Canadian Solar (CSIQ) 17 Mar 222021 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Fourth Quarter 2021 Earnings Conference Call. My name is Dilem, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

conference recorded this replay reminder, a is for being purposes. As the now Canadian to like would call Solar. to at I Director turn over IR Isabel Zhang, Please go ahead.

XXXX to Thank Events provided have and within Canadian accompany which Solar's welcome, Solar's operator, call, to Please everyone, Presentations conference available you, Fourth that section. and slides Quarter the are Conference today's we Investor Call. note website Canadian on Relations

majority-owned are for Dr. Huifeng, and President Shawn go Yan Qu, CSI time remarks. Shawn CEO; Chang, financial and Huifeng Zhuang, in go this of outlook, have Solar's the VP Ismael results. for call, and over quarter. CFO; today Chairman with the of will will President Solar's review Energy Yan messages questions. Senior Canadian after Global who the will formal All Energy. On by and business the which of will conclude us key Global some company subsidiary, Corporate businesses, the we the respectively will and participate Dr. followed will session Solar. Q&A CSI Canadian management's highlights Joining VP subsidiary prepared Ismael remarks and executives the wholly-owned Guerrero, Shawn through after Solar

detailed to projections are Company's Solar results represent found of Litigation expectations. unless differ management's Before discussion for be assumes the that as current subject I remarks Canadian more the forward-looking applicable by protection no today. future to their future The estimates Act from Harbor law. Safe is the and risks can we prepared update Actual and A as claims in contain uncertainties requirements these of remind Form accounting well GAAP. projections Private the remarks annual that may of generally obligation the otherwise regarding statements required in performance begin, be Any Reform of contained SEC risks Company's the the accepted may of report XXXX. statements on Securities Management's today prepared Regulation management's the answers principles XX-F will Exchange will presented as listeners and with management's Commission. of G within the filed forward-looking to or Company questions in of Securities uncertainties.

the Management establish information information financial viewed intends substitute Shawn, provided Solar's analysis non-GAAP and to and Canadian performance please assess be I further CEO, should for a during By operating to call the by Company's accordance go Dr. Shawn GAAP. and presented non-GAAP management provide a with Chairman uses call be disclosing on to operational measures to data Non-GAAP goals. permit will prepared would to investors investors Some as performance a in better over non-GAAP both now not certain additional with information to of underlying turn basis. ahead. information, trends. and the like Qu. GAAP And

Thank everyone, our you, Isabel, call for joining us on and thank you, today.

X. think a full When humbling. where Now the earnings achieved for year year $X.XX. very grew the gross per XX.X% billion. XX% record please through margin and Solar share Slide Canadian is back full to has to Company $X.X The that report of I it from, year diluted come to the for the turn over XXXX pleased number revenue improved to I'm the to

excellence Over and worldwide. companies consistently past brand top been our the we module decade, the of one have for stands

Importantly, down and in our shareholders, we sustainable markets. up value both to for work creating continue on

strengthen our to The shipments grow, of battery we XXXX, revenue nearly storage prospects. Canadian XXX-megawatt period showcases gigawatts long-term our Canadian and In us module company. fact nearly It we solar so Solar. in as addition to shipments This in project record sales. business the over and determination that is diversify that gigawatts of about X.X to one make such success we to battery hour of delivered strength hours Solar's we zero short XXX-megawatt excited just continue note that have gone a is many storage XX.X shipments, important in and of from opportunities the

to we the remain its that Solar Stock I'm the IPO. Now received X. track also for the of of pleased CSI Slide IPO Solar. to turn carve-out approval December, Market please STAR report with Exchange In proposed from CSI on Shanghai

roadshows the We the the investors been Please value has be development unlock and procedures. growth are another in Slide with important the profitable we us usual opportunities our Regulatory have it currently additional process, with going line feedback Commission encouraging. We registration and will started to listing China shareholders. Securities turn with meantime, the through for In capture further believe as will help X. strategic

is missions sustainable ESG a future our explained last in as more and we build to of One report. better our

intensity, and As materials we energy Internally, energy carbon. leading impact transit on company, our customers' a reduce help their are the clean energy increase way of use renewable water minimize our and environment. we reliance on recyclable as we our to reduce our and the

Our always modern people form extends to partners. our been that and we that Canadian and business, have this to anywhere said place would committed labor and does modern I our achieved Solar ensuring to in establishing dignity. including and but this with take tolerate company beyond chain, slavery We of does any everyone chain. reiterate not slavery procedures. interact This I force first customers through before, our culture everyone not policies has supply in or is with like support treat the supply

are governance I website. have verification to policies, ensure to are of We on section will relationship procedures established policies which encourage our these the you mechanisms our and measures I available and feedback. welcome your investor also that publicly implementation review effective.

levels of to Slide and the all true which at our dignity. we are out Company. to examples also to have to stay of initiative supplier This of of Please the just on for website. is These our have few carrying signed taken on suppliers code priority turn conduct, we a a Our been And supplier audit. available ensure us culture our have is we X. respect

worldwide demand Before I There's and turning when no solar other again slipping and like all once to getting is the all still comment of gas, call around across the Energy and constraints cost But of must forefront highs to energy time We increased of over is war, and would apply it. almost citizens. our change system at way will COVID way solar reaching with move do I awareness the move is a security. our with lingering need supply on brighter in for to many This the continue ongoing the advances critical We security. as oil Yan, panels new materials future. battery occur future industries. support and an and lead at energy for solutions. right faster more for to thing security. R&D the our Technology committed invest and energy our high-efficiency state-of-art systems. of a to storage Renewable remain the to will the company increased install climate vision given and only and access to of choice generations. energy is like global

Let And me Yan. over now turn ahead. the call go Yan, to please

side XX.X%, planned you, their our allowed start year I to sequentially margin by it, like growth efficiency lower benefit. on which QX, gross points AD/CVD please. the in revenue short-lived. over billion X, environment driven improvements But in $X.X Slide to improvement operating benefit. Shawn. margin and material billion that to was our also remains and excluding was XXX transportation reversal QX growth costs. or and and reversal That full margin costs revenue the for Solar AD/CVD focus was profitability would over manufacturing basis was an even price CSI the for to basis costs. Please some by sequentially XXX to material said, Thank with us had but improved Gross including increases, XX% $X.X and Slide execution, higher improved challenging material raw team by in also points XXXX. the further There helped deliver thanking X. turn as on Gross by QX. XX.X% over in

in reduce Long-term contracts higher factoring impact. costs, longer material of helped higher the and are schedules transportation we us some shipping costs. shipping have So,

pricing And the Huifeng supply the demand financial the as more this impact, give on in a overall, the material but for quarter. given challenge polysilicon year. particularly first remains side there's will of come significantly, is So, backdrop, industry. for details last to half this and little this incentive we on about the down talked

expect improvement in We an XXXX. later do slide, please. Next

environment As likely is is silicon PPA resulting ramps operating up, capacity meaningfully to improving decline in most increasing pace. At it year, grade across the costs, as through are time, geographies. prices lower downstream the although a the same at material

energy market. downstream We're in very and in upstream together. as global strong share put solar position pictures of record. top you global one strong the growing clean very a gaining We're brand a with the track While

X% We global we five share in to have XXXX in years. been and to over growing below three XX% think can our reach we from XXXX, the market X% next approximately

We market and globe expect U.S., as as evenly the China markets capacity Europe the such expand to needs. to especially grow and our in we across share customer support important

business. to goal year battery this nearly Slide hours Please shipments expect carve-out grow help the battery and completed XXXX. and turn We're profitably storage of growth is goal. progress Of should our course, significant We also XXX-megawatt on achieve XX. further last our IPO in to us making storage

Suzhou also the help in is are market we X.X working In can state-of-the-art expertise area volume as workshop strategic in shipments These active partners, battery be fact, insight. their accelerate leveraging in our several think U.S. double but the the we established and in projects to storage and we we market this and plan China, U.K. we innovation, to more To in deliver we XXXX. Interest where our have R&D mature, battery to been a is hours. year, this well. gigawatt with to high, storage mostly product plan

few storage own design utility our and Solar's using months formally will proprietary own next the we scale energy introduce product Canadian applications, technology. Over for

product be us formal work few life. types agnostic, get competitive launch a of the But market service safest with and we the to We technology different significant announcement incredibly to to designed make of one the flexibility the closer Currently, as in Our we will use giving in are plan be was we product technology. lithium-ion technologies. long with battery to months.

With overview energy Ismael, business. ahead. please stay that, global me of an turn for to go the So Ismael tuned. let over

solar project by This monetization profit. U.S., of of million and added and future storage. to solar as $X certain We This lower summary XX Please full of operating both sales grow XXXX. profits. and in X.X XX% of billion which now provides million. Korea, in by Thank XXXX, cost due million in Brazil, in achieved report but Crucially, you, revenue and with to continue projects We QX projects, Japan, XX% in gross at In slide India the us portion in $X.X gigawatts withstands projects, up margin our of Australia. Slide turn transfer growth profit gives projects This revenue where we compared regions, such confidence global to growth monetized to battery we XX. of across to we achieved achieved grew a January XXXX. gigawatts hour sales in our driven the Yan. Global global gigawatt recognized $XX only opportunities. ownership to pipeline these of battery successfully the storage Mexico, XX and controlling Brazil, the over project was partial XX% pipeline proud as I'm that of our sales to and $XXX combined a of Energy

XX. please, Next slide,

materially meaningfully. in all in as dominant a Last without also our most is are increased including we aware, competitive in we solar have likewise, Spain now same such activities you PPAs have markets, development incentives where shifted and European Power where power position. Italy, As solar direction. year, markets prices have adjusted upwards in and markets prices the increased have

energy considerations, an economic also geopolitical from energy security solar In addition are standpoint. to recent events and attractive making environmental more

expect in to meaningful European well market in growth are in years acceleration a contribute We the positioned and to coming the growth. this

the over last investment Fund with to the retain fund, term. capital of a closed-ended year CSFS I, alternative partnering in patient example, established Italy, longer ownership we For projects investors

up and recurrent are the and the we pipeline on based for in contracted We position developer our to fund leadership Likewise, largest maintain our region country our volume. market this enhance have through in of we been U.S. subsidiary. building the projects in now expect the

are the other of risk. we project hand, as proactively manage the exposure we geographic On portfolio our

been As one have been FX policy currently largest markets and in from of Brazil, X We've risk execution. an volatile an have where American the example, we over successful developers projects viewpoint. Latin and under of gigawatts most

in hikes has inflation and However, the Brazilian utility impacted market interest by been rates.

the of PPAs, adjustment options projects. have to with position value year, limiting occurs inflation we these hedged only our inflation-linked While the a our realize once true

term, to revenues fund. the global retain to turn such our XX. greater into strategy, are on of asset bond Brazilian government our our maintenance generated to operations has in recurring ownership with Slide track, trading asset Please income since increase as make been power strategy Longer progress yields is double income. sales, part infrastructure but Brazilian to we continue markets select management slowed and remains broader As well digits. through the and This

Our business is basis. to quarterly forecast a difficult on

can Given the of on increase project of our income we relative where to certain more deal time standpoint. value cases, mind, long is expect lumpiness and term reflected to by We XXXX. the in In to and makes have operating and to value recurring our our we adjusted project them the plan we for create in we With over project assets retained assets it difficulty believe risk sales certain sales a hold that ourselves. assets and from sense how to to This a longer targets accurately monetization. these the owning share closings. creation stable

some as sales we portion growth will holding significant with did the like of we are Crimson storage already be them we where ownership. of moderating We project, project XX% retain a

similar earlier. business moving be from will for considerations. mentioned and on in have This creation cash we intentions as value flow way, gradually a I sales to revenues spot recovering a accounting We Europe,

ahead. detail. the pass please will let through greater to in Now who results go me Huifeng, it Huifeng, go financial

Slide last still lower Ismael. margin to the the QX, QX Please margin XX. benefited our Gross benefit, Gross AD/CVD guidance XX%, of was you, higher cost from the well ahead turn stand up of ASPs, above was and billion at would XX% XX%. revenue, XX% we XX% true-up. quarter margin in $X.XX guidance. In over to year-over-year. XX.X%, delivered Thank gross reversal true-up Without and a in

cost in distribution As Yan short-lived and and and to was quarter-over-quarter XX% relative noted, year. higher last improvement resumed expenses of the trend increased Selling QX. doubled

and are higher per Here, been This costs increase of from to a transportation distribution around included Know not the which I'd expenses, expenses are like watt number transportation volume $X.XXX to profit. to highlight are has impact heading unit as with per $X.XX selling currently variable. well. $X.XX and The shipment watt. the up increasing gross in that costs approaching higher

higher by and and General for impairment. X% Research higher both increased revenues. operating contracts. accounted XX% the cost and stock asset are solar do small helped spot a Our transportation nevertheless. our prices costs are spending pass still on are driven expenses Total on sequentially, administrative cost of XX% these we but R&D our our lower higher slowly than some this level expenses of towards it expenses moving long-term up by and customers, driven reflected manufacturing up sequentially development burden our But to on a We ASP, battery workshops. contracts XX% for some of renewal. is storage up increased by and

below reflecting from transportation QX to expense closer historical income which X% the losses. $X X% use our million tax higher This tax to able revenue net a OpEx is compares XX% were region, higher we operating of income to range XX%. our when to benefit is QX tax $XX in was Excluding to million, jurisdictions. costs,

the For XX%. effective was XXXX, rate the of full tax year

from around core $XX forward. standpoint $XX from Canadian total income million XX% between Please remain going to We IPO. in and forward. Basic to was to income this of net $X.XX net variance is Solar Canadian is note share attributable income net diluted Total shareholders respectively. per decline after and Solar This the was approximately were $X.XX carve-out CSI completion expect that an the XX% to going expected and the earnings million. annualized XX% and because ownership will increase Solar's

QX million notice that You account. ATM at the which money million will concluded. from of equity you were This will shares X our includes offering, in notice program increased or share the the when X.X

diluted additional for shares our X.X for equity. fully million In adjusted into convertible shares converted addition, our to bond is come the EPS being at

balance and flow Now the sheet. turning to cash

days days by as capital moderately cycles. working increased longer logistical turnover Our affected

For to billion, the year as a we $XXX healthy currently year's of flexibility $X.X cash likely higher, was debt in Total below although as quarter. long-term million. net financial to the EBITDA, the increased light This growth around X.Xx plans at previous balance excluding from billion, X.Xx to capacity CapEx us We measured ended to million is the in budgeting giving $X.X our support cash continued moderately expansion CapEx $XXX XXXX, declined full the prior to of our market guidance opportunities. debt adjusted leverage be over period with conditions.

the Global that to Shawn, Company the turning completed in as November the of the back from potential Solar Energy Solar highlight of the This CSI call to the to between to any was Solar listing its I segment. CSI and carve-out subsidiary Asset we Energy done transfer Before part want process. CSI China XXXX, avoid competition

half second of may Around $XX incur This incurred completion to success continued IPO. this be million QX remaining of approximately to Energy including expected expected Global the of has in asset The product Solar expense segment million we is in a As as solar impact the business, approximately incurred off battery Also the in IPO-related $XX XX% part with a And be standpoint. business, results Canadian the onetime Solar's to contains all the expected IPO, consolidated magnitude Canadian has from incentive business and a no and the immaterial tax. after storage year. in of and EPC. stock manufacturing CSI now development is result, or it transfer was the the system Solar's including cost solutions XXXX, on be of a the China. of upon the

Shawn, it to will me with guidance conclude who and let back the business outlook. our Shawn? pass Now

Thanks, turn XX. Huifeng. And let's to Slide

tends quarter we of be to gigawatt expected For module XX.X%, in to revenues costs. to of shipments a Gross the in solar gigawatts, the billion range to XXXX, QX expect X.X $X.XX to including range be X.X first be higher to reflecting manufacturing smaller of shipment XX.X% expected Total as own the is projects. XXX-megawatt billion are of be between to $X.XX seasonally our to module approximately quarter. margin

XX expect hours XXXX, to to bit be full and hours. the gigawatt Ukraine, especially optimize range to of module battery a faced $X uncertainties, year COVID to full X.X global gigawatt little is facing operations, gigawatt storage we the billion, XXXX to gigawatts to in sales X.X We many guidance gigawatt the previously to projects total Revenue $X gigawatt. X.X from China, of in from lockdowns shipment including These logistics. is of to project related $X.X For which reiterate market and X.X raised X.X billion recent as strategy. shipment We may billion. the to war monetization are our year guidance our X.X retain gigawatt impact X.X billion gigawatt XX the raised challenges we from Total more for the total $X.X our to trimmed in gigawatts gigawatt previously industry. X.X to to same guidance

is Operator? management. your questions. our now building with and I to like All We been customer on innovation. call that and relationships in technology open our With sales business proactive the long-term that, and through channels focus increase to strong business to would resilience, position have our risk said,

first Our Oppenheimer. comes line question from the go Instructions] from ahead. of Colin [Operator Rusch Please

be a for This Shawn. may question

looks seen return the the quarter pattern year, couple that With the years the for relative we've of seasonal a to solar the normal first this a to in industry. disrupted last guidance like full

can basis pattern? you indications about what of say in on terms geographic seasonal on that initial curious seeing I'm relative a to what you're demand So,

be Yes. to market now have Colin, seasonal see and you as pattern, we said, world. gigawatt-sized around a quarter slower do smaller more some or but QX And -- the used quarter. we

another. market one offset can So sometimes,

Indian very policy been duty new For X. has of this on because import QX, the market April example, strong. for effective the That's

rush before So, India April lot X. a was there of shipment into

better. QX the made somehow that So

the from the hand, we China has as and on other to target. for target released of see plan meanwhile, its know, carbon a you order end also inquiries in neutral also market, And example. Now XXXX action lot reach China the

they So, solar to large-scale released base. data-based plan wind power and the build

we actively very see power Now the China in that plan. for so -- and the companies ask supply

would have since the from again of I not price it's if QX, quite price already could a that order up polysilicon Now have we turn polysilicon -- the significant in increase somehow, because expect January. taken we in But China.

I customers good trend. demand still and see coming want guess some the should judge waiting QX, we So, better from But China. to some

helpful. super That's

batteries second little can is trajectory just it's and The give is a you've in really America. about power past then North on on looking bit or systems. question Or question. wondering update One, And both PPA of looking on to are year-over-year project larger size of if HX around a pricing. the the you Europe the kind to the these talked at at trajectory question kind these pricing second an ratios energy two-part attaching the business, of are HX Are PK X:X and systems? in you energy batteries us that a on potentially you I'm ratio?

take Do want question? to you Ismael. this on

seeing to the been lower, wheel say beginning for from least it not question, But significant the Europe, I the over was on power in the a big energy same storage. some so. moving. the seeing a XX%. In what significant right? seeing anticipate politicians are to been see This upwards regulations now, they a for what obvious instance, market we at today driver Colin. last the I all Australia, is In PPAs. back do drop for in rear considering on that What saw on And Look, At consultants from we all come we mean, there. out what started around seeing be increase we previous we are prices. for are that Europe, is the moving has good things. is Look activity to being business around we truly is are keep are the PPA to market that in see. things. main updated grew today it's pre-COVID these -- are concern The On certain the now, changing but U.S., on is is up, similar term like the have would project places price means, charts right instance, a very the let's in for activity XX%, right curves XX% what of of truly what is to markets mean, though the what as I was by because and in merchant reasons, it we totally and in general, remains Thanks we saw XX%, Europe, of a degrade but pandemic, on U.S., trading. the strong. the being years depends going of Happy And question we that the but couple by project. most And right? seeing much

be we in the this So you that the in the to more and places going islands, U.S. of instance, happen. that your right? U.K. will or there volatility like is under U.S. is in and capacity is but into starting more you the We have still see if the high. is starting moving starting Europe as know, the talking are for to places change not to need capacity to bit hope they the to required But because is see for Spain, a that or do are you where what I is most, to That's instance. but I answered I what give any you regulation markets there granted. we is everybody now, wait is are But like we discussion, is happening little about Texas, is see when policies some see in hot regulation why course, in Where storage in that market can. question, happening for to

Yes, that's helpful.

add a comment. Colin, I'd to like

China, trend storage of the something example, see these for of attached solar also agency two touch hours, requirement in to province requiring, our the We most the the the China. to to for XX% by days storage in regulatory of for like solar. And

And storage so we are yes, But seeing a project. indeed, see meanwhile, of independent that. lot also we

on we are a project third-party each. are For working those few all independent on of storage working XX-megawatt example, the for are those storage independent And hour size projects. few in in project a like U.K., storage only. And U.K., example, power in one

I show our next of Capital ROTH the go question Shen comes Please from Partners. line Philip ahead. from

split and module between quarter? the module First through I might on to in one was QX, for the between be you XXXX, give could revenue the And able guide. talk is mix can I the the I those was by but cadence wondering the that you And project be and the business share if if a 'XX outlook the wondering of you you year would margins project -- business the great. for of also, terms rest business, margin business? know if the then gave in of

on take this Isabel, do you want to question.

Sure. Philip, this Isabel. is

Solar guidance terms a this for year, standpoint, revenue from CSI and for the the of take split Solar CSI much year, -- this revenue will rate. bigger in So Energy Global between a

QX that about than terms talking margin improve around bit we're or in probably Solar. more a four, or six So, is guidance at looking but think, from wage even year. to little guidance, we margins I of the QX, of expect a through in And we're coming CSI do then, softer

project between expected business the about business? the module the talk and you by Can segment Great. margins

I guess Difficulty]. Isabel? Yes, [Technical

Sorry?

I the XXXX, said, for question guess also right, I is Philip?

That's right.

Yes, that's right.

vary the point. yet For full year for margin But margin at outlook the this two -- say overall, so the obviously, I year. haven't given guidance for much the too that full would businesses we shouldn't

Okay. for that. Great. Thanks

or yet. As play guys was you and customers? how with seen your that quantify material the in that in demand if and distributors change talk outlook And through it your wondering, seeing you conversations Europe, relates if Thanks. I in have to you're a could out business

-- to question, you want module in on change this take demand do right? demand Yan, Europe,

Yes.

we actually, don't to the term, So directly have for much war. relating short now, exposure

no some in term, in price for no benefit it We increasing looks Russia going the we -- positive like movements Ukraine. up. long for have impact, in almost see see and Long have actually almost we we is can Europe renewable energy. term-wise, now. no business no in also But which business impact actually minor logistic-wise, actually absolutely -- renewable the power demand And Europe energy some

see This is we see in mid, potentially, -- actually demand. increasing long see -- So, we actually term. we

to... relates Okay. Thanks as And Yan. it then

bit For last the but was demand also difficult we well. overall see year in as now demand, entire it's the in actually steady from Actually, a warming it Europe, a up. growth

Okay. Thanks Yan.

key the As delisting a U.S. over ADR relevant to of This was reason through weeks the in the to a and be SEC? it stock wondering that What might et expect stocks. I theme ahead bit. able expect And do you and been if has regulations, your be to you for in to past the you weakness do compliance couple Thanks. other talk cited happen a risk, with with cetera? relates

implying. are we yes, Philip,

that's a short So answer.

ahead. Brian our Sachs. next comes Lee Goldman from the of show question from I line Please go

It's I know QX to inferring to as XXXX? Phil's into level. low a by you're the the to of well the for margins kind inferring like then come question It you're modules Maybe and around lower-margin single-digit there for I level, margin off in of suppose, back CSI here follow-up was XX% Is for some just as for QX that will to that mid-teens. what project segment, bounce sounds quick depressed that level, the that sort going projects or Solar. sales for margins mid-teens-ish

guidance we Brian, only as not guidance. giving giving XXXX are margin yet. we're We actually all, the margin that provide the of first QX not said Isabel

or the range. QX, Solar project similar the CSI the same margin For margin in and

quarter, not to the down go moving gross So although hopefully margin match XX% margin module yet, module are up we guidance annual are -- but XX%, up we go the CSI level. which giving XXXX's we level, Solar the to and solar or expecting

has per per facing watt. dropped you when $X.XX price is module to However, Logistic we're another logistic. challenge, should logistic now But price now the used just be know and over which price is went at that watt still the up. module $X.XX

translate the So, logistics. after GAAP which U.S. gross the take include a very margin margin the XX%, high you to expenses, doesn't XX% selling out in

on color. Okay. that then, Fair I up that to appreciate maybe follow two enough. questions. guess I

have Obviously, declines I modest the single-digit, sounds starting up, pricing next couple Just you it sort they're whatever soften here. cost, low mitigation talked guess, Can market. the you purely know like any pricing? or anticipating over what year exposed Huifeng on of shipping a about, last speak arrangements kind in the to logistics are of quarters? you shipping you Or spot Are quarter, And of you're strategies was then shipping offset already talking any bit but I about doing and freight you do Shawn, where can to cost last quoting panels. in contracts just secondly, rates had or costs these module kind are headwinds? generally mid-single-digit of you're to

my Yes, I Yan? would let comment. question then I'll And add to first. Yan this on take

think is the actually the -- I up side, PPA All with turning right. project together power going pricing price that side, with up. we're On observing

investors cost. the after slowly we tolerance on moving level that And are so, observing are projects

So, we is are this as observing well.

So going it's fast, going it's steadily really not but up.

this price increasing high allowing module absorb by So, cost to us the slowly good, something necessary. whenever is

this in more very policy market. base total different. the trend, annually the would installation past, -- it's relatively installed But now year the I regarding price over more So say because it's driven. -- free It's the more elastic the is dependent we're market. In

supply price. material and electric So, against it's more

observed that So, going to the on the supply side up we year. also capacity ramp over is rapidly silicon

second the in a going observe that point, of price should think the down. we we is half certain silicon year So,

on the margin So us over gross together, year. help going to is

already we're especially chance port a situation be we Coast; East observed already and improvement. the may the on shipping of site, eased. on one point. have that see that we world secondly, in may of plans shipping logistics, congestion total Actually, already if hand, we improved cost, observing the XXX% we And terms the been shipping high part sure U.S. that shipping with locked has believe also has significantly situation a at been the the West situation not because observed on also fixed we're the In the cost, costs very especially Coast, for resolved, we

we we remain into second moving think So, half. positive

Yes. Shawn. This is

contracts. past locking the in years, annual are arrangement, the XX% shipping two the the In terms company typically of with for shipping we're XX%, about

So cost. those the mixed cost our so last spot benefited the shipping from lower year, that -- from shipping annual we than contracts average

That's higher, However, QX. those this And are price shipping more why annual quarter contract shipping annual to have the XXXX. sign we contracts. And shipping -- the than contracts. shipping as those contracts seeing expire, are we're higher cost impact shipping new for new the the XXXX in and

situation and meanwhile, some of Yan However, Yan the the And guys said, example, cargo also as reduced. for for the said, -- areas, lines South also, significantly the U.S. America price in improve for ocean to and the the that we to as started logistic observed

think shipping cost has I to down. East go U.S. Coast started the already

cargo U.S. are the Now still ocean shipping West price high. Coast and

poor congestion getting improved. is the However, situation

the logistics from see So, improved QX it's getting hope we the do on. that

appreciate Okay. Shawn pass it and for me, That's great on. I color, last that to additional hear. Yan. one one Maybe I'll

I business, storage the of certain for breaking target are in you that battery revenue given sort Can from different appreciate trends million cost here wanted have of the On set all us you Kind And inflationary that what's you, supply level just Thank XXXX. maybe situation but really what happening situation? type perspective, margin batteries? there. exposure of what's What's in for raw understand I using out the happening sort a materials to speak the business $XXX you general, guys. in margin of your you're to the and your as situation? to just cells

on take Yan let question. will I this Yes.

question. good a that's Well, Shawn. you, Thank

that First for we want sales already volume the supply. the all, XXXX, say to I planned secured of

margin, terms already around on XX%, is And secondly, of margin. that low in it gross So teens about is XX% building.

profit, could CapEx. terms than that do heavy better actually you the we have in However, module. much or net business, or is neither not OpEx -- of it's heavy this Because contribution margin actually

profit it So, better. net into translates

some module the just we I are storage manufacturers we storage on scale to model CSI that is project, utility know terms -- Solar's equipment business model the shipping do a out ourselves. also But point system our is are for Reason the our you business. -- In that that competitors. business China Canadian to of want in model, integrator is not quite from different business

from also So And which aside we provide any solution, of fund project, turnkey the do the the is we the the EPC ourselves. the And project. equipment. side first contract we on

contract, second a a long-term agreement. have which We service is

lifelong storage enjoy the also possible on any and O&M service we project. on augmentation So, expansion on and fee

sorry, as of that terms in volume something robust terms working And revenue more well is us already other very Tier and both lithium-ion. and sustainability. unique Cell-wise, we -- of and our storage And manufacturers. of own projects, this EVE a with some the we're said, time. profit we cell makes system, own as in BID ship and and in I So to mentioned, containers as months' And start as a -- it's CATL own are actually battery X product. couple which start -- is competitive our we

And taking we're control going manufacturing and on so we're upstream the also process, actually technologies. other of

on in Habitat in leading in talked a company, China. company an in So, a AI. We invested right? we For BMS before, another storage leading BMS that were about we investor example, London, company

is this our strategy. So

and And control start technologies ownership So long-term process there, as well taking as upstream. then agreement. manufacturing from take service system our we're integration you. Thank of of try we to from

show our next ahead. Citi. go comes of Please the question from I line from J.B. Lowe

a if COVID business? lockdowns I just any impacts could. on of in your one, Number wanted throw of out here. running couple I you We're China from time have quick ones seen to

want you question. this to handle Yan,

Yes.

So the after I on a March. the of mid for of say, for so it March, first mainly minor has logistics more -- impact month March. would like of now right XXth of

very minor. limited, is impact the So

Okay. Great.

prepared you XQ? with expecting watt over the this kind per logistics in cost how your to those to on on the the Next then recontracting some expect in XXXX? the course How are you that of logistics do describe that a trend basis on course cost kind per -- you a given logistics of you're volumes one costs And was -- what I what of in basis. of basis of Can like watt watt be know, a remarks of on your Huifeng, you companies mentioned was per XXXX. And XQ? shipping over

you want do handle to Isabel, question? this

Yes. This Isabel. Hi, is JB.

the between and So expecting this level. $X.XX, QX this to we of to cost year, for are around be it most in $X.XXX was

what? around Sorry,

to $X.XX. $X.XXX

Okay.

in versus XXXX XQ. So same level

that your business percentage on just Europe? revenue the Can you Europe Solar is be in XXXX? to Perfect. higher tell And me what of in to exposure is. XXXX a then Okay. last your one And me exposure you basis? was for what to CSI expect Or do in

to this want handle Isabel, you question.

It's about XX%.

We roughly to be year-over-year. this waiting expect the same

our the go I show Satish Praneeth you. line Please comes from question Thank from Fargo. Wells last ahead. of

key then you you just to I product own was you the wondering elaborate margin do if benefits And launch. guess battery product? versus I material could your that competitors? launching on new improvement a from what the plan are expect

favored question. you don't Why Yan, is it? handle this your

answer, short so Well, sure.

our products margin. So our improve own with own by technology significantly manufacturing will our

it's from market. in very with suppliers the available compared and have so the product not but dimensions. cost. in it's just our confident CapEx, about our, cost. the terms of first cost, also buying comparing the ODM product is products When And So, different And just stock with we're obviously, in about talking product, technology, we're we Street all, of our our terms of current in

with designs, have different costs, installation that different you shipping So you have whatever solution different costs.

and side. we and in So we're on also the have that, energy safety the studied gas that the system, have advantage. just liquid of also, not that and also confident course, is -- well. we we market, a clear -- we poisonous we're standard a density advantage. on safety all confident market It's that as actually management management we cooling And the have temporary think the have the the It's but products

had a project we Canada, in been we've long Canada ago, China, for four U.S. first years that time. and in had the our from we spread many team ago, into and R&D it's the England. in into area own then into years this So, -- Starting then

spent we a areas of in So, already. years those number quite

battery we energy So, also storage cell technology. to on tailor-made start do R&D

EV think industry. differentiation the technology the have So, about that against to we understand we

we midterm, spend our lot effort short the But also on important. that's suppliers something a with of cell working is side. battery this on So

in with the with storage energy this industry, we suppliers sales into is because them. battery industry see think few some quite storage easier a to about they newcomers suppliers. energy fast have the attention access So, to have and We started volume the partnership established all their to obviously strategic do increasing entry

battery cell So but that -- of is example, the design, -- side in now talking the the it's see we battery there's a about also that, on -- than terms cell we of industry. already size differentiation but for EV bigger

answers your this questions. hope I So

very could question And continue Maybe if funding needs, also And to then CapEx spending for that's me. outlook on last guess appreciate it. 'XX? just on year? comment just your you this your I for helpful. the No, I you access ATM program will

Huifeng?

program last $XXX have registered ATM Yes, year the already the million. has we completed

about for $XXX million. to larger $XXX have now million, don't for course, Of then we budget much And raised more what last than CapEx option less our budgeted. point, is CapEx, the this we and this scale to the we see is because XXXX on at opportunities, so which see another also do the we And But we need spent one. year, yet. is

like I would like would color some is get here. This Shawn. add Yes, I to to color.

is As you of increase vertical in -- our the our the business. know, strategy integration module to level solar vertical

that and order the to solar not wafer even of expand the XX budget year. this to capacity the cell the our this we technology shipment IPO and our no, track. in roughly can solar numbers, be CapEx shipment our year the we our CapEx while now, to we at XX% also you why And use IPO capacity need better the our we have X said, state-of-the-art course, to the further in see mention gig to And capacity. capacity. and of higher our solar to especially change, is on capacity equipment this solar cell timing -- capacity competitor. higher That's And expand of is is we'll subject wafer carve-out now, module module That's gigawatt technologies probably budget in so XXXX, China. subject cell have of target better module our income right XX% able to our as XX% to carve-out than the to China new to that So, why in XX% support

turn no in over This this back concludes further like call the Q&A remarks. for to At showing closing I'd to time, the queue. our management questions I'm session.

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