Canadian Solar (CSIQ) 9 May 242024 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar First Quarter 2024 Earnings Call. My name is [ Mei ], and I will be your operator for today [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.I would now like to turn the call over to Wina Huang, Head of Investor Relations of Canadian Solar. Please go ahead.

Thank you, operator, and welcome, everyone, to Canadian Solar's First Quarter 2024 Conference Call. conference Canadian accompanied within Solar and section. today's are slides the that Presentation on available Investor note call with is which Events Please Relations website

G regarding risks in XX-F Yan and financial Dr. today. Solar; executives the and Chairman respectively, CSI GAAP a that requirements Guerrero, management the non-GAAP go I with estimates company uncertainties better we be analysis these will remarks the to by generally can information provided with as we for will CFO; Senior results. trend.Management performance to remarks prepared management's today disclosing to who go establish and business found questions.Before Shawn will Shawn update investors assumes Recurrent Corporate of of and Canadian Zhu, outlook, Solar Chairman Recurrent participate Joining during on Energy; through questions financial Solar's remarks.On should will law.A the May is and key remarks will to XX, Q&A President information regulation additional CSI and otherwise the remind answers or turn principles listeners highlights like Private of discussion information, Ismael projections company's the certain be within which Litigation intends Shawn like with not future no uses unless Ismael accordance taking that after will and information the further provide of in as and differ future, messages would to as may non-GAAP Qu. claims Reform non-GAAP Any substitute goals. enable harbor review viewed of under the I to be and are Commission. after the statements of Solar's uncertainties. today The time will over the of session risks both the for the GAAP.And of presented performance to contain detailed conclude management company All on protection over accounting data Canadian Energy, Xinbo forward-looking Non-GAAP prepared be on Huifeng the expectations. more By Solar CFO are have assess and the would will their position please us obligation annual and report safe forward-looking Securities investors with XXXX.Actual results for subject contained prepared applicable well GAAP.Some in be to by this XXXX. in the Management's call, to Shawn, and over required that performance company's SEC VP go statements and Act Securities company's for as CEO; current from represent presented will filed management's Canadian call Form management's Dr. Zhuang, basis. a formal business Exchange prepared operational VP Dr. President underlying the and Yan subsidiary, operating Chang, accepted Qu, now, CEO, Canadian Solar's ahead. call Shawn for quarter. to will subsidiary, in some Huifeng projections measures begin,

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to our political will in may of face I not -- speculate challenges cases, we about that arise. any While convey confidence the want ongoing potential any

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and edges. are teams cross-functional our Our local key leadership competitive professional among

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modules, XXXX, Despite for our North to the the module XX% million. X.X In Revenue the first you, in with industry, overall Shawn. turn income year, XXX accounting of America margin Thank Please total period quarter shipped and of over CSI billion, $X.X X. to same of gigawatts last margin an Solar increased still Slide we reached and of gross the share. $XX contraction points in basis the to XX.X%. decrease significant compared quarter-over-quarter profit operating prices a a of posted

boost due our from As our storage Shawn business. the gains expanding in of highlighted, volume profitability energy these and management deliberate are to

to While the Please team's disciplined our were results us drivers. first some our softer, primarily Slide through driven is X. key execution.Let by turn walk seasonally quarter

in reduction our expand continued a Our the decline capacity, costs recent business by we prices. solar in to trend the module TOPCon bolstered N-type as polysilicon

our Our wafers, half. With moderated the aim our integration, reduce expansions upstream ingots costs investments increased processing to manufacturing. chain. over as we and in supply U.S. in control planned although include further are costs second well enhance vertical decreasing, and by as These

the have Following sensitive. the of the although half, year, recovery remain in ] products. but in expansion to storage, moderated improvement healthy.In with be second are robust, plans We levels is backdrop, this of strategic remained of market demand rationalization a energy and starting we utilization research effectively.In development. this hopeful navigate our our combining by our terms savings ASPs we challenging investment and last market, Against capacity solar in see of the the are may low-cost views of cost [ management order PERC intensifying availability we both price the

reached our Shawn been efforts nearly and to committed to mass Our R&D commercial the technology thereby cell operations technology enhancing team efficiency on our emissions and has initiatives, cycles. and dedicating both continuously advancing are throughout energy for In both carbon has entire purposes.As are to product we ESG grown members. our we production life principles, highlighted, storage, Today, and upstream R&D X,XXX reduce strategic downstream have to TOPCon XX.X%. graphs

not or also Footprint Product Environmental We received but ECS, or only ] the certification. Carbon Thailand Declaration EPD the certification [ French have

to $X.X from X. shipped XXXX. and Footprint Korean recognized Certification.Turning outside revenue over revenue of Please this all valued Thailand of hours We our at volume we quarter module earn factory have The of total Carbon In billion. first product. the the for X.X Page Korea refer significant to first e-STORAGE. a Additionally, quarter, topped the the facility backlog currently is of to gigawatt

from reductions project-by-project newly a Our revenue and its uneven. opportunities recognition.Given contracted contracted both is be business, reflects storage growth energy may backlog

pleased our gigawatt of hours to our hours have also year but manufacturing in not XX storage, We're Regarding XX I'm in globally.Finally, further provide next release, expand to a our a of to delivering leader year, solutions to bankable capacity our been plan point, the our only strict we our quarter that Since reliable as energy CBP approved demonstrating X impeccable This response have award XXXX. achieved now for target list e-STORAGE information, detentions. e-STORAGE fully have provide been this procedures. happy regarding is at for first in half Bloomberg prestigious share encouraging of recognizes a the record, detainment have storage second we bonds the and track energy of updates robust excluded. to second NEF to proud traceability cooperated for have majority on demand.Additionally, storage earned detailed energy with place Tier of to UFLPA and gigawatt year, the last with

provide let business. In project of we have Ismael Canadian go terms their Energy, global Recurrent development risks the to to entirety.Now overview believe hand Ismael, customers, ahead. to almost over please me impact addressed we our of Solar's in associated an

announcement turn Please commitment anticipate secured Yan. made the regulatory $XXX progress. we Having few the of swift Thank to closing next most January, Slide have in approvals, BlackRock's months. X. Since we requisite you, million within

X on assessment, the is ESG and gigawatts well to for corporate actively our with focused As transaction hold to commitment our ESG a European Recurring guidelines the remain of goal joined hours our forces sustainable XXXX. sustainability of part This firm these guide reputable, developing by assessment early conduct solar with independent future double our strategy in comprehensive materiality Energy ESG growth.In impact our enhancing an laser and we pinpoint gigawatt and opportunities including that ]. X this of a Union's to transparency, BESS XXXX, of reporting operational issues of as risks as matters.We with business, aims [ to operating significant both aligning

construction.[Technical on currently that and We substantial are our we projects, demand projects a firsthand under witnessing including opportunity, represents this focused our X.X business. AI gigawatts in solar [indiscernible] are advancing are significant of Difficulty] approximately

from PPAs long-term with PPAs. performance. of Page in contracts be X. have and top-tier our of financial a under We service secured already of companies cloud asset the nearly exceeding megawatts target XXX turn quarterly XX% to providers, on process XX to generation secured rating negotiating years moving with to More we Please to perspective.Now more hundreds continue megawatts top broadly, to are XX% of

modest achieved a quarter first The of with with margin was million no We project gross revenue sales. relatively $XX major XX.X%.

strengthened projects X development Page at During strategic in megawatts our this gigawatt in of period, country we getting have we acquisition, we which added Spain our over to a in of Currently, in also through project the different than and XXX Spain, XXXX.Turning footprint projects more to stages anticipate of solar pipeline. XX. [indiscernible]

We Japan's March April are development project of a long-term development BESS as to income [indiscernible] for [indiscernible] pipelines. unveiling largest reached XXXX, on Decarbonization have recent the XXX landscape. world's including and energy progress and This XX, pipelines provides those solar storage [indiscernible] of mature one the particularly market, LTDA the our where most Auction, to highlight predictability projects, Japanese and Long-Term project and represents like in I battery our have BESS of megawatts would XX, or involving energy milestone gigawatt storage. results energy system for significant technologies hours, respectively.The X.X solar

to ahead. projects.Now will let detail. XX results which megawatts, have accounts of for more X hand over go our awarded who honored auction, storage in projects are please the financial of me this the total to secured energy in the Huifeng, best XX.X% Huifeng, go through We

e-STORAGE. storage since were partially measures. shipment Ismael. primarily a battery in due you, energy of and expenses quarter-over-quarter in volume QX, declined which margin costs to from In higher delivered Thank XX%, a in decline cost-cutting Operating of $X.XX the gross to improved basis was income driven of price, points deposits decreased.Net mainly management mainly solar crisis interest turn Sea net Red strategic $XX $XX sales.Gross have sequentially the by module sequential volume in X improved Slide or that Total costs solution due decrease temporarily per of refunds the Solar and proceeding. guidance, in million offset million with million, $XX due by increased by on interest expense by primarily project assets. Please AD/CVD received inventories flow in the was with revenue The sequential sheet. from turn module to selling increased first to cash operating share.Now cash XXX flow module diluted cash XX. in Slide QX, a and operating $X.X in of on lower $XXX line XXXX the average quarter decline we balance revenue respectively. reflects to billion decrease Please to used Shipping XX. activities The Net coupled flow driven resulted G&A million. uplift margin and from

future have billion generation.In we quarter, setting product million growth supply driven assets stage and assets for in progressing total chain ], CapEx, Our power and in by U.S. systems, around significant passed [ profit first spent the capabilities. solar manufacturing our $XXX the TOPCon $XX

to debt evolved We $X.X a ended please into $X.X I I confidently hear for call Solar, the throughout [ borrowings Canadian total to company, transition, of me XXXX Canadian well he CSI pause Energy.Lastly, new Strategy a the reflects new worked and project Shawn, from operations to unchanged evolved, business continue for Recurrent Slide of company to as for balance as have role over company development the thank see years. our spanning they as integration the like for provider making year I working our product now hand Solar opportunity the in and even $X.X confident the and solar billion. past over Chief with cash a impact will have to Board storage I'm with a would for I'm healthy full transforming of few at I of whom about turn say has solutions, as Directors, the energy my hand Xinbo. to want contribute Our vertical CapEx journey extended expectation U.S. closely development.As CFO which approximately notably excited additional and through ].Before incremental let's the have X and feats I words position capital the reins to the billion shareholders at I both to Solar. to globally well. our a remains my leading and over Xinbo, XX. manufacturing my period moment achieving billion, Shawn, Officer. both world greater and

support thank you, Thank Shawn the and senior Directors to shareholders.Now and working and vision business grateful and Huifeng invaluable the with Board and guidance our management long-term Huifeng. guidance our I'm our back Board will of for role. value who with to and like also period the Canadian continue ensuring the his call entrusting me to look and on me finance company's strategy, executing conclude new would transition I throughout this for team turn Shawn, to to Solar the outlook. let with for forward

thanks, and Huifeng, Xinbo. Thanks,

Let's turn to Slide XX.

battery XX%.Regarding is industry dynamics more than profitability, within to during expect module contribute energy including For we the in the the be CSI second and module the be to expected our to X.X megawatts supply/demand in the own our e-STORAGE Total of of shipment between gigawatt approximately levels so gigawatts, to storage to in half our improvement revenues even the shipments We range $X.X XXX XXXX, would trends. hours, in solar to be X megawatt to I second range hours $X.X billion shipments are including expected expected X.X billion. outlook to like later an to quarter half XXX about of the be by the in project. expected XX% to are projects. own both Total Gross company's hopeful key X solar X.X of the margin highlight Solar is to for half. second between revenue and significantly remain to of year, profit first. to of the

TOPCon up continue capacity market N-type efficiency, advanced our to and [indiscernible] cost yield to is which meet will rapidly Our enhancing demand, ramp PERC.

distribution expect that solar in XX excelled.With traditionally to be guidance shipment where to improvements generation we in have are module CSI of adjusting mind, we We of range gigawatts. XXXX, for total in market Solar's the continued full year the XX

We range USD USD to expect X.X to full of billion. X.X the revenue year be in billion

growth questions. like forecast a dedication for floor our to Our I now and revenue revised navigate shipment would profitable challenging we that, to the open underscore macroenvironment.With as

[Operator Instructions] Oppenheimer. from of Your first comes Rusch question Colin

supply utility-scale into batteries? pricing the Obviously, and seeing that you rationalization for chain company? on for of for the as potential margin Could margin talk how are guidance? production some cell translates with you are guys the you the about that, but X there's the about the And flows what in it side, how trajectory expansion, trajectories matching dynamics terms thinking curious those of through up

like Yes, I question. on to comment this would a to Colin. provide ask Yan

Right. is Yan. This

X that as or actually, even years or know, been contract of So -- least always at negotiation for like you X contracts storage signing has shipping. ahead X utility

covenant So our and we've indexed of contracts contracts over most been signing are pricing. the lithium

we're is a seeing today Even even So terms XXXX, healthy. sometimes margin in we're margin. still pipeline the this negotiating for healthy of we're XXXX, XXXX, for and that protected margin,

So we're actually pretty safe there.

pace permits, of And terms construction time you're you not you're the construction and terms time grid on just just what of a those permits of then slowness interconnection at any but seeing Europe quicken and the level, or access construction of in in Can cadence little what frames. bit gears now and the And talk sort to Recurrent that shifting really frames? ability the both frames? seeing to just U.S. the and right time civil about in

-- this do for comment? to question want Yes, Recurrent, I to is so you think Ismael,

for the Colin. Sure. Thanks question,

we works ][indiscernible]. delays competitor the experiencing of the not many EPC are sort, We significant but or of see anything the [ civil in

EPC kicks X we before before by So like of difficult. before, ready or start more them Europe. is company to we year can what make with more year Europe teams acquire detail build site these the saturated doing construction grow engaging to own way X.X took action When [indiscernible] an it's off. size, so on why X analysis, It's or years engineering time to so an reasonable taken that we way XXX in are when sure a our months EPC the we are That's EPC start, megawatts doing roughly.In Europe. last

on ] a to to that own time year, we execution something hope everything, has So X company thanks acquired that. that, it like able [ and helps, their we and like get machines been have I piling Colin. reasonable lines

comes line question next from Wells Fargo. Your of the with Satish Praneeth

the XXXX, in revised I on you recovery kind if the level that of confidence I margin of the So kind prioritizing you shipments of guess Maybe the recovery? guidance a in can a the still just that unpack of been follow-up, back shipments have then drivers, with in for module half here the sharp kind you've And in half. year. assumes think as first

see half, to So a gross think range? of second can you margins in of about think as type kind XX% maintain XX% the you recovery at we do you that? the should How

Yan comment Yes. on I Yan? ask question. this will to still

Okay.

half So demand half. the also, is than continue stronger be first the on situation, we improve. COGS second and capacity believe TOPCon to realize our both up will continuously in we're reducing and And to we And the our cost oversupply OpEx. ramp going that still but the

-- which that mature markets the DG market are distribution so believe the And in also, channel, recovering. is we

can of year. second reasonable moving margin confident are get half actually we we at that So in more a volume the the

maybe then switching just gears. And

to maybe How do do just for visibility preparing the on a an So power of on module this supply large opportunity any business, I you multiyear directly on into center this decade? of later a start centers data to center enter CSI some coming. growth? you given seeing of business, data the think come And are obviously, the consumption the site, pipeline is? generation U.S. Solar the think lot you AI or contracts, developers in to this there's you here then load data guess

with developers the they with CSI data deal And typically developers, center. Solar EPC deal and companies. EPC the

the So some to I provide on would color center Ismael activities. data ask

The all, are truly do are development on services having for big we seeing to struggling their usually keep is PPA to re-signing they to is our us basically saw are far, discussing And the have PPAs. in the years companies Amazon, further now on to because are a be they power top very as Look, them, we the companies, they market. on #X need to this on several are they any higher signing based IT the on where what much ] expectations time. PPAs signing can. And on are these -- they are keen with X the [ the on of as of shift [indiscernible]. projections And all and the going engaging they go Shawn. are companies world much they beyond by you, are than the reports have on signing see and for the company on we agreement right first short-term distributed we what that Thank even

Your line next Roth question comes of of from the Capital. Shen Philip

shipments the share I First of your could revenue QX? you is if and expectation and what's wondering U.S. the was QX around the U.S. percentage from And for QX? one in

Well, shipments. or small On And market. the more Philip, and less our Shawn. is is is of is And of of North the page show America yes, slide, gigawatt the slides, think terms second the a America one XX% or in third page North I this shipment. Canada U.S. we

to same QX, expect for expect And sorry, Southeast for -- you maybe the fair anti assume XX%? the roughly and about be think you the same? that QX, would that still as go Asia, down? it increase to AD/CVD case is QX on mix an or the so the you do Or then should And

more I would it be or XX%. less expect to

As of for you the I last me in calls, right, XX and earnings you know, module gigawatts. is guidance around to new was our we shipment, in what said expectation earnings and And the Thomas That year. believe call. question, gigawatts XX our asked XX this annual previous is I U.S. shipment answered

So its XX%. around

it then if the QX not, QX? if you then what this, QX? share, I And the expect And sorry benefit was? share guys what from missed Can I'm XXx but you in did standpoint, and you in

still -- XXx, IRA the production. Well, is we U.S. just for ramping U.S. the the incentive are module factory. up We

the X.X is small, compared gigawatts. total So shipment still from insignificant the like factory, QX yes, the Mesquite with

from see QX numbers. see on, we'll Now QX we on hopefully, significant -- will from

be would in to than again happy QX. address question I share, report to months this more X when So we

next of Goldman comes with the Sachs. from question Your line Lee Brian

could little that. a bit might for mean it us missed this, had I XQ? like a behind margin of really gross the guidance battery storage in margin have sounded gross but you of XQ, solid part give color I and you was results

So down in you then some the the XQ And of why costs higher margins are battery? being side gross mix mentioned have lower higher guided revenues. you despite on even module and

what's XQ? lower the gross just wondering So driving view into margin

on I gross top range, and margin believe guiding exceeded guiding of our QX actual our the the range.

current to we So accurate. do it we can I difficult it's hope be according provide When in the And guide. to QX numbers. we also we do than guidance, better so

about I'm especially the the the a solar went and materials, weeks. again much I the that's of guidance will materials, the say the say lower talking So the than same down actually XX% going indeed, XX% cost I XX% modules realized. the cost, not past to not to say, in would silicon-related is few range.And

price of -- markets However, maybe the market, as some in the of moved some low-end the well. down

So modeling But number better said, that's QX. I than we as what report are gross margin a we can why for our hope we cautious I in guided.

Solar expectation embedding for If for do margin embedding sense the conservatism drill margin you're half various battery for the can CSI what you you some guidance then gross expect give solar of XQ then, we us baked margin sets product modules And gross within versus gross for bit year? that. cadence you're maybe into storage the guidance? second down for for the XQ just what in more into the a a both that So in

provide on to will details. I these color let Yes. Yan

Right.

We So -- on disclose we about you we utility-scale around for the I don't calls XX% don't gross XX% storage. the margin, the separate. but separation mentioned tell of previous margin, the can in

try we module mentioned side, has as to try because to So we conservative in QX. also on that the Shawn sell more be

So while we more margin. grab healthy volume try a achieving to

And if moving bet, I can So it's lot second and we're for both the be and we which a stronger half, especially half. And faster. that than well, actually is cost better.So confident second and from the we capacity. are half, business, worse the also our to know Japan but first let's demand. back to pricing new second in Europe do distribution is we on our also, uncertainties we're bouncing to that both are continue markets not e-STORAGE for say, confidence getting strong improve have quality all actually seeing, growing have belief. in channel have This on half.So of into We're we aside see our U.S., our seeing of significantly in going we

So somewhere can that grow. that is we also

I I your answered So hope think question. that

turn call continue. There at I'll are further no this questions Please to time. management. the over the

joining today. also for you support. us thank for you And your Thank continued

would a If please to team. Investor set you questions care, contact or and Take have up like have Relations day. any a nice call, our

this Thank conference your today's you participation. for and call. concludes gentlemen, Ladies

now may disconnect. You