Q2 2020 Canadian Solar Inc Earnings Call
Yes.
Second quarter 2020 pages functions.
[music].
At this time.
Okay.
A question, but just session.
So just to be recorded for nothing physician.
I'd like to try to presumably to each other.
But she would interest and energy escalators.
Yes.
Thank you operator, and welcome everyone Canadian Solar second quarter Twentytwenty earnings Conference call.
Joining us today are Dr., Sean shoes, chairman and CEO.
Yes, John President and COO.
Dr People Johnson senior VP and CFO.
This call Sean will provide an update on the market environment and Canadian Solars long term strategy, followed by yet who will review, our recent progress and business outlook.
We will then review our financial results in capital management strategies.
After the prepared remarks.
I have time for questions.
[music] listeners the management's prepared remarks today as well as their answers to questions will contain forward looking statements that are subject to risks and uncertainties.
Therefore, the company claims the protection of the Safe Harbor.
Looking at.
That is contained in the private Securities Litigation Reform Act like 95.
Actual results may differ from management's current expectations.
Any predictions 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 for applicable law.
More detailed discussion of the risks and uncertainties can be found in the Companys I know reports on forms.
All of the Securities and Exchange Commission.
Management's prepared remarks, <unk> presented we didn't lose Harman FCC regulation G regarding generally accepted accounting principle.
Yeah.
Since I guess, what information presented during the call well be provided on both GAAP and non-GAAP [noise].
I disclose these certain non-GAAP information management intends to provide investors with additional information permit further analysis of the company's performance and underlying trends.
The only got measures that are assessed operating performance and to establish operational.
Non-GAAP information should not be viewed by investing as a substitute for data prepared in accordance with gas.
At this time I'd like to turn over the call to Canadian Solars, Chairman and CEO Dr., Sean She shops. Please go ahead.
Yes.
Hello, everyone.
Thanks for joining us today.
How do you know photos deliver strong second quarter resolved Oh swim manage it through the ongoing impact of cold <unk> nine pm and dynamic.
We continue to deliver clean reliable and affordable Solana Joe's twog customers.
Well operating under strict how protocols.
Despite these taught Andrew would deliver higher the expected diluted earnings per share of the poor in a second quarter.
Now, let me give you an update on the market environment and the Canadian Solars long term strategy.
Our old for share some call Oh result, dolphin cool Axa kindness capital market.
Oh the last call.
Global demand for 20 or 28 marked decline for the first time to try to you.
Well you about the Bachelor even if the industry I think I might underestimated the screen solar market.
The global demand situation was soft in the first talk but we're continuing I wouldn't call girls Sherman and gain market share.
Over the past a few weeks, we have things are sharply improvement in demand across most of our fans marketing.
And your crude in the U.S.
Okay, Youre up Japan, Australia and China.
Yeah, Hi, Recapitulate. Some code there have been delayed federal court else true, but overall demand situation here is a very strong.
Now running at full capacity [noise].
Okay, [laughter] <unk> accident, a job staying focused pulse survey our customers.
Phase Oh, we design team tried and true.
RMB vital part pretty inhalation.
An increased level of economics, so there could always help a scale in a pass a few years have broad solar power to the growing number of Citi.
This is why the man quickly rebounded.
Today.
Project I left still the right subsidy.
All right, but I.
Hi, Scott Solomon.
Other I'm sorry.
[noise], so the underlying demand, yes school.
Yep full cost at 110.
Sure, while I'm disappointed gigawatt of global demand this year.
We now believe there will be somewhere in the middle how properly towards the higher had probably this range.
The only limiting factor just availability help raw material supply and upbeat attitude towards hooked.
The next few quarters.
Your next up your mind [laughter].
We're trying to turn there what I'm trying to try to true.
Yeah Middle point estimate for global demand.
Well I heard your 50 to 160 Gigawatts respectively.
This is consistent to what we have heard through our former trying to attack.
Well I'm extremely excited about the long term opportunities in the industry I went up a thinking in Canadian solar more a circular when I put a growth.
Oh, the Mojo and system solution.
Hi, Matt that's freezing aside.
We recently I know our strategic decision so, let's Oh, a wholly owned a mess that subsidiaries they try and used for South America.
If somebody's lifting is successful we expect will have greater access for cheaper fourth Theirself capital.
That will support a syncope choice, a greater share of market growth and value creation.
Additionally, <unk>.
Market consolidation accelerate.
How about unique advantage I've just fine.
So many years building pop here, Brian I reputation.
Well above global sales channel.
<unk> inquired about a strong operational and financial track record.
We believe we're better positioned for growth than anyone else.
But I expect them to try though its capital RK will also benefit from the low calls I've got it.
How other key motivation purpose, you're not listen there's a lot of audio for shareholder.
Well hopefully [laughter] fourth.
If you're lucky our view.
Hi justified.
Okay got it during the Canadian solar.
Or try to listed here.
That's the uptake or what we are kind of process.
Well I've started the pre IPO cocktail refund profit.
Youre talking about Q color, Matt sorry.
Yeah, Hi, the converting yes, it was too high final for his job Rigel jumped all over there.
Yes, I required by the time is security regulation for listing China softened.
This investment.
If expected to be completed by the end of September I will bring a rough capsules to support the forthcoming hi, Matt.
Financial growth for the next year.
Well, it's back to Mr.
Capital raised from the free I feel will.
Also allow us use the fast available technology equipment.
For our new module shipments is what can they try to one.
Well update you will further hopefully reach further milestones.
Well, Matt afforded combative, our last talked yesterday.
The goal is our global eligibility.
We.
It's always a five year growth guidance, we get last quarter, which came true achieving a well try to 5% to cater.
Product sales volume.
With that let me try our older coal yet.
Our goal so our business results I'll also yeah pretty far ahead [noise].
Thank you Sean let me start we that's three key messages.
Firstly, we achieved strong financial and operating results in Q2.
Weve remedies and profitability both above our expectations.
We are proud that even under the challenging market circumstances, we adjusted swiftly and continued to deliver a strong results.
However, in the near term, we see some margin pressure due to cost increases from poly silicon supply shortages, but.
But given our strong market position and pricing power, we expect to share a portion of the higher costs.
<unk> customers.
Most importantly, we are positioning ourselves for long term growth by expanding capacity, increasing vertical integration you know module business.
And strategically investing in total past storage capabilities.
Now let me go through our Q2 2020 or preaching results.
On the M.S.S. business side [noise].
Shipments in Q2 grew over 30%.
Both sequentially and year over year, two to 2.9 gigawatt [laughter] well above guidance.
Q2 revenues of $669 million well also ahead of our expectations.
But were down sequentially as the volume growth was not enough to offset the ASP decline.
Manufacturing costs, while also lowering Q2 and despite the expected decline.
Gross margin remained at a healthy level off 21.1%.
One of the exciting developments in Q2 was our new product launches.
As we introduced margins of 500 to 600 watts.
When I joined Canadian solar back in 2007, the standard module watch it was over 100 watts.
So we have come a very long lead.
And over that time Canadian solar has been the leader by bringing a serious selfie Libby innovative new solutions to the market.
As we increase the benefits to customers.
Our latest smokers higher salary efficiencies larger wafer sizes longer product, wherein tees and ultimately all for our customers lower LC elite and better returns.
On the energy business side due to the previous higher volatility capital markets have some delays in project sales.
This is the main reason why both our energy revenues and gross profits were down in Q2.
Our strategy is to take a balanced approach beaten recycling our cap to quickly while maximizing the valuation of our solar power plants.
Financial markets appear to have stabilized over the past few months and currently demand far projects is strong.
For example, we recently announced to the financial closing off our Maplewood projects off 367 megawatts.
We expect to make more announcements over the coming months as we reach closure.
Well I need your business revenues were soft in Q2 gross margin was higher than usual at 43.4% growth.
Gross margin benefited from stable high margin revenues from our operations and maintenance business, which now has a round three gigawatts of projects under control under contract, we expect to drive additional growth in our own them business as we accumulate a growing.
Portfolio of partial ownership our preaching assets.
In terms of this is Steve out and we find to private P.A. seen Q2 in Brazil totaling 274 megawatts.
Brazil, it's one up our key markets.
We were one off the first solar companies to enter this market in 2013, and even set up a module factory in some Paula.
Over the past seven years with Cook, we have sermon to our leadership position in the Brazilian market, both as a project developer and as a module supplier and system integrator we.
We continue to see significant growth potential in this market given the strong energy demand higher sold all your writings stable capital markets and attractive project would be turns.
Now, let me comment on our guidance and business outlook.
For the third quarter, that's all the third quarter off 2020.
We expect total module shipments to being the wrench of 2.9 to 3.1 keep was.
Total revenue or expected to be in the range of 842, 890 meeting and gross margin is expected to be between 14 and 16%.
For the full year off 2020, we now expect to module shipments to being the wrench healthy 11 to 12 Gigawatts.
In the near term as reflected in our guidance were seeing some margin pressure due to higher costs from the part as citizens supply shortage.
However, given our leadership position in premium markets and the strong overall demand rebound, we expect well be <unk>, we expect we'll be able to share part of the higher costs with customers and have already started to reduce module prices.
We currently expect the impact of the poly silicon supply disruption to lessen as supply expense in the coming quarters.
On the energy side, they exact timing and recognition of search and project south to remain uncertain.
In terms of volume, we expect to recognize a large part of this year's project sales in Q4 lead some projects potentially moving into next year as we previously communicated.
Men amenity due to delays and impact of Colby 19.
Over the longer term I'm very excited about our growth outlook, given the compounding solo market dynamics and Canadian Sotos company specific catalyst.
Well, we are expanding capacity of increasing vertical integration far module business, which will allow us to capture more global market share intense pricing power control costs and improve profitability.
In fact next year, we're planning on 18 to 20 Gigawatts of shipments where are you in the process is complete and capacity and the Capex plans that will support our long term growth and we plan to give an update during last quarter's results tentatively scheduled for November.
Importantly, we are seeing industry consolidation at a rate.
And as the global leader in both the energy Oh two businesses.
We are uniquely positioned to capture an outsized share of industry profits to generate long term sustainable returns where you masters.
For technology standpoint, we are building, our expertise and ramping up quickly into solar PV Paul storage space.
This quarter, we almost doubled our total pipeline and backlog of storage projects in the U.S. For example, some of the customers that we previously sold utility scale solar projects.
To go total projects to our coming back to us to help them three two feet the power plants with our pro apartment property Terry battery storage solution.
We're also starting to Butte, our storage pipeline in other parts of the war.
Including Latin America, Europe, and Australia.
Every day I'm reading news articles about how conventional fossil fuel generators are being retired earlier than expected.
So I think we'll see a lot more growth into solar plus storage space.
At Canadian Solar we're committed to innovation and beauty that technology beginning to lead the next week for growth in the energy industry.
Now, let me turn over the call to leave room for more details on our financial results.
I have to management strategies.
Please please go ahead.
[noise] [noise] please vote.
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[laughter].
People are you still on the line.
Say that can you come back.
[laughter] online and Karen I'll be the automatically right.
Thank you thank you yet.
Sorry.
Nickel problem before I review the numbers I like to ship a quick thoughts.
Let's see what I.
Disquieting medium sold off.
In Twentytwenty.
Really.
In Q1 of the <unk>, that's supposed to keep shot.
I think we lost.
I'm here now can you hear me.
Hello.
Yes, yes.
So I can continue.
Hello.
Okay. Thank you yes.
Yeah. The key word I, what do you used to describe Canadian so again twentytwenty yeah.
In Q1.
The Corona wireless.
Uh huh.
We lost the production for <unk>.
But our teams worked incredibly hard to catch up safely.
Production issues were resolved.
She has emerged in Q2, and we can't extremely cautious with our liquidity management.
Oh, yes.
Our management team has developed a habit <unk> that's true.
Sure potential challenges as.
Well, we see warning in the horizon, we bring the alarm bells and a plan for the Wallace.
We always.
So the situation at all.
Because of this habit most times thing you're right actually turned out to be better than what we initially expected.
I'm very proud of our teams will walk you through challenging times with <unk>.
Okay I accept the results.
No back through the financials, yeah reviewed a revenues and the profitability. So I wouldn't go through it again.
Total operating expenses in Q2, 102 billion U.S. dollar down 17% year over year.
Decline.
Welcome to be driven by lower travel expenses other wells, all what can I suppose potential packs.
The next summer.
Loss.
During the quarter, what's food quantify.
Which was larger than usual.
The global company, we manage currency risk.
A comprehensive hedging program.
I heard your 100% cost prohibitive.
So we take a balanced approach.
Exposures are we to a level, we can see the reasonable and it takes some currency risk.
This quarter for example, the high FX loss was mainly due to the favorable.
Yeah, the Brazilian real.
Hi, Bob.
Moving onto the balance sheet.
<unk> capital markets conditions, both improved.
We are what seem to stock about it which we are investing for the long term goals and preserving cash.
I will elaborate.
The matrix what stable this quarter.
Total debt at the 1.9 billion.
No.
<unk> was 2.4 times and that you'd be that's a net interest coverage was 7.9 times.
Both of these matrix.
Healthy and abroad.
From the previous quarter.
We also continued to folks are working capital management.
Well one could argue that we have been two successful as a matter you what can stop though given the recent raw material price increases.
Most of which we had a large inventory.
It's hard to put it too quickly.
It's not a risk we are willing to take.
Hi packs in the first class was 86 million <unk>.
<unk>.
Twentytwenty is slightly higher than what we said last quarter.
300 million.
We are actually be bonding capacity expansion.
Response to the stronger.
At the same time, we remain disciplined.
Yeah, our capital allocation decisions.
And our goal is always to pursue returns acquisitive opportunities.
Oh pretends you're listening in China.
First of all will give us additional resources to deliver higher future goals I never would tend on capital.
Given the importance.
Yes.
The opening of China's financial markets.
So lucky Monoclonals.
And the cost of silver reaching retirement.
Cost an increasing number of market.
On a Saturday mocking the consolidation.
We currently see a strategic window of opportunity through to your breath in growth.
To capitalize on long term opportunities.
Our long sustainable value for all shareholders.
I would now like to open the call to your questions operator.
Thank you.
And gentlemen, I'll begin to question answer session.
Question.
Simon.
He needs to be.
Okay.
<unk>.
Okay.
<unk>.
First question is one.
Sure.
<unk>.
Yes.
Hi, everyone. Thank you for taking my questions.
The first one is on your 2021 guidance.
It's a nice and large increase.
Just 2020, and Sean I think you mentioned in your prepared remarks.
That today is driven less by subsidy more by project economics.
I was wondering if you're seeing.
The lower module pricing any result of.
Greater subsidized demand creation, we saw this pattern.
Early 2019 after the May 31st 2018 downturn, when China reduced its and changed its feed in tariff program do you think we could see something similar for 2021 and how much of 2021 demand do you think could come from.
Unsubsidized markets versus.
What we've seen in prior years.
Hi, This is a chicken well my answer is that I believe about almost oh, the trajectory I wouldn't get man [laughter], sorry, almost off they're trying to each one of on demand will come from Oh This upside demand.
And rather than the government's upside to your man.
[laughter].
Great and how much of 2021.
Do you have visibility into let's say your guidance is 19 Gigawatts of mid point do you have already visibility or even contracts for 25% of it or something even more.
No. This is the Demandware phase theme and this is what we're beauty. We believe we cannot begin to show where did or channel check with thing there a personal.
The med D up towards on trying to project that thing of course true I'm trying to turn it was oh the old line up the demand source.
And Oh, a minute probably didn't prepare for trying to turn away anyway.
Third the.
Oh by the military Oh a increased.
<unk>.
[noise] financing.
In the capital market.
Well.
Two with your growth in trying to do anyway.
So data and as a matter of fact.
Ooh, we believe it out to the.
The module ASP.
Probably a start here be stable more stable than.
Through a there were many I'm trying to trended through training for anyone rather than the.
Big decline Oh, we have seen a past couple of every year.
Because oh dot right now we are focusing on new products were offered a new product go to market and rather than through Rochelle tool a style oh without a contract, but we do have a a lot of quotation follow already aware monitoring I didn't close Nicole.
Asia Midale, the Oh, the big potential contract.
Let me add.
Sounds common.
So I felt it actually when we're talking about how much volume of locking I think it's not just a contract we fine remember that a lot of demand did that are more reliable then contracted demand. So this depends a lot our long term.
Contract signing for example in U.S. and also declined demand supply relationship like the U.S. that demand can only be matched by the south East nation capacity that is that does not have that much bankable capacity. So we have over threeq.
Lots of book about seeing how did that are are that are almost a you know I would consider reserved for the U.S. and we have a.
Like we have a quite a few large contracts that are three years long term contracts based on cost plus model and that is already locked and I think that the entire you as a tight on capacity of three Gigawatts are to me is locked because you asked demand is high and the margin is healthy and also we have mark.
Like Japan, 'cause a in Japan, we have a different channels, including that the residential residential system cells.
There are a it's a it's a it's a it's a distribution business that are that are very loyal channel I repeat customers. So they're not going to change. So we know that volume up this isn't coming every year. We the stability can also even for you to scoop watch it projects in Japan. The demand is close to two or three years.
Ahead of time, so it doesn't change suddenly so that were coming in for sure and globally. We have a direct sales channel handled by separate team setting small volume at higher price to the U.S dollars.
You know going into residential and commercial tops are those costs from started repeat customer so they will coming and we have our own project.
That need mode, you and that the volumes Google not significant that next year that volume is locked. So if you count oldest E. I think we have already lucky. So that's a amounts I hope that answer your question.
Oh It does yeah. Thank you very much that's that's very helpful. So.
Looking at the other side of the equation in terms of your capacity expansion potential I know you mentioned that you would like to share more on the next call, but given the visibility that you have was wondering if you might be will provide a little bit of color. Today. So specifically you know how much expansion could you see potentially in 21.
As it relates to wafer and cell and module and then how much do you expect to have to spend to invest in that vertical integration and expansion. Thanks.
Sorry, I feel if I can give you some indication, but I couldn't get cannot give you details remember it's because.
Whereas skewing the the into lots pizza planning and we need to guess do get needs to get the boards approval before that I cannot share the did the tangible numbers, but I can tell you that we already have for shipment guidance for next year. So Ah so we need to expand our capacity to support that volume up.
Shipment and also to sustain our profitability. So out you know our culture you know song in our management team that were very rational and we're very number driven once once we you asking the capacity we have a margin target a profit target. So so the words integration and the capacity.
Expansion needs to support both volume and probably doesn't return.
Okay, great. Thanks, one last one if I may as it relates to the China listing how much do you think you could raise.
Via the pre IPO.
Process and then ultimately you know how much would you target during the IPO process in China.
Well.
We do have our target about where you can be pre IPO talk right now.
I would rather share this number with you after we close the wrong, that's only going to be less than two massive and so so I would rather shift, but what I can let you know is tied to the demand for the pre IPO.
Okay.
Well the the available.
The demand put a pre IPO target is a very very strong Oh, we are receiving a phone calls from a phenomenal hurt.
There are a critical of the method patent the on a daily basis. So are we saying God or pre IPO filed later collect.
Quarter will be Oh over subscribed.
Okay. Thanks for the color that Sean I'll pass it on.
Thank you.
Once again for your questions. It is number one.
Keith.
Next question.
Goldman Sachs.
Hey, guys. Thanks for taking the questions maybe just a quick follow up that fills last one on the pre IPO discussions you're having any sort of sense of range evaluations that you're hearing investors are comfortable with for that for that segment.
Ah that's I know the cross train I would rather oh for off to where you have to number I don't want to give an indication thought I try to the.
Hey, I'm sure you're right there's no other negotiate with me.
Well that ahead as I said in my out there for the previous question the demand all.
Through our your investment.
On a quarter or is it fair high so I want to see.
I think we're a see some healthy competition so.
Valuation will be probably out ahead of what we.
Expected.
Alright fair enough <unk>, maybe a couple of housekeeping questions for waste when we file on the Threeq guidance can can you give us a sense of what makes of energy versus MSS sales is embedded in that and then.
The kind of gross margin ranges for each of the segments given how lumpy it's been through the first couple of quarters here.
That's right.
We don't have don't provide the number yet.
But mostly steel in the M.S. aside.
In the queue suite, there will be some.
Frog in sales Koetje.
But not significant contribution.
I know there also is the uncertainty.
Of the closing time.
But I think it.
Before the end of year between usually Q4 that will be some cogent.
Okay Fair enough I guess, maybe maybe just a follow up on that though if you take the implied price per watt into Q. Since you know two key revenue was almost all modules.
And you assume a fairly small contribution from energy in Threeq. You you know that would imply module pricing is going up from Twoq to Threeq, which I don't think what we're really expecting that I don't know if that's what you're telegraphing here, but it seems like Threeq you as embedding a decent amount of energy revenue relative to you know two.
Q I think more inline with what you saw in Twoq in one Q, but just trying to understand the puts and takes here because the pricing otherwise wouldn't would be implicitly going up here.
Okay, well maybe.
I will come back to you laid out.
<unk>.
With more details.
Okay, I'll take that offline, but maybe just one last one for you on the gross margins, presumably that you know there they're going down for a modules in Threeq you since the majority of your revenues in Threeq you are still going to be module based.
Should we expect gross margins to sequentially declined further in Fourq you just given.
You know the volatility in poly pricing in the timeline between you know what's your purchasing ultimately.
What what you're passing through in terms of higher costs.
Let me take that question. This is the yen Brian.
Well for Q3, the Martin this is lower.
For module business is because small do contract a was fine few months.
Earlier.
Are you now for Q3.
And and suddenly were experiencing a part of silicon shortage and price up.
Significantly up so Oh, we are increasing our remote do pricing, but for the contracts that are already fine.
That we were not.
We will not be able to reduce oh, the pricing for older signed contracts. So a that is why you're seeing lower margin for Q3, our module business and up for when we enter into Q4, because a a few months ago liking the in the past few months.
So we decided not to take home those the super low price deals for Q4.
So I I, so we do have.
Are you know I wasn't a cost came up when the cost to one up we had up a pretty good.
Idle capacity for Q4 to sell that to we we'd be able to sell at a better pricing today.
So that was a good decision was a good call and so so Q4 and also we believe that the cost.
It would be stabilized let me get into Q4 so.
And maybe at certain points Q4, Amy you know I don't know I wouldn't say will go down but at least would not go up more yeah, but module pricing. We can you know we can do better in Q4 than Q3, so Ah So I think.
The that margin going down trend will not continue into Q4 to four we should do we should do better.
Okay. That's all I'm project site and on the project side in Q4, we might have a chance to close to have more closer on projects out in Q4 than Q3.
Understood. Thank you.
Thank you.
What does he was asked a question and it started the number one.
Telephone keypad and teach you might against it sounds like <unk>.
Next question from Tonight accordion wash.
Hi, this comes from.
Well. Thanks, so much trends can you talk a little bit about the the any mix shifts and changes with the truck sales channel and how we should think about pricing, which started its bigger volumes versus pricing dynamics with or without Europe sales channel.
We experienced we experienced a some impact.
From Koby 19 direct sales channel on the residential markets and commercial markets in some markets for example in the U.S.
And they started to warm up.
And however, the impact varies from country to country and like Japan, which is the in terms revenue the biggest a residential market for us what's not affected at all so there's no impact and other markets Europe I think we'll come back already so this.
No impact anymore, and the only a China's a strong the only markets that are do you have we're experiencing a negative impact is you asked in Brazil I bought that you are thinking the U.S. So the market is already better than now it's better than Q2. So.
Direct sales channel I think a for Q2, we do Oh, we do a a deep well actually I'm. The director of channel. The proportion is a is close to 50% or for the total shipment in Q2, So that's actually pretty hot and a and that's why we have achieved 21.
So on a gross margin for Q2.
And so it's I would say.
You know the pricing for direct sales channel, it's actually a lot more robust than the utility scale projects.
During the pandemic a a crisis.
Maybe it's the nature on you know because this market, it's more inertia to pricing the price elastic to the last two city, it's not that to sensitive than the professional utility to school markets.
That's a that's very helpful.
And then in the project business can you guys talk about opportunities for acquiring distressed projects you know what's happening with your customers in terms of push outs challenging challenges on financing, where you guys might be able to start then and capture some outsized value.
Pony differences, we see and they are good but a distressed assets.
Yes, there were a big called opportunity and a this moment, we haven't really we haven't seen big ones yet but.
Usually that let us know if you heard I alternative.
Well be interested calling.
Okay, great. Thanks, so much guys.
Thank you.
Once again, we don't at least as a question for these topics that side, there number one and your telephone keypad.
<unk>.
Next question so.
So JP Morgan.
Uh huh.
Yeah. Thanks for taking my question. So most of them actually been answered and one of the follow up on a on one of Brian's questions, though Oh wait something are you able to quantify the impact of the poly no supply shortages in Threeq you just the 14% to 16% guidance can you say what what that.
Might have been without the the poly disruption.
I think it yet.
Yeah <unk> answer the question.
Well I think a the impact is a pretty major I made a calculation.
Prime or I mean, I think majority of impact comes from the silicone right, but however, you know when something happened everybody tried to write the seemed boat restart pricing. So Ah Ah. So oh together I think a one he comes from module they impact just like two sets of U.S.
And so so Ah however in Q3 for pricing a promote do price a up we try to receive a price for module, but does not mean, we can reach 100%. So so I would say we do lost.
Or at least a 5% a that a margin that's a probably you know property there that the rock number.
Okay. Okay. That's helpful. That's it for us thank you.
Thank you.
Gentlemen.
Question answer session.
Thanks.
We'll take for closing comments.
Well. Thank you for joining todays call well continue with before if you have any across Chris Paul will like to a set of I'll call. Please contact our investor relationship team.
Thank you about come to know support I Hope you on your family a safe and healthy they.
Thank you.
Thank you.
Please standby.
Oh.
Thank you for participating.
[music].