Canadian Solar Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's second quarter 2022 earnings conference call. My name is Sherry and I will be your operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Isabel Zeig. Investor Relations Director at Canadian Solar. Please go ahead.

Thank you, Operator, and welcome everyone to Canadian Solar's second quarter 2022 conference call. Please note that we have provided slides to accompany today's conference call, which are available on the webcast as well as Canadian Solar's Investor Relations website within the events and presentation section. Joining us today are Dr. Sean Chu, Chairman and CEO, Yan Zhuang, President of Canadian Solar's Majority-Owned Subsidiary, CSI Solar, Dr. Huipeng Chen, Senior VP and CFO, and Ismael Guerrero, Corporate VP and President of Canadian Solar's wholly-owned subsidiary, Global Energy. All company executives will participate in the Q&A session after management's formal remarks. On this call, Sean will go over some key messages for the quarter. Yan and Yvonne will respectively review the highlights of the CSI solar and global energy businesses, followed by Huifeng, 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. 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 claims 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 represent management's estimates as of today. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by clickable law. A more detailed discussion of the risks and uncertainties can be found on the company's annual report on Form 20F 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 principles or GAAP. Some financial information presented during the call will be provided on 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. And now, I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Sean Chee. Sean, please go ahead.

Thank you, Isabel. And hi, everyone. Welcome and thank you for joining us today. Let's turn to slide three. This slide provides a summary of our key performance matrix. We achieved a strong result in the second quarter of 2022 with record solar module shipment of 5.1 gigawatt. Revenue for CSIQ came in at $2.3 billion, and gross margin was 16%. Our results were all at or exceeded the high end of our prior guidance. We also took another major step towards forward in cementing our leadership in the fast-moving storage segment with over 1 gigawatt hour of battery storage shipment in the first half of 2022. During the quarter, we remain focused on profitable growth, which has been a co-tenant of Canadian solar since its founding. I am pleased to report that we achieved Q2 next income attributable to Canadian solar shareholders of 74 million US dollars. with diluted earnings per share of $1.07. In the end, Ismail and Huifeng will go through our performance in more detail. Before that, let me highlight three key messages. Please turn to page four. First message, our capacity growth strategy as highlighted last quarter. is firmly on track. We are expanding our strategy to incorporate upstream polysilicon capacity, which is expected to start production in 2024. By the end of 2022, we expect our ingot, wafer, and cell capacities to reach approximately 20 gigawatts each, and module capacity to reach 32 gigawatts. We are also introducing our capacity expansion plan through the end of 2023. We expect engine wafer capacity to reach 25 gigawatts, cell capacity to reach 35 gigawatts, and module capacity to reach 50 gigawatts. We are still finalizing shipment ranges for 2023, but the magnitude of the planned capacity expansion should give you an indication of the significant growth we are planning for next year and beyond. The rationale for this more aggressive growth strategy is that we are seeing a significant acceleration in global demand. This growth is driven by multiple catalysts, including clean energy economics, energy security, and decarbonization. For example, we are particularly excited to see the passing of the Inflation Reduction Act, or IRA, in U.S. We believe it will drive a significant acceleration in demand for clean energy in U.S., solar energy and battery storage in particular, and we are one of the best-positioned companies to capture this growth. Canadian solar is one of the strongest global clean energy brands with established channels, large project pipelines, strong customer relationships, and an unparalleled track record. We believe we are seeing a once-in-a-decade opportunity to gain global market share and further enhance our long-term defensive competitive advantage. To achieve that, great control over our technology costs and supply chain is critical. This is why we made the strategic decision now to invest into polysilicon capacity as well. While we are still believing that polysilicon pricing will ultimately come down, we believe that directly control our supply chain is critical to our long-term competitiveness from a cost supply security, and decarbonization standpoints. Now this brings me to my second point. Please turn to slide five. Our new poly facility will be located in Qinghai Province. We selected this location after careful evaluation. Of note, Renewable energy accounts for approximately 90% of the electricity in this province. This will be our second facility in Qinghai after our new ingot plant, which started operation several weeks ago. Poly and ingot manufacturing are the most energy-intensive parts of the solar supply chain. Using renewable energy to power these processes will contribute to our decarbonization goals and reflect our position as an industry leader. We expect to power our entire global operation with 100% renewable energy before 2030, which will serve as an important milestone in our drive to reach carbon neutrality. You can find additional details of our environmental efforts and performance in our latest ESG sustainability report, which we published last month, which is available to download on our website. Now please turn to slide six. In summary, our board and management teams confident in making this capital-intensive investment reflect the strong business case we see both over the immediate and long term. The timing and pace of this investment will be linked to the timing of the carbon IPO of our CSI Solar subsidiary. We remain in the registration process with China Securities Regulatory Commission, or CSRC. The process has been delayed somewhat, but we are on track and will update you on progress achieved as we move forward. With that, let me now turn over to Yan, who will provide more details on our CSI solar business. Yeah, please go ahead.