Q4 2020 JinkoSolar Holding Co Ltd Earnings Call
Hello, Ladies and gentlemen, and thank you for standing by for Genco Solar Holding Corporation Ltd fourth quarter, 2020 earnings Conference call.
At this time all participants are in a listen only mode.
After the managements prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.
I would now like to turn the meeting over to your host for today's call to MS. Ripple Channel Genco soldiers Investor Relations manager. Please proceed ripple.
Thank you operator.
Joining us today for Genco, so that fourth quarter expense and drinking earnings conference calls the accounts.
And if it results were released earlier today and available on the company's IR website at W.
And it was happening at dusk genco, so that they'll come.
Newswire services, we have also provided a supplemental presentation for today's earnings call.
And can also be found on the IR website.
And I'll call today from Coca Cola and New studies.
And that of the board of directors and she does that still keep officer of Genco Solar holding company Ltd.
Your child is how chief financial officer, and coastal them holding company Ltd, and the most agenda now Chief marketing Officer of Banco Sabadell Company Ltd.
And he was he's gaskets and coastal business operations and the company highlights followed and he's coming out and we'll talk about the sales and marketing and revenue for powerful that go through the financials.
And I'll be available to answer your questions Jeremy the Q&A session that follows.
Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 19, Nike five but what are you looking statements involve inherent risks and uncertainties as such our future results may be materially different from the views.
Extract it today because that information regarding this and other risks and included engine and coastal that's public filings with Securities and Exchange Commission and co Silvio does not assume any obligation to update any forward looking statements, except as required under the applicable law.
It's now my pleasure to introduce Mr. Engender, Chairman and CEO of Genco still that holding literally will speak in Mandarin and I will translate his comments into English. Please go ahead and Italy.
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And he 20, whatever it was a challenging year for the solar industry, okay, except the momentum for strong growth.
And I forgot and European Shrugging and uncertainty after we went through the COVID-19 pandemic globally scale, although demand for solar installation was affected and we experienced and a domino effect over the global economic slowdown and went through some of the lowest full and we were still able to recover rapidly after restrictions.
We eased in major markets is that second half over 2020 shortages of polysilicon and solar glass rising shipping costs and the appreciation of RMB together with the impact of COVID-19 and.
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But activity is that industrial value chain and the.
Full of extreme challenges, we continue relentlessly to up and mikes costs through technical innovation and improved profit gross margin and the fourth quarter, well within our expectations and in both revenues and shipments for the full year, we call it significant well compared with 2019. Meanwhile.
Our brand and global distribution channels and further demonstrated our strong advantages and our resilience during market volatility and and we were able to actually increase market share and solidify our leading status is a global PV industry, our solar module shipments during the quarter and for the full year 2000 and trim.
And both hit historical highs as of the Andover, 2020, our accumulated and module shipment to which they haven't paid gigawatt, making genco solar the world's largest PV manufacturer and we expect our shipments to sustain a growth rate of over 30% in 2020 one.
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And the global economy continues to face unprecedented impacts from the COVID-19, and collected their solar industry hasn't show they saw their resilience against the pandemic and achieved rapid recovery and it's part of keeping us and high kind of enthusiasm for clean energy in 2020 net performance over that.
Global solar market exceeded expectations with newly added installations worldwide of approximately 134 gigawatt and English.
22% year over year, compared with 2019, Germany, and the pandemic government introduced stimulus packages, which I showed in a wave of new opportunities for renewable energy to develop across the global industry Chen economic stimulus often needs to large scale kept going back and then.
This investment will most likely determines the direction of the economy economic recovery now and for decades to come.
Mark and 117 countries in the World have made specific policy objectives to encourage the development of who and <unk>.
And you about energy and you don't.
Five and move that happened not only boosted the industry that can make them moving to clean energy.
And I'll stop at ball for the Chinese market, which accounts for about one third of the world's total new PV installations, the pledge to reach the peak of carbon dioxide emissions by 2000, and searching and carbon neutrality by 2016 cover both cut the delicious for energy safety and economic.
Your bedroom and adopting supported policies and measures and kind of near term.
And you haven't done that they come and transition plan in order to switch, but electricity generation from fossil fuels to renewable energies at the Premier resource China has been accelerating the application of new technologies and the reform of the electricity system system. Meanwhile, great parity and well do I.
It has brought to rapid development to improve distributed photovoltaics generation and energy storage systems. Following the 20 fruition.
And globally the co.
And the industry will continue rolling out its ambitious plan and and leveraging all opportunities. So we are in four two and gross momentum over the next few years.
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Since the first quarter of 'twenty, and 'twenty mismatch between supply and demand and that drove up the price of polysilicon caused by the relatively low capacity expansion and circle for polysilicon production and volatile short term market sentiment at the same time and with the price increases of bulk commodities higher production costs.
Were passed down the index.
Natural value chain, which resulted in significant price increases in modules. He was boss some investors and solar power generation have accepted lower yes, however, practice and each upstream and downstream segments continue to fluctuate and we predict we'll do so into the second quarter.
All of this year.
Installations are still likely to increase and the supply is sufficient and most segments of the supply chain, we anticipated debt and mindful module, so well with life well.
Market crashes stabilized while they are still supply shortages and there is enough party city come true support over 180 gigawatt.
For module production and this will have palace demand, we supply and in that year, we were less optimistic about global installation levels in 2020 one.
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The continuous volatility and the industrial value chain and further highlighted the resilience to risk of integrated manufacturers. Meanwhile, economic uncertainties continue to concentrate and key players and heightened competition for survival of the free cash and we will get highly adoptive companies two game.
Market share, we closely monitored and market trends and adjusted with flexibility each link of the production process and to continuously optimize our supply chain management throughout our network and partners. Firstly, we signed long term agreements with material suppliers to secure the steadiness of.
A lot of cool matures and secondly, we continue to tribute and bulking partnership alone upstream and downstream to share resources, especially for segments with more severe supply shortages and actively established practice for me and industrial.
Ecosystem. In addition, we maintain flexible tracking and and storage of alternative technologies and material is to minimize market risk caused by supply chain and volatility.
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And that's those are industry and does the era of grid parity around the globe Genco. So they'll continue to expand successfully with small business day, Nevertheless, and business models, leveraging our brand and reputation built out and use of global marketing and excellent.
Service, we have established against foothold to build specific standardized and industrialized and not just storage development models and eight major regions worldwide at present, we have shipped our energy storage products to the middle East and Africa and it was launched.
Debt special ladies and but the U S and Japanese market in the second half of 2021 and Meanwhile, our business in the global distribution market is showing a rapid upward trend and our products for the PV systems have been installed and a number of commercial real estate projects and <unk>.
China and coastal actually now and brand and expert teams continue to drive the successful execution of our business plus day burst of life of global ketchup and much to localized after sale services did have guarantees and reliability and the consistency of our.
Products and services.
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Is committed to promoting and the acceleration of carbon neutrality through product innovation and operating excellence over the next one or two years. Our technical go it's true. It's the highest net bocelli efficiency of 25 quantified per cent for amtech mono crystalline silicon solar.
Sale and a 29% for the multi junction solar cell so far our new generation type of pro flagship products have accumulated all day, so well over 10 gigawatt Tiger Pro provides the best and match between maturity of the industry and high efficiency latch and report that we expect the attack.
So as to accounted for 40% to 50% our total shipments. This year. In addition, we will continue tuned average our leading technical innovation capabilities to promote the development of safe and highly efficient energy systems in response to increasing demand of this space we have.
Been actively deploying and solution for their solar plus industries, such as technical storage for photovoltaic hydrogen hydrogen production and integrated PV storage and smart systems.
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We remain bullish on and maybe true long term growth of the solar market space and are continuing to invest in new production capacity with technical and cost competitiveness and taking into consideration multiple factors that technical maturity and capability to meet increasing downstream demand.
Our high efficiency product, we expect our in house annual production capacity of our mono silicon wafers.
Fisher see solar cells and modules to reach such a sweet 27, and 37 gigawatts respectively by the end of 'twenty 'twenty. One we expect the proportion of our in house production capabilities to reach over 75% in 2020, one which will enable us to become even more.
More resilient true risks and continued volatility of the supply chain and technical obsolete and this long term investment in our business and will help to optimize operational efficiency and increased profitability.
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Before turning over to agenda, and I would like to go over our guidance. We expect total solar module shipment to be in the range of four point to five gigawatt to five gigawatt for the first quarter of 'twenty 'twenty. One total revenue for the first quarter is expected to be and the range of one point 18 billion.
And just all those two one points to $8 billion gross margin for the first quarter is expected to be in the range of 12% to 15% based on current estimate the flow 2020, while shipments and creating including wafer cell and module to be eager and drove a 25 gigawatt to a certain.
Gigawatt.
Thank you and me sleep.
And the fourth quarter expense totaled.
Total shipment of solar modules reached five eight gigawatt and.
For the full year of expenses total annual cash costs were $18 eight gigawatt.
And so supply and demand remains volatile we were still able to reach our shipment target for the full year 2020, our modulus were shipped to two and year to date.
160 countries and regions in the war and so.
Our oversea markets remain our main shipment destinations with the Asia Pacific U S and Europe accounting for the major portion.
Shipments and Asia Pacific achieved a significant growth of over 60% and 2020.
During the fourth quarter, we strategically increased the portion of shipments to emerging markets in order to capture growth opportunities.
And as economies gradually recover from the pandemic.
Although well recognize the solar brand global network of localized to real time customer service quality products and once the technology, where major assets that help to mitigate risks and increase our global market share in 2020.
Shipments of our high efficiency mono crystalline products increased significantly from 74% and 2019 to nearly 100% and 2020 and.
And my 2020, we launched our new generational sex ship products for the Tyco Pro series, leading the industry to fully and towards the era of Ultra high power efficiency about 500 Watt peak.
And as technology innovation continues to accelerate product iterations, we estimate shipments of type of Pearl module will reach 40% to 50% of total shipment in 2021, which will greatly reduce the LCR EBITDA for the customers and the same conditions.
Recently, we launched our new ultra high efficiency Tiger Pro products, especially designed for distributed DG market.
Well suited for a wide range of distributed scenarios, including industrial and commercial rooftop and the residential growth.
And the future we will continue to launch premium PV products and diversified solutions and continue to expand our brand influence in the field of distributed generation and segments.
And the recent price hikes, along the supply chain costs correlated increase in module price it and pressure to downstream installations the amount.
However, we believe the short term price price will have relatively limited impact on demand flow.
And China's attached to achieve peak carbon emission by 2030 and carbon neutrality by 2016 state owned enterprises or assigned mandatory target for renewable energy installation.
According to client feedback several major Chinese investors already lowered you had targeted for the power generation projects, bringing strong installation and expectations for the downstream market.
Believe that near the added newly added PV installations.
And significant growth momentum in 2021, and the mid to long term global transition to clean energy will become irresistible and more.
More and more countries launch policy and the flow to cut carbon emissions democratize incentives are expected to partially offset the cost pressure.
Solar industry will continue its strong growth momentum.
Next I will detail rich.
Detail, each week and market trends and <unk>.
China 2021, the first of the year after 14th five year plan and it is also the first year for the solar industry, except to the residential sector.
Into the era of grid parity with and subsidies.
One aspect according to the new 2021 policy growth projects that should be one through BD.
Otherwise you installation would be approved as a result of the reduction of subsidies on existing projects.
This will lead to lower price projects going forward and increase the solar generation capacity.
Further drive down the cost of solar power.
And more because of delayed projects non connected to the grid by two and service will boost subsidies. This will accounted for the most of the connections to the grid this year.
Including this digital projects the worst 10 gigawatt.
And each market is expected to achieve a growth rate of 25% a year over year and new installations, reaching 55 gigawatt level in 2021 average.
<unk> annual installations during the 14th five year plan is expected to reach 70 to 90 gigawatt.
According to the latest reported Bloomberg and you Ana to finance solar installation capacity in the U S reached a record high of $16 five gigawatt in 2020.
And our industry show the connection with not retaliating in the middle of the pandemic Doom and gloom and most of them and.
Economic contraction precedent and Baidu has announced that the U S. We have rejoined the Paris agreement and at the House of Representatives has introduced a great Act a critical deal debt includes a five year extension of solar investment tax credit.
So economic recovery policy in the post Covid era, and accelerating the carpet nidation of the U S energy system will further enhance and attractiveness of solar power and energy efficiency.
And 2021 newly added a solar installations are expected to exceed 20 gigawatt for the first time comparative with other renewable energy sources.
Rice of solar power in the U S is very competitive and as market competition is more rational because you'll.
You'll need to supply demand relationship and the market increase.
We are confident about maintaining our leading position and U S market and we saw a stable supply capacity and capability excellent customer service and high quality part of advantage.
And 2020, our shipments in Asia Pacific market and reached a historical high with non contributing the largest growth and the shipments affected by expired ratio of.
Fifth projects, Japan and Russia.
Large number of project in September 2020, and I'd say economic advantage of rooftop projects continue to grow and Japan rooftop solar power generation is expected to replace that utility scale projects and that becomes the main source of the newly added power generation capacity for the country.
Affected by some adverse factors, including the pandemic and excessive day high electricity costs nearly simulations and in.
<unk> experienced a decline.
However, it is worth mentioning the ministry of new and renewable energy will impose tariff of 40% and 25% on solar module sales respectively.
From April 2022.
This move is expected to excuse me and stimulate a new round of installation rush before the deadline.
Demand in other markets in the region, such as Australia is expected to remain stable.
According to the European market outlook for the solar power <unk>.
2000, 22024 published by solar powered Europe, the European market and reached <unk> seven.
Gigawatt of new installed solar power, producing a double digit growth of 11% and 2020, the highest growth rate since 2011.
In term of market performance, so new renewable energy source Act will benefit the divestments of rooftop installations in Germany.
Non established a leader in solar generation and the residential energy storage is expected to become another emerging and growth driver.
And the Spotlight awards, our spend in 2020 at the country net Europe subsidy free market growth and it became the third largest solar marketing and Europe.
In January 2021 span awarded a total of over strictly go about solar and.
Wind power capacity in the first day renewable energy auction houses 2017, with the lowest <unk> for solar.
And a one eight <unk> procure went out.
In addition, solar market in Netherlands, Poland and the fronts.
And the solid momentum we.
We remain bullish on the long term development of the European market.
Most of the countries and emerging markets like Latin America, and the middle East and actively promoting solar power projects.
Vacations for solar power generation has extensive and.
Joseph and a major driving force for solar power development emerging markets.
Brazil State owned Energy Research office.
Recently announced that it has reached a total of nearly 67 gigawatt of renewable energy projects for auction influence this year, including 1050 solar projects with a total capacity of over 40 and one gigawatt.
So Dubai Supine Supreme Council of Energy recently announced a significant increase in renewable energy share of Dubai total energy mix.
Following a strong recovery from the severe impact of pandemic emerging markets I expect it will become a powerful contributor to the development of the global PV industry.
We see solar generation, and becoming widely popular and more and more countries and the growth of the global solar market and will no longer rely on single dam and the dominant market and like the U S Europe, India, and we will continue to diversify its.
The agenda general trend of the global Penny free.
Energy transition, we will open up a new growth cycle for solar plus energy storage projects to achieve cost effective integration of flexible resources and smart distribution grid.
At present, we have diversified our solution for our residential and C&I and the utility customers.
Our major markets around the world.
We will co create with leading companies in the energy storage supply chain to accelerate deployment to the entire energy storage business change.
Recently, we won over all.
Achievers Awards and the 2020 photovoltaic module Index report published by the renewable energy testing Center, our high performance across three essential index hatred categories reliability performance and the quality demonstrated our commitment to product et cetera.
As the world's first the global solar manufacturer, who joined our U 100 Gene controller was the first company and the industry to signs of global framework of principles for the carpool Decarbonising heavy industry.
In 2021, we will strengthen our distribution channels expand our network of value added customer service and bring greater value to our global customers with high quality reliable modules and the premium services.
With that I will turn it over to Charlie.
Okay.
And thank you dinner and the fourth quarter, So I think cost of raw materials and shipping costs combined with RMB appreciation puts pressure on our profit because it is <unk>.
<unk> margin was 16% or 14, 3%.
Excluding the reversal benefit for <unk> and <unk>.
And we the benign.
And I always tell our guidance, our long term competitive advantage and branding and distribution channels and demand for our high increasing products and customer services have helped to partially offset the pressures from the upstream price volatility.
As costs, along the supply chain and stabilize our highly efficient growth.
Reduction capacity that these and better integration, we will continue to give us a competitive edge and the industry.
Let's go into more detail so far this quarter and a total revenue was $1 4 billion and U S dollars.
Kris a one 1% year over year gross margin was 16%.
<unk> to 17%.
Well to a near and Dear and 18, 2% in the fourth quarter of 2019.
<unk> CVD reversal benefit gross margin was 14, 3% in line with our previous guidance.
Total operating expenses Q4 four.
202, new mini and <unk> and.
And increase of 51% sequentially and.
And increase of 26% year over year, the sequential and year over year increase was.
And the attributable.
Preclinical and increasing disposal income and losses or equivalents as a result, our company's operator production Laurence.
Total operating expense is currently at 415% of total revenue from the fourth quarter of 2020 compared to 10, 8% and the third quarter of 2020 and.
11, 9% in the fourth quarter of 2019.
Operating margin was 8% in Q4 compared to six 2% in Q3, and six four and 2% in Q4 last year.
<unk> was 100 million in U S dollars compared to 144 million and U S dollars and sort of quarter Longs GAAP net income was $5 1 million and U S dollars, a decrease of 92% year over year.
Which translates into long term diluted earnings for eight years of 11 cents.
Taking into account and the loss from the change in fair value of convertible senior notes and the comps due to the sharp increase in stock price of oil company and Q4 GAAP net loss was purchased and with my daughters.
A brief you on our 2020, a full year financial results.
And you're trying to was.
Dramatically stronger compared with 2019 total solar module shipments were 18 eight gig.
Gigawatts of Saudi Aramco and year over year total revenues were $5 4 billion and <unk>.
18% year over year.
Benefited from our increased and shipment of solar modules and production volumes from our integrated high increasing capacity.
Whereas cost reduction from companies and there should eating integrated cost structures gross perfect for the full year was 945 million U S dollars and <unk>.
Kris so searching for and a 6% year over year gross margin was 17, 6% compared to 18, 3% trend Tucson, 19th and <unk>.
Moving the ADC with easy worse will benefit gross margin was 17% flat with Tucson, and 19 operating margin for the full year 2020. It was five 1% compared to five 8% for the full year 2019.
Operating expenses for Sharepoint and five percentage of total revenue in 2020.
That's true.
Tucson, and 19, EBITDA was 463 million U S dollars compared to 370 and 16 in Tucson, and 19 net debt to EBITDA ratio was three four times.
Non-GAAP net income was 147 million U S. Saar is compelled to line of sorting and nine men and U S. Doors in 2019. This translates into non cat basic and diluted earnings per it is obviously point to a sense.
Moving to the balance sheets, and the end of fourth quarter, our plan and so cash and cash and equivalents were $1 2 billion and U S dollars.
<unk>, two 943 million and <unk> by the end of third quarter, and our cash low levels significantly improved.
They are term over a day in Q2 50 days compared to 61 days in Q3 inventory to lower days were 97 days flat with the third quarter.
And so that was true and spending.
And I stars.
Compared to 2.5 thing.
At the end of third quarter, and one nine thing and Usr's buys and our last year.
It's 115 million U S dollars was related to international solar projects.
Debt was $1 five stars from held to one four and five nine thing and Usr's sort of quarter and one thing and you all stars.
And by the end of last year.
In September 'twenty, and 'twenty, and we announced our plan to less our principal operating <unk>.
Subsidiaries <unk> co.
And on the Star.
<unk> in China by the end of October 2020.
John C gene called completed equity financing, our RMB three four and one things.
This process is proofing.
Progressing smoothly.
This concludes our prepared prepared remarks, well now happy to take your questions. Operator. Please proceed.
Thanks and maybe.
Ladies and gentlemen, you will now begin our question and answer session. If you have any questions for your speakers today. Please press zero followed by one on your telephone keypad and net and wait for your name to be announced.
I'd like to cancel your request please press Cerro followed by two.
Again that zero one on your telephone keypad now.
Yeah.
As a reminder, everyone that zero one on your telephone keypad to enter the queue.
Your first question is from Philip Shen Who's from Roth Capital Partners. Your line is now open Phillip. Please go ahead.
Hi, everyone and thank you for taking my questions.
With a Q1 over now can you talk about what you.
You see for pricing and Q2.
Shipments and margins I know you have not provided official guidance, but.
Any color on the Q2 outlook would be very helpful. Thanks.
Yeah.
And there's been no.
The pricing formula price and constructive you know the input costs.
Continue to be relatively high given particularly the polysilicon supply bottleneck.
And we are seeing you know Disney back in the balance.
Uh huh.
And no negotiation with our customers and.
And the module price.
And our growth globally, including China.
I think and.
And no change to to go up and go to absorb a true.
And you're flat so you know the input costs.
And the impact.
So we didn't give the guidance second quarter two.
Overall, you know.
Gross margin to be relatively stable.
To answer the first half of the year.
We are.
We're expecting some positive factors.
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And the market price is down.
And the RMB.
Depreciation and all.
Looks like you know.
Positive.
And do you know off should.
To offset some.
Input cost pressure from.
And you know.
Specific to the polysilicon impacts.
You know I think that it's.
It's a little bit impact on the on.
And the global demands from the module perspective because of that.
Hi, no input costs and.
I think and most of the tier one companies the likes to balance shipments which as.
And the module shipments versus the.
And you know.
The high input costs and.
So essentially you know the Simmons.
I'm expecting you know the tier one companies and the second quarter and.
Quarter by quarter and shipments will have significantly increased.
Okay. Thanks, Sean so.
And then.
Hello.
Sure.
Okay.
Yeah, so regarding the shipment I think.
You might have noticed our disclosure of the shipment targets to include.
Total shipment and startup module ownership, but we should reflecting our strategic flexibility because right now we see that and balance that the amount of supply from upstream and downstream right now so that's why like Charlie Charlie just thanks.
And our shipment target us doing in line with what we said, but we are keeping and some flexibilities that between you know.
Wafer cell and module in order to mitigate.
<unk> mitigate market risk and try to optimize our margins.
Thanks, John and I did notice that and.
Was wondering if you could share a little bit more on the general and specifically.
How much wafer only sales or so.
The only sales could we see them.
So that we can get a more accurate.
Module only.
Module shipments and 21.
Yes.
We don't we don't have that number yet because we are we.
We are keeping that flexibility.
Two to make sure of debt and we can adapt our strategy to the current.
Polysilicon price hike, that's why we keep that debt.
The effects of all part but.
In general we're still taking a modularized our main business.
But partially its partially off our shipments and will be weighted.
Wafer or salaries depends on the margin on the spot market.
Okay. One other question from me.
Guys added I think 16, gigawatts or and plan to.
Of cell capacity by the end of this year can.
Can you give us a little bit more color and that strategy around the capacity expansion and and the focus on.
Why is that.
And so much and so and then help.
Help us with the Capex for 2020 total and then what do you expect it to be and some one and how much do you expect that to be from <unk>.
Partner contributions in terms of the Capex.
And the Capex.
And the Chilean walnuts and a range of one thing and you asked on this too.
<unk>, one 2 billion and U S dollars, reflecting our investment on the.
And it's dramatically and the sooner the sale as well.
The wafer stage and for the strategy of a solar sail.
And the affecting our and.
And the type of leasing.
And this in two or three years within and increased salaries.
Yeah, so and wholesale capacities because you know we we.
And we think the non it is not so mature and the loss.
Two or three years.
And now and you know.
The market is shifting.
Bigger size high inflation and.
And time.
So there's still it's acknowledged and.
We believe it is.
And to increase our solar cell capacity and increase and our integration levels.
And that is why you know.
Increased a little bit more on the solar cell capacity into news to anyone.
Great and then the 2020 Capex Charlie.
Truly truly I didn't have the exact non there is.
Roughly.
<unk> been and U S songs.
I'm, sorry, it's 500 magazine and stars.
Okay, great. Thank you I'll pass it on.
Thank you Phil.
Thank you.
As a reminder, if you have any questions from your speakers today. Please press cero, followed by one on your telephone keypad and wait for your name to be announced if you wish to cancel your request. Please press zero followed by two.
We'll pause for a moment to build up the queue. Thank you.
As a reminder, ladies and gentlemen, if you'd like to ask.
A question.
Please press you followed by one on your telephone keypad now.
Your next question.
Is from Brian <unk> from Goldman Sachs. Your line is now open Brian. Please go ahead.
Hi, guys. Thank you for taking the question.
I have a couple of questions for low.
Alright, I can hear me.
Yes.
Breaking ranks us.
Is it better now.
Yeah, and it's better it's go ahead.
Yeah. Thank you for the questions. This is Greg on for <unk>.
Ryan.
A couple questions first and just.
Wonder how far and.
And then are you both for modules and is there a flexibility and pricing or will you and not able to raise pricing until like the second half of 2021.
Thank you for the question I think from a module price one side a warehouse.
Our firm commitment and.
For the contract with science, but also we always keep a portion of our capacity is the spot market to adapt ourselves to the volatile market changes so for the contracts signed apart.
And we're doing our best to respect the contracts legal commitment.
Since we have a long term partners.
<unk> shipped with many customers for years. So we are we are still talking to many of them try to get there and I say, a health plan and Flexibilities to work together to to face the current and challenges in the market. So that's progress.
Is that answer your question.
Yeah Yeah.
How far.
You booked quite a module from us.
And one.
I think that over our order book and.
Martha half booked.
But still you know some of them.
With a firm commitment and some of them some are with flexibility.
And with.
A framework contract only so.
Yes.
Okay, great Thanks for color and I.
Hum myself and my second question, just and now that more and he calls around the China imports and the five year plan.
And those expectations.
And why people from five gigawatt.
So I, just wonder how and how you're thinking about.
Does he ran picture here in terms of like what could drive upside or downside.
Sorry can you repeat what's the upside and downside.
Sure.
Oh, what kind of demand and what could drive upside.
Yes, So I think right now in short term and we did face some challenges because of the and balance the growth of the <unk>.
Capacities.
Our pre mark.
And our earnings speech.
The growth of upstream capacity is much slower than the expansion of the downstream day Mount So there is cost.
Short term turbulence and volatile market situations right now, but in long term, we are still a believer for the.
Long term gross after market, including China market and all of the market as well because we see a very ambitious.
Target announced that by China government, and we have we have except a very clear signal from our downstream customers about their ambitions pipe price in China.
And so are the currently challenging in the short term market and balance the supply and demand that happened in.
Our per strength, but we expect that it could be resolved in the next I'd say midterm short term or midterm.
Chris the China.
And I say, China grid parity projects always got a long time to after the PPA signed to get great connections. So I think yes.
So and market it will adapt itself based on the market principles and.
The China market together with a global market amount and we will continue to be very strong and at a high speed growth.
Okay. Thanks for color and if I could.
And one more I just thought here and how should we.
I think about like the vaccine and 21 should we think about like.
And as a percentage of like around.
And 1%.
And and how should we think about the gross margin.
And second half off comes along.
At this time.
Okay.
Mhm.
The gross margin and we are expecting some and a more competitive competition.
Competition, among tier one companies and.
One was that.
The bottleneck is still good and materials.
So we are expecting the.
The second half year with more the.
Barton.
Arsenic.
The materials and the.
And the cost.
Expecting to be improved.
Compared to first half of the year.
And we have more.
Possibilities and with.
The integration level and increase.
The parts and Nick owns the key materials and.
And to improve our gross margin second half year.
Okay, great and.
Pardon the interruption Grace or are you still there we lost you for a minute there.
Yeah, yeah, thanks for color.
And the Opex.
How should we think about the opex is it.
I'm still around a return to a normal kind of like normal range like 11% to 12%.
Yourselves and myself.
Okay.
Yes, it's true.
The average 11% to 12% against the total revenue.
Okay. Thanks, I'll pass it on.
Thank you.
Okay.
Thank you.
Your next question is from.
Phillip.
Who has a follow up question Who's from Roth Capital Partners. Please go ahead.
Hi, everyone. Thank you for taking my follow ups.
One of the questions I had was around poly silicon and and <unk>.
And where pricing is.
And the dynamic there of pricing continuing to go higher I was wondering if you could share.
How much polysilicon and you've secured for 2021, possibly and metric tons.
So Phil I think from the <unk>.
Supply side, and we have secured enough.
Polysilicon supply.
But the challenge is.
No.
Because of this market situations August.
Secure them.
And I sit and kind of supply is always up to the market condition.
SaaS.
Pressure or is a big challenge and for everyone, but currently extremely almost mission impossible to secure a long term policy and pricing. So we secure the volume I think there is enough, but from the pricing why Ice's steel August.
Up to the market.
Mhm and what's your view generally as to when that pricing.
Can become release.
And I think Tony has some capacity coming online at the end and this year.
Do you think we have to wait until Q4 or is there and if we get relief before that what causes that relief.
We think we think that it will relieve us step by step is well it won't change overnight.
But gradually I think that the pressure will be released.
The challenge here right now is not that the demand side, a very very hot right now so that's why you know.
And the upstream is August.
Holding their expectations.
And so.
The demand and the support.
The price.
No.
It will and short term, we are still expecting a volatile market and the upper end.
But in long run and like you say.
Pressure will release step by step and follows a market principles.
Okay, and then as it relates to Q2 shipments and we talked about this earlier Jenner.
But when I look at Q1 relative to what we forecasted in the.
Q1 levels or what you guided to were lower.
Hum.
For Q2 should we expect something similar meaning.
If you think back to what you expected to do and Q2 back at the end of last year.
Do you expect the shipments to be lower in Q2 now versus then because.
Hum.
And the raw material outlook is so challenging and.
As a result, and you know your.
Customers and and you are pushing out orders. So are you do you expect to build less in Q2 than you previously had and I imagine.
I think Phil as a principle, we are holding and the companys true to keeping the market capacity and more flexible than others right.
Our wafer and cells are in the food.
For us and for the module side and we are holding more flexibility is up to the what we say right our margins down and market conditions, and that's why and I was just <unk>.
Shipment contests and all three segments, we have so I think that we will hold the same principle for Q2 as well.
The number wise.
I don't think it's the right time to talk about it and maybe we can talk about and next time.
Okay, Alright, I appreciate that and then.
In terms of the China listing Charlie and I know you mentioned some.
Details on that I was wondering if you could share if there is what's the potential for the China list and to be in Q3 or four this year is it meaningful or is it more likely and the early part of 'twenty. One 'twenty two I know you guys have talked about.
And perhaps taking a two year process, but wanted to see it.
And the others are going this year like Darko, and then I think Canadian or us has chance a chance of getting out there this year.
I'm thinking you guys have a chance to get there this year as well China listing, but wanted to get some color from you guys. Thanks.
Okay.
China and less thing we have separate teams working on this process.
And more complicated is from.
Compared to the U S listing.
And the process is still is on track and msas or smooth and.
We are expecting to reach them.
And efficacy milestone and.
And the next couple of months, and we will pivot and Rockies.
And you're in progress and.
In terms of timetable you know how long we will get to that.
China and this thing down although you know a lot of process.
The company's controls and particularly from the <unk>.
Good day, there's a couple.
Couple of wrong, So you know.
So missing and.
And you know response.
And the comments from the regulators and.
And the greater as they have.
You have different tendencies to control the low.
The total volume of China, and less things so it's a.
From the company and perspective, we try to drive as a positive.
And.
As quick as possible and the more information there, but some of the policies depending from the government and regulators perspective.
Okay.
Thanks, very much from a follow up questions and I'll pass it on.
Thank you Bill.
Thank you. Our next question is from Johnny Chen Who's from Greencore Capital. Your line is now open Johnny Please go ahead.
Yeah, Hi, everyone can you hear me.
Yes, Hi, Hello Huh.
Thank you for taking my question and I have two questions for you. So firstly, we know that from the company has been developing and.
Yeah.
So, let's see how technology is nationally and popcorn. So would you please elaborate.
Net elaborate a little more debt.
And you know the capacity plant and and the efficiency and the success rate.
And my second question and its debt.
And any possibility definitely.
Any.
Develop and.
And another and platform technology, we call <unk>.
Thank you.
Okay.
Okay.
We build up.
Our R&D capabilities and time.
A couple of years.
And I assume.
So and 19, starting from 2019, we have built around 800 megawatts.
Top count base capacities.
The efficiencies have been reached to <unk>.
Roughly 24%.
And.
Now this year, we are building.
More capacity and the solar cell assays and.
And the capacity is large sized space solar cell capacity.
Whereas we have flexibility to upgrades.
We're currently upgrade to that.
The top comp base.
And to acknowledge we're free to air and.
In terms of its J T.
And though we still believe.
No its stock cost.
So in fact to at this stage and we have as you know.
R&D and <unk> taken on is available and continue to watch out.
And the maturities, particularly from the equipment perspective, there's no material growth perspective, So we don't have plan to low Dodge.
Dodge size.
Yes.
Well two years.
Hello, and thank you. Thank you.
We were up.
Two please.
And once you make sure that I hear you right. So what is your capacity expansion plan and we'll talk about tough call again this year in 2021.
So and you said it well we didn't have plan to increase our top count.
Capacity.
And just emphasize the new capacity or the capacity.
Easy and comfortable and we have visibility and.
It is available you know.
Okay.
And you know to upgrade to the top car immediately.
Yes, so so.
The capacity expansion and suites.
And so on the parts and technology right.
Yes, right free time.
Yeah. Thank you. Thank you that's all from me.
Thank you.
Right.
Yeah.
Thank you. Your next question is from Ken Powell Who's from Brooks and your line is now open Kim. Please go ahead.
Hi can you hear me.
Hello.
Hi.
Thank you for taking my call.
I have a couple of questions.
One is you mentioned in your opening remarks.
And so he's willing to accept now.
Lower than then.
Normal returns with a new with the new solar projects.
Can you give us a little bit more color on that like what kind of returns.
They are willing to accept now.
Yes.
And second.
I wanted to my second question I wanted to ask a little bit more about.
You all have U S too.
E coli and supply demand situation.
Poly silicon materials.
And.
And when do we think.
We would see a.
A return to normal pricing.
For polysilicon and.
And also.
And at what level currently.
Yeah.
You were too.
Maintain a margin.
From from Europe and.
2000 Twenty's.
Normal operating margin.
And what time.
And what kind of policy you can price.
Would you need to actually get there.
Thank you saw regarding our questionnaire about Chinese <unk>.
And our expectation.
Actually I think that there are a lot of.
Chinese Soe IPP, so who has set up very ambitious renewable targets for this.
Our new five year span.
And according to what we have heard from the market I think that they are our expectation has been lowered from previous today around.
Eight to 10.
Two right now around six to eight so I think Thats fair.
Very big and I say junk or let's say, a big decline in order to pump more renewable projects and.
And renewable sector, which gives a lot of hopes and ambitious targets for the whole industry.
Especially in China.
And regarding our second question about supply demand relationship.
Especially for polysilicon and I think in the previous question to Phil.
We have provided our views that further.
For the polysilicon.
Because of the cash of the polysilicon supply is mainly driving by the.
And balanced growth.
Our expansions between upstream and downstream because the ramping up.
Phase four the upper stream is much much lower than downstream SaaS manage their visa and.
For the force.
The price range or how much weight well it goes back to so called and I say 2020 level it depends on the.
Supply and demand and that relationship as well. So that's why we see and short term our view is.
So volatile upper stream.
The volatile market and driven by the shortage of the polysilicon or the upper stream a material will continue and the short term and mid and long term, we deeply believe the market principles, which will automatically balance between supply and demand across the different sector and this is.
Industry, and we believe in long run and renewable is still a very promising industry.
Hopefully that answers your question.
Okay can I have a follow up.
Yes.
Sure.
Okay.
Hello, Yes go ahead.
Okay.
I'm just thinking in terms of time.
You'll be given the fact that there is not that much new supply for polysilicon coming on stream and two.
Towards the end of the year.
Do you think we should be able to reach some kind of lift when you. When you say mid to long term do you think we should be able to reach a more reasonable from polysilicon price and margin levels for us as a result.
Towards the end of the year.
Well.
Our first day of thousands of polysilicon and I think.
There are capacities start from and wrapping up and the new capacity start to release that the polysilicon.
Materials to the market.
It's just a step.
Steadfast that it won't be.
It won't happen overnight.
I think you can look into you know the men polysilicon manufacturers.
Wrapping up and I think that there's still lots of public information available and regarding your margin question and I think.
The margin will follow the market principal asphalt right. So it will go up and down for example, and recently.
The solar glass price has dropped significantly which.
<unk>.
So module makers.
More or less and all.
And let's say east.
<unk> is a pressure from the upper stream a little bit so.
And it happens just.
We prefer to look into this industry in the mid and long term and status one month or two.
Thank you.
Yes.
Thank you.
Thank you there are no further questions at this time.
<unk> and gentlemen, this concludes our conference call for today. Thank you all for your participation you may all now disconnect.
[music].
Okay.