Q4 2019 Earnings Call
Thank you for standing by please note the event will start in two minutes again, Steven will start in two minutes. Thank you.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Jinkosolar fourth quarter and full year of 2019 earnings Conference call.
At this time, all participants I know listen only mode.
It will be a presentation followed by a question answer session, which you will need to Prestero followed by one on your telephone keypad I would now like to have the conference over to your first speaker today Mr. Triple Zhao. Thank you. Please go ahead ripple.
Thank you operator, I can't really well drilling appetite for Jinkosolar fourth quarter full year timing I can't I mean, how critical the company for without well we need on yesterday.
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Please note that states discussion will contain forward looking statements made on the safe Harbor provisions of the U. S Class Securities Litigation Reform Act like that to flat.
But want to they'll keep statements involve.
The risks and uncertainties as such our future results, maybe Mike So many different from the views expressed scale.
The information regarding these and other risks include it in some color. So that's public filings with Securities and Exchange Commission Jinkosolar got stuck seal and application to update any forward looking statements except as required.
Take a bundle.
It's now my pleasure.
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Jinkosolar Nicktropolis inaccurate and I will translate these comments in English.
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Sure good nickel, great guys, Oh, gosh, I got from document I get roughly.
Thank you recall good morning, and good evening, everyone. Thank you for joining us today.
Sure you obviously during their shopping there comes a dime degree of gets on in the crusher suffice hitting agenda. It probably does come back.
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They they came from the lapping expats, you're about mono wafer production capacity during the second half of recognizing and our industry, leading integrated cost structure, we closed out the air recovery strong performance.
Larger shipments for the revenue and gross profit.
Record high for both the fourth quarter and a full year EBITDA was $318 incomes 19, non-GAAP net income for Air Canada at 140, U.S. dollar, meaning at U.S. dollar while gross margin expanded it to 18.3 person.
Oh significantly improved when compared to last year.
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Hi, Latonya.
Sure.
What I continue to sometime here because as possible.
Thank you 19 significant milestone was not operate history, which recently executed successfully completing our transformation into the most competitive manufacturing either alone.
Efficient execution.
Strategy through [laughter] here and I've got to rack.
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Taking they increased the proportion.
My through our pre integrated manufacturing process.
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Last production I want innovative products and that he predicts them to our growing customer base eager to any stage from their increased efficiency. We also further refined management process to further optimize operational efficiency across our business and supply chain, which significantly reduced manufacture.
Green coffee.
As a result after the close outs easier we significantly expanded share on a global market.
Which I think.
Are they transact to continue doing to sell into your ahead, where we expect module shipments increased by approximately 45%.
Thank you again trying to your conference on June.
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No installations globally and real estate today throughout the year expiration in Europe, that's taking Nike while active.
Hi, after without our constrain supply.
The margin market flower show with many of them approaching gigawatts levels, which we believe it reflects the direction.
Happy to wasting by diversifying globally, instead of being potentially a few large markets.
Great.
May approaching the long term growth potential.
Industry, if the western they opening up governance across the globe increasingly devoting resources volatility medical length of clean energy and quickly rolling out plan with the medium to long time package for clean energy production. We believe looking mind Btwenty will continue generating strong.
Well its momentum with newly added information except to be in the range of 140 to 150, Gigawatts increase around 20% year over year, turning to economic market didn't make announcement of the government subsidy policy for PV projects in China in terms of 19 NAFTA.
The time for companies to create something like project, you recognize application, which resulted in many of them being pushed back intercompany tripping necessity for Twentytwenty expire.
Now lets down last year, which will allow more time called project development planning and application on the without higher level of completion rate.
But the now.
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Expected to be just 40 to 50 Gigawatts looking at increase of about 50%.
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Hi came the outbreak of corporate Nigel local governments across the nation, having to like a series of Cup comprehensive syngenta measure to approve Greg.
Bringing out a quick other control if measures.
Equally.
Extending the Chinese new year holiday lighting.
And distributing medical resources and strict controls.
Question, which has impacted the so let me.
Based on internal data container demand that we tend to work, creating a shortage has.
The corporate actions impacts.
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Our next.
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I've talked to some locker shipments during the first quarter, which has been.
The second quarter.
In response to the upfront we implemented now opportunistic.
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And your teeth, including ensure safety health are important and minimizing the impact.
Action.
Hi.
Up on critical raw material and Matt.
A quick action and logistics the situation is gradually improving asset economy gradually with us.
That temporarily impact on our supply.
It has improved.
Capacity utilization rates has already reached 100% we estimate that.
Outreach to 500 megawatts of our solar module shipments in the first quarter, let me play into the second quarter, which caused shipments investor to core countries.
The company. Thanks to this metric we believe the impact on our shipments.
Acetate expansion pack for for public company or not.
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Our next question.
I mean precious agenda.
Hi, all idea, we landscape for strengthening our competitive edge is a market we increased our investments into R&D in 2019 winter without.
Thanks, Ricky sales efficiency and module as well as Recode Clive enjoy.
And in Washington, and generate 2020.
Really appointed Chief Technology Officer, who will lead excellent.
On the efforts and quickly claims entered mass production of October product.
Hey, Tony Nike, we officially launched related additions to our range of premium Cheetah products. This will likely grow module, which clearly Andrew Baum ticking up based factsheet.
The modules comprehensive performance quality inevitable design and industry application what was recognized within with tip of the England sold out of what Tony 19. In October 2019, we say 10, new standards for industry with the launch of a new high efficiency power modules using now.
Uh-huh mono PERC and then.
Hello.
Technology, we were the first in industry to sub technical prominent using paddling wave and technology and the first two peaking mass production of high efficiency monitors with meeting on costs as part of our depreciate put backs, but to date, we released a new generation and modules.
For the residential market, which has been widely adopted by customers for its ultra high efficiency and effectiveness.
It's bricks to demonstrate.
Ability to lead the industry.
Clay income for power generation efficiency and energy density going for what we will continue to allocate resources towards the development of package H. technology and accelerate the mass production.
Okay products leveraging the significant.
Advantage.
Our.
Fully integrated industrial Chen provides.
Our next year again, but not just a couple of trying to think about timing that come through that time shutdown.
Maybe your cost reduction from presented a hitting Jay.
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Yes.
Our production would you have to order temper, our chief regarding Jen.
Thank you liking our ability to compensate drive technological breakthrough.
Capital under with our expanding production capacity for high efficiency products continue to drive down manufacturing cost.
Integrated cost structure now leads the industry wafer side.
Like our integrated a mono crystal Bernice controlling controlling system, which is highly highly customized.
And the intention to the production process, which will further improve production quantity and efficiency on the sales weeks, Andy and updating.
Capacity by four gigawatt within four months braking and Thats really call it will lead the industry into mass production.
Hundred megawatt hour high efficiency and type sales wins at leading conversion efficiency currently available.
Our merger side, we are maintaining our leading position in terms of module shipments manufacturing costs and product quantity and leveraging our global footprints and fully integrating industrial Chan.
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Well. Thank you guys have you done at over onto kind on it for them choose to get to that you're going to snap on credit when entering aqueduct. So is your project execution.
The competitiveness of products in the market today is driven by the technologies. They incorporate the ability to invest heavily in R&D and applying new technologies to the mass production is increasingly concentrating among a few players in the industry, who have the capacity concentration.
And industrial generous, making it to drive the pocket Fort we believe the market, we're continuing to be concentrated among our peer leading players going forward and will allow us to continue growth.
Market shares over the next few years.
And if I mean, just could you go more consider that ingredients that up so you get glass.
Again patterns for Dan It would you like so again 100 products.
Yes, it's always hard to share more credible shipment by Geo, Canada, chief passenger or might you consider comes in greater China, charging and see a competitor budgets.
Thingworx, although at a targets our energy density attending.
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I'll read our concentrated on issues within gap.
Touching pembina, yes, our future.
Because of that George you want to turn here for Tenapanor, because you talked about junior often do more pushing towards.
And capacity side, our half mono wafer.
Sales and high efficiency. So the module production capacity now reached 11.5 gigawatt 10.6, Gigawatts at 60 Gigawatts respectively.
Of the fourth quartile, Kathy Nike given the rack release of capacity as part of phase two of the shaft project and production at efficiency increase.
Well the existing capacity, we expect our mono wafer capacity to reached 18 Gigawatts in April to tricky. Meanwhile, the 800 megawatts of out during high efficiency and pipe sales project has reached full capacity in our fourth quarter of 2019.
Patients to meet growing declines are never take mass production targets.
We will gradually expand mono.
Expense.
Capacity nine Gigawatts NATO from this courthouse twentytwenty.
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To your Dungeness Carlita is your medium term, calling on digital goals that represents altogether I guess, we buy funding should you have to Jim.
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Bob I caution Xerox Jen.
Before turning over to Jack I would like to quickly go through our guidance for the first quarter of Twentytwenty based on pilot estimate.
From the outbreak of College 19, we expect total solar module shipments in the range of 3.4 gigawatt to 3.7 Gigawatts for the first quarter of Twentytwenty total revenue for the first quarter and expected to be in the range of lumpy get us dollars to 12.88, a lift already.
Gross margin for the first quarter is expected to be either range like team Jude can you walk.
We will wait.
Great guided full year 2020 shipments to aid in the range of 18 Gigawatts to 20 Gigawatts.
Thank you Ms. Chen.
Looking forward.
Sure.
During the fourth quarter 2009 to.
Our total shipments for modulus reached 4538 megawatt direct core high for the year.
Total shipments for the full year 2009 to 14.3 gigawatt.
This impressive performance allowed us to retool our number one position in terms of shipments globally for the fourth consecutive year.
In terms of regional growth non China shipments accounted for approximately 83% of the total shipments in 2019.
Outstanding results driven by our comprehensive global sales network and the localized professional team.
In currency night to the proportion of shipments between North America on the Europe growth significantly.
Creates a more balanced the cells portfolio among both market.
We also implemented in the strategic close to deploy all the services in key emerging markets.
Leveraging our global marketing networks.
Part of Rice model based high efficiency products as a contributor the total shipments increased significantly from 44% in 2018% to 74% in 2019, which maintain coke to become not only the world's largest module supplier, but also the world champion of.
Mona.
Module provider.
As the word leaving module supplier, we understand the same forecasts and the value of excellent customer service say in the pink refi us from competition.
In 2019, we closely monitored and analyze the market demand to improve and optimize our global distribution networks.
After having carefully studied at the local policies and the various technology through the Norwegian practices, we further improve our operational efficiency and upgrade to our flexible supply chain management system, which are expected to treat with could drive further improvements in customer satisfaction.
Looking forward into Twentytwenty, the proportion of non turned the shipment is estimated to remain at 85% national.
A lot of mono PERC high efficiency products will further increase up to almost 100% by the end of Twentytwenty.
Meanwhile, data of new product with higher energy worsening efficiency and the power output, we'll keep over 40%.
Geographically speaking, we will seize opportunities to generate steady growth in mature markets going forward to enhance market penetration by our high in the products and the premium services.
Well contribute continuing to expand our arms in the deeper into segments of each market over next three years.
From a demand the perspective, we are very confident hub.
Domestic about the global market in 50 50.
Firstly, let me share with you some current updates in China.
The second half of 29 to five along with the supply chain system, how being said, we adjusted the recap recalibrated due to the delayed demand.
As a matter of fact protect economic competitiveness in multifold providences surface.
Making solar to treat the source of energy available locally.
Delayed announcement of the government disrupts the policy in 29 to resolve data you approximates a tone gigawatt of installation to beat the late 220 currency.
Earnings Finalization of subsidy policy, because you can be expected to.
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Lastly, we increased our investment into R&D 29 tier and the lunch the one tiger and untied height to 50 per to.
Targeting different marketing effectiveness and the Cline.
Neil products with strong demand received the very positive popularity.
Throughout the night, we'd be pen deepened our interactions with our clients and other markets sites.
We participated in 257 marquee event globally for our Keysight doubling the amount between 2080.
A very strong demand intensity brinci and I remain optimistic about our first cost brass reliable customer service mature supply chain, along with that give us deployment of marketing campaign, we slowed sir stringent how global reputation for producing cost effective under reliable high pitch.
Correct.
With that I will turn it over to Chardy.
Thank you again.
The financial results were saw with quarterly and annual module shipments total revenues gross profit pushing historical record.
Looking to tenants on here well, we're confident about our since then but close we continue to strengthen our product portfolio by promoting new high efficiency products.
Further solidified our shipments and expand Goepel Mark this year by taking advantage of our top brand global manufacturing and sales and marketing good presence.
Meanwhile, the pant expensing of integrated production capacities and eating cost structures will drive our future profitability.
Furthermore, we continuously strengthened our balance sheet they tend to reduce leverage ratio. Our production capacity expansion will be funded by our strong operating cash flow and I'm sure renewable infrastructure.
Yes, this Ross any international solar.
Projects in Q4, we enter into an agreement to still two solar projects in Mexico with a combined capacity of 155 megawatts.
Pasta so for funding.
So obligation.
To close this high Saxons by April.
Once the transaction, we've completed our total debt well be reduced by one kind of 31 man you ask powders.
Consistent with our strategy to focus our solar manufacturing business.
Turning into Q4 results.
So revenue increased to 1.37 billion U.S. ours.
27% sequentially gross margin was 18.2%, excluding the 80 Threed easy verso benefit gross margin was 18.1% compared to 18.5% in Q3.
Gross profit was 248 million U.S. ours.
House to too high of Tunius remain you ask stars in Q3.
EBITDA was 161 million U.S. daughters.
60% compared to 100 million U.S. ours in Q3.
GAAP net income.
Ladies and gentlemen, we apologize for the technical difficulty.
These companies down the line as we try to resolve this once again apologies for the inconvenience.
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The.
Turning to the Q4 results total revenue increased to 1.37 billion. Your Srs optimist, 7% sequentially gross margin was 18.2% excluding the 80 CVD reversal benefit gross margin was 18.1%.
Compared to 18.5% in Q3 gross profit was 248 million U.S. aureus compared to 220 US remain you asked orders in Q3 EBITDA was 160, a woman you asked partners off 60% compared to 100 million you asked.
So in Q3.
GAAP net income was 62 men your source this translates into a non-GAAP diluted earnings per Ats, a $1.40 cents.
Operating expenses accounted for 11.9%, our total revenue compared to 12.8% in Q3. The decrease was due to a decrease in shipping costs as the percentage of revenue because shipments to China accounted for a higher percentage autoship.
Events in Q4.
Now what are your for you our work through some 19 full year financial results.
2019 was so significant that is stronger than to say 18 total solar module shipments were 14.3, gigawatts opportunity a 6% year over year.
Total revenue was 4.3 billion usource up 19% year over year close modules.
<unk>, 0.3% compared to 14% in Tucson 18.
Excluding the Eightyfifty the virtual benefit gross margin was selling teams going 5% compared to 13.2% in 2018.
The substantial increase costs contributed by global growth, our integrated production capacity in second half, what Tucson and team the continues to be talking all manufacturing costs and our highly diversified global sales network.
Operating expenses were 12.4% total revenue in 2019 compared to 5% into saw 18.
The increase was due.
Increased shipping costs as a percentage of revenue driven by higher percentage of shipments to the international markets.
EBITDA was 304.
So in the six named US dollars compared to two kind of trended full man you ask cars in 2018 net debt.
EBITDA ratio was 2.7 times significantly improved from four times in 2018.
GAAP net income was long higher Ceridian I mean, you asks are compelled to.
Surface streaming you asked dollars into saw 18 this translates into a non-GAAP diluted.
Basic earnings per Ats Australian dollars and 29 cents.
Moving to the abandoned seat at the end, though Q4, our patents on cash and cash equivalents were 895 million you asked Sars compared to 580, I mean, you asked ours at the end of Q3.
They are some over days improved to 58 days compared to six is three days in Q3, the inventory turnover days reduce to 67 days compared to 93 days in Q3 total dads were 1.9 billion you asked honors at and then though Q4 amount.
Which 294 million in us dollars, what's related to international solar projects compared to one point. So I've been in your Estars at the end of Q3 net debt was one thing you asked honors compared to one for one thing dressed ours at the end of Q3.
We reiterated our guidance of total solar module shipments for the full year Tucson trendy.
In the range of 18, Gigawatts to 20, Gigawatts Capex for the near 20, it will be around 350 or in draft daughters. Operator, Let's go to the question answer session.
Thanks.
Thank you ladies and gentlemen, if you have any questions for your speakers today. Please press cereal followed by one on your telephone keypad and wait for your name to be announced.
If you wish to cancel your request please press cereal followed by too.
Again that still one on your telephone keypad now.
Your first question is from Philip Shen from Roth Capital Partners. Your line is now open Phillips. Please go ahead.
Yes.
You guys. Thanks for the question some congrats on successfully navigating through the current a virus disruption in your operations I can imagine I think it was a pretty tough challenge that said it looks like we're likely going to get a substantial amount of demand.
Destruction in the U.S. in Europe.
How do you plan to navigating that like the likely demand issues in these two regions I think they could.
Be nearly 50% of your revenue in 2020 are you hearing yet to have any cancellations I know it's early.
But what are your customers telling you I think you guys are have pushed out a bunch of shipments from Q1 into Q2, what's the chance that we get some.
Substantial I shipments being pushed from Q2 into Q3. Thanks.
Thank you Phil This is China actually we are actively talking to our customers auto was the work including Europe.
Actually right now the current feedback, we gotta from customer and they still need support us and the pretty urgently one and the one side as the market demand is still there and the another side, there's a short of supply in Q1 because of the.
Great. Thank China. So as they are you expecting who come as days a loss on the catch up with the there.
Congrats on the revenue, but well that's up this year.
What we heard.
Beyond the August vessel securitized steel in the normal position and we cannot hear any outbreaks or and a couple support delivering all goes on it over the contract.
E. coli be cressa black or that we are experiencing some on logistic although not meant a it's not canceled.
Do you or canceled that do you agree to cost longer time for that.
For the inspections and the clearance, but still you know everything out still in the right right now, but we arent closely following our customers and market to see if theres anything happening.
Okay. Thanks.
I know, it's a real time situation. So it's an fluid so.
I can imagine we'll be getting more.
Updates later.
As it relates to capacity expansion theres been a lot of announcements by your peers.
You know between what's interesting now as you know as you guys ramp up.
I want to say you guys.
Ecosystem is ramping up.
Could be this demand slowdown, yes, it's a it seems like a potentially cut situation are you seeing any potential impact on what are you hearing about pricing.
For 2020 is their chance that pricing could be incrementally lower than than what you guys had expected back in November.
Thanks for.
Addressing this issue.
Thank you Phil.
The market price side, what we hear or what we are looking on right now is deal with the market price comp that dollar had been a compare with let's say.
Q4, but still in generally stable between Q1, two and all the deals were looking at restaurants. This year the intensity pension assets. It's many good quarter scientists expectation Alpha short of supply for Q2 unit procure straight because people need to catch up there so lots of.
Delayed demand to be ship.
Use the Q2 Q3 capacity to to compensate store in general the high quality high efficiency capacity are still in a short of supplies you short term in long term, we believe the solar industry as a whole needs to continue to improve of south to provide a better economic.
In terms of the resources.
Sorceress off the power market.
Hope that answers your question.
Hi, Thanks, and then my last one here is when you guys provided guidance back in November for Q4.
The implied kind of blended cost per watt was roughly 22 ish sense, using but our Bakken without back of the envelope calculation for the actual Q4 blended cost per watt was closer to 24 cents.
After maybe backing out some project sales.
Can you talk about.
How why chemo came in so much higher the cost per watt for Q4. When you gave the guidance in November so you're already likely shift.
The modules for December so did something in December the causing some becoming much higher than planned or.
If you can give some color there that would be great. Thank you.
The fed up on the.
There I'd say there maybe some nice interpretation so for the no cost structures and there.
The fact is our in house integrated production costs.
To.
Turning to improve through the fourth quarter.
And well we're confident now no we are leading well wasn't the eating.
Integrated.
Most of producers and the with the cost leadership.
And.
Im not sure how you calculate the Ace P. EBIT. This you know maybe that blended cost and the wont wont what was the factors may be I think data integration level and if you look at and you know I'm tool for the total shipments on 4.5, Gigawatts, which is you know.
Significantly higher than the sort of quarter the shipments.
So I'll close with our internal production for the mono wafer as you know product sales continue to increase but if field.
Actually the integration levels I think you for the Q4, given the strong shipments significant off.
Integration level, it's relatively lower than.
The third quarter.
Okay.
From a calculation standpoint, we're just im just simply taking the from the guidance for Q4, just taking the shipments and the revenue guide and then.
Like the gross margins all blended yeah, just says to us.
And yeah.
All of the total revenue uplift for the Q4, we have roughly.
6% on revenue is from the.
Self serve positive for the multi wafer.
On the low end patient.
Sales and in the way we continue to operate the legacy multi wafer capacity is roughly 3.5 gigawatt.
Our product being shipped it shifted almost like a sense with a mono modules and the.
So we produce a multi wafer and without the so pardon.
And as a monkey is low, but we still make some very tiny.
Net income funds and multi wafer business. So that you need to when you calculate days ph et cetera, you need to excluding the 6% in revenue, which is not relevant sort of module.
So I think that go get more accurately due to bend the cost.
Great. Okay. Thanks for the color I'll pass it on.
Thank you.
Thank you Phillip Your next question is from car Liu from CCC. Your line is now open Carl Please go ahead.
Hey.
Is that men taking the crashing.
My first question is above the guidance.
Gross profit margin in the fourth quarter. So we have a 19 to 21 gross margin guidance.
We are seeing the wealth my these slides of the decline in the fourth for the so so could you. Please give us some guidance on the how we achieved the at the bottom out in the first whether it's coming from the product mix improvement from high efficient.
Oh or.
They cost reduction and the we have I have a follow up question.
Okay.
So it really ever compressing and the delivered roughly 18.2%.
Margins.
Fourth quarter, and the which is relatively lower than our original guidance the 18.5% within 5%.
And.
That is because in the way we have higher multi wafer revenue.
The which is which is not.
Our original estimations excessively it ties a multi wafer self pay sounds of vacant basis, we'll wait for the basis.
The as us they've makes probably modeling LIBOR congenial production Thats, just what's our partners for the.
Once you wafer to gross margin.
No it's roughly 5% so it's its impact is impacting to the blended gross margin. The second the second thing its a.
No module shipments is.
Experts and higher our estimations.
For the incremental shipments it's from our internal production is we need to buy the sale.
Solar cells are ready to assemble the modules the margins, but lower.
A significant lower that actually.
Okay.
Gross margins from our integrated.
Produced modules, so back to process, the fourth quarter relative lower onto affect us wise, we have more revenue from the multi wafer what you've referred to margins level second wife module shipment is higher.
While we expected by the incremental par into the margin flow work, because we need to five solar cell pumps or party.
So that is the key Ruth.
On the for the for the Q1, we are looking to increase our R&D. It goes modeling to 19% to 21%.
On the it's firstly as you know.
The Q4, we have roughly 75% shipments to China, China This feasibility lower.
Q1, we have lower shipments to China profit essentially 50% from the ASP perspective.
Because of Diversifications mall to invest in our markets on the ASV is relatively.
Yes.
Our stable this is first.
Thank you and the second wife.
Because our the second phase five gigawatts mono wafer is ramping up space.
It's going to.
For capacities in April so we produced more model wafer fab. So during the first quarter, which means we are going to integration level is is higher.
Dramatically higher.
Fourth quarter.
And as well as we continue to to improve our internal production costs.
That is a key fundamental reason and two to two to increase our goes to have higher gross margins here first quarter.
Okay. So we both have the pullback mix improvement and cost reduction because the integration percentage increase right. So we have more.
Modeling that capacity that we can we should the Bible. So the patent.
Yes, yes. This is the first is key.
First the most important drive raisa integration level is higher.
And.
You have more want to wafer production by myself.
So we have.
Well mix into international markets, our is relatively stable quarter over quarter.
On top of that we still improve on other a little bit enough.
That's in costs, because you had to watch the some kind of Tenda Chalktown engine.
You know certain materials.
I'm not sure coffees under the two higher credibly internal production cost us some improvement.
Okay.
China, but it sounds.
Yes, so good.
And I have some color on the you mentioned about the integration potentially you look if we can compare with the fourth quarter, whether we have what percentage of integrating level, how its level of maybe and look what the up without Nike.
We have these numbers.
Yes, we we have either roughly on the.
Well, we attack or the integration levels, we will use them mondavi for paradoxes races.
The sale productions.
Average total so for example in Q4, we produced Mondo wafer referred to a point.
Gigawatts Andas self 2.5, Gigawatts, so roughly an integration 2.6 gigawatts with is 4.5 gigawatts integration level always.
Yes.
Relatively lower domestic they've accent and for the Q1 on the given our shipment is relative lower stray from four gigawatts should close six gigawatts. So I view, roughly 65 for central 70% integration level.
Okay.
Thank you and now I'd depth of questioning about the demand side. So.
We are seeing the car buyers not only impact on China about going overseas. So can we have some color Bob maybe over the book now let solid visibility all like either in that.
Thank you tend to Gigawatts of May ship them at this year. So do we have that will be the beating the order book this year.
Yeah, So I I first taking the classic any general supplement and actually thanks.
Virus the impact of in China, actually firstly, so so timing impacts.
So we are.
Sam the exit of ratio.
Order visibility this and are you listen to and losses on the we have a size is off the over 55%.
Turning gigawatts this year.
I was asked if we have.
A couple of Gigawatts.
And the arrangements and.
Well were covered on efficacy of from the Gigawatts.
Because we.
We love to have no exposure to over 100 countries and the we have committed is let's say to medicare's some risk off from some sort of countries. The Tessa.
Demand no maybe some disruptions in southern peers.
We are able to Medicaid.
In some countries, we got shift more under Visys.
Our countries because of demand softness we kind of mitigate so.
I think you know we worry covenants that is why we actually don't change.
Full year guidance to a new gigawatts and.
Capacity expansion pack.
So they will do lives.
Yeah, Yeah, thanks for the but I would say thanks, that's all of my best practice.
Okay.
Thank you.
Thank you Carl.
Next question is from my Mum noise from Credit Suisse. Your line is now open Sir Please go ahead.
Hi, Thanks for taking my questions and I apologize if I Miss it earlier, just having a some technical issues here as well.
The.
I know that the Corona light a situation as a.
Changing and every hour every day basis, but to the extent if demand is actually lower dime expected for the year can you talk about any flexibility you have.
And now you're shipments are your Capex plan for the Oh, if you could delay any of the capacity expansion plans.
Scheduled for later this year.
If I I tour I give you a classic car rockfish youre talking about the.
Capacity expansion.
Right and the this year and the.
Are you increase the amount of wafer actually the mono wafer capacity every sorry.
You know, there's I'm hopping on the.
From the.
The Q4 last year. So its own is it's almost up for the bundled wafer and.
What about race to 18 Gigawatts in April.
The next month.
And we'll continue to increase outputs that you know the total capacity is rich to 19 Gigawatts model wafer capacity by the end, though this year so for the model with rates or almost his wife is into <unk>.
On top on that given away.
We have no the go to rich can they gigawatts.
We have only 16 gigawatts.
Mando module capacity by the end on last year on the we plan to increased 99, Gigawatts Mando module capacity throughout this year and then the Muslim passive.
By the end, though the second quarter.
So we I think.
We we don't have the pan to change I on the and the if you look kind of long term perspective, let's say the next year.
And.
Yes, we can deliver sort of person goes and so on the mono capacity is a cap capex not intensive and.
Great.
The.
Customer in March we are doing the you know the next generation Trx acknowledge compasses non standard compasses and.
Back to generate cracks here for the high inpatient.
And you know on off come past year, we're expecting from here to be new shortage the supply shortage. So.
So back to request and we don't have pen to change.
In terms of our Marlow more the module capacity expansion plan.
Fair enough and then.
Yeah, I hate to I think.
It's kinda yeah sorry.
I think I'll take that I'd be a more from the demand side to help you and that's.
Why we keep our or retail Pat I'd say, if we look into that demand.
Side.
No matter, which I know that's required it has even the lower grand goodwill over 100 gigawatt annually right, but most of conservative right. So it's a huge market the amount of compared with the expansion or the capacity we have at the top top player in that industry. I think the we are all that stuff.
That said prioritize that as.
Prefer to supplier.
All our client so when that were outside at the demand they bought some product they offsetting for first you have about availability.
So that's why are the top tier supplier like Genco I always you know having sufficient order book.
Meanwhile, our expansion like what Charlie.
But very important part of the Capex the stuff for the.
The increase says the integration level, we had we see having largely cost.
Correct.
Okay are critical.
Two.
You improve our cost structure. Meanwhile, we are upgraded and expanded slightly for our module side, which give us the competitiveness to continue to supply the high efficiency on the high end the product, which is always the you know always welcome that on a pre Florida for any customer all wasn't work.
So follow those two logic, we do believe in that the marquee. These huge and that we are we on the preferred supplier short of supply of high efficiency Acorda. Meanwhile, we can continue to.
Improve our cost structure. So that's why we continue to expand that according to our Meanwhile, actually acquiring a corona wires impact.
It has not significantly impact the market till now all of our customer and the project side.
Hi stick to their pet and we have been requested to ship out AWS modulus and follow the scheduled to close today. So we have not.
Steve and.
So from our customer and saying Hey, three thoughts as Air Force majeure, or just big impact because of the virus steel not even some up or having customers continue to ask us to ship those products you learnt a lot you take longer thing effective.
Got it.
That's helpful. And then can you just remind us of how much integrated capacity you have for the full year footprint 19 was the in house.
For the and I was mono bore capacity was of the 20 gigawatts of shipment target.
They will not have.
The 20, Gigawatts, Siemens roughly 99% almost why emphasize model.
No base highly efficient products and they have to look out of the.
I see integration levels and the rich 19, gigawatts modeled wafer so almost wife Risa Palace self and it doesn't give us probes.
And that would need to do the OEM you know for their gap.
And as you know for the sale capacity versus.
You know that tend to Gigawatts, you know the gap under so and the for the for the foot for them.
A module capacity.
Almost we produce how itself you know able to rich to near five gigawatts.
And we plan to produce 20 Gigawatts module so the Gabby.
Phil on the which is we are able to.
To do the OEM and the to go with OEM and are you using.
Using it converts hour.
The produced the.
Mono wafer to sell.
So.
Yes.
If you compare year over year, you know two is on the need to India with his 2019.
The integration level is dramatically increased.
Got it then.
Just keeping that high integration level in mind and.
The higher mix of.
Ladies production or Chinese supplies this year.
And your visibility in pricing can you talk about your expectations for gross margins for the rest of the based contracts.
Yes, yes on the.
You know.
Our targets and close marketing, it's a conservative it's amazing its a.
For the integrated production Mando modules, I will target gross margin of 20% to 25%.
And no.
Some all new new products and markets higher for example, the TR.
Modules and that for example, and higher than margin.
Second they have dramatically higher than the conditions through 25%.
And then in terms of the.
Blended gross margin, we need to think about you know the sale, we need to do the OEM right and.
And it's roughly.
We believe its property high teens blended gross margins throughout the year.
And.
We we have no.
Targeted for the net income as well and it's a roughly.
4% to 6% net margin.
Net income marketing and the converted to net income roughly 200, mainly U.S. ours to 300 and your stores this year.
Got it I'm hopeful and then.
Probably just one last question from man, but I'd leave it for a does the on the residential solar market protocol T. Our product could you talk about like which markets are launching them and how much is at U.S. Your open other markets and how much price premium do expect on those products versus.
Selling and do a utility solar farms. Thanks.
Yes. Thank you Mike I think this.
Paradox, well lunching talked me I'd be stable market, many covering all the may I visit from market, including like the U.S. Europe.
Australia, Japan, you know.
All the major residential market has been well cover an advertiser.
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The premium we can gather from the market a square hi, it's almost a 22, 15% to 20% higher than the banner.
Attacks or like the commodity products, so were expecting that product that will contributing a lot of but the good reputation and.
Customer feedback fortune.
Thank you.
Okay. Thanks.
Thank you did you the interest of time this will be your last question to be from Alex whose for new B.S. Your line is now open L. Hicks. Please go ahead.
Thanks, I got two questions one it's regarding to your capacity expansions. So last call you have progressed with smaller capacity expansion plan in a in the sales segment compared with your wafer and multi pensions. So what you are just strategy and the logistics is up about the behind the because the same.
Like.
It should have more what what couldn't get hit the past the cross with Patricia.
My second question is fault, the asps of watsco wheels, and thinking about the ask you across the supply chain it across the year.
I mean, you know MCU quarter from poly silicon wafer automobile. Thank you.
Yeah.
In terms of first class seems Oh, we were doing last night, no capex and we look.
For the long term as we look for the tool to adjust for years, we don't look just for one of yours and.
We we make if we make the investment and we want to make sure that come passed it is worth a competitive next two or three years.
The other thing time, you know we target.
I will return period, that's the rest of your compute and that's that's three years.
On top of that there's a lot out you know considerations and.
WAFS condo.
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Pastas procedures that we're going to best I'll be going to reinvest the you know the amount of liver.
We're going through the rest of the sale or the which is the modulus and we need to evaluate taken honest risk.
And the you know.
Back to you know last year at the beginning last year.
We have decided if we were not going to rest of the traditional standard PERC cell capacity.
Because you know we believe isn't enough.
It's not the next generation technology.
And that is why last year 2019, we go out.
The 800 megawatts and type Topcon.
Hawks take advantage.
And the the did not as Lori.
You know.
Promising and the 800 megawatts and and type still to come working efficiency.
In the have reached to 23.3% that it's very good results and we plan to increase to 24%.
And if it's for sure you know we are not going to you.
On the PERC cell and the country rests on the upside.
It's depending on the you know the customer demand.
Picking on its maturity is on the economic returns.
So for for the second thing Youre talking about.
Ladies.
Yeah, I would take the second question for the ASP actually ASP.
Contract, we signed I think that's pretty firm contract with upfront commitments. So that's kind of fixed ASP for that but I'd say over 50% and others that are around 40% to 50% off the contact they feel we still stick to the market.
Capable to get some premium the S.P. against the market type of steel, we we need to follow the market price right the market crisis that really depends ounces.
Right now.
Right now at least in short term all deals in Q2 Q3, especially on the market is still in short of supply decor. Subsequent no wires impacted Q1 trying to supply for all the customers are desperate to get more.
Supply thats sufficient supply so we have seen very the Boston robot the demand for kids on chemistry, we anticipate a quite stable market price for lots of short term in the make near term, let's say six months even beyond.
We believe you notice a corner wires outside China impact will.
We'll take into effect that use the demand has got delayed some how we we are anticipating the.
The market prices start to chop.
Well you know all the government can fight against this the wire see should I know and process.
We believe the Barkey price will.
Beijing healthy that's the right they decrease quarter by quarter.
Okay. So do expect they are in the press will be prudent broke down.
When time it started bidding for their project in putting bumpy pick up it seems like we may be lower module price for the new projects like pumping China right.
While it's still in bidding process for the new projects for the China demand or at least the onto a meta this year at the end of Q2 beginning of Q3, we we see the China denominator, mainly driven by the Tente 19 projects right, so either that or delayed a schedule acuity.
So you shouldn't get delayed into Q2 to three or so old attention nitin grid parity project that need to finish installation I mean up this year. So we have seen all girls demand driven the market in China market, benign, China, which saying that the product and also given to you know the intense.
That's a short of supply side or we believe the market price will be kind of stable. While Q4, we need to see how the twentytwenty try not to parity or the China project auction goals.
People are expecting you know the auction price could be more rational and the reasonable, especially given the a module side have bar, whilst the technology can provide a more competitive.
Else he'll you Oh, we do not shop jobs in the Q4 right now.
Okay got it about clear thank you.
Thank you.
Thank you Alex ladies and gentlemen, this concludes our conference for today. Thank you all for your participation you may all now disconnect.
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