Emeren Group Ltd

Hello, ladies and gentlemen. Thank you for standing by for Emarin Group Limited's fourth quarter and full year 2023 earnings conference call. Please note that we are recording today's conference call. I will now turn the call over to Gary Dvorak, Managing Director of the Blue Shirt Group. Please go ahead, Mr. Dvorak.

Thank you, Operator, and hello, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2023 results. We released our shareholder letter after the market closed today and is available on our website at ir.emron.com. We also provided a supplemental presentation that's posted on our IR website that we will reference during our prepared remarks. On the call with me today are Mr. Yumin Liu, Chief Executive Officer, and Mr. Ke Chen, Chief Financial Officer. 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 Emarin Group'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 Emarin Group's filings with the SEC. Please do not place undue reliance on these forward-looking statements, which reflect Emarin Group opinions only as of the date of this call. Emrin Group is not obliged to update you on any revisions to these forward-looking statements. In addition, please note that all financial numbers discussed in this call are unaudited. 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 Yumin Du. Yumin, go ahead.

Thank you, Gary. Thank you, everyone, for joining our call today. I'll begin by providing an overview of our performance in Q4 and the full year of 2023, followed by the main achievements. I'll then talk about our project pipeline. After that, Kerr will deliver a comprehensive breakdown of our financial results for Q4 and our guidance for 2024. We closed 2023 with 104.7 million revenue. 22.2% gross margin, and a 9.3 million net loss. These results were below our full year guidance, primarily due to the delays in closing the sales of six projects in the US and Europe, which are now expected to be pushed up to 2024. Our Q4 results were further impacted by several one-time items, including a 4.1 million assessment the earn our revenue at our 75 megawatt of projects in poland as well as a 5 million of write-offs of project cancellations and bad debt reserves our projects continue to face delays due to a mix of rising interest rates affecting financing terms utility scale project delays stemming from transmission capacity challenges and regulatory uncertainty in the us and europe These challenges underscore the need for adaptability in our project financing strategies, the importance of early engagement with transmission and utility stakeholders, and close monitoring of regulatory development in the US and Europe. Despite these challenges, we are focused on executing our core solar project development strategy, diversifying our global footprint and advancing our position as a leading global renewable energy company. Turning to what we have achieved in Q4. First, we announced the sale of a 53.6 megawatt solar project portfolio in Hungary to Chronospen Douglas Renewables. The portfolio includes six projects at various development stages, with four already operational as of today. This venture contributes significantly to Hungary's photovoltaic capacity and aligns with Amer's mission to enhance solar energy infrastructure. Also, we acquired an 86 megawatt solar portfolio in Spain, comprised of 13 utility-scale projects. These projects are expected to significantly contribute to our energy production capacity, powering thousands of households and enhancing our storage capabilities. Further, we achieved a significant milestone by setting a 703 megawatt battery energy storage system, or BESS, project portfolio in Italy to Matrix Renewables under the Development Service Agreement, or DSA, which combined with the previous sale of the 260 megawatt in Q2 amounted to a total of 963 megawatt of batch projects, with the majority of the portfolio having an eight-hour duration under the DSA structure with Matrix. This achievement marked a substantial advance towards the agreed portfolio target of 1.5 gigawatt in the DSA partnership with Matrix. Finally, we expanded our energy storage portfolio in China. by acquiring a 10.8 megawatt-hour energy storage portfolio. This acquisition, comprised of six energy storage power stations in Zhejiang Province, enhances Ameren's position in the China energy storage market. We plan to generate returns through energy arbitrage and participation in virtual power plant scenarios, leveraging the facilities connected to Huaneng Power International's VPP platform. This strategic move aligns with our global storage expansion and the growing VPP market in China. We acknowledge the results over the past two years have been unsatisfactory, and we fully accept responsibility for not meeting investors' expectations. To address this, we have been working under a development service agreement structured to recognize revenue and receive payments from early stage projects in Italy in the past year and a half. This DSA model is now being implemented in more markets, including several countries in Europe and the US. This strategic move allows us to capitalize more effectively on our early stage project portfolio. Compared to the traditional model of the revenue recognition and payment collection at the notice to proceed or NTP stage. A DSA enables us to better manage our returns and risk throughout the development process, optimizing the timing of the project completions and bolster cash flow. We also implemented strategic cost control initiatives throughout all regions aimed at enhancing efficiency and optimizing resource allocation. These measures include workforce reduction, lead management policies, and halting certain greenfield developments to concentrate efforts and resources on advancing existing project portfolios. This shift aims to reduce overhead associated with new greenfield exploration and allocate personnel more effectively to projects with higher likelihood of success, improved profitability, and shorter development cycles. In addition, in February 2024, we announced that our board of directors approved an accelerated stock repurchase, ASR program, of up to 10 million. This accelerated stock repurchase program underscored board's commitment to our shareholders and confidence in the company's future growth. With our expertise in solar project development, strong industry network, a solid balance sheet, We are making significant progress towards becoming an industry leading global solar and storage developer. Our strategic focus remains on maintaining a lean cost structure and achieving sustainable profitability while monetizing our extensive advanced stage project pipeline. Looking forward to 2024 and beyond, we remain well positioned in the world's fast growing solar markets that are benefiting from increasing demand for clean energy and supportive government policies and technology trends. The solar industry is experiencing strong tailwinds, driven by the global commitment to renewable energy and sustainability. Governments and corporations worldwide are setting ambitious targets for reducing carbon emissions, which in turn fuels significant demand for solar energy solutions. One of the most exciting developments in the renewable energy sector is the booming demand for solar power to support artificial intelligence, AI operations. As AI technologies become increasingly integrated into our daily lives and business operations, the substantial energy needed to power these advanced systems is evident. Solar energy and battery storage with their scalability and decreasing cost profile are becoming a reliable source of power for these high-tech applications, further driving demand in the sector. Moreover, we are witnessing a surge in overall electricity and storage demand. The electrification of transportation, the proliferation of electric vehicles, and the increasing need for energy storage solutions are amplifying this demand. With strong demand for solar energy storage projects globally, We entered 2024 with around 3.1 gigawatt high-quality advanced stage project pipeline. We anticipate monetizing approximately 400 to 450 megawatts in 2024. Furthermore, we accumulated approximately five gigawatt independent storage project pipeline with four to eight hour duration in the planning, which equals to 20 to 40 gigawatt hours at end of 2023. We expect to begin accelerating monetization this portfolio in 2024. We expect 2024 full-year revenue to be in the range of $150 to $160 million. We expect gross margin to be approximately 30%, and net income to be at least $26 million, approximately $0.5 per ADS. We anticipate our 2024 IPP revenue to be between 24 to 26 million and the gross margin to be approximately 50%. We expect gross profit contributed by DSA globally to be at least 6 million. For the first half of 2024, we expect revenue to be in the range of 50 million to 55 million. We expect gross margin to be approximately 30%. Finally, We expect our operating cash flow to be positive throughout the full year of 2024 and cash balance to exceed $100 million at the end of 2024. Now, let me turn the call over to our CFO, Ke Chen, to discuss our financial performance and guidance.