Emeren Group Ltd

Hello, ladies and gentlemen. Thank you for standing by for Rene Solopower's second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. At that time, if you wish to ask a question, you'll need to press star 1 on your telephone. Please note that we are recording today's conference call. I'll now turn the call over to Mr. Gary Dvorak, Managing Director of the Blue Shirt Group Asia. Please go ahead.

Thank you, Tara, and hello, everyone. Thank you for joining us on today's call to discuss second quarter 2021 results. We released our shareholder letter after the market closed today. It's available on our website. There's also a supplemental slide deck posted on the website that we will reference during our prepared remarks. On the call with me today are Mr. Yumen Liu, Chief Executive Officer, Mr. Ke Chen, Chief Financial Officer, and Mr. John Yuen, CEO of North America. Before we continue, please turn to slide two. Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking. These forward-looking statements represent Rena Sola Power's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under risk factors and elsewhere in Rena Sola Power's filings with the SEC. Please do not place undue reliance on these forward-looking statements, which reflect Rena Sola Power's opinions only as of the date of this call. Rena Sola Power is not obliged to update you on any revisions to these forward-looking statements. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to Mr. Yumen Liu. Yumen?

Thank you, Gary, and thank you, everyone, for joining the call. I will summarize our financial performance and review our operating highlights in the quarter. I will then turn the call over to Ke, who will cover financial results in more detail, and will also provide 2021 guidance. We will then open the call to questions. In Q2, we again focused on profitability and delivered excellent bottom line performance. Gross margin of 61% was well above expectations, which demonstrated solid execution of our strategy to focus on project sales at NTP. Gap operating income was 7.3 million, up significantly both sequentially and year-over-year. EBITDA of $9.5 million increased by more than 140% from Q1. Importantly, we reported our fifth consecutive quarter of profitability with net income of $7 million, or $0.10 per ADS. Q2 also marks the most profitable quarter since we divested the manufacturing business to become a pure-play project developer in the third quarter of 2017. You will notice that revenue was down both sequentially and year over year. Why are we so excited about our results when revenue was lower? Our excitement emphasizes the most important point we want to make about how we run our business. Pure and simple, we focus on the bottom line. While we can never guarantee it, we intend to be profitable every quarter, whether our revenue is up or down. We are confident in our ability to do this because of our unique, fortified business model. First, NTP sales drive growth in our business. We have realigned our strategic focus to make more sales at NTP. The margins are better. Project sales are large and somewhat unpredictable and will vary as you saw this quarter. But over time, as we grow our pipeline, we expect project sales to drive strong and sustainable growth to the bottom line. Second, our IPP segment provides a baseline of stable and highly profitable electricity sales quarter in and quarter out. This foundation delivers consistent income and enables us to plan our business. As a shareholder, you all should judge our performance the way we judge ourselves. We should be profitable, whether the revenue is up or down. Pipelines should be growing handsomely over time, and gross margins should be trending up over time as we ship more product sales to NTP. In addition, you should see our operating expenses growing in line or a bit slower than pipeline growth. Pipeline is closely tied to the investment we make in development and sales, so these two metrics will always be closely correlated. Let me now discuss recent operating highlights in more detail. First, our development pipeline remains strong. Our mid to late stage project pipeline from 1.3 gigawatts in Q1 to 1.6 gigawatts by the end of Q2. Expanded pipeline of business activity indicates greater demand for projects, as well as greater execution by our team in a still COVID-challenged environment. Our focus is profitable markets, including the U.S. and Europe. where we see tremendous growth opportunities with high-quality projects. Second, we successfully closed the sale of our 38-megawatt portfolio of solar projects in Poland and a 5-megawatt portfolio of projects in Maine and recognized revenue for both sales in Q2. The Poland projects were sold to Optum, a leading international solar investment company based in Denmark. The projects were sold at NTP stage, and Winning Solar Power is responsible for EPC management, project financing, and final delivery of the projects to opt-in at COD. Against that success, closing of the Spain project sale was delayed from its scheduled time in the first half of 2021, causing our revenue to be lower than originally planned. The sale is expected to be closed within next month and will be recognized for revenue in the third quarter of 2021. Third, we were awarded 29 projects with a capacity of one megawatt each and one small utility-scale project with a capacity of four megawatts in Poland's electricity auction in June. These 30 projects are under Poland's CFD regime and eligible for a 15-year guaranteed tariff. The projects are expected to be connected to the grid within the next two years. Fourth, we further strengthen our financial position by paying off short-term debt of 11.8 million in a quarter. As a result, we further enhance our capital structure with a debt-to-asset ratio of 16%, down from 19% in Q1. we have a healthy balance sheet with a strong cash position of $286 million. We intend to use our cash to expand our solar project pipeline for working capital and for potential strategic M&A opportunities. Speaking of M&A, we are actively pursuing several opportunities. We are making progress and intend to provide more details on our next earning call. We believe the capital raised at the beginning of 2021 will enable us to execute our long-term strategic growth plan as we further consolidate our transformation into an asset-like solar project developer. First, subsequent to Q2, we signed a strategic partnership agreement with Ameren. A UK-based project developer focused on the development of renewable energy power plants As part of the JV agreement, Venus Solar Power and Ameren intend to develop projects in the broad range of sizes across Italy with a target of reaching 110 megawatt, sub-rated projects by 2022. We are excited to partner with Ameren. The co-development agreement aligns with our growth strategy, enabling us to expand our project development activities in Italy. Italy is the first market for the JV to tap into. and we look forward to pursuing other opportunities to co-develop projects across the rest of Europe. Moving on, I will now update you on our project pipeline. At quarter end, our mid to late stage pipeline was 1.6 gigawatts, up from 1.3 gigawatts last quarter. As we grow our pipeline, we are allocating resources to the markets with the best profit potential. Our objective is to add incremental project pipeline in our core markets to reach 2 gigawatts by the end of 2021, and we are on track to achieve this target. Let's review highlights from certain key geographies. First, let's turn our attention to the U.S., shown on slide 7. Our late-stage pipelines are 470 megawatts, of which 82 megawatt of community solar in Maine, Minnesota, and New York. Additionally, we have projects under development with a mix of corporate, municipal, and utility out-takers in other states, such as California, Pennsylvania, Florida, and Illinois. Meanwhile, we operate 24 megawatt of small utility-scale projects in North Carolina. In Poland, shown on slide eight, Our key assets is the portfolio project rates. We have a pipeline of 339 megawatts of ground-mounted projects under development and construction. Slide 9 refers to Hungary, where we also invest in small-scale DEG projects. Our pipeline has a combined capacity of 42 megawatts in the country. Those projects are under development. Slide 10 and 11 detail our pipeline in France and Spain. We have 100 megawatts in France and have expanded our pipeline in Spain from 180 megawatts to 216 megawatts. We continue to gain traction in Germany, where we are building quality projects. As shown on slide 12, we have a project portfolio totaling 62 megawatts, up from 50 megawatts last quarter. In the UK, shown on slide 13, we have a project pipeline of 281 megawatts, including solar plus storage projects. Additionally, we intend to capture opportunities in other European countries, such as the Czech Republic. We will provide more details on these new opportunities when appropriate. In China, as highlighted on slide 14, We have a late stage pipeline of 88 megawatt of commercial rooftop projects located in various provinces. In addition to our development pipeline, we operate a portfolio of 170 megawatt of solar projects that generate high margin recurring revenue. As you see on slide 16, our operating assets including 146 megawatt of commercial rooftops in China and 24 megawatts of utility solar in the U.S. In China, we intend to expand our IPP assets in the Yangtze Delta area, which has attracted electricity tariffs. We are being cautious and deliberate as we prepare to build and operate commercial rooftop projects. We are very disciplined about profitability and are only selectively pursuing high-quality profitable projects. In summary, the momentum we are seeing in our business continues to reflect solid demand in the markets we serve, the resiliency of our business model, and the outstanding execution of our team. In addition to growing our business, we are also looking for ways to build a better solar power for our employees, customers, partners, shareholders, and society in general. We recognize that our role in shaping a future of sustainability brings important responsibilities. We are committed to building a sustainable and fair future. We are helping address global issues such as climate change and focus on the need for social justice, equality, and human rights. Importantly, We are making progress in the areas of environmental stewardship, social solidarity, and corporate governance. With that, we believe that now is a good time to provide our first ESG report, which we will issue in the second half of the year. Taking such initiative reflects our commitment to becoming a more sustainable and socially responsible business, and we look forward to your input once our report is publicly available. Let me now turn the call over to our CFO, Ke Chen, for comments on our financial performance. Ke?