Chindata (CD) 31 May 232023 Q1 Earnings call transcript

Good morning, and good evening, ladies and gentlemen. Thank you for joining, and welcome to Chindata Group Holdings Limited First Quarter 2023 Earnings Conference Call. We'll be hosting a question-and-answer session after management's prepared remarks. Please note that today's event is being recorded.

I'll now turn the call over to the first speaker today, Mr. Relations Group. Investor from Zhou of Chindata Don Please Don. go ahead,

Relations Hello, and you, This Chindata our company. CFO, Investor our Nick Group's Zoe Vice are Thank us is of to today With from and call. XXXX everyone, Wang, conference President, welcome Finance. operator. Mr. the earnings first Don Zhuang, Ms. team Senior quarter

team to will During our operational of your the quarterly present financial this our review call, here Nick will take will results. afterwards. questions Management and answer you Zoe be through performance

I will quickly Harbor. Now, go over Safe the

materially. our Some operations considered that of involve and results the we statements such differ could and financial make a be today may that regarding of risks actual uncertainties business, performance number statements and cause forward-looking to

refer risk our information, the SEC. the more discussed with factors For filings please in to

available both press call, of reconciliation in to measures. this will During which located our we at release, and is the our non-GAAP financial is investor.chindatagroup.com. A GAAP and Investor Relations GAAP to included earnings public website measures through non-GAAP present distributed

have presentation today's company's which Relations website, material to on be important call. updated quarterly referred We Investor can for as the an our also supplementary

I'll Nick. call over turn please go Nick, ahead. ado, the further Without now to

Hello, and Don. for call. joining the you, Thank everyone thanks

XXXX First, of with with first CEO, another the and on behalf quarterly performance. started I attendees year of strong to address following We our our would like the opening financial remark. business

company quarter as healthy continued was delivery our the and advance remained of Demand demanding first clients schedule. XXXX, scheduled. During existing the project to highly from with ramp-up

for demand we related positive on EBITDA with top our Notably, hold a and on beating IDC the to line drive side, machine product a their As such continued in quarters. result, the large lines. healthy such the AI our consensus have market consecutive we while adjusted term, models, technology very development view XX grow effort we learning, into should current recent new demand clients corroborating also generally (ph) noticed language the industry in of long and as bottom existing

region certain secured in-house and of for have with unique deployments more campuses cooling of supply we In future. and accumulated the our full is experience in abundant suited, cabinets capable in existing layout -- energy our are of believe practical technologies deploying these density our business practice and demand cabinet our contracts capabilities, high key applied data features high model accommodating we tested, The we first stack centers. have actual our in our and in density AIGC various related the quarter, model

the over the resources and of business, our dedicated Johor and of we focus devoting to X overseas Phase X MYXX are the timely delivery. project ensure delivery the In XXX remains megawatt key expansion We serve business, cornerstone in consideration solid for the to remain confident our in target fundamentals with continue the and momentum hyperscale diversification. year our future healthy on business a capacity XXXX as

start our to added bringing highlights to megawatt remained centers the Demand quarter. capacity the key XX some X, for quarter. project of in the Now first our Slide let's first additional an XXX megawatt one with new megawatt capacity quarter, capacity or total and new On we City, datacenter during of an hyperscale put XX. data ramp-up of service We Zhangjiakou XX in total increase number total bringing one healthy. and XXX megawatt, into to in-service

OpEx bringing the capacity an rate power in client the side into our to bringing to the XX XX by efficiency solutions. committed We quality our XX% capabilities received layout, and CapEx full our center efficiently electric solid a of and We maintained data of XX%. of megawatt contracted in the total capacity offering energy in-house to converting leveraging capacity. utilized commitment megawatt, first and sticking rate of total total We reliable capacity quarter, client stack quarter, a to XXX of additional added utilization the utilized in power fully of computing leading clients megawatts remain megawatts, mission pursuit our commitment to our XXX IOI of and and

widespread prestigious and side awarding acclaim a recognition advantages variety of from bodies. Our gained supply

Some Hebei management. Delta Province, recently Yangtze their campuses level as national Province, global River our energy Shanxi well of in construction, efficiency, awards in design in won have and as for performance unique and region operation and

year-over-year new strong. XXX.X% Our XX.X% RMBXXX top representing and high year-over-year bottom to market was a RMBX,XXX.X growth. in beating by quarter million million, income year-over-year Adjusted have the XX.X%. Net consecutive grew quarters, been and of of with consensus. net margin a by EBITDA grew XX.X%. for margin line XX.X% Revenue reached momentum to remains RMBXXX.X EBITDA XX first Adjusted million

year Finally, momentum, revenue full outlook. range we guidance business current positive very given our reiterated with the

raised While RMBX.XX guidance midpoint, EBITDA range adjusted now by the to new at range is billion between guidance our X.X% billion. RMBX.X

to close first demanding let's at construction X. adhere on a take Now details go into working to our resources timely on consistently are strategy side our delivery a delivery to energy to look and and We ensure project Slide X highly clients. schedule level and of

remains service of international The with project first quarter capacity utilization total of a one current first Mainland one XX% quarter, XX megawatts. operations. in Zhangjiakou City, rate Hebei, reached clients. on supporting schedule. of CNXX the our put In in project in China delivery the plan located This we Our its key project is into

intended megawatts, of and international with one we XX% in clients. one campuses CNXX, of construction our design delivery project key contracted. Zhangjiakou new scheduled in It for XX City. of addition, of a hyperscale The In for second currently one project of the during the is quarter, is starting located from is the XXXX capacity started is first quarter

to you megawatts, brought by above we on first our XXXX quarter, the Of readiness. supply Slide the we total XX in and and up in overseas diligently megawatts megawatts XXX during of capacity XXX delivered can service China ensure construction. changes With XXX teams end, capacity our under end our in be the by megawatts under and the X, quarter expect quarter XXX have construction megawatt see by with working as are currently the to reaching

demand see from in clients, potentially Northern XX, additional campuses. Now, their continue regarding our initiatives existing demand China and coming on business and existing new Eastern Slide to our we supporting

client total by increased in first XX megawatts the commitment quarter. Our

clients, CEXX received another Specifically, key of for contracted indication construction X megawatts and of one the the megawatts we international product X CNXX capacity for new interest under on and CEXX. project

X for MYXX X for project. in contracted by Johor, China deployment. We MYXX an of capacity Lumpur, Kuala secured capacity were have MYXX the existing of Meanwhile, Phase from XX Malaysia the Northern for Phase density a X, client, IOI some capacity anchor in of contracted cabinet and and the around intended increased Malaysia, megawatt capacity high also project kilowatt megawatts X and XX quarter, new aforementioned XX including construction contracted megawatts for under megawatts conversion in the our

exciting the AI one era. clients in our clients been and its speaking, existing we already growth. significant successfully on AI There how many business been in takes are leaders of place resulting with the this integrated of existing base. product, new Generally into we our related in potential this industry, momentum client our have are AI has And advantage pleased there have news among think

cooling servers, essence really power we new are on our the within that is Chindata AIGC of technologies example, is, As datacenter distribution, relevant et solutions the know-how ready the a host for well-positioned all company, whether what energy believe for help a for need care era AI sufficiency, datacenter cetera., the to we about, to the and era.

XX In contracted from existing deploying cabinet to kilowatt campuses. the capacity, accumulated XX high in to density practically cabinets addition aforementioned experience kilowatt per our and to new actually we have up in

commitment energy portfolio with suited equipment including has for China cooling sufficiency of cetera., system to look layout cabinets to status characterized model site our in-house waterless design us and cooling, apply test different liquid ensure cooling, immersion power and level liquid technologies and density, and our hyperscale Our overseas. evaporative and indirect that and of our asset building healthy. various the cooling in cold-plate continues in campuses cooling, et The enabled

by of megawatt quarter. same by relatively the was in-service in year. and to for either compared XX% quarter is our previous first capacity, existing quarter in last contract This of in XX, Slide XXX IOI the XX% end On XX% the or committed stable clients the

Slide previous was end with quarter at capacity compared in XX% of first last the our quarter XX, ratio and the XX% on year. the quarter commitment For in XX% the total same the

contracts our longer, expire capacity and of differentiated X.X base, of long-term were XX business And over of leading X% until demand our current quarter, we of we less than XXXX. capacity terms end average contracted existing or year to terms contracted emphasizing, and remaining weighted expect our end contract client years. XX% healthy to first the of of been profile our top contract for as of the the have visibility. On brings unique By a

Now coming Slide to on XX. customer move-in

quarter, schedule. healthy capacity and pace added in our of capacity We XX the compared last our move-in megawatts Our year-over-year first megawatt year. quarter total utilized the to This bringing megawatt XXX with XXX is XX.X% represents same growth. utilized with in-line in

China international the XX% Quarterly overseas and last the anchor the of projects one quarter India, client. end quarterly of utilization in our Northern same with other in in a move-in project These clients, well client, international our cloud quarter campus, lead supporting by was supporting Chinese compared contributed the client, XX% year. a as dynamics to by ratio

a management that of Slide stage of XX% utilized of mix a them utilization project geography, and global design XX. Looking or on national healthy operation XX business our and to overseas previous award total demonstrating gained utilization at energy projects to with respectively. and above, construction, the quite XX of have up are hyperscale the wider of at performance capacity. project, project existing share reached The demand. similar quarter in compared further By and campuses around efficiency, at the winning by now majority of our XX% XX% ratio X% or out the recognition, have mature made in-service By geography

and IT time an critical efficiency accolade. and with XX, computing, received awards Awards. single Asia-Pacific spheres is highly XXXX, other largest is Shanxi campus the Lingqiu the in the distinguished honored Slide Construction our Campus in Global in Datacloud was region, computing, XXXX the power the or usage prestigious April Award Province have Center Data of the cloud maintains datacenters, infrastructure, Campus annual Design within These at are we hyperscale of X.XX. and second PUE such On a Lingqiu edge and this data

energy that at list, performance an and in management, Slide unique Zhangjiakou National Datacenter demonstrating in On have year Industry on of operating we security. Green our operation X.XX, the is datacenter Donghuayuan by XXXX National made annual consecutive our Technology. second list and it Information was Ministry PUE March is XX, and efficiency, Datacenter in the selected to Campus Campus for of New the Donghuayuan data and XXXX,

awarded globally was obtain Province Slide prestigious which certification. On as is datacenter Jiangsu key Chinese campus, assets system is the important enhanced XXXX, in April company Campus Asia XX, The enterprise management to our utilizing Nantong first standardization. The the management of achieving datacenter real-time to its indicator operating of operational industry in monitoring the and an DCOS®:XXXX widely in efficiency. recognized Kunpeng its DCOS®:XXXXstandardization and Southeast standard its datacenter certification, and maintenance in IDC manage was the DCOS currently

turn and With details Zoe, Zoe, will that, I performance. for I please. the President, Senior our have our of Vice concluded my financial part, to

you, Nick. Thank

a you the through walk quarter very first performance. financial maintained XXXX. Generally we've me let in year healthy momentum our financial of speaking, Now quarterly

line increase to growth a to utilized a capacity the of year-over-year with in XX.X% first utilized recording total the healthy, year-over-year similar which the in previous business revenue quarter is XX.X% the reach level capacity. remained in to Overseas quarter. quarter, first contributed X% in RMBX,XXX.X million, Our

operating the cost increased by million RMBXXX.X Slide RMBXXX.X to X.X% costs, utility down in by and XXXX in first of million. same XX. quarter Total decreased on of million XX.X% further the from in and expenses. quarter mainly amortization Total of driven the period depreciation revenue first Looking XXXX, to RMBXXX.X by increase in year-over-year expenses

of X.X% the marketing RMBXX.X lower share-based by expenses year-over-year XXXX and compensation primarily million, in and selling decreased primarily in expense. million year-over-year RMBXXX.X Specifically, quarter lower to of expense. due to due first quarter decreased General by first X.X% to the expenses compensation share-based XXXX slightly to administrative

due Research and share-based of to R&D primarily first personnel and million, quarter higher increased development to by expense. the increase XX.X% XXXX compensation expenses in in year-over-year RMBXX.X

XXXX in XX.X% recorded quarter operating increased an As a first of a income operating by of this, XX.X%, new margin million income RMBXXX.X of result and to high. the

by period increased XXXX. margin the a in million quarter of income compared RMBXXX of Net first of XXXX XX.X% with quarter X.X% with of in and in XXX.X% XX.X% the to XXXX fourth the net same

costs XX. core on and of expense breakdown Slide For items

and business the of first X.X% stringent cost X.X% our to (ph) cost out X.X quarter. points other percentage expense revenue see Maintenance in the revenue. of the growth pushed lower the of scale to control, economy the and percentage quarter, With was lower of costs we previous our of the was adjusted continue previous X revenue, points quarter, than SG&A and than that percentage

seeing we that not first costs level utility are are price We in operating in made up similar the utility revenue of regions and changing the a quarter.

filing With control income net efforts, Slide reach first X-K be the million a PPT. margin of stringent in net Details and non-GAAP the the GAAP growth XX.X% by in on Adjusted reconciliation year-over-year quarter recorded XX, IR high as in or a XX.X%. RMBXXX.X in cost available can such the increased model quarter-over-quarter EBITDA adjusted historical to on growth hyperscale XX.X% to business of our EBITDA and to year-over-year our the XX.X%. the XX.X% you a at appendix RMBXXX.X of would million, see and margin income

highly initial potential XX, investments incur the of in CapEx schedule, continued under the given with similar first quarter projects was projects construction first quarter the with compared pipeline CapEx the quarter. Slide RMBX,XXX.X million existing as On in level the RMBX,XXX.X we certainty. good previous some in delivery demanding that covered million well as during to

with and around adjusted client XX, million quarter the XXXX. which in to system a improve in first compared our continued our EBITDA recover fourth RMBXXX.X cash flow the Operating one-off cash in the epidemic was quarter flow RMBXXX.X Slide of COVID-XX upgrade. XXXX of is On million, XX% operating following and

debt position the million. and first Financing cash a million the as in flexibility that we well our we ensured flow RMBX,XXX.X RMBX,XXX.X with funding notes financing as dollar RMBX,XXX.X senior for was and ongoing completed offering cash quarter of million February a ended development. position up project need With U.S. total in net project this, of have

Our leverage range. remain coverage and and healthy in ratios a reasonable

months net was quarter adjusted first to debt end in compared XX previous X.X last XX, the Slide of On EBITDA with X.X by quarter. ratio

financing up to as quarter compared adjusted in last X.X of in quarter total ordinary XXXX. senior to project EBITDA our one-off notes, XX at the as previous same in X.X drawdown and of X.X quarter months Given well the the issuance in debt the ended the

healthy to XX.X% from quarter Capital a structure is the healthy in X.X in quarter. operating with total debt ratio around last coverage led to XX at On capital the clients ratio strong consistent growth at ramp-up the funds XX.X% (ph) compared ratio, The months growth months a adjusted compared EBITDA EBITDA remaining XX profile X.X support to in adjusted last rapid with total XX% company. to based return on our continue EBITDA at previous debt. of and interest the with momentum on previous of of

last same compared are year. capacity in utilization of and with XX.X% pre-tax end XX% by quarter, seeing first IT XX.X% the quarter XX.X% the ROIC the of quarter previous With ratio the we the in a

million, guidance midpoint to are previous preliminary RMBX,XXX EBITDA to This the on guidance the our million market raised million views forecast operational in of X.X% RMBX,XXX on and reiterated million company's reach. increase of while which is XXXX compared based Finally, adjusted XXXX change. revenue to with the at range which RMBX,XXX the the current reflects a conditions, we range our preliminary to (ph), and subject the views company's RMBX,XXX

questions. today. This our concludes are to now prepared we ready Operator, remarks for take

you. Thank

begin from will of Morgan Liu the go First Please now question We Instructions] Stanley. comes ahead. from [Operator line Yang the question-and-answer session.

margin I three actually from? perspective, saving That you. or EBITDA margin RMBXXX where's up the costs about months compared see growth. to about to ago. far is saving more one question, where almost running my below by maintenance comes with Thank share can I results. the would the you on in one And view. the come would Congratulations you the the the management like from? be ask about From that and only ask I forecast I what revenue please upside other like -- EBITDA that. Could If could is revised million because strong have the

the for Yang, questions. Liu great you, Thank Yeah.

of accelerated think expected pace I than schedule before. yeah, is there's a or actually either is on move-in move-in we think, Number one -- us the customer is I couple reasons. get

actually on margin top in EBITDA think, that's I improvement the So contributed significant, line. a

that guidance QX. Zhangjiakou in full the we we didn't is as the room. take line half might for some place that in Province, year, room Hubei just Bottom at the -- -- but in a think be year, budget did our and public first reserve this consumption some time, happen in it for provision potential substation as of some initial some reserve did activities we areas, We diesel revamping there to

So some news from so This therefore, didn't second actually the it we happen, as the reason. big QX. can is release

And actually see been I not the third metal company-wide combined effective. sales with is And our playing control cost and we the economy like, same we discipline new like savings. the expected and huge -- we our cost economy answered very you leadership a have I we time, at cost lower The in saying better reducing continue And into control, R&D also, discipline necessary (ph). your on have and reason a to the of the marketing see scale, expenses that including the Hope past, cost directions and part the of under this activities, business questions. achieve are scale the are helped to -- can basis.

you. Thank Yes.

questions. the for you Thank

moment Next please. questions, one

ahead. Please from up, have the UBS. line Sara Next we Wang from go

questions. for ask to the opportunity Hi. the Thank you

So again, results. the congratulations solid on

one a capacity or in committed net the on adds Just quick utilized.

metrics, both five it adds So quarters. or the than of previous slightly the I seems four in that lower megawatts noticed net

be adds ended no loaded or I [Foreign year? sales if may Language] more will than megawatts net utilized matter back is last So in if ask, there

the of Sara. incremental delivery take as is under delivery, upper -- well top you, as project Yes. project Thank from more half side potential year, is we the a with can line going take Most but that and efficient That's part the year customers, of demand with believe the upper bit hopefully, upcoming year we're full AI-driven positive say going a the AI-related full say project revenue in limit well. the outlook. we very of our to on-time we we some second range. there we -- of remodel, in play reiterate -- and guidance will little why delivery opening new year our this place project to revenue very remarks, this guidance when our revenue, as may our beat to Obviously,

on XXX it. one And the saying megawatts to year. quick net about Got full Previously, adds just XXX then utilized. in you megawatts megawatts were the a something for

So actually are this are sticking or number still we revising this we up to target?

Yes.

and still early, coming sticking to existing start already megawatts. from confidence we to megawatts AIGC of are part that from range our We -- a And related see but of XXX business sign the clear this with a we come clients. the XXX fact very

So us. that's news a for good

you. Thank it. Got

for next the One questions. the moment for questions. you Thank

up, we Next have Please Mingran CICC. ask the line from question. from Li your

that government datacenter. side energy for policies, congrats on and question of local management. a taking aim released the on note integration some recently energy storage and performance. have strong And the Hi, because I system question promote which my to we Thanks the

Thanks. strategy view any this future trend your about and what's So this? on

our because knows [indiscernible]. mission strategy in and peers. our everybody specifically you Therefore, always the are this I'm power from related to try computing the energy and energy that our find bring most Thank in energy and are regions, different renewable actually convert Shanxi. you, of questions We glad to out Hebei the electric efficient power. datacenters also ways most located to abundant

believe. So is what here we

total the two we What three road, in and our XX% renewable down places is out power consume two datacenters these of believe over like of would consumption. roughly Hebei years or Shanxi power

over places fact, have matter these of generation of renewable already a total power accounted XX% the for As in power two generation. today,

in this So frequency renewable be curve. needs is energy of better out in smooth order energy supply place the to of the amount renewable an abundant storage and use fluctuation power, to logic to appropriate this, infrastructure

the these power And a in facilities into and, investment And significant in say, power also in alongside power the local of areas in power to combination data future. same regions. scenario both a would have regions, power most renewable in grid, generation power the people a centers I and our and obviously, the storage renewable will we renewable generation plus storage in these two the investment grid of Language] usage by convenient users this [Foreign the to as do Chinese, seen basically, say, renewable hyperscale by create the power lot perfect this, efficient plus the how IDC of power or

view. that's So our

-- achieve ourselves. power cooperate in our accordingly, too therefore, renewable And data better plan areas power to investment and is partners objective power the with center green to storage without our from much generation business the generation

Got Thanks. it.

for Thank questions. One the you moment next for question. the

comes ahead. the Morgan. questions of Anthony go Next from Ling Please J.P. from (ph) line

Hello. Can you clear? hear me

Yeah.

upper limit this demand my AIGC move-in in rate color is Congratulations revenue for revenue that Is question. be, financial or in guidance the the Thank potential is not you attain? this more the -- a included this given is question performance. could you incremental previously, This give to you. and first this My case? included delivered pretty on, likely get say would guidance good

from a that Therefore, to clients opportunities anchor see of pick so up. current AI-related only to around would demand small tell, some in we our going in very -- going for scenario range. cabinets existing I that incremental far, to say AI-related year, beat high consider to from But outlook, revenue half our that, these business our hard second customers. say we're demand the but our I we we're already see small going a density the sort It's would there this is

and trend. are are [indiscernible] will They because trendsetters both essentially. you become clients, that right, the of Microsoft, new bigger AIGC I I the believe this our name, they are we they related leaders But know know ChatGPT they think in --

choice think both computing large of their we're they once first model in overseas. launch language to become I So and going the China system, their AIGC

question, to know investor in to it color to get it. the there contribution know? Got this on segment we have for want very stage something revenue, any about like Understood. -- to the the early the is and like energy of knowing And up that is follow just this do --

I part missed the not voice last your clear. because Sorry, is very

Okay. the To us again, to to or color know repeat contribution is total color Thank about there and any related you. appreciated? will AIGC let be capacity revenue any

Yeah.

I fact. stuff think, here I want the is to bit. AI-related expand little the topic a on

So ChatGPT basically, AIGC how to quantify these or demand. AI potential

demand much They anchor So -- basically, from they're the servers we're estimate have watching trendsetters high believe how We we going always power basically have. leaders. or already GPU they side, our closely customers. are to are or AIGC they

the the we cabinets demands. second we accommodate do China designed and deployed cabinets these we energy always to to in actually high-density regions located we're count very already is density in abundant a And our And our high going that closely. of usage thing -- more centers have data this in

And as to seen AI high already model units. some so sign hosting data of our cabinets very we our clear starting clients have selected density deploy large centers far, with anchor as early, of a computing I in just mentioned,

they're powerful to offer companies used with currently, of the service. cabinet. be kilowatts kilowatts XX primarily And one to XX from able are that that density And going GPU the being are few proud we per very host is cabinets IDC to we high thing range of one to

traditional things and note. X you cabinets is as hosting servers to also purpose low Number consume ideal to X such for not more two the please I want GPU cabinets kilowatts are powers. AI or kilowatts they that So density give one the

traditional is Chindata require that. we of these it their for are play doing second And of solutions. customized deployment model become actively with and two density data redesign centers and different right would just the The as cabinets a high hyperscale transmission a cooling attributes ready into

data are for quantified roughly the is in moment, X% centers something need it as the cabinets actually high probably down. density numbers, our cabinets. to you At write So this

So utilized very we expect in these cabinets be near and the quickly mid-future. to

the for why more large by AI the demand from density these that's not high foreseeable our we're than our for computing anchor incremental clients. see to think with of And we development rather ongoing likely clients, steady future model cabinets

based deployment we However, sign Microsoft And our every early in in this new firmly selected leaders on of that, of the will and be wave reason the data related over will clear have existing AIGC two centers the AIGC by anchor that of we long GPU ChatGPt run, believe Binance powerful believe on this our clients, demand and server to ChatGPT, a in them, future. Chindata cast trend.

you. trends, is you us is helpful. That my final the think ask about and very it. more a costs very Got clear trend or and expansion it Thank bit May EBITDA about question. I EBITDA. could in electricity little the can – add I I the Theoretically, give years following the also

cost of That's have actually better concentrated in in low built locations. power these a supply in That's business of have regions. and point we securing power, at gives very infrastructure that, that a saying unique one. keep pretty model. facility renewable terms we us basically hyperscale concentrated a as power think and abundant traditional huge advantage I And and

scale including drive number fixed and unit percentage-based per nature Point economy to or marketing, of maintenance the the going sales, and two, and the cost, development. of expenses down also operational like other and research costs

XX going cost to a or percentage expenses. As XXX percentage on savings in what in past X X you megawatts you like happened three months, of past years, and almost give the the can see every

a you're XX%. between any future, right fall not will see this very in although I years, think in you way. put the we following to will for by XX% to to give our going the the why that's EBITDA we official coming that especially margin guidance And XXXX, logic, But healthy going range XXXX.

you much. it. to back now. the you. very Thank Got queue I’ll Thank

Thank you questions. for the

ahead. line of Lee go Please from the from Our Edison next comes question Jefferies.

three Thank Nick. implies very growth Hi, year, on quarters and questions my that one for this guidance next congrats only still in Number much XX% you I on for raised EBITDA for results. Hey. taking the your the two Why is questions. particular there than my a a implied question. margin year-on-year think are them reasons That's first being growth so out the slower is XX%. basis. And quarter? EBITDA lot conservative, of only that will first be the have you any also -- EBITDA

the number it's operating year-on-year first Thanks. little bit a actually level And rest the your down Is on in for that sustainable the basis. costs two is, a absolute of level on a quarter, year?

I question. think, a yeah, good

diesel for public in we -- there XXXX to quarter it's be in consumption I year Whether might as that revamping first be a place the we coming some to a as substation take some some second quarters. room Hebei in explained third reserve going think, for or I full budget, know. quarter potential quarter, budget do Province don't summertime, the as provision

what is will basically that It we project -- the when revamping is happening. not way, even happened government. that by And by completely project may So happen. see conducted the

think I that to happens, even to operation. So going it's absolutely be don't our hit

in this power to from power we potential budget, burning. necessarily the run So diesel our have don't do grid But for Hubei. regular in from budget disruption supply this we

it impact it or is So lower. if see coming that's bit doesn't little in even you doesn't why to it us. the happen a any happens, EBITDA margin create quarters, But if

to to going news our definitely good we're think line. as release I bottom them

behind a terms hiring (ph) the a we people, item business cost, some budget for that lagged maintenance bit. is element cost some people, operating basically, obviously, when on of little do timely some pace the In travel operating basis, quarter-by-quarter – include

So optimism the but expenses pushed to the maybe cost coming and doesn't be for the it bottom impact forward on my or line, year sure. quarters, may full both line top some of

follow grid I up about by this Hey, revamp. Nick. Can asking

it's you think it's long if to to take? So how going happen, going do

probably going weeks. a couple it's think be to I of

A couple weeks. of

Okay.

So by XXX% be that diesel. weeks of backed will couple up

but has Zhangjiakou some XXX%. you We of But see of data Maybe in a will yet. center in there’s pattern lot things, of estimation. don’t don’t a on been really our can know. there built Not this forecasting conservatism -- be impacted, know we our our based

our is to into So scenario, therefore, our anything think I be think we reality we worst-case which than built happens budget. going better

Yeah. Okay.

Okay. you. Thank

Yeah. Thank you.

questions. Thank for you the Instructions] [Operator

And any summertime this happened stable. unlikely thing of one Finance because the actually like our power is in past and in we just the they’re the hasn’t the be remain utility believe the the it supply VP, in other power this that cost that happened power hike mentioned, sufficient very tariff tariff By year in is regions. year, will way, actually like the of Zoe thing

Thank you.

the We Liu Morgan follow-up from line go Please have questions a ahead. from of Yang Stanley.

us days Thanks this pretty for or that this see Do a is range. of I question. this your kind to a that normal to kind opportunity already cash another of quarter you ask flow Yeah. rebounded lot back a not behind normalization of think operating the will or operating future receivable or normalization the seen your room or the continue on of or flow far see this is flow, to quarters this (ph) trend cash in further largely you. kind trend? few cash Thank view EBITDA next there what’s

I receivable think -- the already. accounts turned normalization receivable has to back

much, and the as think, QX of I the XXXX. can operating XXXX quarter, much than So QX first the it’s from flow better performance, see you much better the than cash

So the issues the system by -- been client faced of onetime solved. anchor and our has ERP because upgrade

forward following normal. everything to that back go quarters, in So the will I expect moving

Okay. Thank you.

you conference for Thank the that concludes gentlemen, for our you questions. Thank and participating. Ladies today.

lines. You now your disconnect may

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