Emeren Group Ltd

Hello, ladies and gentlemen, thanks for standing by for the Renee Sola Powers Third Quarter 2022 Earnings Conference Call. Please note that we are recording today's conference call. I would now like to turn the call over to Mr. Yuja Shai, Managing Director of the Blue Shirt Group. Please go ahead, Mr. Shai.

Thank you, Operator, and hello, everyone. Thank you for joining us today to discuss our Third Quarter 2022 results. We released our shareholder letter after the market closed today. It is available on our website at ir.renesolapower.com. There is also a supplemental slide deck posted on our website that we will reference during our prepared remarks. On the call with me today are Mr. Ewan Liu, Chief Executive Officer, and Mr. Kui Chen, Chief Financial Officer, and Mr. John Ewan, CEO of North America. Before we continue, please turn to slide two. Let me remind you that the 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 reflects Rana Sula Power's opinion only as of the date of this call. Rana Sula Power is not obliged to update you on any revisions to these forward-looking statements. Also, please note, 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. Yumin.

Thanks, Yuja, and good day, everyone. Thank you for joining our call today. I'll give a high-level summary of our third quarter results and then elaborate our recent strategic initiatives as well as provide an update on our guidance. Then Ke, our company CFO, will review our financial results for Q3 in detail. After that, we'll be joined by our U.S. CEO, Jiang, for Q&A. Beginning with our financial performance, Q3 results outperformed the high end of our guidance range. and represents one of our best quarters in the last three years. Revenue grew 86% year over year to $28.9 million. Gross margin was 29.6%, and net income was $3 million, compared to $711,000 a year ago. We achieved these results despite economic challenges and a strong dollar, which negatively impact our revenue and earnings from Europe and China. by approximately three million. Excluding this foreign exchange impact, results would have been even stronger with nearly $32 million revenue and over $5 million in net income. These results were driven by solid performance of our project pipeline and our IPP solar assets in the US and China, and the recently acquired 50 megawatt solar farm in Princeton, UK. We closed acquisition of Breston on September 30th. The total transaction value was 41 million, of which 20 million was cash and 21 million was nine recourse project financing. This acquisition marks the beginning of our European IPP strategy, which will add predictable and stable cash flows to complement our project sales business. PPA prices have been trending strongly across Europe due to energy shortages and favorable regulatory conditions. In fact, we have already signed an attractive multi-year PPI for the Brenston project through March 31, 2027, which we estimate will provide over $25 million EBITDA by the end of 2026. In addition to Brenston, we completed the acquisition of Ameren on October 10, through an all-cash deal of $16 million with earn-out provisions. Ameren is an Italian-based utility-scale solar power and battery storage company. They have over 2.5 gigawatts of projects under development in different stages, including over 2 gigawatts of solar projects and over 500 megawatts of storage projects. As part of our European IPP strategy, we decided to withhold 110 MW of project sales in Poland and Hungary that we originally planned to sell at NTP stage in Q4 2022. We will now construct these projects and operate them in our European IPP portfolio. In October, we completed the first 10 MW across two solar farms in Hungary and expect the remaining 100 megawatts will be energized by Q3 of 2023. Because of this shift from sale to IPP, we will forego over $20 million revenue and 5 to 6 million of net income in Q4 2022, but we'll gain significantly higher lifetime revenues and stable cash flows. We estimate the payback period for this IPP projects to be four years or less while still retaining the optionality to sell this IPP assets in the future. Due to the strategy shift in Poland and Hungary and approximately $6 million of unexpected negative foreign exchange impact, we now expect our 2022 four-year revenue to be in the range of 85 to 90 million. We expect 2022 gross margin to be 25 to 30%. For net income, we anticipate full year net income will be approximately seven to eight million. Looking forward to 2023 and beyond, we have many things to be excited about. We have strong presence in the world's fastest growing solar markets, thanks to growing clean energy demand rising PPA prices, and supportive government policies. In Europe, we are excited about our newly acquired assets and growing IPP portfolios. For Brest, Amren, and 110 MW of IPP projects in Poland and Hungary, we have good visibility into 2023 and expect these assets to contribute approximately $35 to $40 million revenue and $10 to $50 million EBITDA. We are also aligning our China strategy to the rest of the world under one strategy of develop, own, or sell, compared to the original strategy in China as develop, build, own as IPP. In the immediate near term, we are in the process of monetizing certain China projects and expect to close the sale before the year end. For our project development business, we expect to monetize approximately 400 megawatts of our mid to late stage pipeline in 2023. And we are targeting to achieve a total pipeline of 4 gigawatts by the end of 2023. To conclude, the future looks bright for solar energy and also definitely great for our company. We believe we are well-positioned to capitalize on accelerating solar adoption across the world. Given our deep expertise in developing and operating solar projects, our extensive network of industry partnerships, our well-capitalized balance sheet, and our unmatched track record in closing financing transactions and profitability monetizing projects, We are progressing steadily in our goal of becoming a leading global solar developer and operator. With that, I'll now turn the call over to our CFO, Ke Chen. Ke.