Stephen Haymore - First Solar, Inc. Mark R. Widmar - First Solar, Inc. Alexander R. Bradley - First Solar, Inc.

Philip Shen - ROTH Capital Partners LLC Sophie Karp - Guggenheim Securities LLC Paul Coster - JPMorgan Securities LLC Brian Lee - Goldman Sachs & Co. LLC Benjamin Joseph Kallo - Robert W. Baird & Co., Inc. Julien Dumoulin-Smith - Bank of America Merrill Lynch Michael Weinstein - Credit Suisse Securities (USA) LLC

Please standby. Good afternoon, everyone, and welcome to First Solar's Third Quarter 2018 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investors.firstsolar.com. At this time, all participants are in a listen-only mode. As a reminder, today's call is being recorded. I would now like to turn the conference over to Steve Haymore from First Solar Investor Relations. Mr. Haymore, you may begin. Stephen Haymore - First Solar, Inc.: Thank you, Holly. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its third quarter 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 provide updated guidance for 2018. 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? Mark R. Widmar - First Solar, Inc.: Thanks, Steve. Good afternoon and thank you for joining us today. Our financial results for the third quarter were solid with net sales of $676 million and earnings of $0.54 per share, driven by the sale of development projects. From an operations standpoint, we have started the first commercial shipments of Series 6 from our factory in Vietnam and progress to date on the initial ramp has been good. Commercially, we continue to be very pleased with the strong demand for our technology as demonstrated by our net bookings of 1.1 gigawatts since our prior call. It is important to note, we have booked over 1.6 gigawatts since the May 31 solar policy change in China. Before delving into the specifics of the most recent bookings, I think it's important to highlight some of the trends that we are seeing and which support the near-term and long-term growth of utility-scale solar globally. As has been the case for some time, the low cost of solar power continues to be the primary driver of demand. Beginning with U.S., solar procurement from utilities and corporate customer is strong and growing. According to a leading third party market research firm, 8.5 gigawatts of utility-scale solar was procured in the first six months of 2018 alone. Looking forward, we expect this procurement trend will continue to be robust. Based on our tracking of utility integrated resource plans as well as other public announcements, we expect utilities outside of California to procure more than 15 gigawatts of solar in the coming three years, a number that has increased by several gigawatts over the past year. Much of the growth is coming from regions such as the Midwest and the mid-Atlantic which are still in the early stage of utility-scale solar adoption. Several announcements over the course of this year highlight the trends of U.S. utility-scale solar growth. For example, AEP announced the plan to add more than 3 gigawatts of solar as a target of 60% reduction in CO2 emissions. Similarly, in its 2018 integrated resource plan, consumer energy in Michigan proposed a 5 gigawatts of solar and the plans to retire all coal generation by 2040. Most recently, NIPSCO, the second large utility in Indiana decided to retire all of its remaining coal power plants in some cases as much as 15 years earlier than previously expected and replace them with over 1-gigawatt of solar. NIPSCO cited the low cost of renewable energy as a key factor in this decision. Notably, all three of these utilities are in regions that have not historically been associated with solar but where the low cost of solar power now provides a compelling economic alternative to thermal generation. When you factor in additional procurement in California, which has passed the mandate for more than 60% of renewable power by 2030 and has decided to close its last nuclear power plant by 2025. The potential for solar growth in the U.S. over the next several years is even greater. It's important to note that nuclear power plant closure was not made solely on the basis of solar's favorable economics. The limited flexibility of the nuclear plant to adjust to market price signals relative to solar was another key factor in the decision. Within the renewable sector itself, another factor supporting the growth of utility-scale solar in the U.S. is its increasing competitiveness relative to wind. As the production tax credit continues to step down and with the recent IRS guidance establishing ITC Safe Harbor requirements, it's expected that solar deployments will outpace wind in the U.S. through 2023. The transition is expected to be particularly noticeable among corporate buyers of renewable energy who in recent years have tended to procure more wind than solar. With multiple gigawatts in our development portfolio, we expect to be able to take advantage of the recent IRS Commence Construction Guidelines and enhance the value of these development opportunities. Outside of the U.S., economics also continue to drive solar growth in many markets. For example in India, the LCOE of solar power is around $20 a megawatt hour less than coal. Similar economic benefits as well as growing concerns about carbon emissions have led to a resurgence in solar demand across many parts of Europe. Last year, Spain awarded 4 gigawatts through a tender process and many more gigawatts are being planned in Europe, in some cases, on a merchant basis, as a result of the low cost of solar energy. In France, EDF recently announced its solar power plant with intentions to develop and build 30 gigawatts of solar from 2020 to 2035. And another factor that may have a significant impact on solar procurement in coming years is the potential for increased electrification of transportation. While it is uncertain how quickly the transition to EVs will occur, momentum is building and there is a potential for significant solar deployments driven by this shift. With this context around what we're seeing in the macro environment, I'll now turn to slide 4 to discuss new bookings since our last earnings call. In total, our net bookings since the prior earnings call were 1.1 gigawatts, which brings our total year-to-date net bookings to 5.2 gigawatts. Continuing the trend in the first half of the year, systems bookings were especially strong this quarter with more than 350 megawatts of new development projects. After accounting for shipments of approximately 700 megawatts during the third quarter, our future expected shipments, which stretch into 2021, are now 11.3 gigawatts. We are largely sold out to the end of 2020 when taking into account our new bookings in combination with opportunities that are signed, but not yet counted as bookings. Our systems bookings are comprised of two PPAs that we signed with leading utilities in the U.S. The first of these projects was a 50-megawatt AC project that we will construct for PacifiCorp in order to provide affordable solar power to a Facebook data center in Oregon. We are excited about the opportunity to partner with PacifiCorp and contribute to powering Facebook's operations with 100% renewable energy. The project is expected to achieve COD in 2020. The second PPA for the quarter was a 227 megawatt AC agreement signed with a major utility in the southeastern United States. This project is intended to support a collaboration between the utility and its corporate buyer to meet renewable energy objectives. It's a tremendous opportunity to be part of this project, which is expected to reach COD in 2021. Additional details will be available in the future. Both of these projects are prime examples of our differentiated capabilities that enable us to address the renewable energy goals of corporate buyers in partnership with utilities by leveraging efficient and reliable large scale offsite generation. Since our first C&I PPA with Apple, we have now contracted nearly 1 gigawatt DC with corporate buyers to support their renewable energy goals. With the increasing number of companies joining the RE100, we expect C&I demand will continue to grow and we believe that we are strongly positioned to serve the needs of this segment. In addition to these project development bookings, we also signed a 50 – excuse me – we also signed an EPC agreement with Tampa Electric to construct a 50 megawatt AC project in Florida. This marks the fifth EPC agreement that we have signed with Tampa Electric, and we continue to look for ways that we can partner together. Note: this is not included in an incremental booking as we have signed the module agreement for this project last year. The remainder of our bookings for module sales in the U.S. and various international markets, new international bookings of nearly 300 megawatts are particularly notable in light of the challenging price environment in certain markets. In contracting this volume, we remain disciplined with regard to pricing and continue to focus on our points of differentiation. This differentiation includes focusing on regions where our technology has energy advantage, deep customer relationships, and opportunities that favor our leading eco-efficient technology. As we move forward, we will continue to leverage these strengths to capture the best opportunities across all of our markets. Lastly, before moving on to other topics, I'll briefly highlight the progress we are making in our O&M business. Year-to-date, we have booked 2.3 gigawatts of new projects, bringing the total fleet under contract to nearly 11 gigawatts. With nearly 80% of this year's bookings coming from projects where we are not the developer, we continue to capture additional value with our O&M offerings. The single largest booking this year is a 530-megawatt agreement with Tampa Electric to provide O&M services across several project sites. We began initially with Tampa Electric as a module agreement arrangement has grown into the scope to include EPC services and, now, O&M services. We strive to be a solar partner of choice for utilities and this is another example of how we can leverage our capabilities to meet our customers' needs. Continuing on to slide 5, I'll next discuss our mid- to late-stage bookings, opportunities, which now total 7.9 gigawatts DC, a decrease of approximately 400 megawatts from Q2 due to the strong bookings reported today. On a geographical basis, North America remains the region with the largest number of opportunities at 6.7 gigawatts DC. However, we also continue to have a significant number of opportunities in both Europe and the Asia-Pacific region. Similar to prior quarters, the total potential opportunities includes deals that are signed, but not yet counted as bookings until certain conditions precedent are closed. The total is now more than 550 megawatts, a slight decrease from the prior quarter due to the projects that were booked. Included in this total is a 150-megawatt DC PPA opportunity in the Western U.S. In addition today, which is not reflected on the slide, we signed another PPA that is over 140 megawatts DC in size, which when included, brings this total to approximately 700 megawatts. Our Q3 systems bookings of approximately 450 megawatts DC, we now have 2.5 gigawatts DC of future contracted systems shipments. Combined with the 2.6 gigawatts of mid-to-late stage opportunities, which now includes 300 megawatts DC of projects that are signed, but subject to CPs, we feel we have good line of sight to our 1-gigawatt yearly systems goal. Continuing on to slide 6, I'll next provide an update on our Series 6 production ramp. The most significant development to highlight from the past quarter was the start of our production at our first Vietnam factory in September. With this milestone, we now have three facilities in three separate locations producing Series 6 modules. Commercial shipments began from this location earlier this month. And the factory is demonstrating throughput levels at 35% of full capability in only two months since the start of production. The factory ramp was accelerated relative to Ohio and Malaysia by applying prior learnings, including starting production with an improved model framing tool. With each successive factory ramp, we expect the length of time needed to reach full production levels will be progressively shorter as we implement best known methods captured from the prior factory ramps. Our second factory in Vietnam is also making good progress towards the start of production. Construction on the facility is now complete and more than 80% of the tools have been delivered. We originally anticipated that the factory would start production in the second quarter of 2019, but based on the tremendous effort of our manufacturing and engineering teams, we now expect production will commence in the middle of Q1 2019. Finally, construction of our second U.S. factory in Ohio remains on track. Relative to our Ohio and Malaysia Series 6 factories, since our last earnings call, we have made good progress ramping each of these plants. Our Ohio factory is now demonstrating throughput levels near 90% of its full capability as compared to 60% at the time of our last call. Our Malaysian factory is demonstrating throughput levels at 75% of full throughput capability versus 40% previously. In Ohio, we are finishing the installation of the last inventory accumulator to adequately buffer the line. In Malaysia, we are just starting the installation of the accumulators and expect completion by year end. We also continue to make good progress upgrading the toolset, primarily focused on improving availability for both factories. For example in Ohio, we have completed approximately 70% of the tool upgrades identified. The combination of the accumulators and toolset upgrades are expected to enable both of these factories to demonstrate full throughput capabilities by the end of the year. Module wattage in our lead factory in Ohio continues to improve steadily with approximately 50% of recent production at 420 watts per module or higher when running at full process entitlement. This compares to wattage of around 415 watts at the time of our future earnings call. We are now seeing top bin reaching 430 watts per module versus 425 watts as of the last call. Module wattage for our Malaysian and Vietnam factories is lower than Ohio as we are still in the process of matching the efficiency between the factories. Note, during the initial factory ramp, we do not run our anti-reflective coating products. We ramp our non-ARC product first to focus on throughput and performance. A key driver of matching efficiency to our lead factory will be the transition of our anti-reflective coated product. In addition, because these factories are still in the early ramp phases, bin distributions are much wider than our lead factory. Over time and as we match the process between the factories, we expect the fleet average efficiency to increase and bin distribution to narrow. Lastly, before I hand the call up to Alex, I'd like to briefly highlight some of the remarkable work that First Solar as a thought leader in the industry is helping to facilitate related to grid flexible solar. At our Analyst Day last December, we introduced the concept of Solar 2.0 which moves beyond the traditional view of solar as an energy-only contract to valuing solar as a flexible and dispatchable resource. As we highlighted at the time, flexible solar can enable solar penetration rates without the need to add storage. As part of our comprehensive engagement with stakeholders on this topic, we recently sponsored a study conducted by E3, which simulated the impact of flexible solar on an actual forward utility system. The results of the study are impressive and indicate that operating in solar flexibly as a scheduled resource provides significant additional value to the utility, any form of expected reduced fuel and maintenance cost for conventional generation reduced curtailment of solar output and reduced air emissions. The study simulated the utility-scale solar deployment at a level up to 28% annual solar energy penetration and the benefits increased as the level of solar penetration grew. While we discuss more about this topic on future calls, we invite you to view our recent press release on the topic and visit the E3 website to access the study. I'll now turn the call over to Alex who will provide more details on our third quarter financial results and discuss updated guidance for 2018. Alexander R. Bradley - First Solar, Inc.: Thanks, Mark. Before turning to our financial results for the quarter, I'd like to highlight that we'll be hosting a call in late Q4 to discuss our outlook and financial guidance for 2019. A press release with the date and detail of the event will be issued approximately two weeks in advance of the call. As Mark mentioned, we had solid third quarter financial results driven by the sale of several development projects. I'll provide some more context beginning on slide 8. Third quarter net sales of $676 million, an increase of $367 million compared to the previous quarter. The higher net sales were primarily a result of closing the sale of the Willow Springs project in the U.S., the Manildra project in Australia, and selling some smaller Japan assets. Note that each of these projects achieved initial revenue recognition in Q3 based on the respective project percentage of completion. In addition, we recognized high revenue from the California Flats Project as compared to the prior quarter. Systems revenue as a percentage of total quarterly net sales increased to 82% in Q3 versus 66% in Q2 as a result of the project sales mentioned. Third quarter gross margin grew to 19% as compared to a negative 3% in the prior quarter. The improvement was due to the mix of higher gross profit projects recognized and a $25 million reduction to our module collection recycling or EOL liability, partially offset by higher third quarter Series 6 ramp charges of $48 million. Our systems segment margin was 24% in the third quarter and the modules segment margin was a negative 5%. As it relates to the modules segment gross margin, bear in mind that sales were still comprised entirely of Series 4 volume as early Series 6 volume was allocated entirely to our systems business. However, the modules segment COGS is comprised of both Series 4 COGS and Series 6 ramp-related costs. And these are allocated in the modules segment. The net reduction to the modules segment gross margin from ramp-related costs partially offset by the EOL adjustment was $23 million. Third quarter operating expenses were $71 million, a decrease of $25 million compared to Q2. Plant start-up expenses decreased by $10 million as a result of lower Series 6 pre-production activities in Malaysia, partially offset by increases for initial Vietnam factory. In part, the lower start-up was due to accumulated learnings from the prior two Series 6 factory start-ups which we've been able to apply to Vietnam. SG&A was lower versus the prior quarter primarily due to a benefit from the reduction to our module collection and recycling liability, and lower variable compensation. Q3 operating income was $59 million compared to an operating loss of $104 million in the second quarter. The quarter-over-quarter improvement in operating income was primarily due to higher net sales, improved gross margin, and lower operating expenses. Income tax expense of $2 million in Q3 as compared to a tax benefit of $6 million in Q2. To relate, the U.S. tax reform enacted last December, we have not recorded any adjustment through Q3 related to our original estimates. We expect to finalize our accounting related to tax reform in Q4 based upon finalization of currently proposed tax regulations and the filing of our federal and state income tax returns. The combination of the abovementioned items resulted in earnings of $0.54 per share in Q3 compared to a net loss in the second quarter of $0.46 per share. Moving to slide 9, I'll next discuss select balance sheet items and summary cash flow information. Our cash and marketable securities balance ended the quarter at $2.7 billion, a decrease of $405 million from the prior quarter, primarily as a result of capital expenditures for the ongoing Series 6 capacity expansion and the timing of receipts from system projects. Third quarter net working capital which includes the change in non-current project assets and excludes cash and marketable securities increased by approximately $215 million. The change is primarily due to an increase in unbilled accounts receivable. Total debt at the end of the third quarter was $466 million, an increase of $10 million from the prior quarter. The increase was primarily associated in current project level debt in Japan and Australia, partially offset by debt assumed by the purchase of the Manildra project. As a reminder, essentially all of our outstanding debt is project-related, and will come off our balance sheet when the projects are sold. Cash used in operations was $225 million, primarily due to the timing of receipts from systems projects. Keep in mind that 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 had not assumed the debt. In Q3, buyers of our projects assumed $56 million of liabilities related to these transactions, and year-to-date, that total is $116 million. Capital expenditures were $238 million in the third quarter, compared to a $195 million in the prior quarter. The cumulative spend on Series 6 capacity now exceeds $1 billion, out of total expected spend of around $1.9 billion, so 6.6 gigawatts of capacity. And lastly, depreciation and amortization expense was $34 million in Q3 versus $30 million in the last quarter. Turning to slide 10, I'll next give you our updated 2018 guidance. Before covering the detailed updates to our guidance range, there are some key business updates to discuss. Firstly, as we highlighted on last quarter's call, there was the potential for our guidance to be lowered based on the sales timing of our Ishikawa project in Japan. Despite the weather-related issue experienced earlier this year, all modules have been installed and construction of the project is nearing completion. However, based on the timing of the sale process, we now expect to complete the sale of the project in 2019. While this does impact our 2018 outlook, the sale in 2019 allows us to optimize transaction and realize the full expected value of the project rather than potentially sacrificing project value to ensure closing this year. The impact to delay in the sale of the Ishikawa project is expected to be partially offset by the sale of two other smaller Japan projects. Selling these projects in Q4 has been part of our opportunity portfolio and with the revised timing of the Ishikawa sale in 2019, it now makes sense to aim the complete sale process for these projects in 2018. Secondly, we expect a reduction on our module sales for the year, as a result of some changes in shipment timing, as well as a reduction in certain international shipments. And thirdly, as we progress through the year, we determined that while the cost for our initial start-up activities for Series 6 is lower than originally expected, the savings is expected to be more than offset by higher ramp costs. As a result of this distribution of Series 6-related expense, we expect cost of sales to be higher due to the increase in ramp costs while operating expenses will be lower due to reduced start-up. So, with these in mind, we're revising our 2018 outlook as follows. Starting with net sales, we're lowering the range to a revised forecast of $2.3 billion to $2.4 billion in order to reflect lower module sales and the revised timing of the Ishikawa project sale which is expected to be partially offset by other Japan projects mentioned. Our expected gross margin has been lowered by approximately 200 basis points to a revised range of 18.5% and 19.5%. The reduction accounts for the increase in ramp and related costs from $60 million to $100 million, lower margin from module sales, and the change in mix of systems projects to be sold. The operating expense forecast has been lowered by $45 million to a revised range of $345 million to $355 million. Plant start-up expenses decreasing by $30 million to $90 million for the full year. The remaining reduction in OpEx is primarily due to capital management of core operating expenses. Our outlook for operating income has been revised down by $40 million as a midpoint to a new range of $90 million to $110 million, as a result of the low revenue and gross margin partially offset by the reduction of operating expenses. Below operating income, the most significant update is the forecast of full-year tax expense, which is now expected to be approximately $15 million. The decrease from our prior expectation of approximately $35 million is a result of reduced operating income as well as the change in the jurisdictional mix of income. Our guidance continues to assume minimal additional equity in earnings to the balance of the year. And putting these revisions together, our earnings per share guidance is now $1.40 to $1.60. The operating cash flow range has been lowered by $200 million as a result of the revised timing of project accounts receivable collections and lower module sales. With some projects receiving Series 6 modules later than initially planned, this is concentrated work later in the year and resulted in some cash collection timing moving from 2018 into early 2019. Capital expenses are unchanged at $800 million to $900 million for the full year. As a result of the decrease in operating cash flow, we're lowering our net cash guidance by $200 million to a range of $2 billion to $2.2 billion. And lastly, we're lowering our shipment guidance for the year by 200 megawatts to a revised range of 2.6 to 2.7 gigawatts. And that change is due to the lower module sales mentioned previously. Finally, turning to slide 11, I'll summarize the key messages from our call today. Firstly, we had very good execution and solid financial results in the third quarter as we closed several projects sales and managed our OpEx effectively. As you've seen over the course of the year, the timing of project sales can produce uneven quarterly results. As we move forward, this trend is likely to continue, particularly as it relates to international project sales to may be sold near its completion of construction. Secondly, as we continue to make progress with our Series 6 manufacturing round, we now have a third factory shipping Series 6 modules and demonstrated throughput continues to improve across all sites. We've also accelerated start-up production of our fourth Series 6 factory. And lastly, the strength of demand for our Series 6 product remains the highlight. With bookings of 1.1 gigawatts since our previous call and total future contracts of shipments of 11.3 gigawatts, we have strong visibility to future demand. In particular, with over 350 megawatts of PPA award included in our new bookings, more than 1.6 gigawatts of systems bookings year-to-date, we continue to make excellent progress in building a systems portfolio that we expect to average approximately 1 gigawatt per year over the next few years. And with that, we conclude our prepared remarks and open the call for questions. Operator?

Thank you. Our first question today will come from Philip Shen with ROTH Capital Partners. Philip Shen - ROTH Capital Partners LLC: Hey, guys. Thanks for the questions. Since the end of May, module pricing continues to fall lower. We're getting to very low levels now. And I know your cost structure can compete with it. But I wanted to ask a few questions around this topic. So is the current environment putting any economic pressure at all on your 2019 or 2020 bookings for either Series 6 or Series 4? I know your contracts were legally binding, but what kind of pressure, if any, are you receiving from your customers? We hear the pressure may only be on Series 4 which is a much smaller percentage of your overall bookings. Additionally, how much of your current bookings are for Series 4 and how much Series 4 capacity is left to book? And then finally, would you contemplate winding down Series 4 capacity earlier than expected? I recall back in December, you guys extended that capacity, but would you consider ramping that down earlier than expected and then in turn accelerating the Series 6 expansion there? Thanks. Mark R. Widmar - First Solar, Inc.: All right. Philip, there's quite a few of them. So hopefully I'll get them all. Let's start with the economics on the 1.1 gigawatts which 700 or so megawatts was module and the 350 megawatts or so that we highlighted was our systems business. So, when you look at the module business – and again, of that 700 megawatts, about 300 megawatts of it was outside of the U.S. Slightly more than half of that volume was actually Series 4 of that 700 megawatts. So, there was a big chunk of Series 4 in there. And then most of the international number that we cited was international and that was a Series 6. I am – again, we tried to highlight in the script, in the prepared remarks that we have a very good luxury of focusing on where we can capture the highest value, where we can capture – where have point of differentiation, where we can capture the energy yield that we have in certain markets, where we can capture the eco-efficient or eco-friendly attributes of our module and focus on those markets. And so, when I – when you look at that and you look at the economics and what we saw for both Series 4 new bookings and Series 6 new bookings, and you've got to remember the Series 6, in particular bookings are starting to go up further into because we're sold out through 2020. So, we're starting to see more latter half of 2020 kind of buying books that we saw this quarter. We saw a nominal reduction to the ASPs in this quarter. Our sales teams have done a fabulous job of positioning the product, capturing the best value from the customer. And I'm talking nominal being 10% deltas on ASPs, right. From what we booked last quarter versus what we booked this quarter on both Series 4 and Series 6. So I'm extremely happy with that. The team has done a great job of getting the best value for that product. And the way I would look at that is where we're pricing Series 4 with the new bookings will be kind of mid-teens type of margin which I'm happy with. And then I'm getting about – and if I look at my last quarter bookings I got about a 10% premium of Series 6 over my Series 4 price. So that's obviously very, very positive. So from that standpoint the volume is great and the actual underlying ASPs and the economics relative to the headlines. I understand what's going on in the market now here as well sometimes from our customers. I understand pricing in some markets is very aggressive. We're not seeing anything today. And if we do, we're not going to book it because I don't need to, right? So we're booking good economics with good customers and we have great relationships with. So that's kind of a new bookings aspect. As it relates to the contracts, as I said before, the contracts were negotiated with customers with a risk sharing approach and creating binding obligations between both parties to perform. And to the extent if the parties do not perform, then there's implications around that to that party, right? We have LDs. If we don't deliver, per requirements, our customers will have a cost associated with termination and forfeiture of deposits and those types of things, right? As it relates to Series 6, I haven't had one customer come to me in the United States, and have any discussion relative to that. So we haven't seen that. And the customer understands if they want to do that, then it's very clear what the implications are and won't force our rights underneath the contract. We had a couple of examples internationally that we, for example, in a couple of markets that have turned soft. We had one example with a customer that we were selling modules into China. And given what's happening with the policy changes in China, they didn't move forward with the contract and we took their 20% security. Right? So, again, we will enforce the rights underneath our contracts. We had – there was a small number of megawatts that we had in India because of what's happened with the new tariffs. I'm talking small megawatts – it was less than 10 megawatts – that we shipped the vast majority of the contract, and there was a small residual amount that didn't ship based off of the timing of the cutoffs of when the tariffs would be applied. So, we didn't fulfill that contract, the 10 megawatts to that customer. And we've had a little bit of noise because of what's happened with economic turmoil in Turkey, but that customer is going to redeploy those modules to opportunities outside of Turkey. But that's the backdrop of what we've seen relative to our contracts. As it relates to Series 4 with the current bookings that we just had, we're sold out of Series 4. So, we've got more than enough demand around Series 4. So, there's no more Series 4 volume that we need to worry about contracting. Now, we will – I said this before. As it relates to some of our contracts, we have optionality of delivering Series 4 versus Series 6 for some of our customers. We need to focus on what creates the best position of strength for First Solar in 2021, and a higher mix of Series 6 is going to be better for me. Scale is important; drives contribution margin. So, I want as much capacity of Series 6 in 2021. Now, it may mean that I may negotiate with some customers to move some volume that's contracted in Series 4 over into Series 6 in order to – and potentially push some of that volume into 2021 in order to enable me to scale and to capture the highest Series 6 production profile that I can in 2021. So, those discussions could be happening with customers and we'll continue to look at that. So, as it relates to our decision around that, we may provide a little bit more color on our guidance call in December, but some of those conversations are having – we are having with our customers in the background.

Your next question comes from... Stephen Haymore - First Solar, Inc.: Would you please go to the next...

...Sophie Karp with Guggenheim Securities. Sophie Karp - Guggenheim Securities LLC: Hi. Thank you for taking my question. I was wondering as far as systems demand in the U.S., are there any particular areas, states in particular, that you see that are stronger than others? I know some of your competitors have also been a highlight in Texas and some other Southeast States. So, I'm kind of curious where you see demand coming from in the next few years. Thank you. Mark R. Widmar - First Solar, Inc.: Yeah. I mean I think – for us in particular, Southeast is a really strong market. As we highlight, one of the larger PPAs that we announced as part of our booking this quarter was with a utility in the Southeastern U.S. We – last quarter we also announced we had an acquisition of a portfolio of projects in the Southeast which also came with a PPA and we're real happy with having more development sites in the South Carolina region, in particular. We're doing a lot with TECO; you saw that. So, the Southeast region is a very strong region for us across Texas, and then obviously, into the Southwest continues to be a good market. But the one thing I would say, and we kind of highlighted this in the – especially as you look across the horizon, to your question, over the next couple years, solar is only going to be increasingly more and more competitive through 2023. And if you look at some analyst reports, especially when you go beyond 2019 into 2020, over the next several years, you're going to see the vast majority of utility-scale renewables being solar. And so, I had, actually – I'll use an analogy that one of my customers used who does both solar and wind. Their view over that horizon is if you look at the map of the U.S. today and red being solar and blue being wind, there'll be a convergence of red all over the blue. So the red will continue to grow mainly – around most of the U.S., except for maybe the Midwestern states where there's very strong – Central states where there's a very strong wind resource. So as you look at it over the next several years, you're going to start seeing competitiveness of solar across many different geographies. I was talking with a customer recently, even in the Northeast where wind is a good resource, the economics are penciling out better for solar right now. So I think we're strong in a couple of traditional markets today, but that's only going to expand and grow; and, we highlight what we're seeing with AEP and what's going on in Michigan and Indiana. So across Michigan, Ohio, and Indiana, those are all states that are in early innings and we're seeing tremendous amount of opportunity for solar deployments over the next several years.

And our next question will come from Paul Coster with JPMorgan. Paul Coster - JPMorgan Securities LLC: Yeah. Thanks for taking my question, Mark. It is a little bit difficult at the moment to get a handle on what the normalized gross margins are and what your earnings power through the cycle is here. It looks like the cycle itself is somewhat kind of attenuated by this visibility you have. So I'm hoping that you're getting to the point now where you're able to forecast the earnings power within the band for a couple of years, at least. Is that starting to come into focus? And when can we understand what your gross margin kind of structure is? Alexander R. Bradley - First Solar, Inc.: Yeah. Paul, certainly, internally we obviously forecast it out. I don't see us providing guidance out multiple years. We'll provide guidance to 2019, specifically, later this year. But if you go back to the Analyst Day that we had in December of last year, we gave an outlook at that point trying to break down the various components of the value chain that we have through the module development piece through EPC and through O&M. And we gave indicative gross margin numbers around that. And we said at the time that that was being used for guidance for the year, but you could think about that as an indicative view of how we looked at the business in the long term. You're right that the current visibility we have over the next few years, based on the contracted pipeline, is very helpful for us, and I think the message we gave in the Analyst Day still holds, which is those are good indicative ranges to use when you think about gross margin across the various segments. We've talked about the amount of the development business that we look to have around that gigawatt a year mix of self-developed project assets plus EPC business. So, you can use that. And then, internally, clearly as Mark said, we are focusing on putting ourselves in the strongest position we can for 2021, such that when we're through this period of current contracted backlog, hopefully fully over to Series 6, to our most advanced product at (40:42) that point, we still maintain a competitive position even in a market where we'll naturally see ASPs come down. And we're seeing that competitive environment be strong at the moment. So, for the long term view, I would still guide you back to what we talked about last year and, obviously, there's considerable strength over the next couple of years based on the contracted pipeline we have today. Mark R. Widmar - First Solar, Inc.: Yeah. And the only thing I would just add to that is that I do – we do try to hopefully get people to continue to think about not only at the gross margin level, but what is the op margin expansion that we can see as we see higher contribution margin coming through from growth, right, as we continue to expand the platform. One of the challenges we have right now is we're only producing a little bit less than 3 gigawatts when you combine the Series 4 and the Series 6. And the Series 4 is two-thirds of that number, and that's obviously not our most advantaged product. So just as that mix shifts from all the Series 6, and then we start growing from 3 gigawatts and to 4 gigawatts to 5 gigawatts and 6 gigawatts and to 7 gigawatts with a relatively flat OpEx profile, there's an opportunity for a meaningful op margin expansion which I think everyone needs to take into consideration.

The next question will come from Brian Lee with Goldman Sachs. Brian Lee - Goldman Sachs & Co. LLC: Hey, guys. Thanks for taking the questions. I had two of them. I guess first off, last quarter if I recall correctly, you called out lower margins due to some higher ramp cost on the back end of Series 6. So wondering what's incremental here in 3Q since it sounds like you're calling that out again as one reason for the outlook change here? And then I had a follow-up. Mark R. Widmar - First Solar, Inc.: I think on the other ramp, I think, actually the last quarter we were at $60 million for the full year and that was a number for the prior quarter. I think we started the year right around $60 million or so of ramp. So we hadn't changed the ramp last quarter, so and the guidance didn't reflect any change to the ramp. What happened this quarter, partly because we ended up starting our Vietnam factory, first Vietnam factory, and we'll start our second Vietnam factory sooner than we had anticipated, is that the profile has shifted from start-up into ramp. So start-ups come down $30 million. The full-year number now for ramp is $100 million. So it went from $60 million to $100 million. So there's about a $40 million increase in ramp. $30 million of that is just the kind of geography shift between start-up and the ramp. There is about a $10 million of incremental ramp cost. Some of that is partly – we're still working in both Malaysia and Ohio. Our framing cell is still – it's basically manual back-end process. And the throughput through there is still not where we want it to be. And as well, we also had to hire some incremental labor in order to deal with the revisions that we made to the frames. So, there's some of that costs that – that's in there. But the way I would look at it, Brian, outlook to outlook, ramp, what we guided to last call, the $60 million that was consistent with Q2 – excuse me, Q1 and now it's going from $60 million to $100 million, but $30 million of it was geography shift and $10 million of it relates to some incremental ramp that we are seeing mainly associated with Malaysia and Ohio. Brian Lee - Goldman Sachs & Co. LLC: Okay. Okay. No, that's helpful color. Appreciate that. And then just my second question was around free cash flow. I know there's a bunch of moving pieces here but the – the end result this quarter was pretty negative. And then if I look back a little bit further at the overall cash flow profile since your Analyst Day in December, there's been like a $350 million to $400 million swing in free cash flow to the negative as cash flow from ops is down and CapEx is up. So, wondering how you're thinking about the profile into 2019 and if you're confident that free cash flow can get back to positive next year or if that's maybe still too aggressive of you right now to assume just given the recent trajectory. Thank you. Alexander R. Bradley - First Solar, Inc.: Yeah. Brian, I'm not going to comment on 2019 but I'll – we'll give you numbers later in the year. I think when it comes to the off-cash fees, there's a lot of noise based on how we've been selling assets. So, I wouldn't focus particularly on that. But what you're seeing a lot on the free cash and on the cash position overall is a significant decrease at the moment, just based on timing. So, as we've been shipping Series 6 product later to certain sites, that means one of the EPC agreements we'll get milestones later. And when they're in the billing cycle, we're receiving cash later. So, we've got a dip in the quarter here which may actually go through the end of the year as well just based on the timing of construction. So, we're actually seeing receipts from the some of the larger projects we have potentially spilling out over the end of the year in 2019. And you're going to see a reflection of that in terms of the unbilled amounts on the balance sheet as well. We've also added in Perrysburg too. So, if you go back to beginning of the year on the CapEx side with an initial guidance we have in December that CapEx is going to have significantly booked with adding in the new Perrysburg plant as well. And then lastly, we've also structured a couple of deals recently where we have pretty back-end loaded cash flow profiles. If you look at the cost of carry from a project perspective, relative to the opportunity cost and the cash in the balance sheet at the moment, we've been using some of that cash optimizing some of the project returns and timing of cash flow receipts from projects. So you're seeing a lot on the project side that's causing noise for the year. And then later in the year, we'll give you an update on 2019.

And our next question will come from Ben Kallo with Baird. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: Hi. Good afternoon. (46:31), so, just on Series 6, so I'm clear, because you have – I heard you say, Mark, the pull forward, our Vietnam starting up faster, so you have some extra cost there. And then you have the framing cost. And so, I just want to sure that we leave this call understanding where you are in the technology level, and at the same time, the cost level, so we can model that out. So, are you there... Mark R. Widmar - First Solar, Inc.: Yes. Benjamin Joseph Kallo - Robert W. Baird & Co., Inc.: ... with the technology? And this is a onetime thing, and then the cost is where you would expect it to be? And then, we've pulled forward some Vietnam because you guys did better than you expected? Mark R. Widmar - First Solar, Inc.: Yeah. So, let's talk about – part of the question was around the ramp delta, right, from what we had last quarter to this quarter. So, the vast majority of the ramp delta, $40 million, $30 million of that was just a geography move from startup into ramp, because we were successful at pulling forward Vietnam into production faster. And we're actually going to pull forward Vietnam, too, sooner – faster as well. We highlighted to that as well. So, that's just a geography shift in terms of where the cost goes. $10 million was the incremental ramp cost, for the reasons that I said, mainly for – associated with Malaysia and Ohio, mainly on the back end for the framing cell and some of the manual processes that we had to put in place there. So – and then that is all being normalized away. So, as I indicated as well, in Perrysburg, we were at – we have one accumulator left to do, which will help sort of buffer the back end a little bit more, which will help drive higher throughput. But more importantly, we're 70% through on the tooling upgrade – tool set upgrades that we need to do. So, we have identified and prioritized a number of upgrades that we need to do for the tool set. We're 70% through on that. So, I'm happy with where we are there. As we indicated, Perrysburg, even with not having been fully buffered, but clearly the benefit of having buffered a significant portion of the line, we went from kind of a 60% capacity number to around a 90% capacity number. So, I'm really happy with that. Malaysia made similar progress. And as we progress through the balance of the year, we'll have accumulators installed at both factories. And as we indicated, we should be exiting the year where we need to be on both of those factories; so, feel good from that standpoint. As I said before, the tool set when we looked at it – when we communicated in the last call, two most critical things to me were really cycle time and performance of the tool set, and everything is still performing extremely well from that standpoint. So very confident that once we get – finish the buffering, get the availability where it needs to be, both of those factories should be running well. The other thing that we indicated was the – when we started at Vietnam, it already has an enhanced – has a different framing cell. And as a result of that, it's much more resilient in capability. And therefore, we're seeing better performance in Vietnam, and every new factory that we have going forward will have that revised framing cell and – plus other modifications that will be made. So that should help us ramp and get to full entitlement of our second Vietnam factory, and then obviously, Perrysburg after that. So – and we're starting to reach 430-watt modules. And so, I think when you look at it from that standpoint, we feel good. On the technology side, the one thing that I still – we need to tighten up the distribution. So we're seeing the top end starting to approach 430 watts, but we're still seeing tails in the bottom end that are not where we want to be. And part of that, as I alluded to in my prepared remarks, is that we will start – normally we'll start and we'll ramp through with our non-ARC product. And as a result of that, it's going to be a lower-efficiency product, for sure, because ARC is going to give you – if you had a 400-watt module or so, you're going to get 12 watts from the benefit of ARC. So that delta will drive to a lower bin. It's about two bins lower for a non-ARC product. Plus, it also drives higher costs. So the more non-ARC that they make does add about $0.01 to my cost profile. Now, when we get everything up and running and on – fully on ARC and we've got a new ARC application in a product that we're using that will – effectively we'll get to – almost 100% of our production will be on ARC. That $0.01 goes away. So near term, I got a $0.01 mix issue between ARC and non-ARC. And then, as we indicated in the last call, I've got – we are dealing with issues around tariffs that are impacting the cost of steel and the cost of the frames. So the frames, $0.01 or north of that of impact that we're dealing with on the module cost that's a headwind for us. So, we're dealing with a little bit of headwind there, and I'm dealing with a little bit of headwind just because my throughput is not where it needs to be. But as we drive the throughput up, we go from a non-ARC to an ARC product, and then we're still working through some solutions to try to get the cost out on the frame, get out from underneath the tariffs, source differently, other options that may happen that can drive that cost down, then we'll be able to get to where we need to be on that standpoint. So, I don't want you to leave the call with a view that we haven't – we still have some cost challenges. They're well understood in what we need to do, but we're going to have to deal with – and one that's probably structurally going to be the bigger challenge would be in the frame.

The next we'll hear from Julien Dumoulin-Smith with Bank of America Merrill Lynch. Julien Dumoulin-Smith - Bank of America Merrill Lynch: Hey. Good afternoon. Thanks for the question. First question here, just going back to the systems side of the business, obviously you've had continued success. Can I ask you – in terms of margins, obviously, we've seen pricing come down on the module side. How are you thinking about the margin profile persistence as you continue to scale this up and you see a little bit of a different geography? Is it still kind of in the same ballpark that you all have seen historically? Part one. And well, maybe the second question, I'll throw it out now. On the actual Series 6 panel, you kind of hit at it a little bit a second ago, but you kind of alluded to on the call the competitiveness of the panels themselves actually improving a little bit. Any sense of the magnitude, overall, versus what you'd been contemplating perhaps earlier this year, just as you think about it? Mark R. Widmar - First Solar, Inc.: I'll let Alex take the system one. As it relates to the competitiveness of Series 6, we're very happy with how it's positioned in the market and the value that it's capturing. As I said, just on our bookings this last quarter, Series 6 versus Series 4, we've got a 10% premium of our Series 6 product over our Series 4 product, which when you couple a 10% premium with, I would say, a much lower cost profile entitlement, then that's a very attractive product. And the indications that we're getting from our customers – and I was recently at SPI, and one of our structure providers came over to me and was just very excited about Series 6 and the implications it has on helping them drive cost out as well on their structure, as well as the installation velocity and what we're hearing from our EPC partners. They're very happy with the ease of the installation, the ease of the wiring and the connections associated with it. So, we're seeing the same thing in our own projects that we're self-developing and executing on right now. So, what I'm seeing on Series 6 right now has been very much in line, maybe slightly more favorable than what we had anticipated, but the product's been very well received in the marketplace. Alexander R. Bradley - First Solar, Inc.: Yeah. Julien, on the gross margin side, I refer you back again to the Analyst Day last year. I think at that point, we talked about our contracted pipeline having greater than 50% gross margin on the pure development piece. Now, the way we did that makes it clear as we broke out what we thought the entitlement for the module was, assuming a third party module sale, the total EPC, and then the residual development piece is a very small number. But on that development piece, we are seeing contacted margins greater than 50% on the existing pipeline, and new contracted development asset from the development piece, we are seeing over 20% gross margin. So, clearly, it's come down over time, but we're still seeing, I'd say, healthy gross margins on the development piece there. The other thing to say is that it depends a little bit who the buyer is and what the structure of the deal is. So if it's a contested auction in California for a busbar long-term PPA where there's a huge amount of competition. We may no longer be the best buyer because they're not going to sacrifice a successful gross margin profile for volume. But what we're seeing is there are a lot of opportunities out there for us to deploy the skills that we have and the team, and the opportunity set that we've built up over time in both sites and human capital. Through more complex PPAs, for instance, with C&I buyers, who have a different profile rather than contracting a significant amount of product and assuming that maybe some PPAs will fall away and just re-contracting them. Renewable energy buyers, corporate buyers have a much more reputation in focused procurement process where they're looking to make sure that everything they procure will actually go through, so the stronger counterparty risk piece that they place and that positions us very well for that. And then finally, also on the UOG side where again we can bring talent to bear and skills to bear that we have as a company that aren't necessarily the same across the board, and we can see successful margins there. And we don't look through where the procurement is happening, but in general, I'd say that especially with the backlog we have today of systems procured, we're not going to go out and chase margins down for the sake of volume when we're seeing enough opportunity, acceptable margins today to maintain today that gigawatt a year that we talked about. Mark R. Widmar - First Solar, Inc.: Yeah. And the only thing I'll add is that – look, I think there is still quite a bit of demand for high quality assets. And so, when you look at the capital stack and across whether it's the tax equity side, I think it's becoming – where we thought that it maybe would be less competitive given some the tax reform that happened last year. We're not seeing that at all. We're seeing even more getting involved in the tax equity side here in the U.S. The cash equity, there's a lot of money being raised around the world that people are looking to deploy in either great quality assets from that standpoint. And we're even seeing on the debt side, aggressive pricing from that standpoint as well. So, all that accretes higher value to the projects and the value that we can capture. And we've got a very strong pipeline right now, not only here in the U.S., but Japan assets in Australia. I'm very happy with what we have, and we're going to continue to build upon that. I think the Safe Harboring opportunity that's in front of us. And again, an opportunity to deploy our balance sheet to carry multiple gigawatts of opportunities out in 2023 is going to be a very good position for us to be in.

Our final question will come from Michael Weinstein with Credit Suisse. Michael Weinstein - Credit Suisse Securities (USA) LLC: Hi, guys. Thanks for the question. With capacity expansion and CapEx already locked in and product development pipeline now pretty much above the 1-gigawatt-per-year target, can we expect – this is use of cash question. Can we expect M&A or maybe capital return next year? And then regarding M&A specifically, do you see any opportunities for project pipelines or are there any technologies or new verticals of interest out there that you might be looking at? Alexander R. Bradley - First Solar, Inc.: Yeah. Look, we continue to see most things that are happening in this space. We're always very happy to look at development portfolios. And I think Mark mentioned earlier we acquired a small development portfolio on the southeast this year. We're always happy to look at both early stage and contracted assets. So we'll continue to do that. In terms of technology, given that we have a unique and different technology relative to most players in the market, it's hard to see what could be out there that would be untouched to us. But there are things that we'll look at. And for instance we did make an acquisition last year that's helped develop our anti-reflective coating technology and it's been advantageous there. So we'll continue to look at things around the core technology. The other thing that comes up often is storage. As of today, we haven't seen anything that we think is differentiated enough to make it worth a lot investing in the source technology. We clearly will make sure we invest in understanding how to integrate storage and how to contract storage in a plant. But today I don't necessarily see us investing in the core storage technology. On the second piece there on capital return, we'll continue to look through the future opportunities and uses of cash. And we've talked before about having a waterfall and how we look at that funding our core operations, the capacity expansions, any M&A in developing business, and then having a reserve given the cyclicality of the industry that we're in. So, we'll look a bit more through that. The other piece I'd say is towards the end of this year. We're going to be talking a little bit more about the opportunity to Safe Harbor because we look out to the end of 2019 there could be considerable opportunity for us to Safe Harbor either through our module business or through using some of the balance sheet and that could give us a strategic advantage not available to other players without the financial resources we have. So, we want to always make sure that we're looking to use that cash as advantageously as possible. But if we go through that full waterfall, we can't see an opportunity to expand the business. And we have laid out a CapEx profile against the current capacity profile. If the future of solar is as we believe, there's no reason that that is a stopping point for us from a capacity perspective. So, that's something we're going to continue to monitor and look at when would be the right time to consider additional capacity, which obviously we prefer to do versus returning capital. But if we get to a point where we can't feel we could use that cash accretively at acceptable returns through the profile, then we'll, at that point, look at options to return capital. Mark R. Widmar - First Solar, Inc.: Yeah. The only thing I'll add to in terms of the kind of use in entirety is that one of the things now that as we move forward with Series 6 and where we are, and obviously, there's a number of programs still on our efficiency roadmap, we're going to obviously look at our California team which is our advanced research team just to continue to think about the next evolution. Where is the next evolution with our current technology? Where can we take its fullest potential to go above and beyond? Now, as we do that, there may be opportunities that – opportunities may come up that some form of an acquisition or capability or – that we don't have today. If you guys remember one of the things that helped us with our core technology to where we got it today was the acquisition of the IP from GE a number of years ago. Alex referenced the acquisition of a new anti-reflective coating that's obviously beneficial to our product, not only from the standpoint of giving a better benefit to – a better efficiency benefit to the product, but also enabling us to capture almost 100% of the market with that product. And so, I would imagine as we think forward, especially with the creativity and capability of our advanced research team in California, there'll probably be some other opportunities as we think about, again, how do we evolve this technology to its fullest capability.

And that does conclude our question-and-answer session for today and today's conference. We thank you for your participation.