Q1 2020 Earnings Call
This conference call.
My name is ever be all per year for today.
At this time, all participants I know listen only mode.
Later, we'll conduct a question answer session. As a reminder, this conference is being recorded for replay purposes.
During the call over to Isabel John Director of Investor Relations at Canadian Solar. Please go ahead.
Thank you operator, and welcome everyone to Canadian Solars first order Twentytwenty earnings conference call joining.
Joining us today are adopting Sean.
Chairman and Chief Executive Officer.
Yes.
President and Chief operating officer.
We think <unk> Chief financial Officer.
Oh that's.
Sean will provide an update the market impacts from cold in 19 or something else Canadian solar is long term physician.
Well again.
To review our recent progress.
We will then review our financial results and actions, we have taken to further improve or balance sheet liquid.
Well then have time for any questions.
Before we begin may I remind listeners that management's prepared remarks today.
Just a question will contain forward looking statements that are subject to risks and uncertainties.
Airports, because many claims the protection of the safe Harbor for forward looking statements.
Contained in the private Securities Litigation Reform Act.
19 exercise.
Actual results may differ from management's current expectations.
Any projections of the company's future performance represent management's estimate as of today.
Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable.
More detailed discussion of the risks and uncertainties can be found in the Companys I don't report on form 20-F help with the Securities and Exchange Commission.
Management's prepared remarks will be presented within the requirements of actually see regulation G regarding generally accepted accounting principle.
Some financial information presented during the call, we provided gap and a non-GAAP.
I just want to certain non-GAAP information management intends to provide investors with additional information.
Further analysis of the company's performance underlying trends.
Management uses non-GAAP measures to better operating performance.
I wish operational goals.
Non-GAAP information should not be viewed by investors the substitute.
Your next 40.
At this time I'd like to turn the call over just Canadian Solars, Chairman and CEO after launching chunk. Please go ahead.
Thanks, everyone for joining us today.
Over the past four doses the number old coleen, I'm, saying, hey safe.
I haven't economics brochures.
Certainly.
<unk> globally.
Needless to say a lot has changed things for a long hole at the end up.
That's Canadian solar.
Quickly.
<unk>, both my shows to protect our support for employees customers and partners.
In China and died in a rapidly.
Yeah, no implement it struck preventative total coal.
Also taken steps.
For the local communities, which we operate across the globe.
According to the latest data.
Wars C.
No no.
I hope that you are you all family save healthy I wish you over the past.
Now, let me give you, though overall picture hope to code market situation or some color or long term view.
In trying to join day.
Global demand for solar equipment.
Yes, typically the first time in 20 years.
Recent market report full cost global demand to be somewhere in between London part 100 gig walk.
Hey are true last year estimate of approximately well have to try and they get.
Well supplied aside capacity is expected to grow which will lead to additional they asked the question.
Market consolidation.
Decently apart for a likely you felt across the supply trends.
Paulson input cost so declines elsewhere.
On the flip side.
Until they tend to truck to hold polar vortex practical side effect from the lower it kinda speed Where's the performance.
Holder, becoming even more attractive relative to other or they just foresee given the lower capex cost.
[noise] originally the yours and Latin America market.
Being the most fold it held a wall Colby 90.
And then your where the biggest impact has been on a reduction.
I Billability Pac pride for their finances.
In the increase in a cost of capital well sort of proved that buyers.
That's that's all potential delays.
They try and they pulled out of sales.
The lobby America.
Impact has been unpaid applied to the sharp depreciation old local currency.
Helping local markets that delayed purchases and consolidation of U.S.P. twice solar modules.
On the positive side no covidien impact has been limit there.
Japan and Korea.
Hi, I will say, though to reopen and now appears on trial was strong demand in trying to try me supportive.
<unk> policy on a healthy translation for grid parity.
In general the execution, all commercial audio Tethadur school colder.
It's been relatively smooth.
Delays, mostly driven by publishing and other frictions driven by the loss.
Well, we expect near term water penetrate the long term growth drivers remain strong.
We remain optimistic about industry and Canadian Solars long term schools fine.
Global Hoppers, who decarbonize full competitor <unk> accelerate.
Especially after the call something out of your becomes increasingly competitive.
The cost performance, how far too as far as I'm sure they'll say improved.
Which will be critical.
Solar plus storage reach a squeeze powered has a called a growing number of market.
And a lower for longer interest rate environment leaves five total pipeline will become even more attractive investment assets for the lesser so you can stay low culture cyclical.
Well I mean frankly skills.
And they didn't fall or some globally diversified revenue at about Ocotlan basis.
Our relationship with customers.
Wires or the findings in popular.
Our healthy balance sheet liquidity preservation give us second if it kind of competitive advantages.
We continue the statistical it your but they are the I mean ovation OS was due to significant momentum.
She solutions provider.
Solar plus storage solutions market.
No downstream energy business, well procedurally also long term goals.
Well continue to grow old global backlog.
The pipeline well selective labor Kid ownership in solar program.
Joel you source it sounds good calling on the predicts a predictable cash flow.
Well you the process all executing our solar pulled their monetization strategies.
We have shared it with your last quarter.
The Perry also whatever recovery not is fall because.
[music].
Hey, good or bad or Canadian solar is well positioned.
The near term certainty.
Abstral long term goals opportunities that deliver sustainable returns for shareholders.
Before I turn the call again I'm pleased to announce that yeah has been appointed president.
President and Chief operating officer of Canadian folder.
I'm grateful well Yanks leadership and the his incredible dedication during has nine years tenure at Canadian folder.
I look forward to working closely with yet, but I'm tired team had Canadians holder.
With that I will Echo park aligned so yes, yes. Please go ahead.
[noise]. Thank you show as always let me start to some key he could we saw from this quarter.
Firstly, we achieved strong financial and operating results for Q1 2020.
We've got remedy unprofitability those above our expectations, we were affected by manufacturing disruptions in China.
But the overall Toby non can impact was limited.
We expect a more significant impact in the second half as Sean noted.
Near term our approach is to conservatively manage a heavy healthy.
Balance sheet and preserve cash through this period up liquidity validity.
We have a strong track record in doing that because you're doing that.
Longer term, we are reinforcing the company's position for growth and that's an area. We are excited about is the solar plus storage market.
We see a window of opportunity from the declining battery storage costs.
Higher capacity needs and accelerating retirements off also to pounce across the world.
Canadian solar is uniquely positioned to benefit from this.
As we leverage our competitive manufacturing base.
And Oh large captive markets in fact, we attribute a solid 2.5, gigawatts, our storage pipeline and its 320 megawatts our backlog.
We're currently in advanced negotiations on various projects and look forward to sharing more information we view as we reach key milestones.
Furthermore, we continue to grow and monetize our social assets.
Currently we have 956 megawatts in projects under operation 807 megawatts under construction 3.7, gigawatts in backlog and well keep watching pipeline.
This quarter, we are sharing the view for the first time, our five years plan for growth in the energy business.
If major strategic and organizational decisions to ensure we maximize value capture in the asset monetization.
Process. Our plan is to selectively as we can minority stakes in key markets, we strong energy demand attractive power prices and stable capital markets.
Over time, this will allow us to generate higher margins and capture stable and recurring sources of cash flow, while recycling a large portion off the testers investing.
This strategy has been one off our t. successes in Japan, So we intend to replicated and certain other markets.
Or even the process of executing this strategy and look forward stopped eating you we'd exciting developments.
Now let me go through our Q1 results.
On the energy business side Q1 revenues for $238 million lead their 37.7% gross margin revenue and profit growth. So significant contribution from the sale off the 56 megawatt solar power plant in Japan.
Well as the sell off an 18 megawatts portfolio of subsidy three so pounds equally.
Meanwhile, we continued to secure project financing and execute on our project backlog.
For example, neatly we secured $16 million in the bilateral revolving credit facility with the pass our son Polo, we've been talking to some holdup. This will be used to finance the construction off a 151 megawatts portfolio of solar projects were.
Back to two break ground in the coming mouse.
In Brazil, we secured.
$55 million Nonrecourse project finance from Dnbi for the 151 megawatts lots Ross project, which started construction to be.
We closed several additional project financings since Q1 Andy.
When they into Latin America region.
This further demonstrates the strong and capability of Canadian solar deepwater projects. Additionally, we then we expanded our presence in the distributed generation market.
Yes, Trulia, we made significant inroads in the commercial and industrial segment.
Recently, signing the milestone PPA with a global E Commerce player in Chile, we acquired.
We acquired.
A portfolio of small distributor generation projects currently under development.
Hello, totaling 48 megawatts to bring clean and reliable energy two areas in the country.
On the module and systems solutions or MSS site shipments in Q1 were 2.2 Gigawatts in line with guidance.
Q1 revenues were $690 million.
47% year over year and down 10% sequentially.
The sequential decline reflects Toby 19 related manufacturing closures and lower ASP.
That's a result.
Gross margin also declined sequentially to funding 1.6%.
We remain committed to research and development them continue to innovate.
For example into one we opened the new R&D sudden for you Josh in China. The New center is focused on cutting edge future junction acknowledging and we will be pushing down past lines over the next few mouse setting ourselves up for mass production next year.
Now, let me comment on guidance for two to an outlook for 2020.
The second quarter of 2020, we expect total module shipments to the in the range of 2.5 to 2.7, gigawatts, including approximately 200 megawatts of module shipments to Canadian Solars <unk> projects that may not be recognized as revenue.
Total revenue is expected to be in the range of 632, six started an $80 million weve gross margin expected to be between 18.5% to 20.5%.
Well the full year of 2020, we continue to expect Hutu module shipments to be in the range of 10 to 12 Gigawatts.
However, cobiz 19 has caused significant uncertainty regarding this is conditions seem to second half of 2020.
Especially related to the timing and the scale of S.P. and cost declines and the timing of certain projects else. Therefore, we are withdrawing our 2000 Putney financial guidance.
Looking beyond the near term uncertainties.
Confident that Canadian solar is competitive position will allow us to capture a greater share of the industrys secular growth opportunities.
Our long term outlook remains optimistic as we continue to execute on our strategy and create value for the company and its shareholders.
Now, let me turn over the call to have some four additional color on our financial results and latest to risk mitigation strategist.
Please go ahead.
Thank you yes.
Both shown on the yen noted we delivered a strong caught up on revenue and profit despite the shop decline in the market Ass piece.
We continue to come on the higher pricing than the overall market.
Given our strong brand and the customer in the channel relationships.
Q1 results also benefited from a large part excel in Japan, where the revenue on a profitability pull walk is several times.
Yes.
No that well Oh, what divisional results.
We reclassified our operations and the main can this summer deficient from M. access to the energy business.
To better reflect logical structural our business an operations.
You will find a de tells you know a press release.
Total Opex was 110 million, that's darla during the quarter nine plus and the higher year over year, but 7% of Lois that lost quota.
Selling expenses.
Hi sequentially, mainly from higher shipping and handling costs due to the logistical challenges in Q1.
Hi, though we have put a title it all discretional spending so g. a night expenses were lower in the pull it out.
During the quarter, we recorded an income tax benefit of 29 million.
Which included a 49 million tax benefit from the net operating loss Kelway back a provision on of the U.S. Cronto virus aid and economic particularly to act.
Combining all this we generated a Q1 twentytwenty net income of 111 million U.S. dollar.
I alluded to E P S a $1.84 cents.
Moving onto the balance sheet.
We have maintained healthy lightbridge and the liquidity levels.
I am more cautious than usual approach as we communicated in the last quarter.
We reduced our total debt to 1.87 billion.
Further reduced our short term debt level.
As we noted last quarter. The majority of our short term debt is rolled over annually with Chinese backs, well, we do not see any material risk.
Likewise, there are no major principal pay payments due in twentytwenty.
[noise], all credit facilities, which increased to 3.4 billion.
Which 1.1 billion I mean I'm Joel.
Our non-GAAP total debt.
To trailing EBITDA declined to 3.4 times, while the trailing EBITDA to net interest coverage increased to 8.3 times.
Matrix.
Yeah healthiest level in the past five yes.
We remain focused on managing working capital.
Inventory days at the end of Q1 increased to 92 days.
Mostly with Fracs, our strategic decision to increase module inventory in the U.S. to quantify or investment tax credit.
Overall, our cash cycle remains at the low plus the negative 20 days.
How about spending in Q1 was 42 million.
Our plan for the rest of Twentytwenty <unk>.
Approximately 270 million.
While we are committed to investing to support a long term growth well also cautious and the prudent.
It was all the capital expenditures, especially in the current environment.
So we marginally reduced our capacity expansion class for this year.
This is an offsetting tool is stone and the final capex cloud for Twentytwenty can be adjusted Oh dot depending on external market circumstances.
Finally, we have suspended our share repurchase program to preserve cash and to maximize liquidity in the coal in the market environment.
You know we are confident.
Our strong balance sheet that liquidity will allow us to navigate the market uncertainty and to prepare us for the macroeconomic recovery.
With that I would now like to open the call to your questions operator.
Thank you, ladies and gentlemen, I'll begin the question answer session.
If you wish lots of questions. Please press star one on your telephone I'd like to be needs to be announced if you wish you can say every class. Please press the pound <unk> ski once again, ladies and gentlemen, the star one for questions.
The first question comes from your line of Colin Rusch from Oppenheimer. Please go ahead.
Oh, thanks, so much guys.
Can you speak to the pricing dynamics and channel inventory levels or both.
Direct sales channel as well as the by official modules that you have going on right.
Well a this is the yen.
First just the by official we just heard the news actually.
Yesterday, yeah. So oh, it's certainly helps oh, so now reciting customer sites. So, but we also understand that this is not forever.
So while we're actually you know.
Benefiting from this this new progress, but who are also preparing for the end of this so yes for the next few months I believe two to three miles we don't know maybe even lunder, we will have significant benefits.
That's a policy change how does he.
Progress.
And on that but I'm looking to us.
The direct sales channel I'm looking for pricing and kind of channel inventory levels are trying to get a sense of so.
Part of the business.
For our direct sales into the residential under an DG market. So we have been see experiencing a a downside because luckily 19, but but what we're seeing this is actually will be not to say, it's actually improve.
In the recent weeks.
We had oh, we have been observing actively actually would be I can be contacting our customers and monitoring their most human her level. It was on the upper trend for us for quite awhile, and a and they to me it costs. There's some customers they had a payment difficulties. So we.
Reduced our shipping to that channel.
Late late in Q1 and.
And the an early Q2, so too many to the payments risk.
However in the past two weeks, it's been improving the sell through is improving.
Pricing wise, okay inside the <unk>.
Yep.
Go ahead pricing.
So.
For residential market the price drop is less this is less than utility scale projects. So, let's do a better pricing down utility.
Okay. Thanks, and then on the storage side no. We're trying to get a sense of the the real technology position that you guys have a relative to some of the other solutions out there can you speak to you know your battery management system performance cycle time.
You know, how you're performing versus some of the other solutions that are out there as you're out bidding on some of these teachers.
And other products.
I think our men's stream is actually Oh, we have the ability to do better such projects TV Prost storage. So we had already has a pretty significant pipeline on the ground and Oh, we have overt actually in the past years, we'd been.
We have Oh, we had a experience accumulated from the pasta project execution, Sunny PC and knowing them. So we learned until we have ability on the on the on the execution of solar project in the solar plus storage is a is is this the space that we need to creep.
And our business model at the value Chen supply chain or economic and financial modeling risk management and how do provide.
The wrap up Serbia's for the had asked the total solution for this project certain terms technology I don't think till we have time to go into details.
But oh, we have so we are actively working on a closing the first solution for our first project in the U.S.
I guess, a little delayed because of the probably 19.
I suspect the is coming.
Okay. Thanks, so much faster.
Thank you. All next question comes from a line of Phillip Shen from Roth Capital. Please go ahead.
Hi, everyone. Thank you very much for sharing your a five year plan for your energy business I think it's very helpful for everybody. So I'm just was wondering if you could give some additional detail.
On on that plan so specifically.
With your targets of annual project sales in 2020, and 21 and so forth was wondering if you could speak to the geographic mix that you expect there I'm guessing you know, it's largely based clearly on on your pipeline in your backlog.
But was wondering if certain years me have a greater emphasis in certain geographies and then also similarly further.
Projects expected to be retained.
You know for example in 2020 to 30 megawatts I'm guessing a lot of that is Japan, but was wondering.
If you could speak to the geographic mix for.
20, 2021, and 22 as well for the projects retained on balance sheet. So thank you.
Hi, Phil if there's a shell speaking.
For the trying to try and age most of the project.
Magnitude wise.
Going to be a U.S. project and we have good premium depend probably there in terms on megawatt no megawatt sizes. They put up for every issue megawatt in Japan interview, a lot more than the U.S. fro, there and then moving into a a their future let's say.
Yeah, you improve selling trend is three because on dry therefore, we expect the email project to catch up now what are we also we have.
Some project in Latin America.
Im lay a Brazil, and Mexico, I say, though.
I expect we'll connect those proto more or less.
Or are those aren't trying to one.
In terms of project repaying.
So there can we have the.
Yeah, and a full approach most I pulled their expects us to drop him to see yes.
So our view of support sometimes are the private fund a market provides even better pricing.
Well we might to.
Sell the a though so proto into those kind of those photo fun.
Sometime we hold a decision minority position those thing as well.
And for U.S. market.
At this moment, we don't.
Glenn to hold the.
And it positions the call so the ITC.
If you see a scheme, Hawaii and helps to to support the U.S. holder.
And well focus for the cash flow so as I shared B class.
That's fair, but we don't get much a cash flow in the first for 567 years.
Last week, a you know some part of that discount method. So they've cut this got a future cash flow through the year terms Oh, that's not happening we don't plan to hold the for many years, Australia, but a lot and the IP you see a it's going to be a willing to be a phase solved the a few years.
So I expect Oh go into for example, and puts on five we're going to hold the more and more U.S. project.
Great. Thanks for the color there Sean shifting over to the scrutiny on Chinese companies listed in the U.S. was wondering if you guys could speak to that no given the expected.
Requirements from an accounting standpoint, as well as disclosure.
Since I was wondering if you could address that and how it might impact you and how if at all thank you.
Can you repeat your question.
Accounting or.
Talking about shows.
He said it will be sure.
Sure Yeah, there given for the for Chinese companies listed in the U.S. or the Senate and house have passed a bill and it's going to Trump now too.
Increase the scrutiny of.
These Chinese companies listed in the U.S. exchanges, so there's the <unk>.
They're trying to get the piece you will be to.
If you see it would be wants to collaborate more closely and get access to accounting documents with the see us RC. Okay. So was wondering I guess good okay. If you could speak to that overall.
Criteria that upcoming bill and what it might mean for you guys. Thanks.
No first of all where Canadian confident another time this company, but we do have sometimes its operations and so far aside as far as I understand.
Yes, I see you soon and debt.
Accounting paper or Paul or arbitrary in China, where they'll Anna Krassowska wordy, but we're going to provide more color level.
Sure Hi, Phil Thank you for asking this question.
First of all as sharp as say that we are Canadian company I loved your from day, one we were legally registered in Canada and the business starting Canada. It's like many other international companies are many years ago show a when she started my new fab.
And then he opened a factory in China. So this is the the fact, whereas a very clear a legal truck rack at.
Now you may ask them why we our company has on the left over that PCL be last night I was because out because a lot of operations of our company is based in China, So when we or considering hiring which auditor.
Two audits our book I.
I know, which is the audits.
Well the office in China.
I'm told that we also a every time we file Iowa.
From appointee, whereas a and C C. We indicated that.
The P. sale will be at this point they cannot are regularly cannot regularly access the walk in paper.
At all while auditor.
But uh huh.
You know we have been in the markets for many yes. This issue of auditing.
First of all.
It's the soda time.
This issue came to the market and some investors what spoke I laid out the issue.
Went away.
No. This time the house has house that sounded has passed spent the house need to vote and we don't know what a white house Bill handle this issue, but yes that happens according to the latest appeal I mean, then somebody else in the history.
Right on this issue according to the latest a version of the Bill.
I'll be swing year window time full company too.
Address this issue.
For us.
Of course, we can.
Switch to audits have based in Canada and then.
We are on par with many are the U.S. companies in terms of PCL be complies now what to do I mean bye-bye.
Taking a that's a tough like example, Tesla has also have a huge factory in Shanghai now I'll fall the auditing process of their Shanghai factory. It has to be down by a China based on data so for those.
Accounting books.
PCL be well do the same process care all the same Pos has like because they already the order book that is a deal PCL B. I see you see how to sign the ways.
Chinese regulatory filing in the back that weighs Chinese regulators first the filter the documents for any national CKD consent that not PCL be can I get or whatever paper. They want this hasn't been going on process for several years I know I missed your level.
It has been working very well actually.
More than 10 <unk> companies.
In the same.
In structural which is their paper fire. The FCC was down by audio the based in China, and then PCL be had no problem to getting those what can pay pads. So called booking paper now if you pay close attention to what Avinza media any of the Congress.
You will note is that there's no.
A watch from PCL, B or C C, stating that.
They cannot forget what they need from the Chinese auto so we need to take this issue.
On the factual basis, and also looking to history and then.
Right now we take a what like you well watch and the development. This issue and because we are Canadian company, we have a proximity to address this issue, yes, it becomes a reality.
And I don't think Oh, we invest that shouldn't be concerned all already that we show will continue to be a U.S. NASDAQ listed the company. Thank you Phil.
Great. Thank you with them. They what are the quick question here or just a follow up on the pricing question earlier, I think we roughly calculate pricing for Q.
A one to be roughly for this module cents per watt to be about 28 cents per watt was wondering if you could comment on his first of all correct and then.
How do you expect.
Yes, Peter trends on a blended basis for Q2 and into Q3. Thanks.
I think it yes.
Yeah I'm please.
Hey.
I think of the price movements.
Varies from market to market.
For example, the price the you'd ocean U.S. and Japan are much slower.
And the price erosion a in the U.S. Deshon DG market is lower than you didn't just go projects.
So.
The pricing for Big utility project, another markets Green Dot faster.
So I I in different paces [noise].
And Ah Ah so going from Q1 to two too.
It's a the pricing.
And into second half.
I think the price.
We'll go down and then stabilizing.
I think the price, we're whereas we're seeing some very low pricing sub 20 cents pricing.
That's the bottom his.
If you're talking about ASP or some other channels. The price me continue to move but for the lowest pricing.
Segment.
I think it's likely to to be stabilized to tours and ended this year. So Q1, Oh, yes piece like 27 cents.
And due to its like Tony how we cannot tell you [laughter] that Deborah you too will come down little bit that the the job the reduction has slowed down and ER and Q4, we believe the market may warm up it will recover the demand so surprising.
Likely to be stabilize.
It's my answer.
Great. Thank you guys I'll pass it on.
Thank you once again, ladies and gentlemen, if you wish you asked the question now Please press star one on your telephone.
Our next question comes from the line of Brian Lee from Goldman Sachs. Please go ahead.
Hey, everyone. Thanks for taking the questions yen, maybe if I could just follow up there I know you don't want to give specific numbers, but you know the directional color on pricing is helpful. Here. So to Q is gonna be down from one Q.
It sounds like based on your comments Threeq to pricing will also be down from two Q and then for Q, maybe stable to even better I'm just based on the directional trend you sort of articulated.
Given where spot pricing is today, and then kind of given the lag between when you know you contract volume and ship.
It seems like the the worst pricing impact in the year, maybe in Threeq you. So is that a fair assumption that.
You know to Q is down but than Threeq, you could be down even more.
Before you start to see stability into the very end of the here.
Well, it's a as more and more or less lots the 10, but I wouldn't I wouldn't this over simplified the situation. This out of the Penny Act in the in recent months. So we've been seeing some super low prices I would just say those super like Super low prices will not go down any.
More or less likely because the this is just a penny pricing.
So and also for residential market.
It will it's coming back on the residential done EG Mark is coming back.
And the proportionally if there's more volume is shipping not channel. The overall pricing down situation would be east. So that's a as this content be complicated that overall.
I I cannot I I mean, I agree Q3 price cannot be better than you do a two four we'd be stabilizing.
Okay. That's helpful. And then maybe just a related to that for from a gross margin perspective.
Obviously, Q Q twos down here based on the guidance a fair to assume that that Q3 is also softer on a sequential basis before you maybe see some.
Margin stability or improvement in Fourq, you and I'm speaking specifically to the module segment not not the project side.
Yeah, I think a down certain of the reason we are part of the reasons, where we'd drawing our financial and new guidance is because some certainty or the big on search and significant uncertainty caused by this a a situation to so we're not sure how he asked in cost is going to coordinate.
In a in the next couple of quarters and ER. So.
So in terms of gross margin I I really.
I cannot give you a clarity at this moment.
And that but I can say that a Canadian solar we we have more share of our shipments into the.
The the rooftop market and as well as more share into the high price market.
More proportion our shipping those to Japan, Korea, and the U.S. and a and also the residential market and also our own projects. So lives. So I think maybe our ppas sour position slightly better.
Okay. That's it.
And then last question and I'll pass it on here I.
I think last quarter, you guys had mentioned that the residential market rooftop was seeing impact from Cove. It.
But my read was that you weren't seeing any real impact as of you know as of that point in the utility scale segment.
Your comments today suggest that's kinda change here, where do you have seen impact across all buckets of your business. So.
Can you maybe help quantify I know you can't give us guidance for the year, but sort of quantify what sort of impact you expecting here in the utility scale segment I guess, if I look at the 1.1 to.
1.3 gigawatt range for project sales for 2020 in your five year outlook.
How much would you say that's changed owing to incremental cobot uncertainties since the last quarter I know you didnt have those targets out last quarter, but you know assuming you did would they have look the same more or you know kind of what can you give us a sense of how much that's changed here.
I think the impacts of mentally in U.S. and some projects in Latin America as well.
So on the module side or the impact was delayed so Q2 half a certain somebody gets delayed by that comes from both a the residential market and also the Ramon utility projects and thus as they did he park is.
I would say is say, it's more like a two third of the volume, but on the projects out. So the similar reason is delaying a a project cells and the project financing delaying and some of them is because of the locked the locked down so the construction to escalate Ah so.
Our current five year plan already reflects that and if you're talking about the impact.
Parents, who are end of March Oh, we do see.
We do see some a impact on the on the pace since feed off of a financing closure and project cells. So.
However were where we're actually trying to fix that and a and are there will be some impact compared to our our Ah our planning you and the March but whatever impact. It is already we didn't our five year span. So Ah Ah I know we're working.
Solutions to do lead that.
Hi, Brian or this or Shah speaking.
The current number of one point.
One to 1.3 alerted shakes in some of the potential they lay of the protests delaying Florida sales into tonnage anyway.
It looks like some of the project sales closing and.
Sure Paul.
This moment, but coupon is.
Elicit delay will be comes your way next year, so those probably I would rather.
Put into next year than this year. So Q on Q1, 0.11, 0.3 distant number away or.
Reasonably.
Comfortable at this moment, what I'll call it things change so.
That's why within certain that.
By August we're up tick up this year again.
Okay. That's it I mean 1.1 to 1.3 I know that's your most reasonable.
Direction at this point in time, but is that sort of in embedding a 10% slippage from 2020 to 2021 or is it a larger percentage of that I guess trying to get a sense of.
How much things have moved out.
Two you know to the 2021 time frame if it's a modest amount if it's maybe more significant.
In terms of Ah.
Management Lastly, we always always take a conservative field. So we moved to more than 10% more than 10%. All previously I plan to pulls on trying to two.
Yes, I'll then turn in line, but you know.
Maybe a we'll be able to close said before December 30, Onest that we'll get your got.
No surprise.
Okay, Great best of luck thanks, guys.
Okay.
Thank you as a reminder, ladies and gentlemen, that's down one so questions.
Next question comes from Mcus Rose from JP Morgan. Please go ahead.
Yeah. Thank you very much for taking my questions.
First when you talk about potentially replicating.
The Japanese infrastructure fund strategy and other markets.
How should we think about timing is that something that that could occur within the next 12 months or is that more of a longer term view.
Uh huh, so shall seeking.
Without Cobiz 19 was saying.
Oh, we wouldn't be able to go science.
Strong I don't intend that this year or something would be launching next year. Although was this current situation.
She has become a really good I.
I still expect a we then fault mines, we think that's something we'll call Craig.
Uhhuh offices.
Because we have this structure in Japan, the past one of the stable countries.
We are off to some other markets such as Latin America, and Europe Latin America.
Hi, this local currency.
Depreciation or how close you when that market will not financial market.
And Oh.
Yeah.
Back to a large number of all also there are reaching Sidoti.
Let's say, we can and should be a those here over the no matter for the three year, Oh, we only have to Oh.
Oh structural prepared for the next two years there will be upon.
Okay. That's helpful. Thanks, Sean.
And then just lastly, I I think this is pretty clear, but I just wanted to be certain.
Starting second half.
You know, it's fair to say that there is some uncertainties.
Regarding potential delays, but but as of today have you seen any project cancellations.
This is a shot again, we haven't saying.
Project cancellation.
However, the EPA, then we don't Pennsylvania.
And Oh, we do see that sometimes.
Exactly to become a problem all other financing coffee com hi, although the interest rate.
Let's move now.
People become so with the worse so October lending rate.
We haven't seen really.
Yeah.
Oh.
Well the leg of the podium.
And Oh the protest.
We still have room before the.
The golf that Dave.
Okay, we'll have time to negotiate there were some all coming close.
Or negotiate with the local utility expense.
The CEO these days.
We haven't really right into that much situation like that.
We do that.
I will expire.
Oh really utilities will be Oh, sorry.
Okay very helpful. Thank you very much.
Thank you know like to have the conference back to management team for closing remarks.
Please continue.
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Like the thought I'd call. Please contact our Investor Relations Sir.
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