Good afternoon everyone and welcome to First Solar's Second Quarter 2020 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at investor.firstsolar.com. At this time all participants are in a listen-only mode. As a reminder, today's call is being recorded.

I would now like to turn the call over to Mitch Ennis from First Solar Investor Relations. Mr. Ennis you may begin..

Thank you. Good afternoon everyone and thank you for joining us. Today, the company issued a press release announcing its second quarter 2020 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 technology update. Alex will then discuss our financial results for the quarter as well as our outlook for 2020. Following the remarks, we will open the call 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, including among other risks and uncertainties, the severity and duration of the effects of the COVID-19 pandemic.

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?.

firstly, geographic proximity to solar demand where First Solar has an energy or competitive advantage and which could mitigate freight-related costs; secondly the ability to export cost competitively to other markets. Thirdly, cost-competitive labor low energy cost and low real estate cost.

And finally, a cost-competitive supply chain to support the sourcing of raw materials and components. From a cost perspective, we previously indicated during our December 2017 Analyst Day that we expect to reduce our 2020 lead line cost per watt by 40% relative to the Series four 2016 cost per watt.

We have achieved this target at our Vietnam manufacturing sites and on track to do so in Malaysia by the end of the year. Our Series six factory in Vietnam, which to date has been largely unaffected by the COVID-19 pandemic are a strong leading indicator for the full potential of the entire manufacturing fleet.

Secondly, we indicated that despite an increase in the proportion of module volume coming from our higher-cost Ohio factories relative to where we ended up in 2019, we expect our fleet-wide cost per watt to decline approximately 10% over the year. Despite the unforeseen challenges posed by the pandemic, we remain on track to achieve this objective.

We continue to believe, there is significant headroom and further enhance our competitiveness in our Series six technology and we relentlessly challenge ourselves on commercializing the next-generation of disruptive thin film technology.

Simply put, we continually strive to accelerate our pace of innovation in pursuit of our near- and mid-term technology objectives. In the near term, we are focused on successfully implementing our copper replacement program in our lead line during the second half of 2021 and fleet-wide during 2022.

This implementation is expected to further increase the Series six energy advantage due to increased wattage, significantly reduce long-term degradation and improve temperature coefficient.

Each of these improvements is expected to create value for our customers, which will facilitate Series six bookings in 2022 and 2023 with the module bins increasing from 460 watts to 480 watts over this period.

Of note in July, we produced the first copper replaced Series six modules, which will be utilized to initial -- for initial preliminary testing and validation. While we remain largely on track for our implementation, COVID-19 and technical challenges remain as a risk to the project completion time line.

In the mid-term, we remain focused on achieving our goal of a 500-watt module, which is at a standard test condition glass area efficiency of 20.8%. This technology enhancement will further increase the customer value proposition and cost competitiveness of Series 6.

It is important to note, unlike recently announced increases in crystalline silicon wattage made possible through module size increases. The planned Series six wattage increase is expected to be driven by a 15% increase in energy density without changing our module form factor.

In other words, we do not see increasing our customers balance the system or design costs in order to achieve the 500-watt goal.

Additionally, the benefits of improved temperature coefficient and significantly reduced long-term degradation, coupled with our continued spectral response advantage, will amplify the benefits of increased energy density and are expected to increase life cycle energy beyond 15% without adding cost to the module device.

As shown on slide eight, in support of our near, mid and long-term goals, we have recently announced a series of changes in our technology and manufacturing senior leadership. Firstly, Markus Gloeckler has been appointed Co-Chief Technology Officer alongside Raffi Garabedian, our CTO since 2012 and will join First Solar's executive leadership team.

Markus will drive our Series six platform device and efficiency improvement road map. This will enable Raffi to focus on advanced research and development to create the next disruptive cad tel technology beyond Series six.

A particular area of focus will be to evaluate moving beyond a single junction device and leverage the high-band gap advantage of cad tel into a multi-junction device. The objective would be to create a market-leading high-efficiency technology that remains energy advantage.

Secondly, as recently announced Tymen deJong, our Chief Operating Officer has decided to retire effective April 2021.

Tymen has played an essential role in establishing the company's international Series six module manufacturing footprint, with five announced factories currently in production and a six on track to commence production during the first quarter of 2021.

I'm appreciative of Tymen's invaluable leadership and his many significant contributions to First Solar over the years. Tymen will continue to serve as COO during his eight-month transition period overseeing certain priority projects.

In addition, during this transition Tymen will transfer the majority of his responsibilities to Mike Koralewski, Chief Manufacturing Officer; Kuntal Kumar Verma, Chief Manufacturing Engineering Officer; and Pat Buehler, Chief Quality and Reliability Officer; each of whom will join First Solar's executive leadership team.

We believe the addition of Markus, Mike, Kuntal and Pat to the executive leadership team will enhance our manufacturing technical and commercial capabilities and set the company up for continued growth. I'll now turn the call over to Alex, who will discuss our second quarter financial results and outlook for 2020..

firstly, a declining cost per watt, as we've largely ramped manufacturing our second Ohio factory; secondly, limited revenue recognition from Series 4 during the second half of the year; and finally, limited incremental severance costs expected during the second half of the year.

While we achieved a 25% Series 6 gross margin in the second quarter, we expect a relatively flat Series 6 gross margin in the third quarter to a modest decline in ASPs offset by a reduction in cost per watt.

While we expect a flat Series 6 gross margin in the third quarter, we anticipate an increase in overall module segment gross margin percentage due to declining Series 4 volumes.

In the fourth quarter, we expect Series 6 gross margin expansion of approximately 300 basis points due to a lower cost per watt, increased volume sold and a more favorable plant mix. As we do not anticipate to recognize any Series 4 revenue in the fourth quarter, we expect our Series 6 gross margin will represent overall module segment gross margin.

Of note, with shipments of approximately 2.5 gigawatts during the first half of the year, our expected shipments profile is incrementally back-weighted to the third and fourth quarters.

As we continue to work with our module customers to mitigate impacts from the current pandemic, there remains potential for the timing of module shipments to move across quarters or over year-end with a corresponding impact to revenue and gross margins. Our $1.2 billion net cash position increased by $51 million in the previous quarter.

This liquidity position remains a strategic differentiator, which enables us to make proactive and strategic investments in technology cost and product leadership during the current market disruption and in the long-term. We intend to maintain the strong liquidity position throughout the COVID-19 pandemic.

And at this time, we do not expect to draw on our revolving credit facility. Turning to slide 12, I'll summarize the key messages from today's call. Firstly, we had Q2 earnings per share of $0.35 and increased our quarter end net cash position.

Secondly, we achieved fleet-wide capacity utilization over 100% during May, June and July and have achieved our mid-term cost per watt target of 40% reduction below our 2016 Series 4 costs at our Vietnam factories.

Thirdly, demand for our Series 6 technology remains strong and we have continued success adding to our contracted pipeline with net bookings of 0.8 gigawatts since the prior earnings call and 2.6 gigawatts year-to-date.

With a contracted backlog of 11.9 gigawatts, we remain effectively sold out through 2020 and have two gigawatts remaining to sell of our expected 2021 supply. Despite challenges related to the COVID-19 pandemic, we're pleased with our operational and financial performance, achieving results in line with our pre-COVID expectations.

And finally, while the significant uncertainty posed by the current pandemic remains, we are updating the guidance provided on our May earnings call, which includes full year 2020 production guidance of approximately 5.9 gigawatts, full year 2020 capital expenditure guidance of $450 million to $550 million, and full year 2020 operating expense guidance of $345 million to $365 million, which includes $45 million to $55 million of start-up expenses.

With that, we conclude our prepared remarks and open the call for questions.

Operator?.

[Operator Instructions] Our first question comes from Philip Shen with ROTH Capital Partners. Your line is open..

Hey, everyone. Thanks for taking the questions. For the bookings, you've secured since last earnings call, can you share how much is for delivery in 2021 versus two and three? And what are the ASPs for the bookings? I think last quarter you mentioned pricing for 2022 and 2023 was still good in the 30s.

And I think you mentioned in the deck that it's still attractive. So I was wondering if you're seeing some pressure perhaps in the outer years.

Or if you're still able to maintain? And then also as you think about the bookings in 2022 and 2023 and your cost road map, what are your expectations for margins? It's a ways out I know, but wanted to just get a sense for -- if you expect margins to remain stable in that time frame or perhaps potentially step down with the Section 201 expiring? Or potentially even see some upside in margins?.

Yes. I'll take the bookings ASP and I'll let Alex handle the margin question. So in terms of the bookings between earnings calls, which is basically 0.8 gigawatts, 400 or so of that was with our systems business which is would be for shipments in 2022, and then the rest effectively is 2021.

But what I would expand beyond that, Phil, and we tried to highlight in the call we have about 900 megawatts that sits in effectively final stage negotiations. In some cases, ready to sign a PO. In some cases, subject to some CP. In some cases, a letter of intent with exclusivity locking in the module volume and the module pricing.

So against that 900, we've had agreed pricing on all that.

It's just -- again, with the uncertainty and these are all 2021 shipments, with the uncertainty of the availability of tax equity, with the uncertainty with any type of legislative fixed direct pay type of structure, people are being a little concerned around locking in firm contracts and leaving certain -- some on the CPs open to allow them enough time to assure financings in place and the like associated with the project.

These are projects that are committed. These are projects that have PPAs, their sites, they're ready to go. They're just finalizing some of the financing components to ensure they have everything locked and loaded around the project. If you include those projects, those projects also have pre-annual ASPs.

So if you look at the volume that we have for module only, it's up 300 or so, 400 or so for 2021 plus that additional 900. They all are still very solid ASPs. We are in advantage situation from the standpoint as we said. We only have about 2 gigawatts left to book. Our customers know that.

There are biases and preferences to do business with First Solar and certainty of supply and ability to deliver. And so we have customers engaging with us proactively, so we can lock up that supply. So if I lock up that 900 right now late-stage negotiations, I only have about one gigawatt left for 2021.

And our customers want to ensure that security and get that in place for that supply. So my ASPs are still holding reasonably firm. We're happy with the ASPs. Behind those -- there's two more follow-up orders that almost get to one gigawatt that are associated with that 900 that are in late-stage negotiations with two separate customers.

They have follow-on commitments they would like to make in 2022. So I can give you a feel of where that pricing is right now. It's in line with what we said in the last call. We had a large order which had carried volumes into 2022. It did have a two handle. It was in the high twos. It also had adjusters for bins.

It had adjusters for module degradation, if we do better than we had guided to. So I look at what we have for last quarter that was booked plus what we currently are engaged in the market with around pricing in 2022. We're still pretty happy with how that's shaping up. A lot of things can move and change.

Clearly, there's got to be some solution to tax equity and capacity, because that's going to constrain the market could have adverse implication around projects. But at least from a bookings and relative ASPs, we're pretty happy -- given the challenges in the current environment pretty happy with what we're seeing..

Yes. So on the cost side on the margin side, a long way out as you said to be giving you guidance around gross margin. But if you try and think around the cost piece at the beginning of the year, we said we were looking at a 10% reduction in cost over 2019 to 2020 year-end to year-end and we said we're on track to do that.

We also said that we expected by year-end to achieve the Series 4 minus 40% cost reduction target we initially stated back 2017 at our high-volume manufacturing. So we've actually already achieved that by midyear at our Vietnam factory. We're tracking well to do that in Malaysia as well.

And remember, that number includes freight warranty as well when you're doing a comparison around those numbers. So cost reduction going pretty well so far. And then if you go back to the slide we showed in our guidance call back in February, we gave you a chart that showed a lot of levers around cost reduction.

A key one is our CuRe program which is going to be increasing wattage and Mark in prepared remarks he talked about bringing it out from 460 to 480 in that '22 '23 time frame. And we're doing that with a module that's a same size.

We're actually getting increased energy density versus some of what you're seeing in our competitors today who are announcing very large nameplate watt numbers, but actually on an efficiency basis seeing almost no improvement. It's just a significantly larger module. So our CuRe is really important to getting us there.

CuRe is important for nameplate wattage also improves degradation overall energy profile. So when we look through that, we think that helps us bring cost down, but also negate some of the bifacial threat that we've seen, but that's only a couple of the levers.

And if you look through that same chart I mentioned, we talked about yield throughput efficiency bill of material sales rate. And if you do the math on the chart there we gave, it's still directionally accurate. You get to a point where we can bring costs down significantly over the next few years.

So I can't guide you to gross margin percent at this point. But given what Mark said around was -- where we're seeing ASPs and we're comfortable with those. We're tracking towards the cost reductions that we discussed earlier in the year. I'm comfortable where we are seeing gross margins coming out on those longer-dated bookings..

Our next question comes from Brian Lee with Goldman Sachs. Your line is open..

Hey, guys. Thanks for taking the questions. I guess first one on the gross margins.

The sequential improvement for Series six not to get to sort of nickel and dime in here, but is the baseline 25% that you reported this quarter which includes the $3 million of COVID-related costs, are you assuming those costs come off in the back half? And so it's a 300 basis point expansion in Q4 over a clean 26% baseline? And then I guess related to that, are there any more ramp costs embedded in COGS in Q3 and Q4 that further go away in '21?.

So as of now there's no ramp costs in Q3, Q4. The only ramp that we saw is $4 million in Q1 and that's the full expected ramp for the year. In terms of the expansion, it's still unknown. I mean, the number we're giving you here assumes we may still have some COVID-related costs impacting us in Q3 and Q4.

So I think you can look at it really as a 300 improvement from the 25 as a starting point. .

Our next question comes from Michael Weinstein with Credit Suisse. Your line is open..

Hi, guys.

Can you hear me right?.

Sure..

Okay. Great. You mentioned that Raffi is going to be working on advanced research and development to create the next disruptive technologies beyond Series 6.

Is there some preview of that you could talk about at this time? And are there limits to the levels of efficiency that you can get out of the technology?.

There's lots of headroom still to go on the efficiency side in the entitlement around our cad tel device. Raffi I suppose you may not remember or aware of. Raffi joined the company decade or so ago.

He really joined us as part of our advanced research team and he at that time was leading our efforts to evaluate alternatives to infill material such as CIGS.

So his core competencies around understanding really all of the semiconductor devices in PV in particular whether it's crystalline silicon, whether it's Perovskites, whether it's cad tel, whether it's CIGS all different devices. Raffi has got a deep knowledge and understanding on.

So when we look beyond the current device in Series 6, one of the things that we are looking to is -- one of the inherent advantages that we have with cad tel is that from -- it has a very high-band gap, which means that it captures a significant amount of the sun spectrum the light -- sun spectrum light.

And there's a lot of evolution that could happen with devices or technology and there's some that's being done in aerospace where you create a single junction or to a multi-junction type of technology whether it could be a combination of different types of technologies two different types of thin films maybe even -- could be thin films with crystalline silicon as an alternative.

So one of the things that Raffi is going to be looking at is not only existing materials there could be organic PV that he would be looking at as well different solutions that are evolving Perovskites could be looking beyond just a single junction into a multi-junction type of device.

So it's really just evaluating the world and the spectrum, which they are possible and then how do we leverage what we currently have and evolve that beyond what our current capabilities are around the technology. So that's primarily what Raffi is going to be focused on. .

Our next question comes from Ben Kallo with Baird. Your line is open..

Hey, guys.

Following on previous question from and analyst, just about costs ramp costs anything associated with Series 4 ramp down? And then number two, how do you sell your O&M business, but then your development business, how do you sell that first before development business just in the market? And then number three, just looking at your exit rate for saying that you have two gigawatts to sell in 2021, what does that assume for your total production because I think it's higher than your nameplate?.

So the first -- I'll take the O&M question and then the -- in terms of the 2 gigawatts or 21 relative to what the assumption is for the supply plan. And then Alex can talk about kind of ramp costs in general and then also decommissioning costs related to Series 4.

Ben, look on the O&M business, especially now that we no longer have the EPC capability we'll move to a third party. We've kind of separated the development business from the O&M business. And the reason I say that is that a lot of the EPC providers that we engage with also want to provide O&M.

So now we created kind of a competitive tension around captive development with maintaining the O&M even though we're using a third party to do the EPC. The EPC wants to somewhat -- they have guarantees and other warranties that they provide post COD and they also -- a number of them would prefer to do O&M for that horizon.

And some want to do it strategically longer term. So for us because the separation of EPC from the development business has created this natural separation between development and O&M. So it's not as unnatural as it may appear. It's maybe unnatural from how we first evolved.

As we said there's -- the capabilities and the cycles of innovation that's evolved in the O&M space today is much different than the journey first started off and if you have those full capabilities. So it's kind of separated through that for that reason.

And as we look at strategic options for the systems business even if we end up partnering or doing something different retaining the interest in the development business, it's not as critical to have the O&M capability as it was years ago.

And to some extent what we prefer to even do today is just do the development get a cycle -- site excuse, me to notice to proceed, staple that with a module agreement and then step out of the equation. I really don't want to deal with the third-party EPC.

I just want to -- where we create the greatest amount of value turning keys over to third-party EPC and sell down into a long-term owner. So that's the process around O&M and how we can separate it. The 2 gigawatts of 2021 we'll have nameplate capacity in 2021 of 8 gigawatts. Our supply plan right now is about 7.5 gig.

I think we indicated in prior communication that we view between 7.3 and 7.7. So it's -- the midpoint is 7.5. That's kind of what we're tracking to right now. So two gigawatts left to go out of 7.5. So we've got 5.5 booked. I got almost half of that 2 gigawatts in late-stage negotiations with negotiated pricing finalizing terms and conditions.

So we have a pretty good line of sight to make sure we can sell-through that 2021 pipeline. .

Yes. And Ben, on the ramp side on the ramp up, as I mentioned before, $4 million of ramp up costs for the year fully taken in Q1 than were expected. And in terms of ramp down costs the majority of those ramp down costs hit in Q1 and Q2.

We'll see a few single-digit million still come through in terms of true decommissioning costs and a little bit of ongoing severance and retention but the vast majority of that cost has been taken in the first half of the year..

Our next question comes from Eric Lee with Bank of America. Your line is open..

It's Julien here. Hi, good afternoon, everyone. Appreciate it. Just wanted to follow-up here on -- first off, if you can talk about some of the backdrop here for systems business? You guys talked about pressure on that probably trending towards the lower end.

Can you elaborate on what's driving that? If I'm hearing you right, you're specifically alluding to tax equity but I just want to understand what's driving that today and what your expectations are with respect to that evolving over time? And then secondly if we can come back to the bookings trajectory, near term but more importantly longer term, how do you think about signing into 2022 and 2023 given the potential for further tax credit extensions et cetera? Just want to understand is there still pressure to sign into those last couple of years of 30% ITC the way it's structured now?.

Julien just to clarify on your first question you said lower end of systems.

Can you just clarify what you mean by that?.

Just give some margin pressure on the systems business maybe more broadly as you described in your opening comments?.

Yes. Well first I will and then you can take maybe a little bit on that too. But I think what we said just so we're maybe clear is we did reference the O&M business that we gave a range of gross margin expectations that we previously had established for O&M and the -- now range was 10% to 30% when we based our Analyst Day in 2017.

We indicated that what we've seen in the market is that the actual gross margins on the O&M business have trended towards the lower end. And this combination two things increased competition plus lower PPA prices. So PPA prices have continued to come down.

And really in order to drive to a lower LCOE everything whether it's the module, the inverter, the O&M, operating expenses whatever it is all have been kind of under pressure.

And so that was the comment I think we referenced towards the lower end of the range around O&M and we are seeing that come down part of the pressure because of lower PPA prices. Look I think the tax equity and the implications that it has availability is going to be a challenge.

So it's going to be mainly available for high-quality projects plus because it's a constraint I would expect pricing to actually increase which actually works against the PPA prices and potentially would require higher PPA prices in order to create market-clearing prices.

But I'll let Alex talk more about tax equity and what we're seeing in that regard..

Yes. Just one comment on the O&M for the tax equities. I think you've seen margins come down and that's been also commensurate with a risk profile decrease. So if you look at it on a risk-adjusted basis, I think it's still value in that business.

But overall, gross margins have come down as owners have started to keep more risk on their side of the ledger. When it comes to tax equity, I think what we're seeing, as we mentioned before in the script, capacity levels for 2020 deals.

And that's partly a function of banks firming up their views on capacity for the year and partly a function of them are projects pushing out to the right, which is pretty natural in any given year.

I think what we're seeing in the current market though is that the major players who lead transactions, when you look at 2021, they either have already booked out of their capacity or they're just very uncertain around the early stand. So a lot of those major players have taken loan loss reserves so far in 2021, those are accounting reserves today.

I think you may start to even crystallize into actual losses in 2021 and there's uncertainty around that. When you combine that with existing commitments that they've made and then also at this time of the year you typically tend to get constraints in human resources as the banks focus on closing out deals that have to be done by the end of the year.

What we're seeing is there isn't really committed capital available for next year. On top of that I think the syndication market has become constrained. So the players who don't normally, lead deals that have participation in pieces and then smaller overcapacity have also got a lot of uncertainty. So that market's dried out.

And put more pressure on the lead players. And what that means for us from a value perspective, when you think about Sun Streams 2, like other large high-quality projects from experienced developers I think, tax equity will ultimately be available for that project.

But it may not be -- and we may be able to get committed capital until late this year early next year which will delay the timing of the sale if that happens. And as Mark said, you could see impact on pricing and/or other terms which can also impact value. And so I think, that's one of the constraints for us.

And then from our perspective obviously, we sell modules to customers who also rely on having tax equity to have their projects move ahead. And if we see, significant dislocation in the market that could be the difference between those projects moving ahead on schedule being delayed or ultimately even being cancelled.

So those impact to us there on the module side of the business as well. And overall that's why when we look at it we believe a legislative solution here is the best way to deal with a constraint. Unfortunately if you look at the current draft of the Republican proposal, put out last week it doesn't address this tax equity issue.

But there's a long way to go before that bill becomes law. And so our hope is that that provision will be addressed through negotiation and bill reconciliation..

Yes. I think the other question you had Julien was around volumes in 2022 and 2023. And how do we think about, booking that volume up relative to a potential extension of the ITC, as an example. Between 2022 and 2023, I think where we sit right now, a little bit north of three gigawatts or so that is booked in that window.

We got another about one, gigawatts that's in late negotiations as well, that's got committed pricing around it. And that's -- so call it four gigawatts that we've got a stake in the ground for -- during that window. That's against about 16 or so gigawatts of supply that we'll have over that period of time.

So maybe we're 1/4 of that somewhat committed to or locked into either booked or with commitment around pricing. It's pretty -- we still have room to go. And really we still will be very patient in that window. We'll look for good pricing. So knowing where our cost curve is going to go and where we can capture the best pricing.

Play to our strengths like, we always do hot human requirements. Texas being another area that we talked to -- talked before about given cell cracking issues and inability of some of our competitors to get projects underwritten by insurance carriers or just the general cost of insurance being significantly higher.

So there are a number of things that we do in the U.S. that play to our strengths, evolving that with our new technology with our copper replacement product. And if we can capture good value for the technology start securing up some of that volumes in that window, clearly we'll do that.

But when I think about four gigawatts relative to the supply of 16, I got lots of optionality still left that if there is an extension on the ITC that creates an additional peak in the curve. And potential more stable and better pricing environment we still have to take advantage of that as well..

Our final question will come from Colin Rusch with Oppenheimer. Your line is open..

Hi. Thanks so much, guys.

Are you seeing the impact of lower cost capital start to creep into any of the PPA bids and some of the project economics at this point? Are you seeing PPA prices come down at all? Are you seeing a little bit of give in some of the project-level economics since you're talking to customers?.

Yes. What I would say is, it's -- I guess, you stay core and you stay true to what you do and you try to create value. And where you can differentiate yourself that's where you engage.

And so if I look at the PPA price that we have for what we just cleared with a large Fortune 500 customer, the terms condition structure the price is a premium relative to what I think you're seeing in the market right now. And part of that just being is the particular counterparty wanted to do business with, First Solar.

They loved our sustainability approach. It becomes kind of our full life cycle management of our product inception to final recycling. And how we engage from that standpoint, and how we think about our CO2 footprint, our water usage, it just spreaded so nicely in what they want. And that's core to them as well.

And so those things put us in a position to capture better value. And it's no different than I've got a large opportunity with a particular customer, that's looking to cure over one gigawatts of volume over the next several years.

And they want to do business with an American company right? They love the fact that we have R&D and manufacturing in the U.S. and they're not worried about the lowest possible module price in that example right? We create value through our technology, through our capabilities. And they're willing to partner with us in that regard.

And they're looking for a true partner. So we try to stay disciplined in that regard. As it relates to -- are they -- yes the -- on the debt side is that somewhat being positively impacting where people could think through clearing of PPAs or underlying assumptions around that? You have that, but you still have this uncertainty in the U.S.

around tax equity, I would argue they kind of offset themselves. And spreads may be moving a little bit as well. And you'll probably get back to the same position that you were in to start from. So I don't think we've seen a real inflection point yet, as it relate to cost of capital driving further lower PPA prices..

This ends our time for the question-and-answer session. This concludes today's conference call. You may now disconnect..