Cautionary Statement Regarding Forward-Looking Statements

Certain of our financial results and other key operational developments for the three months ended June 30, 2022 include the following:

Table of Contents power plants and energy storage solutions that offer a flexible operating profile, thereby promoting greater grid stability and enabling a higher penetration of solar energy. We continue to address these uncertainties, in part, by executing on our module technology improvements and implementing certain other cost reduction initiatives.

In terms of performance, in many climates our solar modules provide certain energy production advantages relative to competing crystalline silicon solar modules. For example, our CdTe solar technology provides:

•a superior spectral response in humid environments where atmospheric moisture alters the solar spectrum relative to standard test conditions;

•a better partial shading response than competing crystalline silicon technologies, which may experience significantly lower energy generation than CdTe solar modules when partial shading occurs; and

•an immunity to cell cracking and its resulting power output loss, a common failure often observed in crystalline silicon modules caused by poor manufacturing, handling, weather, or other conditions.

While our modules are generally competitive in cost, reliability, and performance attributes, there can be no guarantee such competitiveness will continue to exist in the future to the same extent or at all. Any declines in the competitiveness of our products could result in further declines in the average selling prices of our modules and additional margin compression. We continue to focus on enhancing the competitiveness of our solar modules by accelerating progress along our module technology and cost reduction roadmaps.

The following table shows cost of sales by reportable segment for the three and six months ended June 30, 2022 and 2021:

Gross profit decreased 26.3 percentage points to (1.2)% during the six months ended June 30, 2022 from 25.1% during the six months ended June 30, 2021 primarily due to a decrease in the average selling price per watt of our modules, the impairment of our Luz del Norte PV solar power plant described above, the higher volume of projects sold during the prior period, the indemnification matter described above, and an increase in sales freight, partially offset by continued module cost reductions.

The following table shows selling, general and administrative expense for the three and six months ended June 30, 2022 and 2021:

The following table shows research and development expense for the three and six months ended June 30, 2022 and 2021:

Research and development expense for the three months ended June 30, 2022 increased compared to the three months ended June 30, 2021 primarily due to higher employee compensation expense resulting from increases in headcount and increased material and module testing costs.

Research and development expense for the six months ended June 30, 2022 increased compared to the six months ended June 30, 2021 primarily due to increased material and module testing costs, lower share-based compensation expense in the prior period driven by the forfeiture of unvested shares by our former Chief Technology Officer, who retired in March 2021, and increased freight costs.

The following table shows production start-up expense for the three and six months ended June 30, 2022 and 2021:

Gain on sales of businesses, net

The following table shows gain on sales of businesses, net for the three and six months ended June 30, 2022 and 2021:

See Note 2. "Sales of Businesses" to our condensed consolidated financial statements for further information related to these transactions.

Foreign currency loss, net consists of the net effect of gains and losses resulting from holding assets and liabilities and conducting transactions denominated in currencies other than our subsidiaries' functional currencies.

The following table shows foreign currency loss, net for the three and six months ended June 30, 2022 and 2021:

The following table shows interest expense, net for the three and six months ended June 30, 2022 and 2021:

The following table shows other (expense) income, net for the three and six months ended June 30, 2022 and 2021:

The following table summarizes key cash flow activity for the six months ended June 30, 2022 and 2021 (in thousands):

Effect of exchange rate changes on cash, cash equivalents and restricted cash

The decrease in net cash used in operating activities was primarily driven by higher cash receipts from module sales in the current period and higher operating expenditures in the prior period, partially offset by higher expenditures for the construction of certain projects in Japan and certain advance payments for raw materials in the current period.

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