Canadian Solar Inc.

Solar. Please go ahead. Thank you, Operator, and welcome everyone to Canadian Solar's third quarter 2024 conference call. Please note that today's conference call is accompanied with slides which are available on Canadian Solar's Investor Relations website within the events and presentations section. Joining us today are Dr. Sean Chu, Chairman and CEO, Yan Zhuang President of Canadian Solar Subsidiary CSI Solar, Ismael Guerrero, Corporate VP and President of Canadian Solar Subsidiary Recurrent Energy, and Simbo Zhu, Senior VP and CFO. 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 Ismael will review business highlights for CSI Solar and Recurrent Energy, respectively, and Simba 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, I would like to 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 protection under 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 applicable law. A more detailed discussion of 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 principles or GAAP. Some financial information presented during the call will be provided on both a GAAP and non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to enable 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 Hughes. Sean, please go ahead.

Thank you, Wyeth, and thank you to everyone for joining our third quarter earnings call today. Please turn to Slide 3. In the third quarter, we shipped 8.4 gigawatts of solar modules and 1.8 gigawatt hours of battery energy storage solutions. Revenue totaled 1.5 billion U.S. dollars, and gross margin surpassed guidance at 16.5 percent. Last November, we began to experience the most intense involution in the history of solar. By involution, I mean the industry competes internally on cost with no significant outward market expansion. Nearly a year later, this intense competition remains. The solar market continues to face significant pressures, geopolitical challenges, trade barriers, fierce price competition, and ongoing patent disputes, to name a few. These combined factors have kept the industry in a cyclical low. However, every downturn serves as a stress test, stringing Strengthening the company's resilience and competitiveness thus in turn drives improvements in economics of solar and energy storage solutions, further expanding their applications. Speaking of applications, let's discuss the growing role of solar and storage in broader energy applications on slide four. Two years ago, OpenAI launched ChatGPT, marking the beginning of a global AI revolution. As AI models and their applications expand, they will present both exciting opportunities and new challenges. particularly regarding high energy consumption and associated carbon emissions. According to McKinsey, in the United States, the largest data center market, power demand from data center is projected to grow from 3 to 4% of total energy consumption to around 20%. to around 12% by 2030, and higher beyond that. Data centers are not only growing in number, but also in size. Research from BCG shows that the average size of individual data centers is currently around 40 megawatts, but there's a growing pipeline of data center campuses sized at 250 megawatts or more. Solar and storage will be crucial in addressing the energy needs of AI infrastructure, providing reliable and sustainable power. A year ago, I also spoke about the potential of reaching the terawatt generation for both solar and energy storage. Today, global solar installations have cumulatively reached nearly two terawatts. But to achieve global carbon neutrality, we will need close to 20 terawatts of solar capacity. Similarly, Storage capacity is projected to continue growing rapidly with annual installation exceeding 300 gigawatt hours by 2030. Solar and storage are still in their early stage, and Canadian solar is well positioned for these long-term growth opportunities. As we move into the new era of growth, differentiation will be the key. Please turn to slide five. Being a market leader means more than just operational scale. It also requires innovation and leadership. Our recent partnership with SolarCycle is a prime example of our leadership in and committed to advancing sustainability. Through this collaboration, Canadian Solar becomes one of the first crystalline silicon solar module manufacturers to offer comprehensive recycling services to U.S. customers. In a time when trust is in short supply, We are proud to be named the world's most trustworthy company in the energy and utility sector on Newsweek's 2024 World's Most Trustworthy Companies list. This recognition is a testament to our ongoing commitment to transparency, sustainability, and delivering high quality service across our global operations. At the core of our business is our commitment to delivering high quality, reliable products. Our continuous investment in research and development ensures that we remain at the forefront of technological innovation in both the solar and energy storage sector across our suite of products and solutions. Finally, let me update you on our American manufacturing plan. Please turn to page six. We are making long-term investments in the U.S. for both solar and energy storage. Our taxes solar module facility came online late last year. We have been adding more production lines and ramping up the volumes since then. We expect to reach full capacity by the middle of next year. For our solar cell facility in Indiana, we expect to be operational by the end of 2025. We are also excited to announce that through our subsidiary, eStorage, we will build a state-of-the-art battery cell module and packaging manufacturing facility in Shelbyville, Kentucky. This project will be built in two phases, with phase one kicking off this year. We will invest more than $300 million in the first phase to build a production capacity of three gigawatt hours annually. Once the first phase is completed, we plan to invest in a second phase to double the capacity of our facility. With our in-house battery management system and US-sourced thermal management system, we will be able to meet domestic content

requirements.