Q3 2022 Canadian Solar Inc Earnings Call
Okay.
[music].
Ladies and gentlemen, thank you for standing by welcome to Canadian Solar third quarter 2022 earnings Conference call. My name is Melissa and I will be your operator for today.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes.
I'd now like to turn the call over to Isabella <unk> Investor Relations director of Canadian Solar. Please go ahead.
Thank you Melissa and welcome everyone to Canadian <unk> third quarter 2018 conference call. We have provided slides to accompany today's conference call, which are available on Canadian solar Investor Relations website.
The events and presentations section.
Joining us today, a doctor Shanxi chairman and CEO .
Angel President of Canadian Solar as a majority owned subsidiary CSI So Dr.
Doctor quick things here.
Senior VP and CFO .
My little corporate EVP, and president of Canadian solar its wholly owned subsidiary Global energy.
All company executives to go participate in the Q&A session after management's formal remarks.
On this call Shawn will go over some key messages for the quarter.
And it's my prospectively with you the highlights of the studios have solar and global energy business.
Followed by Paul who will go through the financial results.
Tom will conclude the prepared remarks with the business outlook after which we will have time for questions.
Before we begin I remind listeners that management's prepared remarks today as well as the answers to questions will contain forward looking statements that are subject to risks and uncertainty.
The company claims the protection of the Safe Harbor for forward looking statements that are contained in the private Securities Litigation Reform Act of 1995.
Actual results may differ from management's current expectations and projections of the company's future performance represent managements estimates about today.
So I assume no obligation to update these projections in.
The future unless otherwise required by applicable law.
More detailed discussion of the risks and uncertainties can be found in the company's annual report on form 20-F, as amended filed with the Securities and Exchange Commission.
Management's prepared remarks, I'll be presented within the requirements.
Generation G regarding generally accepted accounting principles or GAAP, some financial information presented during the call will be provided on both a GAAP and a non-GAAP basis I just quoted.
GAAP information management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends.
Management uses non-GAAP measures to better assess operating performance and to establish operational goals.
non-GAAP information should not be viewed by investors substitute for data prepared in accordance with GAAP.
And now I would like to turn the call over to Canadian <unk>, Chairman and CEO , Dr. Shawn Qu.
Shawn Please go ahead.
Thank you to Bill Hi, everyone welcome and thanks for joining us today.
Please turn to slide three.
This slide provides a summary of our key performance metrics.
We achieved strong resolve.
The third quarter off trend has trended to.
However, long.
Yes.
Seven 1% year over year revenue growth.
18 point, 80% gross margin and net income of $1.12 per diluted share.
Profitability in both our <unk>.
Stoller and global in nature.
Yeah.
Crude medium for us.
We continue to focus on redefining I'll argue that trip occasion.
And driving profitable growth.
Our team executed well across the board and named Q3, one of our strongest quarters since the beginning of Kobe.
As always.
I used to know I'm hopeful well go through our performance in more detail.
Well back let me highlight that.
Key messages.
Please turn to slide four.
First.
We made.
Nick I can progress.
Our actuaries storage.
I crawled all.
All of our verticals.
This includes CSI soldiers utility scale and residential battery storage product teams and our global energy is actually install ready to project development teams.
Honestly I'm, sorry sold I'm sorry.
Continue to be pleased with the level of engagement on our total bank product for you kind of hit scale storage applications.
Which we announced a few months of cycle.
Yesterday, we announced a new 2.6, you go out of our multi year supply agreement.
This underscores.
Very healthy demand.
And a favorable comparison gave a presentation.
Or will continue to provide opportunities for our contracted pipeline as we move forward.
Yeah.
I'm also very pretty obviously.
With the Hartford in customer response to yeah, sorry soldiers.
Gotcha, Dashel and nature celebrates product.
Key Q.
This was showcased Julien.
Our.
Last conference in the U S and we expect this to be a multiyear attribute or below our sales.
Although global Energy T.
Supported by our CSR entered your Stoneridge team made significant progress and you become premium one of the largest actuary salary to projects in the world.
1.4 gigawatt hour Crimson project.
I'm very pleased to report that with global.
Global energy team culture change.
Jamie.
Yeah.
Hi, Brian .
<unk> 40 gigawatt hour at.
The end of Q3.
Well ill take a stab.
Back.
You can clearly see that battery storage has become.
Very strong.
Growth drivers for our guests.
Our customers are excited about the launch.
Sure.
Chorus call Ranch solutions, and we are excited about the growth opportunity.
I'll pass.
Second.
The U S remains one of our coal market.
We are strongly committed to serving our customers and partners.
We believe the U S well remain as one of the most important and on track to any of your markets in the world.
Our efforts in the U S to Decarbonize and the passing of the inflation reduction.
I have provided important lessons from other countries, our comma fight against climate change.
With that in mind, we have a plan.
Hmm.
U S domestic manufacturing across the solar supply chain.
We have expanded our U S T.
Preparation and are now in the final stages of our site selection process.
Well there are many challenges we know the market well.
We are proud of our trying to yourself market researcher.
We are confident in our ability to.
Build upon our long term track record.
Expand the level of support to our customer.
Customers and partners in the U S. Even further.
And U S domestic manufacturing activity.
Lastly, please right so the next slide.
Okay.
I sure prestige Joe Paul.
Yes, hi, its soldiers Carbone IPO is back on track and I'll leave it there.
Completion of the registration or the China Securities Regulatory Commission.
And all of their problems.
I have taken longer than we initially.
Expect yeah.
Oh on track working who complete the carve out leaving Q4 or in.
In Q1 next year.
Well, it's not.
Let me now turn it over to Yan.
While details.
Our CSI solar village Yeah. Please go ahead.
Sean Please turn to slide six.
In Q3, the CSI Solar Division Belabored, six gigawatt of solar module shipments and 570 megawatt hour of battery storage shipments.
Each 300 megawatt hour or two our own projects.
Total revenue reached close to $2 billion.
And importantly, our gross margin continued to improve reach.
Reaching 17.3% in Q3 this was up.
140 basis points quarter over quarter and from an absolute standpoint, Doug.
Though year over year to $341 million.
Several factors contributed to our improved.
Walnuts.
First our manufacturing costs declined further in Q3 led by an increased contribution from the expanded upstream ingot wafer and cell capacity.
With a higher degree of vertical integration and greater control over our costs and supply chain, we've been able to improve our cost structure and profitability.
This is this is in line with the strategy, we previously outlined.
And while we did a great job controlling what is within our control improved costs remained a headwind in Q3.
In fact average polysilicon pricing remains remained at elevated levels and it was flat or even slightly higher than the previous quarter.
As you can see on slide seven.
So the improvement was most of the organic.
We believe polysilicon prices have finally reached a peak and we expect input costs may start to come down over the next few weeks.
Although we won't really see a benefit and true probably next year.
Given the strength in end market demand, we student meat input costs will only come down gradually.
Second our gross margin benefited from currency fluctuations not by the strong U S dollar relative to the RMB.
It was a large part of our costs being RMB relative to a large part of our revenues in U S. Dollar our cost depreciated relative to our revenues.
However, this was partially offset by the weakness most other currencies relative to the U S dollar.
Net.
S piece of our non U S markets were lower sequentially, which had an impact on our aggregate revenue remember.
Third.
Unit shipping costs came down further in Q3, as we said before there is significant room for logistic costs to come down.
Which we started to see in Q2.
We believe there's further room for improvement given where our SKU above historical normal levels and there's no reason to believe that logistics costs are structurally higher than pre Covid times.
Please note that logistics costs do not impact gross margin are and are recorded in selling and distribution expenses.
These factors combined helped drive a tripling of our operating profit year over year to $97 million.
Q3 was a record quarter for CSI is solar.
He showed the strength of our brands and resilience of our business despite the tough market environment.
Please turn to slide eight.
On the technology front, we're making significant progress on our latest anti top comm cell technology as you know we've been working on several entitled pilot lines.
Covering both <unk> junction and tough comp technologies. We believe the time is right for mass production and therefore, all of the new cell capacity, we're now, adding we use our top comm technology.
The first top com products will be delivered early next year.
We believe our product is best in class and we will have approximately one five percentage points.
Higher conversion efficiency.
The average mainstream product in the market today.
Hong Kong will also be margin accretive once we start production. It was developed to contribute to contribute positively to our pricing power due to its ability to lower our customers' liberalized cost of electricity.
Meanwhile, our goal is for manufacturing costs for top come to be similar to our current midstream product, even though the power watch each would be much higher we expect N type top come so products to account for roughly 30% of our 2023 solar module shipments.
<unk>.
Yeah.
Please turn to slide nine.
In terms of battery storage, we're on track to achieve our full year target of one eight to one nine gigawatt hour.
Our new utility scale, So bank product is gaining significant traction with customers and we recently signed a two six gigawatt of our multi year supply agreement with UBS for the U S market.
We've so bank product this gives us significant visibility over our long term growth beyond just the one or two years.
It's also been expanding our market offering across more geographics expanding from the U S into U K, Canada, and China with more markets currently under expansion.
One of our key competitive advantages.
Our strong partnerships with upstream battery cell producers, which helps ensure long term security of supply for our customers.
We back our CSI solar battery storage turnkey pipeline more than doubled quarter over quarter at nearly 25 gigawatt hour globally as of the end of Q3, while certain projects in this pipeline overlap with global energy storage development pipeline.
The value creation and services provided by the tool storage teams are distinct and separate and therefore, the tool storage pipeline should be viewed independently.
The residential E T cute product reception from the customers during the R. E plus conference was overwhelmingly positive and the new fish initial shipments to the U S market are already underway.
We're confident that <unk> is one of the best easiest to install products in the market.
We are excited about this product and believe it will be a highly competitive residential solution.
Now, let me pass it onto you smell for an overview of the global energy business is.
Please go ahead.
Okay.
Yeah.
Please turn to slide 10.
In Q3, we achieved 100 on 1 million worsened revenue.
We said, 47% and gross margin.
Making this a highly profitable quarter for us.
We saw around 819 megawatts of projects in Japan, the U S and Brazil.
Which were mostly preconstruction on earlier stage projects, which meant relatively lower revenues and higher profitability.
Recently, we have two major project completion milestones, which I'm incredibly proud off.
Turning to slide 11.
The first one is the commercial operation of our landmark one four gigawatt hours Standalone battery storage project in California, the Crimson product.
When completed this project in a very challenging environment of a stringent COVID-19 restrictions.
Which affected shipping stadiums and led to project delays.
However, we cooperated closely with our CSA Solar center storage colleagues to bring this project to fruition.
Which is testament of the synergies created demand our business divisions.
The Green some project will provide critical reliability services to the California agreed.
And allow the local grid to absorb more clean energy.
We monetize 80% of the project to a long term investment partner and retained a 20% long term ownership.
Meanwhile, we will continue to provide operations and maintenance of the water they started to fall apart.
We are also expanding our capability in energy trading through this project, which we believe would it be a key area of growth in the future.
Please turn to slide 12.
Yeah.
The other major project completion is the commercial operation of our other flagship project in Japan.
Yeah, So Michael Foods, the 100 megawatt solar power plant.
The project is I'm Gonna 30, 60 M S E T roughly equivalent.
We've all learned plenty for U S cents per kilowatt hour based on current exchange rates.
Making it one of the worlds most viable projects.
However, what I most proud of is that the project will contribute meaningfully to reinvigorate the local community and economy, which was devastated by the earthquake and 20 of them.
This project is still fully owned by Canadian solar.
I highlight this to projects not to emphasize uniqueness, but to choke and Indian solar some parallel track record in executing complex solar and battery storage projects across the world.
We have one of the worlds largest and the strongest development platforms.
Our goal is to develop more battery storage projects like Crimson.
And more solar projects like a sort of Michael foods.
Turning to slide 13.
As of September 30th 2022.
We had a total solar project pipeline of 25 Gigawatts.
Anecdotal, but that historic pipeline, a 40 gigawatt hours.
This is the largest solar and battery storage pipelining to work.
Importantly around half of our total pipeline as interconnection secured.
Which gave us significant confidence of our future ability to create value and grow.
That said do you love some of this that our solar pipeline declined slightly quarter over quarter.
As you know Canadian solar is more than just price.
We prioritize the quality and profitability of the pipeline we are building.
We are selective on the projects that we decided to more of a headwind and we're not afraid of walking away from projects with less attractive risk return profiles.
Specifically, the combination of high inflation and high interest rate over the past few quarters.
Is it an adverse environment in some geographies.
Thus.
We divested of certain assets.
And recovery of our capital to set the stage to invest and grow in geographies with stronger fundamentals.
It is important to note that we have delivered strong results with a challenging backdrop, we chose the rescue lens and the strong performance of global learned this world class platform.
Please turn to slide 14.
Lastly, I will strive to do to increase the share of your government income remains on track.
On the operations and maintenance or O&M is try to we now manage over three six gigawatts of operational projects and their long term O&M agreements.
We also have an additional two two gigawatts of contracted projects expected to reach commercial operation soon.
This makes us one of the alert just tragic operators in the world in both solar and battery storage and we will continue to grow this business.
We will also continue to retain minority ownership in assets that we develop.
Now, let me turn the call over to our CFO .
Who will go through the financial results in more detail. Please.
Right.
Thank you you smell.
But are you starting to slide 15.
In Q3, we delivered $1.93 billion in revenue.
67% year over year.
Gross margin was 18.8%.
Well it kind of all walk guidance of 15 to 16 points to 5%.
He was sorry.
Benefited from lower manufacturing costs.
And net foreign exchange you benefit from the strength of the U S dollar relative to most other currencies.
Higher margin project cells.
Selling and distribution expenses were up 5% sequentially, primarily due to higher shipping expenses from the increase in shipping volume.
However.
Unit shipping costs decreased and we expect further decreases.
In the coming quarters.
General and administrative expenses increased primarily due to a non recurring 30 million dollar impairment of certain aged manufacturing assets.
Net interest income in the third quarter was $4 million up.
Net interest expense of 15 million in the prior quarter.
The change was mainly driven by a one time interest the benefit of $17 million.
But you would receive interest income.
Dinner with him by anti dumping and countervailing duty deposited refunds.
The net foreign exchange and derivative again was $79 million.
Two six.
$6 million in Q2.
That effect was driven by a strong U S dollar relative to most other currencies, but mainly reactive to the RMB.
Total net income was $102 million and a net income.
Beautiful to Canadian solar shareholders was $78 million.
This translates to basic EPS.
One dollar and 22 cents and a diluted EPS of $1.12.
The variance is primarily due to the adjustment for the diluted effect.
Of our outstanding convertible notes.
Now turning to cash flow and the balance sheet next slide please.
In Q3.
Capex payment was approximately $110 million.
Making approximately so we had good 20 million for the first nine months of 'twenty to 'twenty two.
Given the delay in the IPO process, we are reducing our full year 2022 capex expectations.
Signs of $60 million from $850 million.
Please note that this does not imply any changes to our capacity expansion projects.
Rhonda.
Adjustments in the timeline and the pace of implementation of these projects.
We ended Q3 with a total cash balance of nearly $2 billion and remain well positioned to capture future growth.
Total debt was Raj logs unchanged at $2 $7 billion or the share of our long term debt increased to 45% from 40% at this time last year.
12 months trailing net debt to EBITDA, excluding restricted cash.
She was a decline this quarter to two seven times from two nine times of prior quarter.
Now.
Let me turn the call back to Sean who will conclude with our guidance and our business outlook.
Shawn Please go ahead.
Yeah.
Thanks, Paul.
Turn to slide 17.
For the fourth quarter of trying to trying to treat.
We expect total revenue to be.
Rangel, one eight to $1 9 billion.
Gross margin yes.
We expect to be between 16% to 18%.
This was flat.
Oliver steel input costs in Q4, partially offset by benefits from manufacturing cost reductions.
Continuing on the foreign exchange volatility may affect pricing and margin.
Also for Q4 total module shipment recognized revenue I see I'm, sorry, I wonder.
Expect it to be in a range of six to.
613 gigawatt, including approximate.
201.
Megawatt to our own project.
For the full year on tonnage on Youtube.
We expect Tsi solar total battery storage shipment.
It will be in the range of.
1819 gigawatt hour.
Including approximately 300 megawatt hour.
The company's own project.
Global Energy project.
Oh, I expect it to be in the range of.
Coupon to coupon.
And a lot.
Well also.
Richard.
Roofing solar module shipment Gardner.
Next year.
Well from the Tennessee weak, we expect total module shipment to be in the range of 30.
It is five shouldn't walk way to reverse that approximately right.
With the preferred.
Over a year ago.
The net point.
Canadian solar strategy of profitable growth is one of our key differentiators.
Or continue to prioritize investing in long term growth with U S. H.
<unk> all been in yet in <unk>.
Tissue area.
Alrighty.
And leading in the deployment of technology in the region.
The franchisees are prana.
I do for our customer and partners and is a key driver for us.
Brian accurately worldwide.
Okay.
Oh, Yeah, Oh, we're continuing with the focus on what we can control and building our long term competitive moat.
Great lasting value for our shareholders.
With that I would now like to open the call to you.
Your question operator.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is into question Kim you.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Brian Lee with Goldman Sachs. Please proceed with your question.
Yeah.
Hey, guys. Thanks for taking the questions I guess I had a couple just around the guidance.
Yeah shied away from you you mentioned.
Is that are you know gross margins the guidance for Q4 implies a little bit of sequential decline.
It sounded like you know input cost our logistics poly silicon all of that is sort of trending in the right direction. So.
Could you kind of walk us through what specifically is changing quarter on quarter to two.
To drive a little bit of a margin decline into the fourth quarter and then also how you're thinking about that translating into sort of the.
The early part of 2023, what trends, we should expect on the gross margin line.
Hi, Ray I would like to first of all blah, blah, blah, and Knoxville, and I've mentioned them back to our Q4 gross margin guidance.
Yes, hi.
Q3 gross margin guidance.
We did know why people spectacular Q3, where our team is important per se.
We now guide yet 60 and Blake in percent gross margin for Q4, so in terms of all tightened our forecast our kiln for Oxford.
And when we are guiding higher than our Q3 guidance I, just want to manage or not or like Oh, Wow, that's a year or.
To provide more commerce.
Hi.
Hey, Brian Us Yang.
First of all I'll, just say that in terms of Oh.
Matt goes I mean, gross Martin I'm talking about price minus 19 factoring costs Etfs at Q4, it's not.
Anything left in Q3, so that is stabilize more like we believe there's a there's a for example, we and we do not expect.
A similar level of currency gain for Q4.
So that's a one off that Sean you want to have more comments.
No. That's helpful color I can I can take that question offline and maybe.
Good morning to you.
Moving pieces.
On that same topic. So our pricing is the first time I think in a while where module asps.
It looks like they've come down a little bit and I think you mentioned that in your commentary as well can you kind of talk about your quoting activity are you starting to lower prices on modules.
And what's your sort of view on a module asps.
Through <unk> as well as into 2023.
Yeah, So Brian Oh actually for Q4, our ESP is a quite stable comparing to Q4, we do not see any any material.
Price reduction from Q3 into Q4.
There might be filings for some customers some order in some markets and you've seen some minor reduction, but it's not significant in terms of 2023, we're ready signing a lot of orders for next year.
We also as you know we are.
Also see some price reductions on some long term waters, but it's not significant.
And it's one or two cents lower than what it is today.
So that's at the current price deterioration, but moving forward.
We still believe that the price reduction.
Moving into 2023, it's going to be more moderate in the smooth in the in the longer transition period.
So a reason for that is because we do you know.
We all know that the end market is still growing rapidly so.
And also the and the Masters and the end market has a stronger affordability on on high on cost.
Combined with the fact that the ingot capacity right now until the end of this year skew more than the silicon capacity. So we believe are there certain resistance on the price reduction moving into next year. So we do not anticipate any sudden sudden death on pricing so that's not going to happen.
Right, Okay, one more common than not.
Gotcha.
And then a steep price marshaling our U S. Dollar may decline on that does that.
But most of our local clients.
Example of Japanese yen and Euro.
Chinese RMB.
Not really declining in some cases.
My wife actually moving off of that when you sit in the situation.
Lifestyle is very strong.
Okay.
And it looks about prices going up maybe it's gone now but down the local content.
Uh huh.
It's quite stable.
You've been going out.
Yeah, and Brian on top of that worked quite comforted that our margins can improve moving next year, because we're actually we as you know we've been always stronger in more developed markets high price markets and particularly in the U S market. What do you define strong next year and are aware of.
Do we expanding our talent capacity and Channelize. So we've been all these strong she can hop off our volume into DG market and are gaining the electricity retail price has gone up so much.
Experiencing strong demand from that channel and obviously the price tolerances that channel is getting very strong so I'm quite confident that it's going to be a good year for us.
Okay. That's great Super helpful last one for me and I'll pass it on I appreciate the update updated thoughts around the U S. Manufacturing plans I think you had talked about.
Looking at just module capacity. So maybe if you could give us a bit more detail are you still thinking of building just a module only facility what would be kind of the scale and time line.
Would you have production on in 'twenty, three or would it be more 'twenty four and then.
Can you give us a sense of of the Capex dollars and funding strategy you would be putting behind it. Thank you.
Okay. So capacity wise. So as you know we have a guidance volume guidance for 2000 finance Reoffer any offer 30, I'm sorry, 30% to 35 gigawatt, that's our guidance for next year.
Shifting to our guidance so in terms of Capex and capacity we are actually.
We will have to support that and.
So by a year and this year, we're going to have 20 gigawatt of Oh, Levered internal ingot wafer and also 20 gigawatt of cell and 32 gigawatt of module two anecdotes here moving into next year, we're going to add.
It's more a popcorn capacity on itself. So total cell production next year is going to be 27 to 20.
27 gigawatt.
Sorry in terms of south capacity, not 'twenty six 'twenty seven our output.
In terms of output is 'twenty six 'twenty seven gigawatt.
So oh, we're going to have more than 20 gigawatt, but you've got an unlevered. So we'd be more when over the course of next year will be more a module capacity.
And also would that include the expansion of pilot capacity off eight gigawatt of cell and 61 off a module. So so we're going to have enough capacity to support our volume guidance of the the Oh of course, we have some sale purchase like that that might around eight nine gigawatt of cell.
Purchasing so that's.
The capacity plan and Capex wise.
We're actually in the process of you know anywhere variety started investment.
So okay sorry.
I was wondering just specific around in the U S as well.
Oh the U S.
You asked where actually we have set up our team and in the process of.
Our site selection, we plan to secure a site.
That long term wise can support five gigawatt of module capacity, where your same time. We also have a strike are actively assessing the economic viability of policy lights as well on the upstream capacity such as in the wafer and cell, but still we're in the process of clarifying a lot of details.
Alright with that do you see so it's running changing process. So module side, our execution, we made executing phases.
So so this is the plan.
Okay. Thank you.
So we have a customer support yeah, we have customer support a lot of down payment also helps.
Yeah.
Thank you, ladies and gentlemen, if you'd like to join the question. Please press star one on your telephone keypad. Our next question comes from the line of Philip Shen with Roth Capital Partners. Please proceed with your question.
Hi, everyone. Thanks for taking my questions first one is on the.
The IPO in China I was wondering if you could give us a little bit more color on that.
Timing of that I know in the.
Can you guys talked about maybe Q1 of 'twenty three.
But in addition to that.
Do you still expect to bring your poly plant online by mid 2024.
What's the update on how that development is going in.
And.
Oh, you know what the IPO might be tied to some of your capacity expansion plans are thanks.
Alright.
Wanted to address this question.
Sure Hi, Phil Let me Yeah first to talk.
Talk about what that short procedural pause in our IPO process. So on September 30th.
Shanghai stocks Chang on its website you changed the status of our IPO application to pause awaiting updated financial information.
We.
Maybe at the request of information to the stock exchange in early October and as a result.
On October 27, the stock change after reviewing all the documents and all sorts of website.
Although I people started back to in registration and not with a message CSI solar has submitted updated financial information. So since then we.
Im not receiving any.
More of the crops. So are our application is back on track. So I'm positive about four weeks now yes. The process is slower than our expectation, but at this point I don't have a clear answer to why because in general it is hard to know but behind the scenes details.
Inside the government office.
Oh, okay. So it's much harder due to the COVID-19 restrictions on travel.
Management.
We focus on managing the business and deliver better results now the good news is that there is no deadline for our IPO. We just re back if that question from P. S. Oxy. We all saw that also let me share with you. Some statistics there are over 30 companies are probably Paul.
Stop order listing are in the same status with us coffee registration.
And actually one third of that submitted applications before us.
They are also 50 companies are in a pause status. So we're continuing to wait for the completion of registration. Meanwhile, Madden daily business.
And to make the company better for the Olympic Thank you.
Great Thanks, and good morning.
Hi.
Hi, Phil.
Thanks.
Hi, Phil.
So I'll.
You also asked it.
Paul.
The schedule.
Polysilicon project and whether that investment too.
Ill close with you.
Yes, yes.
Some of things that they can program.
And as we all start.
Your question please.
The last earnings call.
We will only proceed with polysilicon.
After.
We completed our IPO.
Great. Thanks, Sean.
Sure.
<unk>.
Wow.
Okay.
The other.
Other classes hold yet.
Not really tied to the IPO and financing for either.
The capacity of Poland Yeah.
New molecule.
But even then I wonder if there are more secure.
No reason any tied to an IPO.
Great. Thanks for that detail, Shawn and I have a quick follow up on that was Oh I Wonder if you could share what your expectations for Capex would be for 'twenty three.
We have the details of our expansion of ingot and wafers at 25, Gigawatts fell to 35 Gigawatts.
And module with a 50, so if you could share that capex are.
That would be helpful. And then you also gave 2023 our shipment guidance I was wondering if you could give us expectations for our project sales in battery shipments for 2023 as well thanks.
Hi, Phil.
We're still working on a capex plan of.
That said some more he pulled yet.
Well be tied to the cash flow and that's good color.
On a capital injection, which S I P O.
Oh yeah.
Me too.
Yes.
Hum.
Estimated march trends as we trend in Boise.
Earnings call.
And.
At the same time like I said the molecule.
So cafe.
Uh huh.
Capacity expansion.
Yes, more or less secure.
So oh.
Oh, no wholesale us even more.
Canadian solar has always been conservative.
All of that and also very strong.
Mike.
Diversifying the customer.
Customer distributed around the world.
Oh hi.
Suddenly cause.
Capacity expansion.
We're still confident we'll reach our volume growth target and also to expand.
Gross margin for them, because I used to Apple.
Great. Thanks, another one for me here in terms of freight was wondering if you could break out in Q3, how much your freight cost was.
Either absolute dollars or cents per watt and then how do you.
I know it's expected to go lower.
Hum how much do.
Do you expect it to be in Q4, and maybe into Q1 of next year. Thanks.
Yeah.
Sure.
Yeah.
Yes.
Yeah.
So Phil.
It's in Q3, it's about two point suite a sense on Q4 is coming down it's about the less than two cents. So that's our estimate.
Great. Thank you Yeah. One last one can you talk about the Opex and EBITDA trajectory.
From here, maybe I'm over the next few years to what degree do you.
How much operating leverage do you think you have.
And.
Maybe if you can speak to both Opex and EBITDA trajectory that would be fantastic. Thanks.
Hi.
Do you want to address this question.
Oh Parch member.
Changed Hmm.
The biggest part is driven by the shipping.
Shipping cost stay because that's all we have their costs, so but all the other numbers are they increased slightly because all our the size of all the team become larger as we ramp up of the capacity, but if we do that analysis opax slashed by total.
Revenue.
I think going to the coming quarters it will decline.
It will be somewhere around the low teens.
Great. Thank you very much I'll pass it on.
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Thanks, So much that's can you talk a little bit about the pricing dynamics for the energy storage market in the utility scale side I'm, just curious how you're seeing that trend given the growth in the backlog.
Well.
Sorry can you.
Repeat the question.
Sure given the strong growth.
Given the strong growth in utility scale storage pipeline can you talk about the pricing dynamics and what you're seeing in terms of moves in pricing given you.
What we've seen in the energy markets as well as the utility utility great market.
Unfortunately, as you know.
Storage pricing.
Yeah.
More or less determined in the body of the.
The cost and especially the carnival in.
Lithium carbonate price.
And lifting carbon endpoints is FX and more why do you view rather than a story with all of you.
Yeah.
We all call for 90%.
Oh.
Lithium.
And are.
We started doing the 10% so you feel.
Talk about the pricing dynamics.
Pricing is moving up unfortunate right.
Okay.
It's more because you can carbonate price and a new one that is more determined by then.
Bye.
All of the storage.
Yeah and Collyn.
Well one more comment is for the project, we're signing we actually secured somehow secured the supply and have a control on pricing.
And are we back to back deposit arrangements and our strengths are on those projects is because we're providing turnkey service and long term service, which is now in the market are not a it's actually a shortage of capacity that's been shortage. So its muskie mandate capability. So we have a.
Better controlling pricing and Ah.
It's not just the additional revenue and profit on the turnkey service long term service, but also the service actually help us to have a more bargaining power on equipment pricing. So so this is a we are.
It would be when we have achieved in the markets.
Especially in the U S and European.
Markets.
No I agree with Yang and I also wanted to comment that although E.
My team is.
Going higher.
Paul back.
Paul back the customer demand.
As customer demand continues to be strong.
Now the cost.
Just more color on the win.
The market requires one mothball it.
All right.
Paul that's going out as you know them all.
Yeah, and even our rapidly growing pipeline our pipeline is actually probably one of the biggest reward and such a partner and help us out on the bargaining power on supply chain. So we have successfully secured a multiyear supply agreement with our suppliers who leads our pipe.
Right.
Thanks, so much guys.
Can you talk a little bit about your position in the interconnection queue and the U S. Obviously.
No it does.
Those things move through those you know those projects after the queues at the rate that they need to but can you talk about the order of magnitude of that interconnection position and the rate at which Youre seeing projects get approved at this point.
Yeah.
Oh, gosh I didn't actually.
Yes.
Now yoga this question.
Yes, sure I'll start.
Sure Sean.
Thanks for the question.
What we are experiencing in general not only in the U S that had been idle is deflation and critical next jumps due to that.
Lead times.
We've been especially.
The high voltage Transformers.
I'll give you an order of magnitude.
In the past are reasonable.
Timeframe was six to nine months, we have seen now lead times of up to 20 months.
So I've said this whole thing for the connection I'm, sorry, 15, delete them, even bigger position into Q might be a good one during the connection is getting delayed too.
So look at one two gigawatts with what do we have in the U S.
Good thing connection.
Q positions.
Some projects that are.
By the way on the connection Qs when we see.
The economics might be changing dramatically.
We are selling and we sold some of those in the U S. This quarter.
But that gives you an idea of where we are I hope.
Yeah. That's helpful guys I'll leave it there thanks so much.
Yeah.
Thank you.
At this time I'd like to turn the floor back to Canadian solar CEO for closing comments.
Hmm.
Oh, Thank you for joining us today and for you all.
Continuing on with that.
Before I saw it.
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