Good afternoon, everyone, and welcome to First Solar's first quarter 2019 earnings call. This call is being webcast live on the Investors section of First Solar's website at 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 Adriana DeFranco from First Solar Investor Relations.
Ms. DeFranco, you may begin.
Thank you. Good afternoon, everyone, and thank you for joining us. Today, the company issued a press release announcing its first quarter 2019 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 Alice 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 2019. Following their 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.
We encourage you to review the Safe Harbor statements contained in today's press release and presentation for a more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer. Mark?
Thanks, Adriana. Good afternoon and thank you for joining us today. I would like to begin by briefly discussing our EPS results for Q1. As we emphasized on our February earnings call, we expected that the combination of lower quarterly Series 6 sales and the higher Series 6 cost per watt relative to the full year average as well as the timing of both ramp and startup charges and the timing of project development sales would have the most acute impact to earnings in the first quarter. Our EPS results for the quarter was in part driven by these factors.
However, the first quarter was also adversely impacted by some unanticipated non Series 6 related costs. Alex will go into more detail, the one key area where we have seen significant recent challenges has been containing costs in our APC business. These challenges include factors both external and internal to for solar. Externally, a tighter than expected construction labor market and certain equipment supply issues produced a drag on profitability of several of our systems projects. We also encountered certain weather delays for which relief was not available under the UBC contract, which in turn put pressure on required milestones, and other completion dates and correspondingly increased costs.
From an internal perspective, our recent record of project cost management, including subcontractor and vendor cost management, failed to meet our expectations. Our EPC capability delivers strategic value to the company But following a recent evaluation of these issues, we determined that restructuring of the EPC organization was prudent given these issues. Accordingly, we have installed new leadership of EPCO organization merging our energy systems function with the engineering procurement and construction group, In addition, we are reviewing certain supplier and subcontractor arrangements and potential remedies with a view to addressing certain of these costs. Turning briefly to the market, catalysts driving increased PV penetration continue to point to a strong global demand in 2019, and momentum building thereafter. For example, in the U.
S, there's a growing impetus to decarbonize electricity. In the past month, Washington State joined California, New Mexico, Hawaii, Puerto Rico and Washington D. C. In an acting legislation that mandates 100% clean electricity standard. Additionally, over a dozen other states have either put in place non binding goals have introduced or are planning to introduce legislation with varying levels of clean energy commitments or are committing to studying clean alternatives to their power generation portfolios.
Corporate buyers are also increasingly looking for ways to de carbonize electricity. This is reflected in the fast changing PPA landscape in the United States which is seen in evolution in buyer types and transaction structures. We see a significant rise in corporate and commercial and industrial PPA structures. With large technology companies dominating the market, but with growing interest from other sectors such as healthcare, finance, and even oil and gas. As part of our focus to accelerate growth in this segment, First Solar has joined the board of the Renewable Energy Buyers Alliance, which has committed to establishing a clear path to its members to procure 0 carbon electricity.
This alliance's goal is to catalyze 60 gigawatts of new renewable energy for its members by 2025. Internationally, Europe has continued on its growth trajectory with 2019 potentially being a record year for PV installations. Initially, this year, First Solar celebrates 15 years in Europe, with approximately 5 gigawatts of installed capacity across the region. In Spain, driven by economics and favorable policy, Spain is expected to add significant new capacity over the next several years. Additionally, France continues to procure utility scale solar as part of its Creek program.
Globally, all indicate point to growth underpinned by a combination of competitive economics of solar and a desire to decarbonize electricity grids. Starting on Slide 4, I'll provide an update on our Series 6 capacity rollout. As a reminder, we began production of our first Series 6 factory in April of 2018. Since then, we started production at 3 additional factories, reflecting over this relatively short period approximately 1 year and the significant progress we have made, we are pleased with where we are at Series 6 in terms of schedule, performance and cost. Since the February earnings call, we have seen significant operational improvements across our Series 6 factory.
When comparing the performance of the month of February, which includes the 1st full month of our production of our 2nd Vietnam factory, the performance of the month of April, meaningful improvements can be seen despite certain planned downtime during the period. Megawatts produced per day is up 34%. Capacity utilization has increased 21 percentage points. Adjusted for planned downtime, the April fleet capacity utilization was 90%. We expect higher than normal planned downtime to continue over the next couple of quarters as we continue to operationalize the full entitlement of our factories.
Production yield is up 2 percentage points to approximately 90% The average watt per module has increased slightly more than 1 bin or 6 watts. And finally, the percentage point of modules with anti reflective coating has increased by 15 percentage points. Another noteworthy highlight relative to our Series 6 production expansion success we have experienced ramping our 2nd Vietnam factory. The ramp has been accelerated relative to previous factories by applying accumulated learnings including starting production with an improved model training tool. This benefit can be seen when comparing the initial 3 months of production of our most recent Vietnam factory to our first Series 6 factory in Ohio.
Capacity utilization is 33 percentage points higher. Production yield is 32 percentage points higher. Average watts are up 19 watts or essentially 4 bins and the arc penetration is 48 percentage points higher. Leading to an equivalent watts produced being 125 percent higher. The progress we have made ramping our has been a key contributor in enabling us to achieve our first quarter Series 6 cost per watt objective.
While this is a significant accomplishment, there is a tremendous amount of work still in front of us to achieve our cost per watt roadmap for the year. As we noted in our February earnings call, our expected Series 6 cost per watt will drop approximately 30% from Q1 to Q4. These significant accomplishments can be credited to the outstanding work of our engineering and manufacturing associates. Construction is continuing on our 2nd Series 6 factory in Ohio. As announced previously, we expect to start production in early 2020, and construction is thus far on track to our schedule, with the first tools scheduled to be installed by the end of Q2.
Once completed, we will have 5 factories with an aggregate annual Series 6 capacity of 5.4 gigawatts, and impressive accomplishment since announcing the transition to Series 6 in November of 2016.
We continue to
be encouraged by the progress we have made over the last year, As noted previously, we planned for full year production of between 5.25.5 gigawatts. As a reminder, this targeted production includes approximately 2 gigawatts Series 4 modules. In order to meet these production commitments, we continue to roll out tool upgrades and optimize the production line throughput across the various sites. This is an dynamic process that continues to incorporate learnings from each of the factories we have ramped and is moving according to schedule. Turning to Slide 5, I'll next discuss our bookings activity since the last earnings call.
In total, Our net bookings since the last earnings call were 1.1 gigawatts after accounting for shipments of approximately 900 megawatts during the first quarter are expected future shipments are 12.2 gigawatts. Our most recent bookings are across multiple customers and include a limited volume of Series 4 for delivery at the end of 2019. The remaining Series 6 deliveries are split evenly between 20202021. Terms of geography, approximately 900 megawatts of the 1.1 gigawatts is for delivery to the United States with the remaining 200 megawatts flexible across the U. S.
And certain international markets. With these recent bookings, we have now added 2.3 gigawatts to the backlog since the beginning of the year. We are pleased with this momentum to date and have increased confidence in exceeding our targeted 1 to 1 book to ship ratio in 2019. As we mentioned on our last earnings call, we are largely sold out through the end of 2020. With the current bookings, now 50 percent of the anticipated Q1 twenty twenty one supply has been booked.
As a reminder, given the timeframe for which we now have available product, we may see future bookings in 2019 to be weighted towards the back end of the year. Slide 6 provides an updated view on our mid to late stage bookings opportunity, which now totals 6.6 gigawatts DC, a decrease of approximately 0.7 gigawatts from the prior quarter. However, when factoring in the bookings for the quarter, approximately 0.3 of which were booked were included in the opportunities in the prior quarter, our mid to late stage pipeline declined by 0.4 Gigawatts DC. As a reminder, our mid to late stage pipeline is reflective of those opportunities we feel could book within the next 12 months and is a subset of a much larger pipeline of opportunities, which totals approximately 12 gigawatts. This includes approximately 2 gigawatts of opportunities in 2019 2020, which will provide demand resiliency to our near term production, while the remaining approximately 10 gigawatts of demand would be for module deliveries in 2021 and beyond.
In terms of geographical breakdown of the mid to late stage pipeline, North America remains the region with the largest number of opportunities at 3.9 Gigawatts DC. Europe represents approximately 2 gigawatts driven largely by resurgent markets in France and Spain with the remainder being across the Asia Pacific region. In terms of segment mix, Our mid to late stage pipeline includes approximately 900 megawatts of systems opportunities across the U. S. And Japan with the remainder being module only sales.
I'll now turn the call over to Alex who will provide more detail on our first quarter financial results and discuss updated guidance for 2019.
Thanks, Mark. Turn to Slide 8, I'll start by covering the income statement highlights for the first quarter. Net sales in Q1 was $532,000,000, a decrease of $159,000,000 compared to the prior quarter. The lower net sales were primarily a result of lower systems projects revenue in the U. S.
And Japan, partially offset by higher module segment revenue. For the percentage of total quarterly net sales, our systems revenue in Q1 was 63% as compared to 83% in Q4 of 2018. Gross margin was breakeven in Q1 compared to 14% in the fourth quarter of 'eighteen. The Systems segment gross margin was 8% in the 1st quarter the module segment gross margin was negative 13%. As a reminder, module segment cost of sales comprised of all third party module cost of sale as well as Series 6 ramp related costs, which as Mark mentioned earlier, expected to be felt most acutely during the first half of the year.
We experienced ramp related charges of $36,000,000 in the first quarter, approximately 70% of the midpoint forecast for the full year. The systems segment gross margin was impacted by $35,000,000 related to the EPC business. This includes approximately $20,000,000 related to our projects for Tampa Electric, which were built with our Series 4 product. Challenge of these projects included tight construction schedules, labor shortages, non force majeure weather related work stoppages, failure by high voltage transformer factory acceptance test. Financial distress of a major subcontractor and certain rework.
We're set to hire the projected costs and the incurrence of liquidated damages for failure to meet certain milestones. Where approximately $5,000,000 impacted our Phoebe project from the inclusion of lower bid in Series 6 modules, a consequence of the earlier than expected start of our 2nd Vietnam 3. Product initially produced in January was held pending release through our quality review process. This fully functional but lower bin non arc product was used in our systems business as an alternative to scrapping it and incurring additional startup expense. While this increased costs, These are more than outweighed by the strategic value having placed the 2nd Vietnam factory online earlier than previously forecast, providing optionality in terms of whip sharing across factories, as well as the ability to run more engineering test articles at our Perrysburg site over the course of the year.
The remaining approximately 10,000,000 impact to gross margin was across our other jits in construction and was a result of greater than projected balance of systems costs related to the installation of low bin modules, higher than forecast labor costs, and certain project specific construction costs. Operating expenses were $77,000,000 in the first quarter, a decrease of $10,000,000 compared to Q4 of 2018. This included a reduction of $5,000,000 in core SG and A and R and D spending, and a $5,000,000 reduction in plant startup expense, which decreased from $15,000,000 in Q4 'eighteen to $10,000,000 in Q1. Given the anticipated startup timing of our 2nd factory in Perrysburg, we expect startup costs to increase each quarter over the remainder of the year. We had an operating loss of $77,000,000 in the first quarter compared to an operating profit of $11,000,000 in the prior quarter.
The reduction in operating income was a result of lower systems revenue and the higher EPC and ramp costs mentioned previously. Other income was $4,000,000 in the first quarter, primarily from the gain on sale of certain restricted investments associated with our module collection and recycling program. Partially offset by the impairment of a strategic investment into Perovskite Technology. Despite providing us with valuable insights into the development Perovskites, the investment was unable to hit certain internal milestones required for continued investment, resulting in an impairment of $5,000,000 in the quarter. We took a mark to market charge of $5,000,000 related to the fair value of certain interest rate swap contracts for some of our project assets in Japan and Australia.
This is a timing impact based on movement of interest rates within the quarter and we expect to see a corresponding increase in project value recorded at the time of sale. Recorded a tax benefit of $1,000,000 in the first quarter compared to a tax benefit of $4,000,000 in Q4 of 2018. Combination of the aforementioned items led to a 1st quarter loss per share of $0.64 compared to earnings per share of $0.49 in the fourth quarter of 2018. To summarize the key P and L themes from the quarter, we had a mix of expected and unexpected. As expected, we had our lowest revenue quarter for the year.
Our quarter with the lowest percentage of Series 6 sales relative to total module sales. The highest Series 6 cost per watt relative to the full year average and the highest quarterly combined ramp related and startup expense. Not anticipated were the higher than forecast ramp and EPC costs, the profit guide investment impairment and interest rate related mark to market swap cost impacts referenced above. I'll next turn to Slide 9 to discuss select balance sheet items and summary cash flow information.
Our cash
restricted cash and marketable securities balance ended the quarter 2,300,000,000, a decrease of approximately 400,000,000 from the prior quarter. Our net cash position decreased by approximately 500,000,000 to 1,700,000,000. The decrease in our cash balance is primarily related to capital investments in Series 6 manufacturing capacity, Series 6 manufacturing ramp and associated working capital inventory costs. And the timing of cash receipts from certain systems project sales. Total debt at the end of the first quarter was 571,000,000 compared to $467,000,000 at the end of Q4 of 2018.
Debt issuance for a course primarily associated with project development in Japan. As a reminder, all our outstanding debt continues to be project related and will come off our balance sheet when the projects are sold. Net working capital in Q1, which includes the change in non current project assets and excludes cash and marketable securities, increased by $272,000,000 versus the prior quarter. Change was primarily due to an increase in accounts receivable and inventories. Cash flows used in operations were $303,000,000 in the first quarter, primarily driven by the timing of systems, business spend and cash receipts.
Well as increased spend ramping the Series 6 module business. And finally, capital expenditures were 149,000,000 in the 1st quarter compared to 129,000,000 in fourth quarter of 2018 as we continued Series 6 capacity expansion. Continuing on to Slide 10, I'll next discuss the updated assumptions associated with our 2019 guidance. Firstly, our guidance continues to assume a back ended Series 6 module sale profile with approximately 75% of Series 6 third party module sales occurring in the second half of respectively above the full year average. Secondly, we continue to see ramp related and startup charges weighted approximately 60% for the first half of the year.
Thirdly, we assume the majority of system sales both in the U. S. And Internationally will take place in the second half of the year. Regards to our U. S.
Assets currently for sale in 2019, we continue to assume a full sale of these projects in 2019 with the majority of revenue being recognized by year end. As highlighted in our last earnings call, there remains uncertainty around both timing and value, especially related to assets with offtake agreements with SCE, given the circumstances surrounding the bankruptcy of PG And E. Recent developments in California have been positive and we're also pleased with the progress we've made in the sale process. However, given the continuing uncertainty in the coverable market, should the market not reflect what you believe to be appropriate risk profiles and values for these assets, we would look to finance the assets and hold them on balance sheet through the period of uncertainty rather than selling our prices below what we believe to be fair value. So whilst unlikely, should this change in sale timing occur, it could result in full year EPS approximately $0.50 below the low end of the current guidance range.
And lastly, in addition, as highlighted in our December 2018 guidance call, guidance continues to not take into account any potential impact to the continued class action lawsuit filed in 2012 or any resolution of that lawsuit. With these factors in mind, we're updating our 2019 guidance as follows. We are raising our net sales forecast to a revised range of $3,500,000,000 to $3,700,000,000. This $250,000,000 increase above our prior net sales guidance relates to both the modules and systems segments. With respect to the module segment, while total expected shipments for the year are unchanged, the early then anticipated transfer of control of the modules sold results in revenue being recognized in the fourth quarter of 2019 was otherwise anticipated to be recognized in the next fiscal year.
With respect to the systems segment, we're projecting the earlier sale of certain development assets in the U. S. And Japan driven by the opportunity to optimize exit valuations for these projects and reduce risk across the entirety of the global development portfolio. Our expected gross margin has been lowered by 150 basis points to a revised range of 18% to 19%. The reduction is used to previously discussed higher than projected EPC costs incurred in Q1 as well as an increase in projected Series 6 ramp related costs.
The operating expense forecast has been lowered by $5,000,000 to a revised range of $370,000,000 expense, which is now forecast to be $70,000,000 to $80,000,000. Operating income and earnings per share guidance remain unchanged. Our net cash forecast has been increased by $100,000,000 to $1,700,000,000 to $1,900,000,000 as a function of the timing of project sales and cash receipts. As well as increased prepayments for 3rd party modules being sold to enable ITC safe harbor benefits. CapEx and module shipment guidance numbers also remain unchanged.
And as discussed previously, we expect the majority of earnings to be in the second half of the year with Q2 close to breakeven and potentially in a loss position. However, the timing of project sales between quarters can have a material impact on the quarterly earnings profile. Finally, I'll summarize the key messages from our call today on Slide 11. Firstly, we continue to be pleased with our bookings momentum. With year to date 2019 net bookings of approximately 2.3 gigawatts, we continue to strengthen our contracted pipeline.
Secondly, we continue to make good progress on our Series 6 capacity roadmap and remain on track for our combined Series 4 and Series 6 production target of 5.2 to 5.5 gigawatts. And lastly, we've increased our full year revenue and cash guidance and maintained our full year EPS range. With that, we conclude our prepared remarks and open the call
Your first question comes from Ben Kallo with Baird. Your line is open.
Hey, thanks for taking my questions. So first, could you guys just talk about on the booking side. I think bookings were down sequentially. But was that just on the EPC side? And then could you talk about pricing on on the new book there the extent you can, how they compare with maybe the the last quarter.
Would you would you talk to us?
Yes. So, Ben, if you
look at the bookings for the quarter, it's 1.1 gigawatts year to date bookings $2,300,000,000, right. So, and again, the one point one that we're referencing is just from the February earnings call. So if you look at it, for a 2 month period, we booked 1.1 gigawatts. For the 1st 2 months of the year, we booked 1.3 kind of number, 1.2. So they're very comparable.
And if you look at the momentum, which would say we'd carry if we carry that forward through the balance of the year, we'll be booking somewhere close to 7 gigawatts. So I don't see really any slowdown in the momentum of bookings. I feel it's a robust number to start off the year. And as we indicated, I think the start of the year is positioning us to exceed our targeted 1 to 1 book to bill ratio. So that would point us to a number 6 gigawatts plus trends pointing us to north of that number, which I think is a positive indicator of what's going on in continued momentum.
In the business. ASPs, I continue to be extremely pleased with ASPs. The profile of bookings, the 1.1 relative to what we booked in the 1st 2 months of the year, ASPs are steady. They still have a pre handle type of the ASP that we've referenced before. I know there's some indications in the market of pricing being much more aggressive than that.
We continue to to be able to be patient given that we're we've sold out through the end of 2020 and now we're effectively 50% sold for the first quarter of 2021. We can be selective. We can engage with customers. We could make decisions of where to walk away. We're not being held by volume that we haven't already been committed to from a customer.
So that helps us tremendously on how we're engaging the market and actually I've been very pleased with the correspondent pricing that we're realizing.
Your next question comes from Philip Shen with Roth Capital Partners. Your line is open.
Hey guys, thanks for the questions. First is around shipments of Series 6 modules. Can you share how many megawatts you shipped in Q1 and then what that ramp rate might be for Q2? And then secondarily, some of our recent checks suggest that you may be focusing some resources on a 3 to 5 year kind of cost out plan, and CapEx reduction plan. Is there any truth around this?
Are you having people that, for example, had been otherwise focused on near term capacity ramp up challenges? Now switch over to longer term opportunities. In other words, does this highlight potentially that you've solved a lot of your near term issues and and you have an ability to focus on the longer term or medium term, set of problems or cost outs ahead. Thank you.
So from a shipment standpoint, I think we indicated that we shipped about 900 megawatts for the 1st quarter you can take from that that we've got 2 gigawatts of Series 4, think of it as being that that should have profile being relatively linear. So you kind of get to a position of the shipment profile around fifty-fifty between the two maybe slightly more serious for shipments than Series 6 shipments. The rent profile is going to increase significantly. The forecast for the year is 5.5. So we got about 4.5 gigawatts to now ship over the remainder of the year.
And again, that entire ramp is associated with Series 6. The threefour profiles going to be consistent across the each of the remaining quarters of the year. Phil, I guess, first off, we are very happy. We highlight that on the call around where the progress that the team has made for Series 6 and we cannot take our eye off of it though. We got to continue to stay focused from both a schedule standpoint, performance standpoint and a cost standpoint.
So there's we haven't really come up for air yet. We're starting off, we're starting off this quarter very well. April's been a strong month. The 1st day of May is expected to be a record for us with all of our plans performing extremely well. We continue to have to take some amount of planned downtime, which that planned downtime will adversely impact, you know, utilization rates, but, but, you know, it will as we currently see it going forward.
A lot of the major efforts that we need you to take planned downtime have effective happen now, through the 1st 4 months of the year, there's still efforts that will continue, but a lot of the major lifting is has been done so far, at least what we currently have currently anticipate. But what I will say is that we never relax when it comes to how do we think about continue to take more costs. How do we think about CapEx? How do we think about throughput? And how do we try to capture, you know, our current nameplate capacity of of a factory is 1.2 gigawatts.
We're continuing to challenge ourselves around how do we get more throughput out of every factory. One thing that I will say in that regard, while it will be relatively small, we are even our Second Factory in Perrysburg that we'll launch. We'll have some additional CapEx investments associated with it relatively nominal that will enable us to increase the throughput from that factory. Once it started up and currently anticipated to be in in 2020. We'll see the success of that effort and determine how quickly we roll out across the remaining fleet.
We'll also continue to challenge ourselves around how do we, again, optimize the throughput across every factoring the benefit by doing that is you effectively are just it's variable costs. So it has not only impact of utilization and throughput benefits, but you're now looking at cost per watt of that incremental throughput is being more or less variable cost and some de minimis CapEx, not an overly significant commitment for the most part. But there's tremendous leverage in value creation for us to do that. Have there been efforts where we're continuing to evolve those thoughts? Surely, there are, but I don't want anyone to take from this that we are taking our eye off at all on both from a scheduled performance and a cost standpoint.
So a lot of work in front of us as it relates to Series 6 delivered against our commitments for the year.
Your next question comes from Jeff Osborne with Cowen and Company. Your line is open.
Hey, good afternoon guys. Just one clarification and then 2 quick questions. Mark, I think you mentioned that the pricing of the 2.3 gigawatts in backlog. Is all of that have a, quote, unquote, free handle, as you said? So that includes the 1 gigawatt for 2021 through 23 that you announced last quarter.
We're very happy with the profile of ASPs as they go across that horizon and Yes, we're seeing very good pricing from that standpoint. I think, I think when you look at the Q, if I'm not mistaken, for what truly it was recognized in they'll come out tomorrow, but what's truly been recognized in the first quarter, calendar quarter, the ASP metric, I think will effectively be the same. It'll stay steady. I think it's around $0.36 something in that range, right?
If
you do the math, you'll see it stays at 36. And then if you do the comparison to last quarter, the incremental is going to show you actually booking at 40 what now as we know that's rounded for our gigawatts and dollars 1,000,000,000. So we're going to take that with a bench of salt. But if you look at it today, you're going to still see the backlog and the module on your booking being averaged at $0.36.
Your next question comes from Brian Lee with Goldman Sachs. Your line is open.
Hey, guys. Thanks for taking the questions. I'll try to get 2 in here. Maybe first off, just given the demand environment and and the more stable pricing trends as of late across the industry, just wondering, if can update us on your thought process around Malaysia 1 and and converting that from series 4 to 6. And then second question would just be around the the new gross margin guidance.
Just wanna make sure I understand the the ins and outs of that, but it implies about, $50,000,000 is is coming out. Alex, you talked about $35,000,000 of EPC and then the incremental $10,000,000 in RAM costs. So Are all of the gross margin headwinds relative to the original guidance concentrated here in Q1 results? Or, you know, am I being too cute there? Are there more cost impacts as you move through the year?
Thanks guys.
Yes, I'll let the gross margin quickly. So yeah, you're generally right that you're seeing the impacts in Q1. It's about $35,000,000 related to EPC business and that $10,000,000 of RAM, 5 of which is true increase for the year and 5 of which is you can think of a move from startup to ramp and you see a corresponding reduction in start up of $5,000,000. And that gets you that bridges you roughly from where we were to the new gross margin percent guidance.
Brian, as it relates to the demand environment, again, we continue to be very happy with the demand that we're seeing here in the U. S. But globally as well. We're happy with our pipeline and one of the things we try to bring into the mix, this time was not just the early and mid stage pipeline or excuse me, the mid to late stage pipeline, but we brought the kind of the total pipeline in, you know, and highlighted that we have about 10 gigawatts of opportunities in different phases that are for 21 and beyond. So, I'm very encouraged with the team and our ability to continue to to engage with customers and find those opportunities.
And our hit rate has been very good and I'm happy with that. As it relates to our last, our first factory and actually in KLM, which is currently non committed to our capacity plan, our capacity roadmap includes about 6.6 gigawatts of Series 6, which would have 2 factories in Malaysia 2 in Vietnam and 2 in the U. S. We haven't made a commitment yet on that last factory. There's a handful of things that will weigh into our decision making.
One of them is still momentum around Safe Harbor and in how long do we run Series 4. So we could potentially even run Series 4 into Q1 of next year because as you know, the safe harbor window allows for deliveries that go through April of 2020. So that could be a decision maker that will influence our timing and how we think through a conversion to the extent there's a conversion. The other one that I think is important though is just Anything we do will clearly be driven by market. So as we continue to build our backlog, that'll give us more confidence The other one is I somewhat alluded to what we're trying to do with our second factory in Ohio.
One of the things we'd like to do is optimize footprint to capture as much capacity out of the existing production that we have before we make additional conversions because the CapEx per megawatt of volume is significantly lower by just debottlenecking incremental CapEx and existing capital versus a new brownfield type of conversion and entire equipment set. And then obviously dealing with cost of ramping and everything else that goes along with So there's a lot of moving pieces that that will play into our mix in in that regard. You know, we'll probably have a much better sense of where we are on that last factory in Malaysia. And as we exit the end of this year, we'll be probably getting better indication of what our plan would be for that facility.
We have a follow-up question
Yes, thank you. I was just going to ask about the TECO challenges. How much of your backlog is in TECO and or are they placated with the resolution that you've had?
So the impact of the last project that we have is, Lake Hancock is, you know, will be complete here. As we exit this quarter. So the items, you know, the portfolio has been largely built now, constructed issues have been, you know, countered obviously reflected in our first quarter. Obviously, we still have some remaining work to be done to complete the last project for Tampa Electric, but we're only a matter of a month or 2 out before that will be completed.
Got it. Then Alex was very specific about Q1 and Q2 and costs of Series 6 Is there any change to that slide that you had from other quarters as it relates to the second half of the year with the declines relative to the full year average?
Yes, that slide generally holds. So I think there's a question around capacity as well. If you look at that, that still holds. So the declining cost of the year going from 130% of the fully average down to minus 10 at the end of the year and then the production being about 75% weighted to the second half of the year in terms of module only.
Series 6 sales still holds.
Excellent. That's all I had. Appreciate letting me ask more. Thank you.
Your next question comes from Julian Julian Smith with Bank of America Merrill Lynch. Your line is open.
Hey, good afternoon, everyone. Wanted to follow-up a little bit on the backlog question and understand a little bit how it fits with some of the safe harboring activity. To what some of the incremental hedging and locking in of sales, just fulfillment and, sort of extension of some of the initial safe harboring activities that you've already committed to in 2019 or
to what extent
is this truly novel customers that aren't necessarily trying to lock in 2019 or falling in on some of the 2019 safe harbor stuff they've already done. Just want to understand, the composition given the pricing discussion we have.
Judah, there's a good portion of what we said is the 1.1 that was booked, 900 of it, was in the U. S. And a couple 100 megawatts be for projects outside of the U. S, potentially U. S, but most likely outside.
So the customer has opportunities both in the U. S. And outside. They have an option to determine which projects they want to use that for. They currently are envisioning international opportunities, but that could change as well.
The given that there's that much volume, there's still some element of this that is somewhat tied to a customer's view of route safe harboring. And they may already have, in some cases, they may already have volume that's on our books, that enables them to Safe Harbor and now they're fulfilling kind of the period in the future, which they need to complete the project. So the 5% may already be a part of a backlog portfolio that we've already booked in prior year. And now they're saying, Hey, well, I need to fill this opportunity out in 2021. And so we're engaging in the conversation for those deliveries.
So the way I look at it, it's indirectly related to Safe Harbor because they're anchoring in with a Safe Harbor opportunity that's already in the backlog. And now they're looking to complete that commitment with volumes that are going to be delivered in 2021. So the pricing isn't necessarily directly related. So it's not that you would say these shipments have to happen now. And therefore you're leveraging that window, which in that window is something being shipped between now and then in the safe harbor window ASPs are very strong and that's one reason why we're looking at potentially how long do we run series 4?
Because I think you can get some economics that pencil out make more sense there. And, but when you go beyond that window, it's largely whether the competitive dynamics or alternative options that a customer may have for modules that could be delivered in 2021. So the window can be more competitive and is more competitive than something that's going to be delivered between now and April of next year. I think there's clear indication in the market that market is tight here in the U. S, especially to our higher efficiency, higher performing product.
There's not as much mono or mono PERC in the marketplace during that horizon. You're seeing pretty firm pricing. Unfortunately, we don't have as much supply that allows us to play that in that window. But when you go beyond you're delivering something in 2021, then it's our technology stands on its own competitive merits relative to other options may have for deliveries in 2021.
Your next question comes from Colin Rusch with Oppenheimer. Your line is open.
Thanks so much guys. Can you talk a little bit about how far out your booked at this point and how much capacity you're trying to sell over the next several quarters? So we are what I tried to indicate a little bit is that we're 50% booked now for a targeted capacity in the first quarter of 2021. And so if you look at our capacity roadmap, we would basically tell you that it's going to be Series 6, 2021 capacity of around 6.6 gigawatts. You can kind of look at the profile of how much would be available in each quarter or about 50% booked against that.
It's a great position to start the year off. If I look at it across the entire year, the numbers are closer to about a third, 30% or so is actually booked at this point in time. And against that, we've got, if you look at our 10 gigawatts of opportunities, 21, both early as well as mid to late stage. We've got a lot of opportunity now that to start filling in that window in 2021. Now clearly, we have some bookings as we mentioned in our last call that actually go out in 2023.
But feel really encouraged by the opportunity set that's in front of us and continuing engagement that we're having with customers. And we'll hopefully as we progress the only real window, we have a little bit of pale at the end of 2020 to deal with on Series 6, but really the bookings as we go forward the balance of this year. And if we achieve our 1 to 1 or greater than 1 to 1, call it somewhere in the range of 6 or 6.5 gigawatts the remaining call it 4 gigawatts, we'll start filling up that 21 window relative to where we are right now. If we can be successful doing that, not all that will sit directly in 21 but we'll be able to fulfill a big portion of that supply requirement by the end of this year if we're successful.
Our final question will come from Travis Miller
Well, I'm a bit of a higher level question here. When we look out, you talked about some of the policy momentum we've had. Certainly, we're seeing across the industry more demand from outside of policy.
If you look at kind of 2, 3 years, what do you see in the competitive landscape? Who do you
see as competitors? And do you see enough demand out there that perhaps You can fill all capacity and have pricing power in that market. The, look, there's there's a tremendous amount of momentum and there's numerous catalysts that are driving the global opportunity for TV. The issues, the demand is going to continue to grow. I don't think there's any concern.
The real question is how much supply comes the marketplace. And that's something I can't control. If you look at Longji now, I think they're making commitments at the mono wafer level. I think going up to 65 gigawatts by, you know, 2021, which, you know, I think the last number that I remember was something closer to 45. So those numbers that they continue to add capacity.
And so it's hard to determine what's going to happen on supply side. But we do though and what our objective is is is we need to create a technology advantage and separation to have the lowest cost product in the marketplace and to have the highest energy entitlement that are able to capture that our competitors can and that's what we continue to do. We've been successful doing that in the past and the challenges in front of us were probably even greater than maybe they have been historically, but that's why we made the decision to shift to Series 6, which gives us the best potential of position of strength and to grow this company and and to capture scale and drive through and leverage against our fixed operating cost and manage the business from continuing to manage the business on balanced business model of growth liquidity, profitability. I mean, that's the core tenets of what we try to do. And, and, you know, when we're staying the course in that regard, As we look across the horizon, we feel very comfortable, but we know this will continue to be a very challenging and demanding market.
This concludes today's conference call. You may now disconnect.