Canadian Solar Inc.

Ladies and gentlemen, thank you for standing by. Thank you for standing by. Welcome to Canadian Solar's fourth quarter and full year 2020 earnings conference call. My name is Ajay, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference has been recorded for replay purposes. I would now like to turn the call over to Isabel Zhang, I am Manager at Canadian Solar. Please go ahead.

Thank you, Operator, and welcome everyone to Canadian Solar's fourth quarter and full year 2020 conference call. Please note that we have provided slides to accompany today's conference call, which are available on Canadian Solar's Investor Relations website. Joining us today are Dr. Shawn Chu, Chairman and CEO. Yan Zhuang, President of Canadian Solar's Majority-Owned Subsidiary, CSI Solar. Dr. Huifeng Chang, Senior VP and CFO. Ismael Herrero, Corporate VP and President of Canadian Solar's Wholly-Owned Energy Business. All company executives will participate in the Q&A session after management's formal remarks. On this call, Sean will go through an overview of Canadian Solar's strategy. Yan and Ismael will respectively review the highlights of the CSI Solar and Global Energy segments, respectively, followed by Hui Feng, who will go through the financial results. Sean will conclude the prepared remarks with the business outlook, after which we will have time for questions. In today's earnings release, we have provided an overview of the new reporting structure. As a reminder, CSI Solar, which was formerly the module and system solutions business, now includes Canadian solar's China energy business as well. In addition, the global energy business includes solar projects, O&M and asset management services is now called the global energy business. Second financials will be reported as CSI solar and global energy going forward. And the historical segment financials have been revised to conform to current period presentation. These are provided in today's results press release. 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 risks and uncertainties. The company plans the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations. Any projections of the company's future performance represents 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 20-F filed with the Securities and Exchange Commission. Management's prepared remarks will be presented within the requirements of SEC Regulation G regarding generally accepted accounting for gas. Some financial information presented during the call will be provided on both the GAAP and 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. I would now like to turn over the call to Canadian Solar's Chairman and CEO, Dr. Shawn Chi. Shawn, please go ahead.

Thank you, Isabelle, and hi, everyone. Welcome and thanks for joining us today. 2020 was a very challenging year, not only for me, for Canadian Solar, but also for everybody. but it is also a strong one for our business, for the solar business entirely. We delivered 11.3 gigawatts in shipments, 3.5 billion US dollar in revenue, and 19.8% in gross margin. We also achieved diluted EPS of $2.38, I would like to thank our team for their focus and great work during this challenging year. In Q4, we delivered three gigawatts of shipments, which was towards the high end of our guidance. We also achieved 1.04 billion U.S. dollar in revenue and a 13.6 percent in-growth margin, both ahead of our expectations. Before Yan, Ismael, and Huifeng go through our quarterly results in more detail, I would like to share some thoughts on the solar market and Canadian solar strategy. Now, let's turn to the slide number three. We are at an inflection point in which solar grid parity is met with growing societal awareness of the urgent need to decarbonize the global economy. Solar energy has been the largest decline in levelized cost of electricity among all sources of electricity over the past decade. and now has the most competitive LCOE according to independent third-party calculations. Likewise, over the past few quarters, we have seen several major economies commit for concrete decarbonization targets and the increase in frequency of natural catastrophes related to climate change is also adding a high level of urgency. These factors are significantly accelerating demand for solar assets with no end in sight. To give you some perspective, annual solar installation was around seven to nine times what they were a decade ago. Yet average solar penetration at this moment remains at just 3%. As the penetration of solar energy and other renewables continues to increase, it will create new market opportunities such as in battery storage. This is a market in which Canadian solar has become an early mover and has a distinct competitive advantage. I will talk more about that later on. Now let's move to slide four. Now under this backdrop, our growth strategy remains unchanged. Firstly, we're investing We'll invest in long-term growth and expanding our capacity across the supply chain. Secondly, we are growing our project development market presence and optimizing our project monetization strategies. Lastly, we are executing our multi-year growth areas. including energy storage. Now please turn to slide five. We have been building out our technology and market expertise in battery storage for several years. And now we are reaching large scales. We're starting to see exponential market growth in energy storage. According to Wood McKinsey, the global energy storage market in 2021 will be 22 gigawatt hours, and demand over the next decade will reach 700 gigawatt hours. Of this, front-of-the-meter applications will account for approximately 70% of the total capacity addition. And U.S. will account for roughly half of the global market over the next decade. At Canadian Solar, we have taken this market opportunity very seriously, as we think that this is a game changer, not just for solar energy, but for the global electricity grid. Hence, over the past two years, we have been building our technology in system integration and our go-to-market capabilities in both the CSI solar as well as our global energy segments. Now let's turn to the slide number six. As we explained in the press release, The CSI Solar Battery Solution Team is focused on delivering preparatory, bankable, fully integrated battery storage solutions. This includes the end-to-end technology offering, the long-term service agreement of the batteries and its future capacity augmentation services. We have nearly six gigawatt hours of pipeline in storage system integration business, which is shown on the table on the left hand of this slide. On the other hand, our storage project development business is now an integrated part of our global energy business. We now have nearly 9 gigawatt hours of global utility-scale storage pipeline, which is shown on the table on the right-hand side. Our global and geographically diversified presence gives us a competitive advantage in identifying the early opportunities in storage market and capture attractive returns similar to what we did in solar development in the early days. Some of these are new opportunities. Some are retrofit to solar project which we delivered in the past. We work on both co-located solar PV parts storage project, as well as stand-alone batteries. There are significant signatures, even though these are two separate teams. Meanwhile, not all the project overlap, and both teams work on their respective third-party project as market opportunities arise. Finally, let's turn to slide seven. Regarding the planned China listing of our CSI solar subsidiary, we are on track and we have completed all the targeted milestones. We expect to submit the official material to the regulatory authorities and the stock exchange in the next month. We are targeting to complete IPO within this year. However, as we all know, there are uncertainties. Therefore, it could slip into next year. With that, let me turn over the call to Yan. We will talk about the performance of CSI Solar. Yan, please go ahead. Thank you, Shang.