第一太陽能 (FSLR) 2013 Q4 法說會逐字稿

Good afternoon, everyone, and welcome to First Solar's Fourth Quarter 2013 Earnings Call.

This call is being webcast live on the Investor section of First Solar's website at firstsolar.com.

(Operator Instructions)

This call is being recorded.

I would now like to turn the call over to David Brady, Vice President of Treasury and Investor Relations for First Solar Inc.

Mr. Brady, you may begin.

Thank you, operator.

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

Today, the Company issued a press release announcing its financial results for the fourth quarter and the full year 2013.

A copy of the press release and the presentation are available on the Investors section of First Solar's website at firstsolar.com.

With me today are Jim Hughes, Chief Executive Officer, and Mark Widmar, Chief Financial Officer.

Jim will provide a summary of our achievements in 2013, and an update on significant business and technology developments.

Then Mark will discuss our fourth quarter and full-year results, and provide guidance for the first quarter of 2014.

We will then open up the call for questions.

Most of the financial numbers reported and discussed on today's call are based on US Generally Accepted Accounting Principles.

In the few cases where we report non-GAAP measures, we have provided a reconciliation to GAAP equivalents at the back of our presentation.

This call will also include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.

Please review the Safe Harbor Statements contained in the press release and the slides published today for a more complete description.

It is now my pleasure to introduce our Chief Executive Officer, Jim Hughes.

Jim?

Thanks, David.

Good afternoon, and thanks for joining us for our fourth quarter 2013 earnings call.

Today, we announced another significant milestone for First Solar, a new record for CdTe cell efficiency at 20.4%.

This record was set using materials and processes used in a manufacturing environment certified at the Newport Corporation's Technology and Application Center PV lab, and confirmed by the US Department of Energy's NRO.

This breaks the previous record of 19.6% set by GE Global Research in 2013.

Last April, First Solar and GE announced a solar technology partnership in which First Solar acquired GE's CdTe solar intellectual property and secured a collaborative research partnership with GE's R&D team.

The partnership was formed to accelerate innovation in PV technology, and accelerate solar module performance at manufacturing scale.

This record marks another achievement in our mission to unlock the industry changing potential of CdTe photovoltaic.

First Solar's new CdTe research cell conversion efficiency matches the research cell efficiency record of multi-crystalline silicon, another technology used in the PV solar market.

We are demonstrating improvement in CdTe photovoltaic performance at a rate that dramatically outstrips the trajectory of conventional silicon technologies, which have already plateaued near their ultimate entitlements.

The synergy realized in our partnership with GE also demonstrates the value of our consistent and strong investment in R&D.

The Advanced Technologies and processes we developed for this record-setting cell are already being commercialized, and will positively impact the performance of our future production modules and power plants.

Based on this new record, we will be updating our efficiency road maps at our Analyst Day in March.

Now turning to our 2013 performance.

At our previous Analyst Day in April of last year, we announced several ambitious targets for 2013, and I'm pleased to announce that we have met many of those goals.

With respect to our technology, we stated that we would lower our average cost per watt from $0.70 in 2012 to between $0.63 and $0.66 in 2013.

The average cost per watt came in at the lower end of this range at $0.63, a decline of 10% year-over-year, and our largest such decline since 2010.

We also forecasted the average efficiency of our modules would rise from 12.6% in 2012 to 13.1% in 2013.

The actual average efficiency rose to 13.2%.

Switching to bookings for the year, backfilling our pipeline of solar projects as we constructed our existing projects was a key concern we planned to address by establishing a book-to-bill target of 1-to-1 for 2013.

And I'm pleased to announce, that thanks to the efforts of our global project and business development teams we have met and even surpassed that goal.

On the financial front, we set aggressive targets for revenue, earnings, and cash flow.

Revenue was lower than forecast, primarily due to several projects that were expected to be completed in 2013, but are now being held through construction into 2014.

This delay in project sales is consistent with the announced use of proceeds from our June equity offering, and will result in improved project economics.

The total revenue associated with projects being held through construction is approximately $400 million.

However, we beat our earnings target, which adjusted for the new share count was $3.75 to $4.25 compared to a full-year EPS result of $4.35 on a non-GAAP basis.

And finally, operating cash flows were $856 million, well within our range of $800 million to $1 billion.

In summary, in spite of the lumpiness of the results we have seen on a quarterly basis, this has been a tremendous result overall for the year.

Now turning to our book-to-bill performance, slides 6 and 7 show the total outstanding bookings in gigawatts and revenue, and the change in those bookings that occurred year-to-date.

This data represents our total business, which includes a relatively small percentage of third-party module sales, in addition to our advanced systems project pipeline.

Total outstanding bookings rose over the course of the year to 2.7 gigawatts DC, which resulted in a book-to-bill ratio of just over 1-to-1.

We had 352 megawatts DC of bookings in Q4, which more than offset the shipments in that period.

The new bookings consisted of a recently assigned agreement to build a 150 megawatt AC solar power plant in California.

Additional details will be provided at a later stage.

We also announced back in November that we had signed PPAs with member cities of the Southern California Public Power Authority for electricity to be generated at 40 megawatt AC Kingbird Solar Power Plant in Kern County, California.

First Solar is developing and will construct the project.

In addition, we booked a 22-megawatt project to be developed, constructed, and owned by First Solar in Pecos County, Texas in the West zone of ERCOT.

Texas represents 10% of total US energy consumption, the largest electricity market in the US.

We will own and operate this power plant for at least an initial operating period.

This reduces both the construction and performance risk of the project, and thereby increases the expected return on any sale.

This also provides us with the opportunity to sell energy into the market realtime, and captures revenues from spot market price spikes triggered by capacity shortages.

The project is expected to be completed in mid-2014, and will position First Solar as a leader in this key developing market.

The balance of the bookings consisted of several smaller deals that included the agreement with JX Nippon Oil and Energy Corporation for the distribution of our modules in Japan through April 2015.

Turning to outstanding bookings in revenue terms on slide 7. Given the lower system ASP environment, our net book-to-bill declined $500 million over the course of the year to $7.5 billion.

However, we have seen a large increase in our opportunity set, which is discussed in detail on the next slide.

The purpose of this metric is to provide a useful indicator of the overall level of activity that we're seeing in the marketplace, which remains strong.

The total opportunity set rose significantly to 10.6 gigawatts during the quarter, primarily due to the inclusion of sites in Japan and sites globally that we are evaluating or have control over with the potential for future development.

These potential projects are included in our early stage opportunity set.

We expect this opportunity set to increase further in the future, and thereby facilitate significant growth of our foreseeable demand.

A number of mid-and late stage deals was 1.1 gigawatts and would have been higher if not for the conversion of the aforementioned deals and the firm bookings this quarter.

However, early-stage opportunities have risen to 9.5 gigawatts, which means that the majority of these projects will have a development cycle of 12 to 24 months and consist primarily of our own captive project assets.

Slide 9 shows the breakdown of demand by geography.

Our opportunity set outside the US is now 5.9 gigawatts, a significant increase on the prior quarter, and represents 56% of the total.

This is a great illustration to date of the progress that we are making in sustainable markets, and gives us confidence in our ability to replenish our pipeline going forward.

Turning to slide 10, we recently announced that will be holding an Analyst Day on March 19th in New York City.

We will take this opportunity to lay out the following: full 2014 guidance on financial and business metrics, the global strategic update and a discussion of our business segments, our competitive positioning relative to our peers, including updated efficiency road maps and production plans, with time set aside for participants to ask questions of myself and the executive management team.

This entire event will also be webcast to the public at large.

I know that both myself and my team look forward to speaking with you then, and sharing with you our plan to continue to develop a world powered by clean affordable energy while providing long-term value to our shareholders.

Now I'd like to hand the call over to Mark who will discuss our Q4 and 2013 financial results in detail, and provide our guidance for Q1.

Thanks, Jim, and good afternoon.

Turning to slide 12, I would like to begin by highlighting the fourth quarter and full-year 2013 operational performance.

Production in the quarter was 444 megawatts DC, up 4% on a sequential basis.

This increase reflects the continued revamping of production lines that have undergone planned equipment upgrades.

When completed, these upgrades will facilitate the achievement of near-term targets on our module costs and efficiency improvement road maps.

[Cavarian] production year-over-year on a consistent basis production increased 7%, and was driven by higher module efficiency, and throughput improvements on the same number of production lines.

In the fourth quarter, we ran our factories at approximately 83% capacity utilization, up 3 percentage points from the prior quarter.

As Jim highlighted early on the call, we've made great progress towards achieving the efficiency and manufacturing cost targets that we provided during our Analyst Day in April.

Module manufacturing costs per watt decreased to $0.56 from $0.59 last quarter, a $0.03 per watt or a 5% reduction quarter-on-quarter.

This represents a combined decline of $0.11 or 16% in the past two quarters, which has been driven by a good balance of efficiency gains, throughput improvements, and variable cost reductions.

For the full-year, average module cost per watt decreased to $0.63 from $0.70 in 2012, a 10% reduction.

Excluding the impact of underutilization, cost per watt fell to $0.54, a $0.03 decline from the prior quarter.

During Q4, our best plant's manufacturing costs at full utilization was $0.53 per watt.

Looking at the fundamental manufacturing cost of our best plant, which excludes freight, warranty, and EOL, our Q4 cost per watt was $0.47, $0.06 lower than Q4 of 2012.

This ongoing improvement of our manufacturing cost per watt highlights the ability of our world-class R&D and manufacturing teams to implement efficiency and manufacturing improvement programs in order to achieve the Company's cost targets.

The average conversion efficiency of our modules was 13.4% in the fourth quarter, which is up 50 basis points year-over-year, and 10 basis points higher quarter-over-quarter.

In Q4, our best line produced was at an average efficiency of 13.9%.

We continue to make significant improvements in our module efficiencies with our best line, now running at 14.2% efficiency, which is 110 basis points higher than our lead line was running at this time last year.

110 basis points is one of the largest efficiency increases we have experienced in a 12-month period, and represents the momentum our R&D and operations team have in delivering against our efficiency improvement road map.

Now moving to the P&L, a portion of the presentation on slide 13, fourth quarter net sales were $768 million compared to $1.3 billion last quarter.

The sequential decrease was due to lower systems revenue and a lower systems volume to third-party module customers.

The decreased consistent revenue was attributed to the initial revenue recognition of Desert Sunlight and the sale of the ABW projects in the prior quarter.

As a percent of total net sales, our systems revenue, which includes both our EPC revenue and solar modules used to the systems project, remained flat from the prior quarter at 95%.

For 2013, net sales were down slightly to $3.3 billion or $3.4 billion in 2012.

Relative to our full-year guidance updated on the Q3 earnings call, net sales were slightly lower, as certain projects expected to achieve revenue recognition did not meet all the required criteria in Q4, and now will be recognized in 2014.

Gross margin in the fourth quarter was 24.6% down from 28.8% in the prior quarter.

The decrease was due to the lower average selling price in our module only sales, and a decrease in the cost of sales in Q3 related to a reduction in the estimate of our end-of-life recycling obligation.

On a full-year basis, 2013 gross margin increased 0.8 percentage point to 26.1% versus 25.3% in 2012.

This increase is primarily attributed to the mix of systems revenue, reduction in module and balance of system cost per watt, partially offset by lower average selling prices for our modules and systems.

Fourth quarter operating expenses, including restructuring and asset impairment charges, decreased $27 million quarter-over-quarter to $129 million.

This decrease is attributed to a pretax asset impairment charge of $57 million related to the third quarter sale of the Company's facility in Mesa, partially offset by a pretax impairment charge in the fourth quarter of this year of $25 million related to a further write-down in the Company's idle Vietnam facility.

In the fourth quarter, a change in our marketing strategy to accelerate the sale of the Vietnam facility was undertaken, which resulted in the asset write-down.

Excluding asset impairment, total operating expenses in the fourth quarter increased approximately $5 million compared to the prior quarter.

The increase in operating expenses was related to a temporary increase in relocation expenses related to the exit of our Mesa facility, and higher investment in research and development expenses in order to accelerate next-generation technologies.

For the full year, 2013 operating expenses, excluding restructuring and asset impairments, were $407 million versus $421 million in 2012, representing a 3% decrease.

The prior year benefited from a significantly lower stock-based compensation associated with restructuring-related forfeited grants.

Excluding stock-based compensation expense, operating expenses declined from $408 million to $370 million in 2013, a 9% decrease.

On a reported basis, fourth quarter operating income was $60 million compared to $208 million in Q3.

The decrease is primarily attributed to the initial revenue recognition of Desert Sunlight, and the sale of the ABW projects in Q3, partially offset by lower operating expenses, including restructuring and asset impairment charges.

Fourth quarter operating income, excluding restructuring and asset impairments, was -- excuse me, full-year operating income excluding restructuring and asset impairments was $455 million.

In comparison, the 2012 operating income was $487 million excluding costs in excess of normal warranty and restructuring and asset impairment charges.

Fourth quarter GAAP net income was $65 million or $0.64 per fully diluted share, including after-tax restructuring and asset impairment charges of $0.25 compared to $1.94 per fully diluted share in the third quarter.

Excluding the asset impairment charges of $0.25, our fourth quarter non-GAAP earnings per fully diluted share was $0.89.

Q4 EPS also benefited from a lower effective tax rate.

The effective tax rate in Q4 was lower than anticipated, due to jurisdictional income mix from lower profits and higher tax jurisdictions, in addition to a one-time tax benefit recorded for post tax holiday and deferred taxes.

Turning to slide 14, I'll review the balance sheet and cash flow summary.

Cash and marketable securities increased by approximately $232 million, reaching $1.8 billion.

The increase was driven by cash received from customers for the continued build out of our captive systems projects and module sales.

In addition, we received proceeds from the sale of our Mesa facility in Q4.

Our net cash position, which provides a competitive advantage, increased by $238 million to approximately $1.5 billion.

Compared to the end of 2012, total cash and marketable securities increased by approximately $760 million, and net cash increased by $1.1 billion.

Accounts receivable trade decreased by approximately $12 million quarter-over-quarter to $136 million, and it's due to collections related to several of our systems projects and continued collections from module only sales.

Unbilled accounts receivables and retainage balance increased by $84 million, reflecting the reclass of retainage related to the Topaz and Desert Sunlight projects from non current to current.

This increase was partially offset by the collection of the majority of the retainer on our Agua Caliente project.

Inventories, including balance of systems parts, increased $70 million, due to higher inventories in our systems business to support increased project activity.

And due to lower third-party demand, as we did not sell through our Q4 production.

Project assets increased $136 million, primarily due to construction activities related to our Solar Gen and Macho Springs projects.

Deferred project costs decreased by $201 million, principally due to continued revenue recognition of the Desert Sunlight project, which was partially offset by increases associated with construction activities on our AGL product in Australia, and the Campo Verde project, which has not yet achieved record revenue recognition.

Other assets, including non current retainage, decreased by $265 million versus the prior quarter, primarily related to the reclassification of the retainage related to the Topaz and Desert Sunlight projects.

Such retainage amounts relate to construction work already performed but which are held for payment by customers as a form of security until we reach certain construction milestones.

Quarter-over-quarter, total debt decreased to $223 million, a sequential decline of approximately $6 million.

Operating cash flow in Q4 was $192 million compared to $375 million in the third quarter.

Free cash flow was $137 million compared to $284 million in the prior quarter.

Capital expenditures totaled approximately $56 million for the quarter, and were primarily related to production upgrades, which are expected to increase module efficiency and throughput.

Depreciation for the quarter was $62 million compared to $60 million in the prior quarter.

Turning to slide 15, I will now cover the guidance section of today's call.

Consistent with last year, we will provide complete annual guidance at our Analyst Day, which, as Jim mentioned, is scheduled for March 19th.

While it is not our practice to provide quarterly guidance, given that it is a couple of weeks away until our analyst Day, I will provide guidance on key elements of our expectation for the first quarter.

First quarter guidance is as follows.

We expect net sales in the range at $800 million to $900 million.

Earnings-per-share in the range of $0.50 to $0.60 per fully diluted share, cash used in operation activities to be between $300 million and $400 million.

There are several factors driving the operating cash flow use in the first quarter.

The primary use of cash, approximately $300 million, is related to ongoing construction of projects which have not yet been sold.

In addition, continued investments in global project development activities, including the initial build of our Varilla plant.

And finally, the timing of some expenditures from the fourth quarter of 2013 are driving the operating cash flow use in the first quarter.

Please note also that these first quarter numbers, particularly operating cash flow, are not indicative of the full-year profile, as we expect to receive proceeds from the sale of projects under construction in a later portion of the year.

Full year guidance will be discussed in more detail at the Company's Analyst Day.

Now moving to slide 16, I will summarize our progress this year.

2013 was an outstanding year, as we have continued to execute on our technology and manufacturing cost road maps.

More detail on our future technology advances facilitated by our just announced record cell efficiency of 20.4% will be covered at the Analyst Day.

In 2013, we continued to replenish our pipeline with bookings of 1.7 gigawatts DC.

We remain committed to continue to build our project pipeline, and we have an opportunity set in excess of 10 gigawatts to enable us to do this, with particular focus on expansion into global sustainable markets.

From a financial standpoint, we exceeded the earnings estimated provided during our Analyst Day this year.

In addition, we continue to strengthen our balance sheet, which provides a competitive advantage as we seek to execute on our strategic objectives.

Now with that, we conclude our prepared remarks and open the call up for questions.

Operator?

Thank you.

(Operator Instructions)

Patrick Jobin, Credit Suisse.

This is Brandon Heiken on behalf of Patrick Jobin.

Thank you guys for taking the question.

I've noticed in the past on your pipeline of projects, that most of the projects you have there are already sold.

I was wondering if you could talk about your plans for a potential yield co maybe next year, and if you need to build out additional projects that have not been sold for a potential yield co?

We continue to evaluate what a yield co would look like for the Company, looking at what the characteristics of the vehicle would need to be to have acceptability in the marketplace, what we think it would trade at from a financial metric, what the impact of that trading valuation would mean for the Company, what it would mean for the drop-down on our transfer price economics.

It all paints a very complicated picture, including the likelihood that we would need to consolidate that vehicle which makes for very, very complicated financials.

Several things are clear from our analysis, one of which is that we believe we have available to us an adequate portfolio of projects that would work in the marketplace.

That's a long way from a decision that we're going to go use those projects to form a yield co, but that is not a barrier that we believe we face.

We believe that we have enough in hand to make that work.

There's a lot more work to be done.

There's significant impact on the structure and appearance of our financial statements that we have to take consideration of, and we're still, I would say, quite a ways away from a decision, but that's not one of the barriers that we see should we decide that's something we want to pursue.

Vishal Shah, Deutsche Bank.

This is Jerimiah Booream on the line for Vishal.

I just wanted to follow-up on the yield co question.

And maybe could you guys give any kind of indication of how many megawatts you could drop into a yield co or potentially to sell to yield co investors?

I think that's a degree of specificity we probably are not comfortable going into at this time.

Okay.

That's understandable.

And maybe just on a different line, could you give us an idea of where PPA prices are today, or where you're seeing them?

I don't think we can generalize.

When we look, even within the US versus globally, it's a very wide range with a whole bunch of project specifics that dictate the outcome.

And I don't think I can give you any information that would really be meaningful.

Paul Coster, JPMorgan.

This is Mark Strouse on for Paul.

Thanks for taking our questions.

First, just a quick clarification.

So the quarterly guidance for 1Q is just a one-off, we shouldn't get used to seeing that going forward.

Is that right?

Yes.

It's indicative of what we see the first quarter.

And I think as you know, a lot of our quarters have movements from one quarter to the next.

Which also needs to be taken into consideration in how we see the annual guidance, which is what we'll provide in more detail in the Analyst Day here in a few weeks.

Yes.

Sorry.

I meant mainly are you going to -- you're going to split the annual guidance though, you're not going to issue quarterly guidance?

Exactly right.

Okay.

This is the same process we used last year.

Right.

Okay.

And then just switching gears can you just give us your thoughts on TetraSun, and what we should expect from that over the near future?

Well, TetraSun, we're moving ahead with the pilot production facility.

And we'll expect to talk to a little bit more about that at Analyst Day.

And the impact in 2014 will be relatively small, as the facility will just be starting up.

So no big major impact, and anything we further we'll talk about at Analyst Day.

Krish Sankar, Bank of America.

This is Andrew Hughes on for Krish.

It doesn't sound like you're writing off a yield co by any means, but just curious what else might be out there from your point of view that you guys could leverage from the cost to capital point of view to go out and further pursue utility scale solar development should you not choose to do a yield co?

There is lots of discussion and activity throughout the industry on a variety of capital structures.

And there are a lot of things that have been discussed in publications and by the industry broadly, including partnerships with institutional type providers of funds that would be interested in the long-term stable cash flow nature of the assets, similar to what the investors in a yield co would be interested in.

There has been discussions of continued securitization through bond offerings similar to what's been done on some of the large projects.

I think that over the coming year or couple of years, one thing you may see is you may see people beginning to aggregate smaller utility scale projects into groups that are then financed on a single basis.

One of the issues you have as you move down in project size is transaction costs do not diminish on the same factor as size.

So the cost to finance a 20 megawatt project is not significantly different than the cost to finance a 200-megawatt project.

So it's one of the things that we can do and others may do is begin to see rather than standalone financings, you'll see the aggregation of assets into groups which provides a little more efficiency and reduces cost of capital.

So I think broadly, what I expect to see is when I look at the cost of capital that's being applied to solar assets, I continue to see a Delta versus a mature thermal asset.

And I'm think that will disappear over time as you get more projects out there and you get an operating history underneath them and you get a comfort on the part of the investing community with the stability of the cash flows and the long-term performance facilities.

You'll just see the risk premium demanded shrink.

And I think we expect to continue to see that continue over the next couple of years.

The other thing is that in general what you continue to see is that the constraint in the market is the actual asset.

And there's a very competitive environment associated with that asset.

And so we're starting to see, as Jim indicated, and we can expect to continue to see return expectations to normalize, maybe more comparable to other asset classes which may see out in the market, and some of that is starting to happen.

The other thing whether we participate with a yield co or not, those of you who follow it know that there's a pretty heavy dependency around growth.

So not everybody is going to have a sole sponsored yield co when they will most likely look to buy third-party assets.

So whether we control and own the vehicle or we participate in that environment given the constraint in the market, largely it's the asset, we think we'll have access to very competitive cost to capital.

(Operator Instructions)

Brian Lee, Goldman Sachs.

I missed a bit of this, but what was the mix of projects versus modules only for the roughly 400 megawatts or so of incremental bookings since October?

And then my follow-up was on backlog timing.

If I look at the projects that you have contracted but not yet sold in backlog, most seemed to have CODs in 2016.

Is there flexibility to pull that forward in any of those contracts so that you could actually deliver power sooner, or is that not an option given your customers' needs?

On the first one, in terms of the mix of the bookings, and I think as Jim indicated, 150 megawatts was associated with a project that was awarded in California, the 40 megawatts was associated with Kingbird.

So I think you could imply from that or infer from that, that a high percentage of the mix was system related volumes.

The other one, in terms of the backlog that you were requesting and the timing, obviously there's always opportunities to move or flex schedules.

A lot of times you have to understand, though, where you are in your permitting process, what the interconnection date is, there's a lot of other variables that have to be evaluated and determined whether or not projects move forward or get pushed back.

But we typically will look at whatever we can do to optimize the return against that asset, and if something makes sense, either to delay or to pull forward, those are the things that we take into consideration to optimize the return on capital.

Rob Stone, Cowen & Company.

If you could, just a little more color on -- you said that there were some projects where the revenue recognition criteria weren't met in Q4.

Can you add anything to that?

Thanks.

Yes.

We had a couple of projects that we included in our initial guidance, and anticipate and that we'd close everything out by the end of the year.

They slipped, and now we'll start to recognize them in 2014.

And we've said this before, the timing of being able to discretely determine exactly when an asset, especially if you're selling something at a COD, which both of these assets would be, the revenue recognition can move by a few weeks and if it does it can fall out of the quarter.

Now, we've also have said in the past that we will not be held hostage to trying to deliver against a particular guided revenue number or an EPS number and forgo the economics.

So we'll be very patient as it relates to that, and closing out our transactions.

And in this case, we have a couple projects that we had anticipated initially to fall into the quarter, and now they fall into 2014.

Edwin Mok, Needham and Company.

Can you tell us, how much of the $400 million that you talked about in fourth quarter will come in in the first quarter?

That's my first question.

And then follow-up, in terms of system costs, any color in terms of how much it declined for the quarter or for the year on system costs?

The $400 million -- let's just wait.

We'll talk about that in more detail when we get into the Analyst Day, we'll give you a better view of each of the quarters, and what we think the year is going to shape up like.

So we can defer that discussion until then.

In terms of the system VOS costs for the year, we continue to make good progress.

We indicated at our Analyst Day, I think we were going to exit the year, including module, a fully installed system cost of $1.59.

And we actually ended up better than that by about $0.03 or $0.04.

So we delivered against the commitment, and then over delivered against our expectations.

And so, we continue to make significant progress in driving down the installed cost of the system.

And everyone, that does conclude our question-and-answer session at this time, and our conference call.

We do thank you for your participation.