Canadian Solar Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's first quarter 2020 earnings conference call. My name is Amber and I will be your operator for today. At this time, all participants are in the listen-only mode. Later, we will conduct the question and answer session. As a reminder, this conference is being recorded for replay purposes. I'd like to turn the call over to Ismael Zhang, Director of Investor Relations at Canadian Solar. Please go ahead.

Thank you, Operators, and welcome everyone to Canadian Solar's first quarter 2020 Earnings Conference Call. Joining us today are Dr. Sean Chu, Chairman and Chief Executive Officer, Yan Zhuang, President and Chief Operating Officer, and Dr. Hui Feng Chang, Chief Financial Officer. On this call, Sean will provide an update on the market impact from COVID-19 and perspective on Canadian Solar's long-term positioning. followed by Yen, who will review our recent progress and outlook. And Huifeng will then review our financial results and actions we have taken to further improve our balance sheet for liquidity. We will then have time for any questions. Before we begin, may I remind listeners that management's prepared remarks today, as well as their answers to questions, will contain forward-looking statements that are subject to risk and uncertainty. Therefore, the company claims the protection of the safe harbor for a forward-looking statement that is contained in the private security's litigation reform act of 1995. Actual results may differ for management's current expectations. Any projections of the company's future performance represent management's estimates as of today. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law. A more detailed discussion of the risks and uncertainties can be found in the company's annual report on Form 20S, followed by the Securities and Exchange Commission. Management's prepared remarks will be presented within the requirements of SEC Regulation G regarding generally accepted accounting principles or GAAP. Some financial information presented during the call will be provided on our GAAP and a non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP. At this time, I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Shawn Xu. Shawn, please go ahead.

Thanks, everyone, for joining us today. Over the past two months, a number of COVID-19 cases, assets, and economic closures have steadily expanded globally. Needless to say, a lot has changed since we last spoke at the end of March. At Canadian Solar, we moved quickly and took bold measures to protect and support our employees, customers, and partners, first in China and then in the rest of the world. We have not only implemented strict preventative protocols, but have also taken steps to support the local communities in which we operate across the globe. According to the latest data, the worst seems behind us now. Here, I hope that you and your families are safe, healthy, and wish you all the best. Now, let me give you an overall picture of the current market situation and some color of our long-term view. In 2020, global demand for solar equipment are expected to decline for the first time in 20 years. Recent market reports forecast global demand to be somewhere in between 95 to 100 gigawatts compared to last year's estimate of approximately 120 gigawatts. Meanwhile, supply side capacity is expected to grow which will lead to additional ASD pressure and market consolidation. These effects will likely be felt across the supply chain causing input costs to decline as well. On the flip side, currently contracted solar projects are expected to benefit from the lower equipment ASD with the deployment of solar becoming even more attractive relative to other energy sources given the lower capex cost. Originally, the US and Latin America market have been the most volatile around COVID-19. In the US, The biggest impact has been on the reduction in the availability of tax equity financing and the increase in the cost of capital for certain project buyers. This sets up potential delays in 2020 project sales. In Latin America, the impact has been amplified in the sharp depreciation of local currency, local market to delay purchases and installation of USD price solar modules. On the positive side, the COVID impact has been limited in Europe, Japan, and Korea. China was able to reopen and now appears on track to have strong demand in 2020, supported by favorable policies and a healthy transition towards great parity. In general, the execution of commercial and utility-scale project has been relatively smooth with delays mostly driven by permitting and other frictions given by the lockdown. While we expect near-term volatility, the long-term growth drivers remain strong. We remain optimistic about the industry and Canadian solar's long-term prospects. Global efforts to decarbonize will continue, if not accelerate, especially as the cost of clean energy becomes increasingly competitive. The cost and performance of battery storage continues to improve, which will be critical as solar plus storage reaches great parity across a growing number of markets. And a lower or longer interest rate environment means that solar power plants will become even more attractive investment assets for investors seeking stable, counter cyclical and climate friendly yields. Canadian Solar's globally diversified revenue and manufacturing basis, strong relationship with customers, suppliers, and financing partners, and our healthy balance sheet and liquidity position give us significant competitive advantages. We continue to strategically invest in R&D and innovation as well as in significant momentum as a key solutions provider in the solar plus storage solutions market. In the downstream energy business, we are positioning ourselves for long-term growth. We will continue to grow our global backlog and pipeline while selectively retain ownership in solar project to capture New sources of recurring and predictable cash flow. While in the process of executing our solar project monetization strategies that we have shared with you last quarter, preparing ourselves for the recovery that is all to come. Together, Canadian solar is well positioned to weather the near-term uncertainty and capture Long-term growth opportunities to deliver sustainable returns to shareholders. Before I turn the call to Yan, I'm pleased to announce that Yan has been appointed as President and Chief Operating Officer of Canadian Solar. I'm grateful for Yan's leadership and his incredible dedication during his nine years tenure at Canadian Solar. I look forward to working closely with Yan on entirety at Canadian Solar. With that, I would like to pass the line to Yan. Yan, please go ahead.