We will now begin the question-and-answer session. Please limit yourself to 1 question. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question. To allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please standby while we compile the Q and A roster. Your first question comes from the line of Jonathan Windham with UBS. John, your line is now open. Please go ahead.

Perfect. Thanks. Hey. Congratulations on the result and appreciate taking the questions. So obviously, the FCC had a ruling about solar inverters a couple of days ago. And I think on 1 side, it goes a long shot serious the government is in promoting domestic content within especially electrical equipment hardware, which is obviously very good for you given your position in domestic solar modules. But just curious if you have any early thoughts on potential impact on broader solar installations and the ability to work around the industry to work around that provision. Thank you so much.

Yeah. Thanks, Jonathan. that is it. I think it continues the theme of you know, our US government trying to ensure we do not have any overreliance on that serial countries. And, obviously, China being 1 of them in particular. You know, I think the good thing about this is that the industry has started to get ahead of trying to find domestic supply chains, comprehensive domestic supply chains. 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 are seeing this now really across all components of equipment suppliers. All the way up even to, you know, trying to find localizations for the battery supply chain as much as you can. So I do not see it. Being a constraint near term. I think the current models that have been shipping 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 scrutiny may be stepped up as we move forward. But I think it just sends another great signal to domestic manufacturers if, look, we need to move forward. We need to domestic create domestic supply chains resiliency to enable not only the solar industry to thrive, but really all of the industries, you know, that as we be industrialized in The US, economy. Right? So, again, I think it is a it is a good indicator of a continued team and message that this administration has, and we fully support it.

Your next question comes from the line of Brian Lee with Goldman Sachs & Co. Brian, your line is now open. Please go ahead.

Hey, guys. Thanks for taking the questions. Just had 2, 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 gigawatts in U. S. Gross bookings came from that 1 project in the quarter? And then how much more bookings potential exists on that project site? And then bigger picture, maybe speak to how you are seeing general interest from the hyperscaler data center community. And then second question I have is just you know, kind of the customary, latest thoughts, timing, visibility into section 32, how you are viewing, you know, the potential for floor prices in the $0.40 per watt or higher range, then how quickly do you move on your bookings funnel in Southeast Asia strategy once you get clarity on this presumably, hopefully, in the next few months? Thanks, guys.

Alright, Brian. I will I will try to take kinda the first 2 and Alexander talk maybe a little bit about the views of Southeast Asia. So make sure it is clear on the project that we announced with our partner, that we supplied modules to for Cypress Creek. That is already in our bookings. Okay? So that was just to highlight a great project. If you actually look at some of the more recent announcements that have been made, over the last several weeks, I think you kind of see a theme there. You have got a very large project with Cypress the 1 that we have referenced that it will be phase 1 of kind of call it the 1.6 gigawatts, then it goes to phase 2, which we will use about 2.5 gigs. So that is a very large project, and I think the battery component of that as well is going to be, north of the 2 gigawatt-hours from a battery standpoint. Really important strategic project. it is there to support Google. We have 2 other projects that have been announced over the last couple of weeks. 1 with Terogen, which was about 1.44 gigawatts. Then we had another 1 with Pattern. Which was another gigawatt-plus. So those 3 projects that have been announced recently are about 5 gigawatts of capacity. The Pattern part of the Pattern volume was actually announced last quarter. So when we did the announcements last week last quarter around booking size, which I think they had in total is around 1 point 4. The Pattern deal was actually included in that volume. I think it is a great message that, you know, the demand's there. Half of that volume of that 5 gigawatts I referenced is directly communicated and tied to Google as a hyperscale. The other 2.5 gigs, they have not disclosed the counterparties. But if you look at the verbiage around the announcements on that bill, reference a very large corporate account 1 of the largest com companies in The US. You can kinda get a sense of, you know, the likelihood of who that counterparty's gonna be for that project. So strong demand, you know, for continued demand for hyperscalers. Really strong relationships and partnerships with First Solar to support those types of strategic projects that are really kind of thrive on the importance of certainty. Right? Those projects are strategic. They are important. They obviously include storage as reflected in the Cypress Creek project. You know, as I have always said, the first thing you need to do is you are building out your project, derisking 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 gonna be set at risk. And we can deliver that certainty and that great technology and that reliability. So we are seeing that in the marketplace, and continued strong interest driven by it as currently still somewhat insatiable demand from hyperscalers. As it relates to February, I will take the pricing piece, and then Alexander will talk to kinda how we thread that into our views around Southeast Asia. Look. it is still you know, there is still a lot of views out there. I think everybody has a view of how the construct may be with minimum import price and maybe with a tariff on top of that. there is some views of whether there is quotas or not. You know, I all I can say is still evolving. And I we do believe it will be constructive. You know, I do not wanna give kind of a our internal read of what we think it potentially could be because there is still a lot of moving pieces. I can say that we are still constant contact with the appropriate parties at USTR and Commerce continue to bring our voice into the conversation. And we are still optimistic that the outcome will be constructive And, you know, we have used it as a reason to be disciplined, and we will see what happens once it is finally announced. And you know, there is there is demand that is still sitting there on the sidelines. You know, if you look at our cadence and our momentum around our bookings, just here in the month of July, we booked almost 2 gigawatts in The US at very good prices, as Alexander indicated. there is about 2 more gigawatts north of 2 gigawatts that sits into a contract that is subject to CP. I got another 2 gigawatts of active conversations with customers that, you know, there is a high probability we can close through by the end of the year. So and how much that gets further catalyzed by decision around 32.

Brian, as it relates to Southeast Asia capacity, we talked on the last couple of calls around looking at this a bit like an option. So we are running somewhere around $30 million a quarter of underutilization. So, say, we are running Southeast Asia, many well below its theoretical capacity Out of that, cash, about half noncash. Given that we have been holding through the first half of the year, making a decision on the long term future there pending the outcome of 232, makes sense to continue to do that. So I would still view this as we are waiting for the outcome of that policy. And just to frame them out, 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. So we originally had about 7 gigawatts of total capacity sitting in Malaysia, Vietnam. About half of that is gonna be dedicated to production that will feed our new finishing line in South Carolina. So there is about 3.5 gigawatts left of that. We did take out some tools and moved them over to The US to reuse in our perovskite work. So ultimately, it leaves us with about 1.8 gigawatts of end to end fully finished capacity that we could ramp up across Malaysia. So it is about that 1.8 that we are talking about we are thinking. We are holding a decision on pending the outcome of 232.

Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is now open Please go ahead.

Thanks. Good evening. Maybe just going back to section 32. Obviously, you know, there is a lot in play, and I recognize that. But, you know, we have 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 am just curious conceptually, you know, from your perspective, if some of these waivers are granted do you think that could mute some of the price upside from section 32 or do you still see a constructive supply demand setup? Just trying to think conceptually, you know, how you think about that.

I mean, obviously, any modifications versus, you know, a 100% restriction. Will create some potential dilutive impact to the strategic intent of the 32. It also depends on if there is a waiver or some type or quota or some type. I mean, how big is it? And does it scale down over time? I mean, it is is it something that is not implemented initially and then that we will we will walk down to maybe complete elimination of it. So it is hard to give you a great, you know, insight to the impact clearly, we are we are not 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 are enabled or allowed at all. We really wanna create a domestic supply chain. And any type of workaround that you get will disincentivize the investments that need to be made here in The US, right, to scale up those capabilities. And I think it is much easier for people to understand the policy and environment with certainty versus creating uncertainty by waivers of quotas and those types of things that they can create. So we will we will have to wait and see. We are firm in our positions, and we do not believe that they should be allowed. But we will have to see how the final outcome is.

And there is some history here too if you look back at the section 201 tariffs, and the exemption was put in place for bifacial technology, it was clear that exemption effectively gutted that provision. So I think the administration has seen how those exemptions can effectively undermine what they are trying to do. If there is a belief that they 32 provides a need around the national security interest. It does not make a lot of sense to have a carve out or a quota piece associated with the national security interest provision.

Got it. That makes sense. And then, you know, if we say that section 32, you know, goes through, you get some kind of, you know, reasonable outcome, positive outcome. You kinda mentioned that there is 4 gigawatts -- it sounds like 4-gigawatts-plus of kind of pending deals for the second half. But do you get the sense that there is more demand sitting on the sidelines that are waiting for policy clarity. And, you know, once we get clarity, you could see that number move up significantly higher. And then just a point of clarification, I guess, again, if section 32 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 you would it come through as unfinished and you would expand your US finishing line?

So I guess on the 32, and I will let Alexander take the other question. Around how we think through Southeast Asia and whether it comes in as finished or partially finished or do we expand capacity for finishing here in The US? I will let Alexander take that 1. On the -- there clearly are customers that are sitting on the sidelines. There is absolutely no doubt about that. And even some of these that were even some of the stuff subject to CP is somewhat tethered to posting security. So 1 of the challenges that especially as you get longer dated in, and in terms of contracting some of this volume, and we are really trying to enforce having cash liquid security against new bookings. You know, that is been a priority of ours. In some cases, some of the counterparties cannot post to the required security now that we are towards having that available and they said that the security is posted then and kinda closes out on some of the CPs. So that is a piece of it. But there is clearly people sitting on the sidelines waiting to see what happens. You know, we have a couple of counterparties that are you know, they are hedging their way. They know that the risk is the ASPs may go up But at this point in time, they are they are trying to wait and see how it plays out and, again, just kind of the conversation last time, are there quotas or not? And you know, what are the options they have? And so forth. So that is all being, you know, you know, the it is in the mix right now. And as we have always said, the best thing for this industry is that we just have clarity and certainty and 32. We just really need really need a decision on that.

Because we can all understand how it is before. As it relates to what we could do with the Southeast Asia facilities, you know, we could bring fully finished product in subject to demand and pricing in The US. it is not only a function of where the 32 sits, it is also function of where other tariff provisions sit. So right now, we have a Section 301 that is just gone into effect replacing the Section 202 tariffs that were in effect for the first half of this year. Those relate to forced labor. There is still risk around a 3 zero 1 relating to excess capacity, so that investigation is ongoing. Pending the outcome of that, obviously, we will 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, or semi-finished, product and finish it in our existing US facilities. there is a limited amount probably in the couple of hundred megawatt range of incremental capacity at our finishing lines across existing fleet in Ohio. So we could do a little bit of that. But it is not effective to run Malaysia low throughput as you are seeing with the underutilization cost we are having this year. So really what we are looking for is an ability to run the factory at close to full capacity. So then I either it is 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 is subject again to finding available site with power and the time it would take to build that out. So I think that is less likely, but it is still an option.

Next question comes from the line of Julien Patrick Dumoulin-Smith with Jefferies LLC. Julien, your line is now open. Please go ahead.

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 is a big part of your open book. What are you thinking in terms of having safe harbor to acquire your initial customer conversations? And 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 is a little bit of just an extension of the logic you were just delineating there, but can you expand a little bit on the time that it sounds like it is not that far off that you make a decision. Let me put it more bluntly.

Maybe I will just take that 1. On the Southeast Asia, we are really waiting for the outcome of 232. We would expect to evaluate that and have a view shortly thereafter. It does not 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, it 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. We can have discussions around whether there is a view of long term offtake potential from those facilities.

Yeah. And then on the I just wanna make sure a couple of things. The booking that we will that we will reporting, most of the bookings that we reported 1.9 in US, so I am I think almost all of that was outside of the quarter close. So most of that happened in July, which would also have been outside of the safe harbor date. And most everyone has safe harbored with, you know, transformers, you know, there is really no safe harbored. You know, I know there was a you know? I do not know. It was, like, 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, you know, you eliminated the ability to use the modular 5% CapEx rule to safe harbor. There was a ruling by 1 of the courts that came out, I think, somewhere like June 20th that was hardly any time left in the quarter. And that in that theory, you could use, you know, assuming that challenged, they there you could use you know, models to potentially safe harbor projects. But, I mean, that was really not an opportunity. It just happened way too late. And most people had already safe harbored with inverters or transformers, excuse me, anyways. But, you know, as you go forward, it is it is an important component, especially for anything that was safe harbored. If you safe harbored the first half of this year, you know, with ability to COD out in the 2030, you know, 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 2029 and 2030 for when those projects most likely could be commissioned. Plus, the other thing I would say is we are seeing there is a lot of kind of rigid interpretations a little bit and there are some people that are interpreting that even if something was safe harbored, you know, let's say, in the second half of 2025, that if you do anything with a change order or let's say we move something from an MSA to a PPA or from a PPA, for instance, excuse me, is actually generated you have to always be mindful of is there a restriction that you could have to comply with both from a prohibited foreign energy perspective. there is a lot of, like, very conservative, which is rightfully so. People want to be you know, airtight and not taking any risk. To jeopardize their either ITC or PTC. And I think there is a view towards, maybe being overly conservative, you know, advice they are getting from tax counsel and others. And I think that is I if I was in their situation, I clearly would do that as well. I do not wanna put anything at risk. So there is that you know, safe harbor and those requirements under 48E as it relates to you know, FEOC restrictions or requirements. I think, will continue to play well for us as we look to book out through the end of this decade.

Your next question comes from the line of Philip Shen with Roth Capital Partners. Philip, your line is now open. Please go ahead.

Hey, guys. Thanks for taking my questions. Just wanted to follow-up on the 232, specifically on timing. You know, we have been thinking it is August. We have seen a bunch of delays. The issue is if it slips past August, then we go in September, and then that gets closer to the midterms, then there is a chance that decision could push on that. [inaudible] And so what is your what is your view based on the folks that you guys are in touch with that this should be August, or do you think there is a greater probability that this could slip into, you know, the fall or even beyond? Thanks.

I think I got your question.

Look. We are you know, we share look. there is I know there is a lot that is in the mix, and what the administration's trying to evaluate. When this is implemented. And we also wanna make sure they do and what is implemented is achieves the strategic intent and the spirit of what it was set out to do. So we are patient. We continue to be engaged We are anxious as well as you are and others. And as indicated, the industry really needs the certainty of understanding. I cannot give you any level of conviction maybe more than what you have right now. We are still getting signal that you know, decisions will be made. There are meetings that are being had that would indicate they are close to making a decision, but you know, we also wanna make sure that this is done right. And so to give you some sense of you know, my level of confidence and in August or whether it waits till September you know, I cannot really give you a strong view on that. I can tell you we want this to be implemented with the achieving strategic intent and spirit of what it was set out to do, and that is you know, that is the most important thing.

And we are going to continue to be engaged with the administration to ensure that Your next question comes from the line of Colin Rusch with Oppenheimer & Co. Your Line Is Now Open. Please Go Ahead.

Thanks So Much. And, You know, guys, are There Opportunities For You To Reduce Input Costs On The On The US manufacturing and talk a little bit about the supply chain and how that is evolving? I know you have had you know, some discussions with glass glassmakers around capacity expansion and the capital needs that they have. But just curious about how you might be able to look at that trend on a multi-year basis.

Yeah. Colin, I mean, it is it is a challenging you know, we are still in this and especially in The US, as you see more reshoring you know, pressure on commodities, You know, the data centers are being built out. I think, obviously, you would expect steel looking copper We do not use silver, but obviously our competitors do. I mean, there is just a lot of pressure You know, the those you can look at fuel cost. You can then look at what is happened in The Middle East, and I see that as more transitory in nature and then once that is resolved, then I think we will see much more competitive fuel prices and what have you. The electricity prices you know, at some of the locations in which we operate, and we are dealing with some of those same adverse impacts that others are. So we are we are in a pretty challenging rising commodity cost environment. Now are we able to do things like drive more throughput, through our operations. Absolutely. We are focusing on continuing to do that. Are we finding ways to create further automation and capabilities that can you know, reduce labor cost You know? So there is there is levers that we are we are focused on. there is some redesign of the product that we are looking at and trying to take cost out of the back rails of the frame. You know? We continue to look at glass and thickness and other things that we could do from that standpoint. But it is a pretty challenging environment from a commodity cost standpoint. And you know, our ability to get a lot of profit, I think, is probably 1 of the most challenging times that we have been in now. I will say that when you look at it on the cost per watt, not necessarily our cost per module, the great thing about CURE is that we have the opportunity to drive the efficiency up So as we, you know, drive the efficiency up, you know, as we go from kinda where we are right now and add another, you know, 10, 35, 30 watts that will help the cost-per-watt numbers. Right? Cost per watt numbers, which is important. Right? We need to we need to drive that number down. And then the ASP, the value uplift because of the energy attributes and the higher efficiency of cure that drives to an entitlement for higher ASPs and the like. So that is what we are we are focused on, and we are never gonna give up on the input cost. We gotta we gotta do the best we can to get cost out, but it is pretty challenging environment right now.

I would also say that the potential to use the balance sheet to work with suppliers who are looking at expansion or needing funding. This is an option there. We could try and leverage position of financial strength to get forward pricing that makes more sense that has to be done at the right risk premium risk profile. And then the other thing I would say is outside of just bill of material costs, let's say we are having a challenging time around period costs going from cost of what is produced over the cost of what is sold. So again, we are seeing freight challenges as it relates to cost of trucking, and I think I mentioned in the prepared remarks that we are seeing costs now to deliver product from you know, Perrysburg over to the West Coast Of The US. They are equivalent at delivering product from Asia to the West Coast Of The US. So continue to look how we can optimize our domestic transport routes, freight, and try and optimize between factories so that we can reduce those costs to the greatest extent possible.

Our final question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is now open. Please go ahead.

Hey. Good afternoon. Thank you for taking my question. I actually want you to come back on the on the last question. Regarding m and a, and I think you just added it a little bit to it. But can you expand a little bit what you what are you targeting with the current balance sheet that you have? And kind of felt like you were mentioning that you could use M&A to maybe help manage the input cost, but what else do you see maybe an option or another possibility for first solar?

So when we talk about uses of cash, M&A is something that is been on the list for us for a long time. Generally, we focus more on the working capital reserve piece and then growing capacity and replicating that is where the company's been if you look over the last decade or so. We have 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. It 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. So I think there is options there. We are we are also taking a look at things that are adjacent to the core, but we wanna do it with a disciplined focus around whether we see opportunities where we have a skill set that we can bring. that is something where we look at our strength in high volume thin film manufacturing, a very high throughput 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 will 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. We evaluate what is the competitive landscape look like, what is the market that we will be accessing look like, what is 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 have not done a lot on the M&A side. So we are more willing to do that. We are more open to it, but we wanna make sure we do it with a disciplined focus.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.