.

This reflects cumulative shipments since the founding of First Solar and highlights the extensive deployment of our cad-tel technology worldwide. Overall, our operational and financial results in 2018 have created a solid platform as we move into 2019.

Turning to Slide 5. I’ll next discuss our most recent bookings in greater detail.

In total, our net bookings since the prior earnings call in late October were 1.6 gigawatts including 1.3 gigawatts which were booked since the beginning of January. After accounting for shipments of approximately 900 megawatts during the fourth quarter, our future expected shipments which now extends into 2023 are 12.1 gigawatts.

Our most recent bookings include two PPAs that were signed totally more than 300 megawatts DC. The first of these PPAs was signed with MCE for the expansion of the Little Bear project in California.

The second PPA was signed with a major utility customer in the Western United States, and the project will support a collaboration between the utility and its corporate buyers to meet the renewable energy objectives. Included in our new module bookings is a greater-than 1 gigawatt agreement with a major customer in the United States for shipments in 2021 and beyond timeframe.

This booking highlights the continued strong demand for Series 6 in the United States, particularly as certain customers look for opportunities to safe harbor modules to preserve the higher ITC. While we are pleased with our 2018 bookings of 5.6 gigawatts and the greater-than 2 to 1 book-to-ship ratio, it’s important to put our 2019 bookings expectations into perspective.

Relative to our module competitors, we are in extremely favorable position essentially being filled out over the next eight quarters. Generally, our customers, particularly in the international markets do not contract for module supply multiple years in advance, given the project development cycle and the time horizon in which they have project certainty.

While we are encouraged by our bookings year-to-date, and target a 1 to 1 book-to-ship ratio in 2019, our bookings maybe more back-end loaded given our available supply is in the 2021 and beyond period. On the O&M side, as we highlighted earlier, in 2018, we added nearly 3.5 gigawatts of new projects, a high percentage of these bookings was attributed to third-party wins defined as projects where we are not the developer, but in which many cases include our module technology.

Third-party O&M not only expands our addressable market, but also helps to create economies of scale for our O&M business. Some of the reasons for our continuing success in winning third-party business are highlighted by an example of how we are able to leverage our O&M expertise to address the customers’ need in a way our competition was not able.

In 2018, we were approached by a customer seeking help with two large utility-scale solar power plants in its portfolio that were under contracts with a competing O&M provider and were underperforming. These projects utilized our competing module technology and were not constructed by First Solar EPC.

Based on the customer’s experience with our O&M services, they asked us to investigate cause of the underperformance. By leveraging our industry-leading expertise, as our O&M team we identified the root cause of the underperformance and created a detailed action plan to improve performance.

The recommended corrective actions are expected to improve the annual energy output of the combined plant by approximately 3%, which translates into more than $1 million of annual revenue to the owner. As we continue to leverage our significant O&M experience to meet customer needs, we expect that third-party wins will continue to be a key part of our growing O&M fleet.

Slide 6. And I’ll provide an updated view of our mid to late-stage bookings opportunity which now totaled 7.3 gigawatts DC, a decrease of approximately 500 megawatts from the prior quarter primarily as a result of our strong recent bookings.

However, when factoring in the bookings for the quarter, 1.4 gigawatts of which were included as opportunities in the prior quarter, our mid to late-stage pipeline actually grew by approximately 900 megawatts DC. North America remains the region with the largest number of opportunities at 5.5 gigawatts DC.

However, Europe has shown a meaningful increase since the prior quarter driven by resurge in markets in France and Spain. Opportunities in Asia-Pac region have remained relatively stable.

Even with the more than 300 megawatts of recent systems bookings, our potential systems opportunities remains strong at 1.8 gigawatts DC. These potential systems bookings are comprised of projects in the U.S.

and over 300 megawatts in Japan. Continuing on to Slide 7, I’ll next provide an update on our Series 6 capacity rollout.

The most notable achievement to highlight since our prior earnings call is the start of Series 6 production at our second Vietnam factory, our fourth Series 6 factory in total. As mentioned previously, production commenced in early January, several weeks ahead of our target start date.

Similar to our first Vietnam factory, the initial ramp has been accelerated relative to the previous facility by applying the cumulative learnings which including starting production with an improved module framing tool. Construction is continuing at our second Series 6 factory in Ohio.

As announced previously, we expect to start production in early 2020 and construction is on track to our schedule. Once completed, we will have five factories with annual Series 6 capacity of 5.6 gigawatts, an impressive accomplishment since announcing the transition to Series 6 in November of 2016.

Since the third quarter earnings call, we have seen steady improvement in our Series 6 throughput and wattage across our entire fleet. When comparing February’s month-to-date performance to the month of October, you can see the significant improvements made.

Note, our second Vietnam factory is excluded from this comparison as it was not operational in the base comparison period. Megawatts produced per day is up 65%.

Capacity utilization has increased 30 percentage points. The production yield is up 7 percentage points.

And finally, the average watt per module has increased 2 amps or 10 watts. Since October, the percentage of modules with anti-reflective coating has increased 33 points.

These significant accomplishments can be credited to the outstanding work of our engineering and manufacturing associates. We are encouraged by the meaningful progress we have made over the last months of 2018 and how we started 2019.

We continue to plan for full year production of between 5.2 and 5.5 gigawatts. As a reminder, this target production includes approximately 2 gigawatts of Series 4 module.

In order to meet these production commitments, we continue to rollout tool upgrades and optimize the production line throughput across the various sites. This is a dynamic process that continued to incorporate learnings from each of the factories as we have ramped and is moving according to schedule.

I would like to make one final point before I hand the call over to Alex. I mentioned in October, First Solar was a sponsor to an innovative study by E3 which highlighted the value of flexible solar to utilities in the form of expected reduced fuel and maintenance cost or conventional generation, reduced curtailment of solar output and reduced air emission.

This study has been published. We have been pleased with the positive response and feedback from across the industry.

For example, Public Utilities Fortnightly, a leading industry publication recognized the study as one of the 2018 top innovators. Our efforts to demonstrate our thought leadership are not only limited to the United States, recently, we supported this study by Solar Power Europe that provides evidence to support the benefits of utilizing low-cost utility-scale solar to keep the European grids stable and reliable.

Efforts such as this will take on increasing importance in order for the European Union to meet its 2030 renewable energy targets and we look forward to remaining engaged in that process. Whether in the United States, Europe or other regions, we will continue to provide support and thought leadership to advance the understanding of how utility-scale solar enhances the reliability of power grids around the world.

I’ll now turn the call over to Alex who will provide more detail on our fourth quarter financial results and discuss updated guidance for 2019.

Thanks, Mark. Before getting into the financials for the quarter in detail, I’ll first provide additional context around the factors that led to 2018 results falling below our guidance.

There were four key issues that impacted our ability to meet earnings guidance. Firstly, 2018 net sales were $100 million lower than the midpoint of our guidance due to the timing of module sales and delays in systems revenue recognition.

The lower systems revenue is associated with inclement weather and also material delivery delays to the projects. Secondly and thirdly as Mark mentioned earlier, we experienced increased EPC cost across several U.S.

projects partially driven by schedule acceleration to achieve year-end customer milestones. And we experienced elevated inbound freight costs to expedite raw materials to Series 6 production.

And fourthly, 2018 ramp and related costs were $113 million compared to our guidance of $100 million. So, with that context in mind, I’ll begin by discussing some of the income statement highlights for the fourth quarter and full year on Slide 9.

Net sales in the fourth quarter were $691 million, an increase of $15 million compared to the prior quarter. The higher net sales were primarily a result of the sales of two projects in Japan.

For full year 2018, net sales were $2.2 billion and as mentioned relative to our guidance expectations, net sales were lower due to the timing of both module sales and delays in system revenues. As a percentage of total quarterly net sales our systems revenue in Q4 was 83% which was nearly flat compared to Q3.

For the full year 2018, 78% of net sales came from our systems business compared to 73% in 2017. Gross margin was 14% in the fourth quarter and was impacted by ramp charges of $44 million as well as in-bound freight costs and EPC acceleration costs.

For the full year, gross margin was 18%, an increase of $113 million of ramp and related charges which equates to a 5% sequential impact. The systems segment margin was 22% in the fourth quarter and the module segment margin was a negative 25%.

And as it relates to the module segment gross margin, keep in mind that sales were composed almost entirely of Series 4 volume and Series 6 volume continues to be allocated almost entirely to our systems business. However, the module segment cost of sales was composed with both Series 4 after sales and series 6 ramp-related cost of $44 million.

Adjusted to the impact of ramp-related costs, Series 4 module gross margin was in line with our expectations. Operating expenses were $87 million in the fourth quarter, an increase of $17 million compared to Q3.

Q3 OpEx benefited from a reduction to our module collection and recycling liability, while Q4 was impacted by higher SG&A from project-related expenses. For 2018, operating expenses of $352 million neared the midpoint of our guidance range.

Now highlighting our efficient management of OpEx in 2018, our combined SG&A and R&D expense decreased approximately $30 million or 10% versus 2017. Operating income was $11 million in the fourth quarter and $40 million for the full year.

Compared to our guidance for the year, Op income was lower than planned as a result of the lower revenue and higher cost of sales discussed. Other income was $32 million in the fourth quarter from the gain on sale of certain restricted investments.

Investments in solar associated with our module collection and recycling program and was seldom parts reimbursed of the funded amounts. Note that the smaller side of restricted investments for similar purposes was completed earlier this year in 2019 were reflected in our first quarter results.

We recorded a tax benefit of $4 million in the fourth quarter. For the full year, we recorded tax expense of approximately $3 million.

Fourth quarter earnings per share was $0.49 compared to $0.54 in the third quarter. For the full year, earnings per share was $1.56.

EPS was below the low-end of our guidance range due to the timing of revenue recognitions to certain module and systems sales and the higher EPC ash rate and ramp costs discussed earlier. I’ll next turn to Slide 10 to discuss select balance sheet items and summary cash flow summation.

While cash and marketable securities balance at year-end was $2.5 billion, a decrease of approximately $183 million from the prior quarter. Our net cash position decreased by a similar amount to $2.1 billion at the midpoint of our guidance range.

The decrease in our cash balance is primarily related capital investments in Series 6 manufacturing capacity, factory ramp activities and the timing of cash receipts from certain systems project sales. Total debt at the end of the fourth quarter was $467 million, virtually unchanged from the prior quarter.

Within the quarter, project debt issued to fund our project construction in Japan and Australia was essentially offset by liabilities assumed by the buyers of two Japan projects sold. Nearly all of our outstanding debt continues to be project-related and will come off our balance sheet when the project is sold.

Net working capital in Q4, which includes the change in non-current project assets and excludes cash and marketable securities increased by $178 million versus the prior quarter. The change was primarily due to an increase in module inventory which is related to a capacity ramp and unbilled accounts receivables.

Cash flows used in operations were $186 million in the fourth quarter and $327 million for the full year. As a reminder, when we sell an asset with project level debt that is assumed by the buyer, the operating cash flow associated with the sale is less than if the buyer not received the debt.

In Q4, our projects assumed $124 million of liabilities related to these transactions, and for the full year that totaled $241 million. Capital expenditures were $129 million in the fourth quarter compared to $238 million in the prior quarter due to the timing of spending on Series 6 capacity.

For the full year, capital expenditures were $740 million compared to $662 million invested in Series 6 capacity expansion. Cumulatively, Series 6 expenditures incurred at the end of 2018 were $1.1 billion.

Continuing on Slide 11, I’ll next discuss the updated assumptions associated with our 2019 guidance. We are largely maintaining our guidance ranges for the year with minor adjustments to ramp and start-up costs which had an offsetting impact from gross margin and operating expenses.

While these changes are relatively small, there are couple of important points to highlight. Firstly, there has been recently significant focus around the BG&E bankruptcy and impacts the company that have contracted all stake agreements with PG&E.

First Solar has one 75 megawatt AC project where PG&E is the contracted offtaker. However, believe any risk associated with this asset is limited, given the project size, total development capital invested today, and the competitive PPA price where First Solar could potentially have greater exposure in several unsold projects where SCE is the contracted offtaker.

We are currently in the process of marking some of these assets to sale and to the extent five of these projects assume any increased risk premiums associated with SCE as the offtaker, this could result in lower project value. Although we don’t see this as a significant to the sale value of these projects given their competitive PPA prices, and the key market interest the contracted solar assets that we’ve seen in recent potential sale processes, it is an item we think should be highlighted.

Secondly, we are lowering our gross margin guidance by 50 basis points to a revised range of 19.5% to 20.5% as a result of higher expected ramp costs. Offsetting the decrease in gross margin is a $15 million reduction to start-up costs within our operating expense guidance.

The increase in ramp costs and offsetting decrease in start-up costs are result of the earlier-than planned started production at our second Vietnam factory. Revised range of ramp-related charges is now $35 million to $45 million and plants start-up is $75 million to $85 million.

Combined ramp and start-up costs of $110 million to $130 million are unchanged from our prior forecast. Thirdly, if reemphasize you on our December outlook call, the profile of earnings is expected to be weighted towards the second half of the year.

Slide 12 contains two charts that illustrates from a revenue and cost perspective some of the factors that are expected to impact the quarterly earnings distribution. In both cases, we are not providing the actual volume sold or actual module cost per watt, only the relative percentages.

The first chart shows Series 6 module, third-party sales by quarter. Notably, only 10% of the volume sold in the first quarter and only 25% in the first half of the year.

Not surprisingly the supply increases across the year, we expect through the volumes of sales increase in Q3 and Q4. The second graphic shows the quarterly profile of our Series 6 module cost per watt produced relative to the 2019 full year average.

The data illustrates the cost per watt for the first quarter of 2019 which has the lowest throughput and module wattage levels for the year is projected to be approximately 30% higher than the 2019’s full year average. Module cost per watt is expected to improve in the second quarter but will still be 5% higher than the average.

The greatest benefit of our improved ramps and efficiency is anticipated in the second half of the year. In the third quarter, the cost per watt is expected to be 5% below and in the fourth quarter 10% below the 2019 full year average.

In addition to the Series 6 sales and customer profile, there are two additional factors which we expect to contribute to lower earnings in the first half of the year. The first is the timing of ramps and start-up challenges which are heavily weighted to Q1 and Q2.

We expect more than $40 million of combined ramp and start-ups in the first quarter. The second factor is the timing of project development sales, similar to our expectation at the time of our December outlook call, project and development sales are expected to be weighted to the second half of the year.

And we also expect to close the sale of our Ishikawa project in Japan in the fourth quarter. Taking all of these factors into account, points to why I expect both a loss in the first quarter whereas low earnings in Q2 with the majority of earnings coming in the second half of the year.

For the full year, we still see EPS guidance in the range of $2.25 and $2.75 driven by Series 6 production ramps and cross border improvements as the technology continues to scale. And finally., I’ll summarize our fourth quarter and 2018 progress on Slide 13.

So as we had earnings per share of $1.36 and year end net cash of $2.1 billion. Secondly, we had continued success adding to our contract supply plan in 2018 with net module bookings of 5.6 gigawatts.

For the year-to-date 2019 module bookings were approximately 1.3 gigawatts, we are off to a positive start for the year. Thirdly, we continue to make good progress on our Series 6 capacity roadmap.

Early this year we started the production of second Vietnam factory ahead of schedule and we continue to make steady improvements in both throughput and module wattage at our other Series 6 facilities. Our progress thus far in 2018 – 2019 indicates we remain on track to our combined Series 4 and Series 6 production target of 5.2 gigawatts to 5.5 gigawatts.

And lastly, our 5% net neutral movement between ramp and start-up costs between COGS and OpEx while maintaining our financial guidance ranges for the year including our EPS range for 2019 of $2.25 to $2.75. And with that, we conclude our prepared remarks and open the call for questions.

Operator?

Hey guys. Thanks for the question.

Just wanted to check in with you on your shipments to customers now that you are shipping currently some of our checks indicate that you may be falling 5 watts per module short in your shipments to customers versus contractual requirements or obligations and this maybe resulting in extra costs. We could be wrong on this one but want to just check in with you on this.

Can you comment on whether or not this may or may not be happening and if true, can you provide some color on this and perhaps talk about how long the issue may endure ahead? Thanks.

Yes, so, I think the premise of the question is we want to make it clear that falling short of contractual obligations. We are not falling short of any of our contractual obligations relative to comments of the customers and the product which we need to ship to them.

We have as we said before, we have been adders and been deductor. So, we have a contracted commitment that we anchor around it’s extent – it’s higher or lower than there is bin adjustment to the price accordingly for that delta could be up or could be down.

So, I just want to make sure that that’s clear. There is nothing that we are doing that would say that we are falling short of our contractual obligation, but to the extent we do have deliver that’s been down would be 5 watts then there would be bin adjustment to the price.

And that is happening in some cases and part of it was – I think we indicated on prior calls is that the early production and in particular we’ve been struggling to see the increased penetration of arc. And so, without arc you are going to lose almost two bins of volume.

And one of the things we said on the call is our arc penetration has increased now 33 percentage points. So, we are seeing a much better utilization for arc and as a result of that as we go forward and we continue to ramp across the balance of the fleet, some of the early launch issues that we have will be subsided and we’ll be able to make sure that we hit the committed bin that we initially structured around but I want to make sure it’s clearly understand that to the extent that the bin is slightly above or below the contract allows for that.

And there is appropriate adjustment to the ASP.

Great. Thanks for taking our questions.

This is Kristen on for Colin. You talked a little bit about this in your prepared remarks, but can you provide some additional color on the geographic diversity of the backlog on an annual basis?

Just sort of the mix of domestic versus international? And then, what opportunities are you seeing to pick up broken projects for the systems business in the U.S.?

sort of correlated to that what the expertise in integrating - your expertise in integrating solar with storage to your pricing strategy for modules?

Okay. A lot there.

When you look at the geographic diversity of our shipments for and some of this will come out in the Q – K actually it will come out tomorrow. You will see that there is a high concentration of module shipments that occurred within in the U.S.

in the range of 70% or so of the shipments last year were in the U.S. and the balance were in international markets.

And again it’s largely reflective of where the strength of the demand is and if you look at our pipeline as you carry forward of the 7 gigawatts of – opportunities about 5.5 of that sits within the U.S. The volumes at which we booked this quarter were largely U.S.

we had some volume with a European customer. But most of the call it, 1.6 since the last earnings call was focused around the U.S.

and it largely has to do with where our customers are willing to commit. And I think it’s important to understand that, of the large order that came through this year, again lot of the 1.3.

That volume is to be shipped in 2021, 2022 and 2023. You will see customers in the U.S.

because of certainty around the ITC and wanting to safe harbor, you will see customers having a greater appetite to commit forward and to procure materials that go out that far in the horizon. When you look at some of the international markets, we don’t see as many customers willing to start procuring in 2021, 2022 and 2023, as part of their lack of certainty of the underlying projects or for those modules and where they would go.

And so, what we said in the call is that, part of the thinking, when we look at the bookings for the year, we started off great and we still look to have a 1 to 1 book-to-ship ratio, which you say that we are targeting to book somewhere between 5.5 or 6 gigawatts this year. We may see some of that being more back-end loaded, because, I do see more diversity of the bookings as we progress throughout the year being more opportunities in our international markets, because we are getting to a horizon that towards the end of 2019 we are looking to ship into customers and starting in 2021 that we can see the international customer participating in that opportunity.

So I would expect our bookings as we progress throughout the year to improve having more of a diversity to U.S. versus international.

But at the same time as long as we are still relatively capacity constrained, while it’s important that we continue to grow and develop our international markets if we have opportunities to capture better value in the U.S. markets we will prioritize the U.S.

market, we may prioritize some of the international markets that are – better opportunities to capture higher ASPs. We will focus there first before maybe we chase some of the other markets that we know traditionally have been low ASP markets.

On the storage question, we’ll let me go on the systems question first. I think, in particular in the U.S., there is a lot that’s in the market right now.

As you can see, there is a lot of smaller developers and others that are trying to actively market and to sell their development pipeline some with contracted assets, some not. And I do think that some of that could be related to the capacity of some of the smaller developers to make the investments to capture the IT safe harbor.

And as we indicated in our last call, we will be investing somewhere call it $300 million to $400 million to secure call it 5 gigawatts of opportunities between now and 2023. That’s a big investment and I think some of the smaller developers maybe constrained with making those investments and I think they understand that if they don’t make those investments, they will be less competitive as they are competing for projects that as those deals that go through the end of 2023.

So I can see a lot coming to market and we are trying to at least get engaged and evaluate and see if some of those opportunities make sense for us and clearly we’ve got a great development team and we’ve proven ourselves with our ability to make acquisitions and integrate development assets and contract them and realize meaningful value associated with that. So, that’s a good opportunity for us.

And then, storage, we are actively involved in our largest storage deal we announced a few quarters ago with AVS. We’ve got a couple of other projects and recently awarded of a project with the utility in Florida to do a pilot for them, a small additional storage on to their array.

We’ve done some work with utility in Nevada on the same type of opportunity where the customers are exploring and learning and wanting to know more about storage and how it can be effectively integrated and it’s an area of emphasis of focus for us. I look at it somewhat of extension to our normal systems business and just part of our offer.

And we can add enhanced value through our power plant controls and optimization of how we charge the battery and dispatch the battery and we’ve proven some capabilities there that’s been very interesting to some of our customers in that regard. So, it’s still early innings.

We’ve picked up some wins and I see momentum as we move forward as it relates to storage.

Hey, good afternoon. Thank you.

Perhaps just to pick up where you left off, if you can clarify a little bit your comments just now about securing up the backlog here from an ITC perspective, A, how do you think about that accelerating into the year end 2019 given that is the timeline that you need to meet to get the qualify that ITC. And then, secondly, I think you alluded to a gigawatt utility customer in the quarter who they were trying themselves to try to lock up some supply.

So, maybe as you think about the potential orders from what you haven’t locked in from an ITC perspective, is that another source of bookings acceleration in the back half?

Yes, I’ll just start with what we are looking at from a safe harbor perspective to ourselves. Similar today to what we’ve talked about on our guidance call in December.

So, we are still looking at somewhere between $325 million and $375 million of spend this year. We haven’t expressly talked about what we are going to spend that on, it’s less likely to be on the module side just given the constraints we have in module supply as Mark said, we are largely sold out for the rest of the year.

So, we will look at the rest of the balance upfront. There will be some projects that were far enough along that we can use the technical work there.

And so, a small piece of that midpoint 350 number that I talked about will be associated with technical working cut. And that will probably be in the range of $25 million to $50 million.

The rest we’ll look to spend on – as I mentioned balance of plant with projects that go out into 2021 from a contracted perspective and then uncontract supplies will take about on that 2021 timeframe. The other thing we said from our perspective is that if there is opportunity to spend more, to the point if we are able to pick up projects where other developers are constrained from a capital perspective, and securing type of material, it’s somewhere we would be very happy to invest additional capital.

I believe the returns are good. So it’s somewhere, where if we see the right opportunity, when you can spend more than that $375 million top-line that we talked about.

And then, from a customer standpoint, Julien, I mean, the order that we secured here was with one customer, it’s the common conversation that our team is having with a lot of our customers and thinking about the safe harbor and how to - what their particular strategy is, and engaging in conversations with us around that and how we could try to evolve that. In some cases – and this customer is – and they already had a commitments to some volume for this year.

So, we didn’t have to – it wasn’t an issue of not having the supply, but what we were able to do is that since we already had contractually had volume on the books for this customer, we then engage with them, or leverage that as your safe harbor anchor and then commit the volumes that’s out in the horizon and when you construct the projects in 2021, 2022 and 2023. So, Alex is right.

We are constrained as it relates to the available supply. Now, starting up Vietnam a little bit faster than – Vietnam too little faster because there is a little bit of supply.

If we continue to ramp, accordingly, we may see a little bit of opportunity there. Those are small in the rounding.

The bigger opportunity I see is, how do we talk to customers today, that have contracted volume that’s on the books and then how do we position that as the anchor for the ITC and then contractually commence with the volume that would sit out and deliver in the 2021, 2022, and 2023 timeframe. So, we are having a number of conversations with customers in that regard.

Hi, thanks guys. So I have three questions.

First of all, like sites flow, it’s kind of confusing. Could you help me through that?

And then, just talk about the cost reduction versus the 40% that you said back at Analyst Day, like you are plus or minus a penny or two from there. Number two, I understand that costs pull forward, but I don’t see megawatts going up.

And then, number three, could you just talk about how you are pricing some of these out year contracts? Just because, that we have a hard time going with ASPs we got to 2022.

So, how do you think about pricing? Thanks.

Yes, just to explain the graphs a bit more detail. That the graph in the left-hand side of Slide 12 is showing you the Series 6 third-party volumes.

If you think about the guidance we gave, the 5.3 to 5.5 gigawatts for the year, you take out couple of gigawatts of Series 4 and then you got to take out the systems piece. So, you are left with what is Series 6 through third-party module deliveries.

And when you take that total number, we are saying, this is the break down per quarter of the delivery of those modules. So, that 10% of that third-party Series 6 volume is delivered in Q1, 15% in Q2, 30% in Q3, and 45% in Q4.

This really kind of show that on a third-party module delivery basis, we're back-ending the profile pretty significantly in the year. On the right-hand side, looking at the cost, so, the question you had around cost, we talked in the guidance call around long-term or end of year Series 6 cost being approximately 40% lower than our 2015 benchmark for Series 4 with a roughly penny adder associated with increased cost around the frame.

So if you take that point over the end of the year, I’d say, that’s a year ending point. You can look at what you think the full year average is.

We are trying to make the point that on the average basis, for 2019, you are going to see whatever that average is, it be significantly higher in Q1 as the module is delivered it comes down to Q2 and by the time you get to Q3, you are fractionally under the year average by Q4 your 10% under the year average. So again, when you combine these two, the left-hand side lower volume beginning of the year, the right-hand side, higher cost relative to the average, you are going to see pretty negative impact to the results of Q1 and Q2.

And you start to see that when you have much higher volume and much lower cost in Q3 and Q4.

Yes, I think, the way I would say there is – Ben, your question about, our view around the 40% off of our Series 4 reference point plus for the penny or so, penny or two for framing piece, there is a couple of smaller components. That's effectively where we anticipate it to be and nothing has changed there and we are working on opportunities where we can even revise the frame and even take more cost out there because between the frame and it’s easy to go assets really where the vast majority of the build material is and the team is working pretty aggressively on finding a roadmap to figure out we get everything back to the whole entitlement of what we had and there is some encouraging work being done from that standpoint.

The other thing I’ll say about that slide is that, one of the biggest levers that moves you from where numbers 20%, 30% higher is in the first quarter versus the average and then trends down to being 10% lower than the average, a big piece of that is the throughput, all right? Because there is a still a significantly amount of under utilization that sits in the first half of the year.

And then as we drive that under utilization down, we are at full entitlement across the entire fleet. As you know, we are starting up another factory now.

And so, we are going to be – utilization while it’s significantly higher upon launch after the first month or so of production relative to our other factories. It’s still going to be driving this down and there will be some under utilization cost that’s going to be weighing down on the overall average across the fleet.

So that's a piece of it. And then the other is the efficiency improvements.

So we will continue to see improvements as we progress from where we are now to the end of the year and it will pick up close to another two bins from the launching point where we are right now to the exit rate that’s close to that from Q1 to Q4. So, those are tipping drivers of that cost forward.

The contracts for the outer year in the pricing around that, Ben, we look at – we capture the fair value, right, and pricing as we go out into 2021, 2022, and 2023, we have a roadmap of where we know where we go with our cost, we know our efficiency is going to be, we know at the energy advantage is going to be at that point of time. We’ve priced it accordingly.

And I am very happy with. We have now quite a bit of volume.

Obviously, a lot of volume sits at 2021, 2022, and 2023, but I am pretty happy with the pricing that our team has been able to capture in that window. It’s above where my expectations would have been relative to the business case we’ve put together for our Series 6 that we are pretty pleased from that standpoint.

Hey guys. Thanks for taking the question.

Two from me, I guess, first on that sort of capacity point. You mentioned in mid-December when you gave the guidance for 2019 that you putting Malaysia one conversion to Series 6 on hold.

And you’ve mentioned capacity constraints and now you are talking about 2023 deliveries throughout this call. So, given that backdrop, what’s sort of the decision process around bringing that back into the capacity expansion roadmap here?

And then, second question just on Slide 12, super helpful with the cadence. Alex, can you help us think about how that average line moves into 2020 with some of the utilization effect starting to fall off and then getting full earned entitlement around the efficiency targets and so forth and so on.

Thanks guys.

I’ll take the capacity and then Alex could take the other one. So, Brian, as we said, when we – at the end of this year, we will ramp down two of our factories in Malaysia.

We will immediately start the transition of one of them. The other one is continuing to be evaluated and it’s really being evaluated based off of market demand and our ability to capture the bookings that we need in 2021 to get a high level of confidence or ability to sell through that volume.

And so, it’s really, it’s demand-related, demand-driven and as we continue to book, then we will somewhat crystallize our decision around that and we’ll get more and more comfortable. Why we’ll say though is that, every one of those factories that comes up in essence creates pricing power, because it creates scale.

And that scale enables us to enhance our competitive position and then it allows us to capture volume in other markets that we may not be participating in today. So, I am very motivated to get that factory up and running.

But it’s highly dependent upon our ability to clear the market, acceptable margins and if we continue to do that, then I think the likelihood of starting that conversion on that second plants and really be on a third Series 6 factory in Malaysia will start to crystallize.

And Brian. I can’t give you guidance on that far, so, what I can say, I guess, is that, as Mark mentioned, a lot of the cost, majority of the cost sits between the two pieces of glass on the frame.

So that’s where we are going to be spending a lot of our time. On both, so, on the frame, we are impacted by the tariffs.

We are looking to optimize the frame further. So, we had some movements in the frame in terms of design from where we originally came out with Series 6 and some of the modules we produced.

So we are looking at can we optimize design to use less aluminum in that frame. On the glass side, we mentioned on our guidance call in December that we had some projects that we are looking at that may impact start up and one of those we talked a little bit of that was trying to optimize some of the glass.

So we today pay more specialized processing on that glass and that’s something we need to bring in-house to try and optimize pricing. So, we are continuing to work that route on the glass side and on the frame side both.

And then, beyond that, we will continue to work the rest of other materials. But a lot of that will get come from increased scale.

With scale, we get pricing power and we get efficiency and lot change as well.

Yes, thanks. Couple of questions.

You saw some revenue recognition slip to 2019, but you didn’t raised the revenue numbers for 2019. I am wondering if it’s something due to PG&E and SC&E or whether it's supply constraints, perhaps you can just talk us through the puts and takes there is why you didn’t increase the 2019 revenue guidance?

The other question I’ve got is that the ramp cost seems to be increasing. I listened to the first – the guidance you gave for 2019.

What changed? If you can just sort of talk us through the process by which we gotten here?

Thanks.

Yes. So, on the guidance piece, we've got a broad range in the guidance since we just talked about on Slide 12 a significant amount of the revenue and margin is back-ended for the year.

So, obviously that’s in the fact that we have a guidance range, but you can see the small changes in timing could have large impact to results at the back-end of the year. There is some risk around SCE.

When we think about SCE and I don’t think it’s a significant risk for us. It’s hard to evaluate.

You got to look at what’s happening with PG&E itself. How California and FERC and the bankruptcy courts will deal with that and then, how that specifically applies to the fact on circumstances around SCE in their territory.

So we are monitoring that. We do have assets that we are selling this year.

We have three assets – currently running at competitive process, we are seeing high demand for those. If you look at SCE’s credit today, the bonds still range at investment grade.

You haven’t seen the yields that widen incrementally. We haven’t seen – gap like you have on PG&E.

So I think we’ve got good confidence, but there is still risk around those processes. So that's a piece of it.

But then the other piece is we just – we are at only eight weeks into the air. So, that will need to make a change in terms of overall guidance.

We’ll continue to evaluate guidance as we go into 2019. On the ramp piece specifically, all you are seeing is a change in geography from start-up moving into ramp and it’s a function of the timing that’s bringing up the Vietnam factory.

So, effectively, we’ve decreased start-up, bring that up early, but it’s increased ramp and you see that in the half percentage point change in the gross margin guidance and that’s offset by a $15 million decrease in the start-up cost in the OpEx. So, those two net out to zero change to guidance.

It’s just geography based on the timing as the Vietnam plant coming up.

Hi, thanks for taking the question. This is Maheep Mandloi on behalf of Michael.

Given your shipment visibility, can you talk about how much of the third-party sales is fixed or is that fixed what the floating price is for the year? And the second question is on the Series 6 cost structure.

Can you talk about when you expect to achieve these target cost structure? Is it still a Q4 target?

Thanks.

So, as it relates to shipment visibility and the pricing, all of the – anything that we recognize as a booking has a firm price associated with it. The only impact that it has is, we’ve referenced this before.

If we deliver a bin that’s higher than what we initially anchored towards, right, so the contract, we’ll say – let’s use an example. You have to deliver a 420 watt module.

We can go down two bins the 410 and then we can up two bins to 430 or we can average to the 420 whatever the math ends up working out to. And those there will be subtle price deltas as you move across.

In some cases, that’s like, a quarter percent for each bin. In some cases it’s slightly higher than that.

So there could be slight movements in the realized ASP from what the center point of that contract is, but it’s a firm fixed price. So they all have firm fixed price.

There is no floating, but for wherever the final delivery is of the product. On the Series 6 cost structure, as we said in the last call, as we exit this year, we’ll be within a couple of pennies from our targeted 40% cost reduction.

And that’s important and as we get there, we saw of an issue with the frames that fully optimized and the glass, we got issues and we got a path of how to improve that. And the other is, we are not at the average efficiency that we hadn’t targeted for Series 6, right.

So, we knew it was going to take us a couple years and we even showed a slide I think in the Analyst Day of kind of where that average efficiency would be and then we show a more of a mid-term objective of where we want to go with the real wattage for the product. So, a combination of optimizing around the glass, the frame and driving the efficiency, we will be in a much better position as we exit 2020.

Should be relatively in line with what our original targeted cost reduction was when launched Series 6 and again, we launched it in November of 2016. So, it’s only a little over three years since – or two years I guess, little over two years.

We are not even three years into the journey. So, just put it that perspective and I think tremendous progress that’s been made over that horizon.

Well I made it. Thank you.

I wanted to go back to the margin comments you made about the systems versus the module business in particular the comments about Series 4. I understand that obviously you’ve got more six allocated to your systems business.

But I am wondering if there is any underloading on the four business that’s weighing on those margins, and also how much that might play out as you ramp the business down?

Yes, you are not seeing any underloading on the Series 4. What you are seeing is just the impact of the fact that the Series 6 business is really - still nearly all being allocated over to the systems segment from a revenue perspective and from a core comps perspective.

But you are seeing all of the ramp costs coming through in the module segment. So you are seeing a blend of what looks like Series 4, but all Series 6 kind of non-core costs coming through as well.

So that’s what’s happening. That it’s not a function of that being any under utilization on the S4 piece.