Q1 2024 JinkoSolar Holding Co Ltd Earnings Call
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Speaker Change: Hello, ladies and gentlemen, and thank you for standing by for Genco Solar holding co Hi, L. T. D first quarter 2020, where earnings conference call. At this time, all participants are in listen only mode.
Speaker Change: Minutes Ben.
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 conference over to your host for today's call Ms. Stella Wang Genco Solaris Investor Relations. Please proceed.
Stella Wang: Thank you operator, thank you everyone for joining us today I think also there's first stepfather 'twenty 'twenty four earnings conference call. The company as a results were released earlier today and available on the company's IR website at Www <unk> com as well as on youth violence services. We have also provided.
Stella Wang: Supplemental presentation for today's earnings call, which can also be found on the IR website.
Speaker Change: On the call today from vehicles solar I'm used to extend the chairman and CEO of steam coal solar holdings.
Pat D.: And you said you allow me I'll see them, all up and cultural a company limited Mr. Pat D. C F O.
Pat D.: The company limited and the Mr. Kelly Chow CFO of single Solar Company limited.
Pat D.: He said he will discuss the bank also are especially its operations and company highlights followed by Mr. Miao, who will talk about the south and the marketing and then Mr. Penny will go through the financials.
Speaker Change: Yeah available to answer your questions during the Q&A session that follows.
Speaker Change: Please note that today's discussion will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve harriss, harriss and risks and uncertainties as such our future results.
Speaker Change: Be materially different from the views expressed today.
Speaker Change: Further information regarding this and other risks is included in <unk>. So there's public filings made with Securities and Exchange Commission.
Speaker Change: And of course, all of our desktop any obligation to update any forward looking statements except as required.
Speaker Change: The applicable law.
Speaker Change: Now my pleasure to introduce New City Center, Chairman and CEO of staying closer to their holdings and he said he will speak in Mandarin and I will translate hedge comments into English based to go ahead, and you said it.
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Speaker Change: Yes, the best alignment, yet Andrew T cells, So Julian Puppy, Jean tells them either new channels that you said one thing that I think you said Evans.
Speaker Change: We are happy to announce that the first two other advantages other anti pup called technology competitive products global market and the many manufacturing layout.
Speaker Change: Module shipments grow 53 point of 3% year over year.
Nearly 20 gigawatt in the first quarter ranking first in that treat the propulsion of N type shipments increased to nearly 80% in the first quarter from approximately seven 2% in the fourth quarter of last year, maintaining our leading position in the industry.
Speaker Change: Adult prices continues to fall in the fourth in the first quarter, while the industry average utilization rates declined sharply we maintained our leading utilization rates at high level.
Speaker Change: Over 70% of a large rush watershed potential overseas markets in the first quarter, while with propulsion of shipments to Europe, and the U S significantly increased sequentially.
Speaker Change: Gross margin was 11, 9% flat sequentially net income was <unk> dollars $84 4 million up 19.8 times sequentially. Adjusted net income was U S. U S dollars 65.21 million up one 6% sequentially.
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Speaker Change: You only added installation in China reached a 45.27 gigawatts in the first quarter, an increase of 35, 9% year over year module export total of 61 point to seven gigawatt.
Speaker Change: Increase of over 20% year over year, the pizza industry, and then one of the few sectors, maintaining a higher growth rate.
Speaker Change: We expect the global PV demand to grow approximately 25% to 30% in 'twenty 'twenty four coming into the second quarter polysilicon prices continue to decline as flight if there's demand on the other half natural economic conditions push that commodity prices higher wild and crazy market demand.
Speaker Change: This drove prices of materials, such as glass and film hire all of those factors to combine the two cases, which is a module prices relatively stable at low levels.
Speaker Change: Now I'll turn the profitability of integrated so lots hockney's S. It's backstage to come under pressure, yes. This distinction.
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Speaker Change: We expect that overall production capacity and other industry well shrink the elimination of weekend players, that's like markets competitiveness sustainable production capabilities and the ability to regularly upgraded and the Angel age technology, They think various optional.
Speaker Change: The challenges, we will focus on helping our competitiveness and we are confident to maintain relative advantages compared to our first of all to your peers.
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Speaker Change: [laughter] ease across the quarter first of a challenging attending market environments with flexible they adopted our Dallas strategies to better balance didn't understand the profitability leveraging our global footprint and a competitive product at the order book visibility for Chinese honey for Harley.
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Speaker Change: Let's continue the pressure along the industrial CIT, we continue to deploy new technologies to improve the mass produced the efficiency of popcorn cells and the module output, while reducing costs through initiatives, such as optimization of supply chain and production process.
Speaker Change: She doesn't even panic or money that that's also a piece in Canada tasteful.
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Speaker Change: Hum and she of course for shooting Shanghai, Yes, we are also accelerating our clearly out of our P type capacity.
Speaker Change: Capacity is expected to stay at a 90% of the total capacity by the end of 'twenty 'twenty four and we expect a.
Speaker Change: The capacity structure to continue to lead the industry generally only yesterday the other highlight in Q1.
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Speaker Change: At the company with the largest overseas integrated of capacity in the industry. We have continually continuously worked to expand in the global industrial check I've, a one gigawatt gigawatts one gigawatt N type module capacity in the U S has started production and another one gig was as expected.
Speaker Change: <unk> production in the second quarter. This year. This advantage of a global operation along accumulated experience in risk management, we had confidence to respond to changes.
Speaker Change: National trade and have continued to provide a freemium products and services to our global clients.
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Speaker Change: Yeah. It seems your positioning with Pizza Hut U S is also at the time.
Speaker Change: Yes.
Speaker Change: According to the latest a prediction by the International Energy Agency IEA solar PV and wind will account for 95% of our global renewable expansions benefiting from low year generation costs down so fossil and knock out of your alternative bye.
Speaker Change: Slide 2028, a share a link and the solar PV and global electric electricity generation will double to 25% Philadelphia. They still has enormous growth potential. Meanwhile, declining cost of solar plus storage will continue to improve the economics of invest P to P. They start.
Operator: Transcription by ESO. Translation by — Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd.'s first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode.
Speaker Change: Each project and it stimulates demand growth for storage projects.
What is that solar plus storage will become the major bottle for future growth in electricity generation and we are confident confident to continue to lead the industry with advanced technologies and a premium high efficiency products.
Speaker Change: But the journey, they're not to the channel and I Chair side shot you just.
Speaker Change: You're just adding up the idea of anything but again, so now Saudi done that all that means I have to do with Yahoo.
Speaker Change: Adding up these dungeons and sleep you had called out yes. The HUD. So again the time, that's going to get that done.
Operator: After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.
Unknown Executive: Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's first quarter 2024 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com, as well as on news vital services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Li Xiande, Chairman and CEO of JinkoSolar Holding Co., Ltd. Mr. Gener Miao, CMO of JinkoSolar Co., Ltd. Mr. Pan Li, CFO of JinkoSolar Holding Co., Ltd. And Mr. Charlie Cao, CFO of JinkoSolar Co., Ltd. Mr. Li will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan Li, who will go through the financials.
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He's just getting bad ones with Joseph before turning it over to Dennis I would like to go over our guidance for the second quarter and a four year of 'twenty 'twenty four by the end of the 20th plentiful they expect and that's pretty much the N type cell if they should say to reach 26.5%, we expect our annual production capacity for mono wafer.
Speaker Change: Solar cells and a solar module is to reach 100 end of 'twenty behind with the tenant and we're hungry 30, gigawatts, respectively by the end of 'twenty 'twenty four we expect the module shipments to be between 24 24 to 26 Gigawatts for the second quarter of 2024 and between 100 and a 110 gig.
Speaker Change: For the four year 'twenty 'twenty, four but N type module accounting for nearly 19% of total module shipments.
Unknown Executive: They will all be available to answer your questions during 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 Security Litigation Reform Act of 1995.
Unknown Executive: Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under the applicable law. It is now my pleasure to introduce Mr. Li Xiande, Chairman and CEO of JinkoSolar Holding. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.
Speaker Change: Thank you Nikki.
Speaker Change: Although sometimes it works out to one nine gigawatts in the first quarter.
Speaker Change: It was much different upcoming fall, where 90% of rescue.
Yes.
Speaker Change: Got it.
Speaker Change: The asphalt market prices.
We still explanation adjusted our geographic mix of our 672% of monitors were shipped to overseas markets, especially Asia Pacific and the emerging markets and.
Speaker Change: Shipments for the U S. We're really stable.
Speaker Change: Well shipments to Europe increased.
Speaker Change: [laughter].
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Oh, I'm, sorry does that make sense for global coverage.
Xiande Li: We are very happy to announce that with the technology of Engine.com, with its competitive products, global marketing, and market layout, the total sales volume of the first quarter increased by 53.3% to 19.99% and is ranked No. 1 in the industry. The sales volume of Engine products increased from 70% in the fourth quarter of last year to, Sponsored ADR [inaudible] $8,440,000 profit from the 1-quarter period, 19.8 times more than before $6,510,000 profit from the adjustment, 1.6 times more than before. We are happy to announce that thanks to our advantages of n-type top-down technology, competitive products, global marketing, and manufacturing layout, our module shipments grew 53.
Asia.
Speaker Change: Despite the problems.
Speaker Change: Got it.
Speaker Change: In summary, though the policy issues.
Speaker Change: We continuously strive to administer.
Speaker Change: This drove global demand.
Speaker Change: Oh.
Speaker Change: So therefore.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: We will help us to respond as the market shifts.
Speaker Change: So festivals there.
Speaker Change: It's kind of a call.
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: For more reliable.
Speaker Change: Uh huh.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: For the full year, we expect the proportion of shipments to Europe, and the U S to further decrease compared to last year.
Speaker Change: Shipments of competitive high efficiency N type.
Speaker Change: A copy of the career that 88% overall.
Speaker Change: Well far exceeding the industry average.
Speaker Change: I give you is increasing driven by customers.
In the European and emerging markets.
Speaker Change: Penetration rates exceeding 90% in terms of effectiveness demand from distribution markets that you're trying to Europe and Asia Pacific was strong you were into the first floor.
Speaker Change: Closely following the market trend.
Speaker Change: The ratio of distribution to approximately 15% in the quarter.
Xiande Li: The proportion of n-type shipments increased to nearly 80% in the first quarter from approximately 70% in the fourth quarter last year, maintaining our leading position in the industry. Module prices continued to fall in the first quarter.
Speaker Change: We have focused very strongly on building rather it makes sense of course outstanding brands is key to long term.
Speaker Change: Uh huh.
Speaker Change: [laughter].
Speaker Change: We were recognized.
Speaker Change: <unk> energy storage provider by Bloomberg.
Speaker Change: If you find it.
Speaker Change: All of our standard products.
Unknown Executive: While the industry average utilization rate declined sharply, we maintained our leading utilization rate at a high level. Over 70 percent of modules were shipped to overseas markets in the first quarter, while the proportion of shipments to Europe and the U.S. significantly increased sequentially. Growth margin was 11.9 percent, flat sequentially. Net income was U.S. dollars $84.4 million, up 19.8 times sequentially. Adjusted net income was U.S. dollars $65.1 million, up 1.6 percent sequentially.
Speaker Change: Energy storage right.
Speaker Change: Reflecting our commitment to provide safe and reliable energy storage solution and origination by customers for timely delivery.
Speaker Change: Deployment.
Speaker Change: Besides we received before.
Speaker Change: Hey, reaching once again.
Speaker Change: Before she was easy.
Speaker Change: T V tach market back up.
She reports.
Speaker Change: We extended our streak of Easter shift in manufacturing.
Speaker Change: Reliable quality market share leadership.
Speaker Change: On the financial performance.
Unknown Executive: In January to March, total exports of 61.7 gigawatts increased by more than 20%. The optical industry is still one of the few industries that has maintained a relatively high growth rate. We expect global optical demand to reach 25% to 30% by 2024. Sponsored ADR, Any???????????,??????????,????,??,??,????,?????????? The price of components and assets of the first-tier companies is relatively stable in the first place. In the short term, the profitability of the first-tier companies will increase.
Speaker Change: Knowledge innovation.
Speaker Change: With that I will turn the call over to Pat.
Pat D.: After dinner.
Pleased to report that our solar module shipment increase.
Pat D.: About 53% in the first quarter, whereas automotive price decline, we in Congress to control over costs and expenses of course, perfect margin flat and adjusted net income slightly improved sequentially.
At the same time, that's to our efforts in depth management.
Pat D.: They've improved sequentially.
Pat D.: Reaching our advantages E N type technology.
Unknown Executive: However, due to the difference in operating capacity between different companies, the expected performance will become more and more saturated. The production capacity of the first-tier companies will be reduced, and the production capacity of the second-tier companies will be accelerated. Facing the challenges of various external environments, we focus on the competitiveness of the first-tier companies. Newly added installations in China reached 45.7 gigawatts in the first quarter, an increase of 35.9% year-
Pat D.: Both sales and manufacturing network.
Pat D.: We're very confident in our grocery perspective, and it will continue to improve the efficiency of our working capital achieving sustainable growth in operating cash flow.
Pat D.: Hum.
Pat D.: Two risks.
Speaker Change: Let me go into more details now.
Speaker Change: Total revenue.
Speaker Change: Well three points.
Speaker Change: $2 billion sequentially on a slightly down year over year.
Unknown Executive: Module exports totaled 61.7 gigawatts, an increase of over 20% year-over-year. The PV industry remains one of the few sectors maintaining a high growth rate, and we expect global PV demand to grow approximately 25 to 30% in 2024. Coming into the second quarter, polysilicon prices continued to decline as supply exceeded demand. On the other hand, macroeconomic conditions pushed commodity prices higher, while increasing market demand drove prices of some materials such as glass and film higher.
Speaker Change: The sequential decrease was mainly attributed to the decrease in the shipment of solar modules and.
Speaker Change: On a year over year decrease was mainly attributed to the decrease either.
Average selling price.
Solar modules.
Speaker Change: Gross margin was at 11.9 percentage compared with 2.5% in the fourth quarter last year.
Speaker Change: Decreases were mainly due to the decrease in average selling price of modules.
Speaker Change: Total operating expenses.
Speaker Change: For 400.
Unknown Executive: All those factors combined to keep recent module prices relatively stable at a low level. In the short term, the profitability of integrated solar companies is expected to come under pressure. Yet, these distinctions in operating capabilities and performance of different companies will have larger differences.
Speaker Change: 26 million down.
Speaker Change: 18 percentage sequentially.
Speaker Change: Sequential decrease was mainly due to the decrease in the shipments of solar modules and the lower expense in relation to the settlement of a dispute with one of our customers.
Speaker Change: Total operating expenses accounted for 13 percentage of total revenues compared with 11 in the fourth quarter until the first quarter of 'twenty three.
Unknown Executive: We expect that overall production capacity in our industry will shrink with the elimination of weaker players that lack market competitiveness, sustainable production capabilities, and the ability to regularly upgrade and iterate technology. Facing various external challenges, we will focus on enhancing our competitiveness, and we are confident that we will maintain relative advantages compared to our first-tier peers. In the first quarter, we adjusted the market layout flexibly to achieve a better balance between exports and profits in the face of changes in the market environment.
Speaker Change: Net income.
Speaker Change: Attributes of Kimco solar holdings ordinary shareholders.
Speaker Change: It was about.
Speaker Change: $84 4 million up nearly 20 times sequentially.
Speaker Change: Excluding the impact from a change in fair value of the note.
Speaker Change: The change in fair value of long term investments and the share based compensation expenses.
Speaker Change: Adjusted net income was 65 million slightly up sequentially.
Speaker Change: Moving to the balance sheet.
Unknown Executive: With a globalized market layout, advantages, and competitive products, order visibility has exceeded 70% throughout the year. In the first quarter, faced with a challenging, changing market environment, we flexibly adjusted our sales strategies to better balance shipments and profitability. Leveraging our global footprint and competitive products, our order book visibility for 2034 currently exceeds 70%. In the context of the industrial chain, we continue to invest in new technologies, improve our TPCOM battery capacity efficiency, and construction capacity.
Speaker Change: The end of the first quarter.
Speaker Change: Cash cash equivalents.
Speaker Change: Two points.
Speaker Change: Fulfilling compared with 2.6 months filling in the fourth quarter of 'twenty three.
Speaker Change: Slightly improved for one point for a billing in the first quarter of 'twenty three.
They are to number of days well Henry days compared with 76 days in the fourth quarter.
Speaker Change: And 95 days in the first quarter of last year.
Speaker Change: Inventory turnover days were 89 days compared with.
Speaker Change: 57 days in the fourth quarter on the Henry States in the first quarter of last year.
Unknown Executive: On the one hand, we continue to optimize our supply chain and optimize our supply design to reduce cost. Despite this continued pressure along the industrial chain, we continue to deploy new technologies to improve the mass-produced efficiency of top-con cells and module output while reducing cost through initiatives such as the optimization of the supply chain and production process.
Speaker Change: At the end of the first quarter total depth.
Speaker Change: Well, it's 366 filling compared to full 0.3 8 billion in the fourth quarter auto industry.
Speaker Change: Net debt was 1.22 billion compared to.
Speaker Change: 1.63 billion.
Speaker Change: In the fourth quarter of 'twenty three.
Unknown Executive: In terms of advanced capacity, we are also accelerating the launch of P-type capacity. By the end of 2024, our N-type capacity will exceed 50%. [inaudible] We are also accelerating the clearing out of our P-type capacity. Our N-type capacity is expected to exceed 90% of total capacity by the end of 2024, and we expect our master capacity structure to continue to lead the industry. As a company with the largest overseas integrated network capacity in the industry, we are not only improving the construction of global production capacity but also building up the capacity of the US 1GW engine to start production.
Speaker Change: Continuous improvement you never dipped structure.
Speaker Change: This concludes our prepared remarks.
Speaker Change: We're now happy to take your questions Craig Sir Please proceed.
Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Craig: You wish to cancel your request. Please press star and then two if you are a speaker a if you're using a speakerphone. Please pick up your handset before pressing the keys.
Craig: Get yourself to three questions. Your first question comes from Brian Lee. Please go ahead.
Unknown Executive: Another 1 GW is expected to start production in the second quarter. Based on the global market layout, the advantages, and the long-term risks to deal with, we are confident in dealing with changes in the international trade environment and continue to provide high-efficiency products and services for global customers. As a company with the largest overseas integrated capacity in the industry, we continuously work to expand the global industry chain. Our one gigawatt n-type module capacity in the U.S. has started production, and another one gigawatt is expected to start production in the second quarter this year.
Brian K. Lee: Hey, everyone. Thanks for taking the questions I appreciate it.
Brian K. Lee: I know you guys are not in the practice of providing specific you know margin in E. S. P guidance anymore, but just given kind of the fluctuations in the pricing environment.
Brian K. Lee: Can you give us a sense you know pricing was down it seems like kind of.
Speaker Change: Ah you're down down to like the low to mid teens here ASP per watt, if we back out the wafer and the cell revenue in the quarter should we expect more ASP degradation in modules and embedded in the <unk> Guide and then what's what's sort of the margin cadence you expect.
Unknown Executive: This is our advantage of global operation and long accumulated experience in risk management. We are confident to respond to changes in international trade and continue to provide premium products and services to our global clients. According to the latest predictions by the International Energy Agency, IEA, solar PV and wind will account for 95% of global renewable expansion, benefiting from lower generation costs than both fossil and non-fossil fuel alternatives.
Speaker Change: Off the.
Speaker Change: The results here in Q1 should we expect <unk> to be up down flat and then maybe back half our views as well if if there's more of a recovery there.
Speaker Change: Yes.
[noise] Hey, Brian This is Charlie.
Charlie: Yeah, So I have two questions on that.
Charlie: No.
Charlie: The module prices, Tom I know you know.
Charlie: This is three quarters and that's a fact and we have different regimes to kind of arrangement downtown versus short term. If you are talking about.
Charlie: So to us it's pretty average it's gone into this person and most important thing is.
Charlie: We are improving the cost and time with us at the same time.
Charlie: We are into.
Charlie: Adoption.
Charlie: Jim do you want take the knowledge materials and are on top of that as well one thing.
Unknown Executive: By 2028, the share of wind and solar PV in global electricity generation will double to 25%; solar PV still has enormous growth potential. Meanwhile, the declining cost of solar plus storage will continue to improve the economics of investing in PV storage projects and stimulate demand growth for storage projects. We are bullish that solar plus storage will become the major model for future growth in electricity generation, and we are confident that we will continue to lead the industry with advanced technologies and premium high-efficiency products.
This year our focus is.
Sam This is Joe for factories.
Charlie: Vaccine to be fully operational.
Charlie: About half the year.
Joe: And for the gross margin I'm convinced that as we strongly believe in the first half of year. This year, it's risen to Boston.
Speaker Change: And Oh.
Speaker Change: The fourth quarter by quarter, we factor in the gross margin relatively stable for the second quarter versus Q Wow.
Speaker Change: For the second half of year, and we expect most of them.
Speaker Change: Particularly in the United States as well as the European markets.
Unknown Executive: Before I hand over the topic to Jenna, I'd like to introduce the performance guidance. It is expected that the battery capacity and efficiency of the N-type will reach 26.5% by the end of 2024. It is also expected that by the end of 2024, the capacity of Danjin Silicon Co., Ltd.'s high-efficiency battery and the main battery will reach 120W, 110W, and 130W, respectively. In the second quarter of 2024, the main battery output will be between 24W and 26W.
Speaker Change: And on top of that we are you know where.
Speaker Change: That's a good position for the middle East.
Speaker Change: And it helps you know the gross margin.
Speaker Change: So that's.
Speaker Change: Uh huh.
Speaker Change: Yeah Dishing weak you know the industry is suffering.
Speaker Change: These conversations are conversations I forgot sorry for price, but we are.
Unknown Executive: In 2024, the total shipments will be between 100GW and 110GW, and N-type shipments will account for nearly 90% of the total shipments. Before turning over to Jenner, I would like to go over our guidance for the second quarter and the fall of 2024. By the end of 2024, we expect mass-produced n-type cell efficiency to reach 26.5%.
Speaker Change: Exactly.
Speaker Change: The capacity is for the tier two tier three uneven.
Speaker Change: Capacity of which are not able to be you know taken on as a comparative base.
Speaker Change: Based on small business this year.
This may.
Speaker Change: Uh huh.
Speaker Change: The.
Speaker Change: Oh, no fat no surprise with this demand situations.
Speaker Change: Uh huh.
Speaker Change: In the second half the year.
Speaker Change: Okay.
Speaker Change: Okay. That's helpful. So if I summarize I guess it sounds like.
Gener Miao: We expect our annual production capacity for monowafers, solar cells, and solar modules to reach 120, 110, and 130 gigawatts, respectively, by the end of 2024. We expect module shipments to be between 24 to 26 gigawatts for the second quarter of 2024 and between 100 and 110 gigawatts for the fall of 2024, with n-type modules accounting for nearly 90% of total module shipments. Thank you, Mr.
Speaker Change: Hey, S piece down a little bit more to Q, and then margins stable into Q off the <unk> level or are you actually seeing quoting activity or what's the outlook for pricing I know, you said shipment volumes and mix improve in the back half, but how about like for like Asps are you actually seeing.
Gener Miao: Puzzle shipments were 21.9 gigawatts in the first quarter, with module shipments accounting for over 90%, ranking first in the industry again. And with the stressful market crisis in the first quarter, we flexibly adjusted our geographic mix. Over 70% of modules were shipped to overseas markets, especially to Asia-Pacific and emerging markets. Shipments to the U.S. were relatively stable, while shipments to Europe increased by nearly 20%, evidence of future human-treat reduction. On the demand side, the general trend for global low-carbon transformation would not change despite problems related to installation and collection in some regions and quality issues in others.
You said, 70% of your 'twenty four is already covered in backlog it sounds like what what's the pricing dynamic you're seeing in the second half versus Q.
Speaker Change: Q1, and Q2 pricing is still going down.
Speaker Change: Yeah, so the pricing the grandfathered pricing, we believe it will continue to fall out of the market, which we believe is already reaching a rock bottom right compared to the market price is worth it.
Speaker Change: The industry, even the leading cost structures.
Speaker Change: Most of them.
Speaker Change: Our peers or the industry figured I saw another water right now so that's why we believe the pricing our pricing to reaching the bottom.
Speaker Change: When we're looking to the improvement of the cost structure wise, so it definitely does not.
Gener Miao: We continue to expect relatively rapid growth in global demand and interdependence growth. Our extensive self-network and the deep-seated local customer service infrastructure will help us to respond to market shifts and adjust our flexible lay-and-time lists, satisfying compliance demands for more reliable low-carbon and compliance-repeated products. We expect that the proportion of shipments to Europe and the US will further increase compared to last year. Shipments of competitive high-efficiency untapped hybrid neomodules accounted for nearly 80% overall.
Speaker Change: No go satisfy a surprise for us in the last five six you bet a month's time. So that's why you know.
Speaker Change: Mark and why I see too.
Speaker Change: Struggle at the beginning of year, but the way we believe what was what's our cost structure is starting to improve two reached a level off the asp's and match. The snowballs piece, we believe as a company or even the whole industry at least the leading competitor you watch will keep their margin.
Speaker Change: As healthy as possible.
Speaker Change: Hope that answer your question.
Speaker Change: Yes, absolutely very helpful. And then maybe last one for me and I'll jump back in the queue.
Speaker Change: You also mentioned you know back half of the year it sounds like your.
Speaker Change: A positive on U S volume trends growing for you I know this is pretty pretty fresh the.
Gener Miao: Well, far exceeding the industry average, as the value of HyperNEO is increasing, recognized by customers. In the European and emerging markets, the Tigerdew penetration rate exceeds 90% in terms of segment demand from distribution markets in China, Europe, and Asia-Pacific dropped during the first quarter. Closely following the market trend, we raised the ratio of distribution to approximately 50% in the quarter. We focus very strongly on building our brand recognition because an outstanding brand is key to gaining the long-term trust of our clients.
Speaker Change: The exception of C. O. This a D C V D potential investigation.
Speaker Change: That was petition last week by some of the U S.
Speaker Change: Suppliers.
Speaker Change: I know in the fall last year, you guys were deemed to not have been one of the companies dumping or or countervailing and so you weren't subject to any duties. It sounds like this petition is opening that entire case back up potentially so what what are your thoughts on the latest.
Speaker Change: You know trade policy update you given what happened last week and then do you anticipate any or are you seeing any customer feedback right now that suggests theres more uncertainty for you as you move through the next few quarters, just kind of how are you navigating it. Thank you.
Gener Miao: Recently, we were recognized as a Tier 1 energy storage provider by Bloomberg Energy Finance due to our outstanding products and capabilities in energy storage, reflecting our commitment to providing safe and reliable energy storage solutions and recognition by customers for timely delivery and effective deployment capabilities. Besides, we received the AAA rating once again in the 2024-21 release of PV Tech Market Compact Bankability Report, which demonstrates our leadership in manufacturing activity, reliable quality, market share leadership, some financial performance, and technology innovation. With that, I will turn the call over to Pat. Thank you, Gener.
Well, yes.
Speaker Change: It's still early to see what could be the result of this our upcoming ADC basis positions, but definitely from <unk> perspective, we still are great for us.
Speaker Change: Fair trade, a word which could benefit not only the genco yourself, but also looking at the whole industry, where we can drive that's what the whole industry has been doing in the last two decades right to driving the also eat off the PV energy are more on the more competitive which.
Speaker Change: It helps the whole world have become greener and more even wider mento friendly in the last couple of footprint.
Speaker Change: We used a week.
Charlie Cao: We are pleased to report that our solar module shipment increased by about 53% in the first quarter. Additionally, while the solar module price declined, we enhanced control over costs and expenses. Gross profit margin for flat and adjusted incomes likely improved sequentially. At the same time, thanks to our efforts in debt management. Our net depth improved sequentially, leveraging our advantages in M-type technology and global sales and manufacturing networks. We are very confident in our growth prospects and will continue to improve the efficiency of our working capital, achieving sustainable growth in operating cash flow, and enhance our resilience to risk.
Speaker Change: Tariff or the current geopolitical you should definitely it is a big.
Speaker Change: Big Challenge is to increase our.
Speaker Change: A lot of cost, but as a company side. The way we have no twice, but you know trial, but faster to adapt to what the market or what's it called.
Speaker Change: I'm in the work. So that's why we are working very hard with our lawyers with all our customers try to find out the best solution that you see in the U S market, but right now honestly speaking, it's still too early to see what could be the protocols for that right. Now. So we will we might need another I'd say Australia.
Speaker Change: Six months to see what could be the.
Speaker Change: Upside than downside on that thank you.
Speaker Change: Okay Fair enough a lot last one housekeeping for Charlie that Pat I promise I'll pass it on after this.
Speaker Change: Charlie what was DNA in the quarter, what was capex in the quarter and then also could you.
Charlie Cao: Let me go into more details now. Total Revenue, Two Billings, Down Sequentially and Slightly Down Year-over-Year. The sequential decrease was mainly attributed to the decrease in the shipments of solar modules. The year-over-year decrease was mainly attributed to a decrease in the average selling price of solar modules. Gross margin was 11.9% compared with 12.5% in Q4 last year. The decreases were mainly due to a decrease in the average selling price of modules.
Speaker Change: Tell us what the percent of our sales in the U S. This quarter was and what U S. A S. P range was a dollar per watt or cents per watt in the quarter. Thank you.
Speaker Change: The U S shipments roughly eight 8%.
Speaker Change: And that was one of them.
Speaker Change: Q1 shipments that's just not so soon.
Speaker Change: The revenue percentage will be higher because of the prices.
Speaker Change: Right.
Could you clarify.
Speaker Change: How does the market.
And for the total Capex.
Speaker Change: Yeah always.
Speaker Change: Sure.
Charlie Cao: Total operating expenses were $426 million, down 18% sequentially. The sequential decrease was mainly due to a decrease in the shipments of solar modules and the lower expense in relation to the settlement of a dispute with one of our customers. Total operating expenses accounted for 13% of total revenues, compared with 11% in Q4 and 12% in Q1 of Q23. Net income attributed to JinkoSolar Holding's ordinary shareholders was about 84.4 million, up nearly 20 times sequentially. Excluding the impact of a change in the fair value of long-term investments and share-based compensation expenses.
Speaker Change: I thought about it a lot.
Speaker Change: Last year, we spent roughly.
Speaker Change: There had been a M D.
The capacity expansion this year will be.
Speaker Change: 50% of it over.
Hum Burnham B.
Speaker Change: And last year, we did their words.
Speaker Change: When do you find with operating cash flow.
Speaker Change: And do you.
Speaker Change: This year, we are targeting operating.
Speaker Change: Operating cash flow will be.
Speaker Change: Sure.
Speaker Change: Notch or two.
Speaker Change: Yes.
Speaker Change: So that's a you know.
Speaker Change: For Q1 as the time passes fifth Street.
Within categories.
Yeah.
Speaker Change: Yeah.
Speaker Change: Hello.
Speaker Change: Okay. The next question comes from Philip Shen with Roth M T M.
Philip Shen: Go ahead.
Philip Shen: Hi, everyone. Thank you for taking my questions. The first one is a follow up on Brian's question regarding <unk>.
Charlie Cao: Adjusted net income was about $65 million, slightly up sequentially. Moving to the balance sheet. At the end of the first quarter, our cash and cash equivalents were $2.44 billion, compared with $2.69 billion in the fourth quarter of 2023, and slightly improved to $1.48 billion in the first quarter of 2023. AR turnover days were 100 days, compared with 76 days in the fourth quarter and 95 days in the first quarter of last year.
Philip Shen: South East Asia, 80, CVD tariffs that could be coming a.
Philip Shen: Later this year.
Philip Shen: So was wondering if you could talk about how you plan on managing the retroactive tariff risk. So I think you guys talked about increasing your shipments to the U S market.
Philip Shen: Or certainly having a high mix.
Philip Shen: Mix to the U S. Through 2024 can you share how much of your shipment volume in 'twenty four it could go to the U S.
Philip Shen: And then how do you plan on managing that retroactive risk a that.
Charlie Cao: Inventory turnover days were 89 days compared with 57 days in the fourth quarter and 100 days in the first quarter of last year. At the end of the first quarter, total debt was 3.66 billion compared to 4.38 billion in the fourth quarter of 2023. Net debt was $1.22 billion compared to 1.63 billion in the fourth quarter of 23.
Philip Shen: That could be as early as may of July. Thanks.
Speaker Change: Yeah for a first day upon award and why are we still stick to our previous plan that we are not intentionally increase or decrease our shipments to U S. B cortisol.
Speaker Change: 80, CVD positions. So it's that's already you know we that all up you bet.
Within the playoffs. This year so it's it's definitely both.
Speaker Change: The car so you'll know what happened in the last few years in the U S switching cultural it that's why.
Operator: A continuous improvement in our debt structure. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star and then two.
Speaker Change: This year's total shipment numbers or the ratio of the U S market are definitely will be higher than last year. That's why we're just saying that and for this.
Speaker Change: Time to risk a retroactive sword. So number one we we don't have much for solutions right. Now that's why we asked you. That's what I just answered <unk> question, we are still talking to the lawyers and the customer to see what could be the best solutions right now at least I'm not aware of any.
Operator: If you are a speaker, if you are using a speakerphone, please pick up your handset before pressing the. Please limit yourself to three questions. The first question comes from Brian Lee. Please go ahead. Hey, everyone.
Speaker Change: Good solutions out there.
Speaker Change: Got it and how thank you Janet how are your contracts structured meaning oftentimes. There's a change of law provision are that may put the risk on to the customer but it does at all does it cover.
Brian K. Lee: Thanks for taking the questions. I appreciate it. I know you guys are not in the practice of providing specific margin and ASP guidance anymore, but given the fluctuations in the pricing environment, can you give us a sense? Pricing was down, it seems like, kind of, down to the low to mid-teens here, ASP per watt, if we back out the wafer and the cell revenue in the quarter. Should we expect more ASP degradation in modules embedded in the 2Q guide?
Speaker Change: Tariffs and so do you have the provisions in all your U S contracts. So that the risk is on the customer or in this case do you believe that the risk of retroactive tariffs may fall into your.
Speaker Change: Thanks.
Janet: I don't think we can't disclose the details of the contract, but that's not a customer feels a risk as well sorry.
Janet: There are some you know Lam krish.
Janet: Uh huh.
Janet: Past, the cash risk with a customer and but definitely a customer side as this.
Charlie Cao: And then, what's sort of the margin cadence you expect from the result here in Q1? Should we expect 2Q to be up, down, flat, and then maybe back half views as well if there's more of a recovery there? Transcript by Rev.com Page of Hey Brian, this is Charlie, back to your questions, the module price is down in the recent three quarters, and that's a fact, and we have different ratings, different arrangements, long-term versus short-term, if you are talking about Q2, the ASP, on average, it's down a little. Transcripts provided by Transcription Outsourcing, LLC.
Janet: So that's the basic economics of the project financing right.
Janet: Is go beyond a certain threshold it definitely does.
Janet: It will not happen or ASP.
Janet: So that's why we have to you know go through all those details when we saw our customers with their lawyers out there financing providers to two two to find out the fast the mutual solution for all parties. So it's not that easy to do it.
Janet: But take out one case what solution fall.
Speaker Change: Okay. All right. Thank you John one last question on the U S market. What do you think is the amount of channel inventory in the U S. We've seen a lot of shipments to the tune of about five gigawatts.
Speaker Change: Coming to the U S over the past year do you think theres as much as a year and a half.
Speaker Change: Module inventory in the U S or do you think it's a much lower can you can you help us understand what you see.
Speaker Change: We have the reason those sort of things.
Charlie Cao: This year, our focus is the Sanxi Shopper Factory. We are expecting to be fully operational in the second half of the year, and for the growth margin and probabilities, we strongly believe in the first half of this year, this year, it's reaching the fall time. Sponsored ADR, particularly in the United States. As for us, the European market... And on top of that, we are, you know, Word, FairPay. Good position for
Let's say oversupply you asked Mark can you give us some some players either downstream or upstream to try to get more modules before so that's another 82 with you but that's the.
Speaker Change: Before I start with.
Speaker Change: Good reason knows but from our end we are we have not been able to verify that directly from the customer. So from some of the follow up here. So that I know, but definitely if we look into the numbers are available in the market or some market actually a part of we have seen a massive number of the modules are solar.
Speaker Change: Pepe you ship to the U S but.
Speaker Change: But it's a great connection numbers might not support that piece number definitely we have the same question that you have right now.
Charlie Cao: Market. And it helps, you know, the growth margin, and so that's, and the capacities for the Tier 2, Tier 3, and even the capacity which is not able to, You know, technology and competitive will be phased out throughout this year. This may help the overall supply versus demand situation, particularly in the second half.
Okay. Thanks, Janet last question here for me on the fire you know.
Speaker Change: That you guys disclosed over the weekend can you talk about the impact.
Speaker Change:
Speaker Change: Sure sounds she is supposedly a key part of your margin right. So you you did say that there would be an impact from 24 can you quantify in any way when do you think that facility could come back online how destructive was far thanks.
The sign up for that.
How are you still are you being evaluated.
Speaker Change: But Tennessee Superfast I remember.
Speaker Change: This year, we do two phases phase one is 14 gigawatt.
Speaker Change: Food sporting goods, another 14 gigawatts.
Under the second phase phase two we'll stick to the original plan and.
Brian K. Lee: Okay, that's helpful. So, if I summarize, I guess it sounds like... ASPs down a little bit more into 2Q, and then margins stable in 2Q off the 1Q level. Are you actually seeing quoting activity, or what's the outlook for pricing? I know you said shipment volumes and mix would improve in the back half, but how about like-for-like ASPs? Are you actually seeing, you know? You said 70% of your 24 is already covered in backlog. It sounds like
Speaker Change: I expect it to.
Speaker Change: Stop it started on pricing in Q3 for the phase two and are fully operational in early of Q4 this year.
Speaker Change: We're talking about the phase one phase one.
Speaker Change: The file has the impact on the on the you know.
Speaker Change: Fill capacity.
Speaker Change: 14 Gigawatts.
Speaker Change: And we expect you know the.
Speaker Change: Uh Huh, there's still capacity it will be 40 operational by the end of this year and ER visits to our original plan. This by the Ngos and the middle year. So it's a it's going to have some kind of impact.
Charlie Cao: What's the pricing dynamic you're seeing in the second half versus Q1 and Q2, where pricing is still going down? For pricing, we believe it will continue to follow the market, which we believe is already reaching rock bottom. Compared to the market prices versus the industry, even the leading cost structures, most of the peers or the industry players are under the water right now. So that's why we believe the price is reaching a bottom.
Speaker Change: Two a quarter of softness and the estimate is in the streets of five gigawatts. So the impact of this.
Speaker Change: Not significant.
Speaker Change: There are no significant impact for the sale.
Speaker Change: And.
Speaker Change: For the personal side, we have.
Speaker Change: Adjust our production.
Speaker Change: Productions.
Charlie Cao: However, when we look into the improvement in the cost structure-wise, it definitely does not go that fast as the price falls in the last five, six, and even eight months. That's why, you know, in the market, it will struggle at the beginning of the year, but we believe once the cost structure starts to improve to reach the level of the ASPs and match the level of the ASPs, we believe the company or even the whole industry, at least the leading competitive ones, will keep their margin as healthy as possible. Help that out with a question. Yes, absolutely very helpful. And then maybe the last one from me, and I'll jump back in the queue.
Speaker Change: Sue Us global if I said it is to minimize the impact to our customers.
Speaker Change: Before the cost size under the no no.
Speaker Change: The impact of accretion we think it's there's nothing in that sort of trend.
Speaker Change: However for the losses, so the you know the.
Speaker Change: It's still your better agent.
Speaker Change: The equipment is fully.
Speaker Change: Get the insurance from the Big T shirt as companies in China, and the world working on pads.
Speaker Change: Got it. Thank you very much for the color I'll pass it on.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Next question comes from Wade will with Jefferies. Please go ahead.
Brian K. Lee: You also mentioned, you know, back after the year, it sounds like you're positive on U.S. volume trends growing for you. I know this is pretty fresh, you know, the inception of this ADCVD potential investigation that was petitioned last week by some of the U.S. suppliers. I know in the fall of last year, you guys were deemed to not have been one of the companies dumping or countervailing, and so you weren't subject to any duties.
Right.
[noise] huh.
Speaker Change: Yeah.
Speaker Change: Hello.
Wade Will: I'm sorry can you hear me.
Speaker Change: Yes. Your line is now.
Speaker Change: So you have to have this element from Jefferies. So thanks management for.
Speaker Change: Taking my question. So I'm first of all we'd like to ask a follow up question from Filipe.
Speaker Change: On the basically how many or what is the percentage off the contracts you have signed or at least have the language that is.
Unknown Executive: It sounds like this petition is potentially opening that entire case back up. So, what are your thoughts on the latest, you know, trade policy update here, given what happened last week? And then do you anticipate any, or are you seeing any, you know, customer feedback right now that suggests there's more uncertainty for you as you move through the next few quarters? Just kind of how are you navigating that?
Speaker Change: It's passing through what the potential liability off the delays and a D. C would be the question of the background of this question is because.
Speaker Change: Some of the peers suffered a lot last year when they have procured high priced polysilicon and then later on when they failed to deliver the shipment they even have to pay.
Pay penalties by those contracts so I wonder if those language is already there.
Unknown Executive: Thank you. Well, you know, it's still early to see what the result of this upcoming ADC-VD petition could be. But definitely, from Jinko's perspective, we still prefer fair trade work, which could benefit not only Jinko itself but also, you know, the whole industry where we can drive. That's what the whole industry has been doing in the last even two decades, driving the LCOE of PV energy more and more competitive, which can help the whole world become greener and more environmental-friendly and with a smaller carbon footprint.
Speaker Change: And it's only a matter of working with clients to solve the pulp is there any potential liability and deliver them indeed the obligations.
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: So again I don't think that we can't disclose that level of detail, but absolutely. We are case by case working with our customers ounces. It used to be the risks as we always do right sort of we've got a lot of support from the customers regarding what has happened in the U S market in the last two year.
Speaker Change: There is time so it definitely we appreciate the support and we are carrying that love for the future long term partnership with most of our customers. That's why we you know we.
Speaker Change: We never want to end up with a loss loss flu shots or even if there's a risk that we definitely go how does a customer to look into the solutions together.
Unknown Executive: With trade tariffs or the current geopolitical issue, definitely, it is a big challenge. It increases a lot of costs. But as a company side, we have no choice but to, you know, try our best to adapt to what the market or what the government wants. So that's why we are working very hard with our lawyers, with our customers, trying to find out the best solution for the US market. But right now, honestly speaking, it's still too early to see what the product concept for that would be right now. So we might need another, let's say, three, even six months to see what the, let's say, upside and downside of that could be. Thank you. Okay, fair enough. Last one housekeeping for Charlie.
Speaker Change: Why we can maintain our leadership in many markets right.
Speaker Change: Yeah.
Okay understood. So then the next question is regarding to our some of the piece.
Speaker Change: He has to be one off.
Speaker Change: Coming in in this quarter, so all right.
Speaker Change: The other income is actually us extra according to quarter by quarter.
I wonder if that's related to a disposal well.
Speaker Change: Our disposal gain in all Xinjiang capacity and.
How much of that as a related to that.
Speaker Change: Yeah.
Brian K. Lee: I promise I'll pass it on after this. Charlie, what was DNA in the quarter? What was CapEx in the quarter? And then also, could you tell us what the percent of sales in the U.S. this quarter was and what the U.S. ASP range was, dollar per watt or cents per watt in the quarter? Thank you.
Speaker Change: In Q1, we really have.
Speaker Change: <unk> completed a transaction to do.
Speaker Change: So 100% equity at all hours of the job.
Speaker Change: That said it is and which was actually roslyn.
H Hunt.
Speaker Change: So.
Speaker Change: 800 million to 900 million no net income impact.
Charlie Cao: The U.S. shipment is roughly 8%, 8% or so. [inaudible] The revenue percentage will be higher. And for the total capex, you are, you know, you are always, you know. Last year, we spent roughly NT$20 billion on this. The capacity expansion this year will be 50% lower. Last year we delivered. And this year, we, our target... Operating cash flow will be lowered. Roger Landon.
Speaker Change: So also I recall in the transaction days.
Hmm.
Speaker Change: But performing this how does is it's kind of like a performance guarantee in the next couple of years.
Speaker Change: Has that in fact in factored into this 800 to 900 million or Dennis completely separate.
Speaker Change: Oh, well, we didn't record as you know the performance you know are kind of the.
Speaker Change: The performance application or wearable.
Speaker Change: Bold consideration from the sale of the.
Speaker Change: So where do you not icons on the bulk we just recorded in the fixed fixed.
Speaker Change: You know for the for the.
Speaker Change: Transaction.
Understood. So.
Speaker Change: And I think another thing that is quite a.
Philip Shen: For Q1, the capex is roughly $3 billion, and the operating cash flow is $1.5 billion. Okay, the next question comes from Philip Sheen with Roth MKM. Please go ahead. Hi everyone.
Speaker Change: I would say quite impressive.
Speaker Change: Impressive compared to auto for a P is just that you actually do not have any impairment on assets. So wonder. If you would think you will have any impairment was going forward.
And this year or because you have a supermajority of El Cabo Pizza popcorn already so you do not foresee any risks going forward from here.
Philip Shen: Thank you for taking my questions. The first one is a follow-up on Brian's question regarding... Southeast Asia ADCBD tariffs, Transcripts provided by Transcription Outsourcing, LLC. So I think you guys talked about increasing your shipments to the US market. We're certainly having a high mix in the US through 2024. Can you share how much of your shipment volume in 2024 could go to the U.S.? And then how do you plan on managing that retroactive risk? That could be as early as, you know, May or June.
Speaker Change: Oh, yes, yes, youre right. The way you know we have very small her capacities.
Speaker Change: The accelerated depreciation over five years.
Speaker Change: So the loss in the last two years and the net book value is not significant.
Speaker Change: Yeah.
Speaker Change: That's yeah, that's impacting impressive one or so you have mentioned the cash flow.
Speaker Change: In the first quarter was actually.
Speaker Change: Positive so wonder if the company has taken initiatives to.
Speaker Change: To improve the cash flow.
Speaker Change: Oh quarter over quarter, because that's also one of the concerns of the mast assessed with the operating cash flow.
Philip Shen: Volume-wise, we still stick to our previous plan, that we are not intentionally increasing or decreasing our shipment to the U.S. because of the recent ADCBD petitions. So that's already within our agenda. [inaudible] Covered risk retroactive or the number wise, we don't have mature solutions right now. That's why we are still as I just answered the right question. We are still talking to the lawyers and the customer to see what could be the best solutions right now. At least, I'm not aware of any good solutions. How are your contracts structured, meaning oftentimes there's a change of law provision?
Speaker Change: Yeah.
The increase in phase two our focus operationally frequencies.
Speaker Change: Many mines.
You know production lead time logistically it everytime task on the worsening psychosis and there's essentially show perfect figure out beauty as long as the key consideration is inclusive.
Speaker Change: Four cycle, you know kind of where we're seeing.
Speaker Change: Improved cash flow minimize the.
Speaker Change: All the working.
Speaker Change: Working capital as well.
Speaker Change: Our house cost I don't know look just at Etame.
Speaker Change: Okay.
Speaker Change: Thanks, a lot finally on the AR.
I wonder if it come and ask any guidance on the pace of the buyback because I have noticed that there's a lot of announcement around that but wondering if you would provide any guidance on that and would there be any blackout in buy back.
Speaker Change: After the end of quarter and before the announcement of the results.
Speaker Change: Uh huh.
Speaker Change: No or penalties you know preliminary price this.
Speaker Change: Further our return is roughly 200 million in U S dollars this year.
Speaker Change: And.
Speaker Change: See you know where do you see these news we have spent roughly long time Joe.
Speaker Change: $5 million to repurchase back you know the a T S bands.
Speaker Change: And on top of that.
Philip Shen: [inaudible] I don't think we can disclose the details of the contract, but definitely, the customer feels the risk as well. So even there are some, you know, language which gives the cash risk to the customer end, but definitely, the customer side has the basic economics of the project financing, right? go beyond certain thresholds, and the project definitely will not happen as planned. That's why we have to go through all the details with our customers, with their lawyers, and even their financing providers to get the contract.
Speaker Change: Which is subject to board approval, we plan to.
Speaker Change: Do you care a dividend roughly it's some of them in U S dollars to 80 million in U S dollars. So.
Speaker Change: Together with our plans you know eliminate finds this year's shareholder return is roughly 200 million of U S dollars.
Speaker Change: Okay.
Speaker Change: Understood. Thanks, a lot parcel.
Speaker Change: Uh huh.
Once again, if you have a question. Please press star one on your telephone and wait for your name to be announced the next question comes from Rod, Yes, Chad Reed with intrinsic edge. Please go ahead.
Philip Shen: Sponsored ADR, Take One Case, One Solution For All. [inaudible] Sponsored ADR: Do you think there's as much as a year-and-a-half of module inventory in the U.S., or do you think it's much lower? Can you help us understand?
Rod: Good morning, and congratulations on the on our strong performance in a very tough first quarter for.
Rod: For the industry.
Rod: My first question is about the.
Rod: The gross margin.
Rod: It seems like your are your cost per watt modules were down.
Rod: Roughly 10% from the fourth quarter to the first quarter.
Rod: And and Oh my.
Speaker Change: My question is number one.
Speaker Change: Can you give us an idea of how you were able to achieve such a dramatic decline in our cost per watt.
Philip Shen: We have read the notes saying there's an oversupply in the U.S. market, and even some players, either downstream or upstream, try to get more modules before, just not AD3D, but just before Antiserq. We heard that, we read the notes, but from our end, we have not been able to verify that directly from the customers or from some of our peers right now. But definitely, if we look into the numbers available in the market or some market analysis reports, we have seen a massive number of the modules or solar products have been shipped to the U.S., but the grid connection numbers might not support that big number.
Speaker Change: And given that the you know the poly silicon costs were down as well, but but not as significant.
Speaker Change: Then I have a follow up on the on the on the gross margin as well.
Speaker Change: Yeah, it's a combination of the our supply chain.
Speaker Change: Our R&D teams and you're only taking on us and improve the.
Speaker Change: Nowhere is the consumption.
Speaker Change: All of the materials and we upgraded his hometown campaigns to adoption.
Nicolas economics, and significantly improve our selling efficiencies well costs out not all of the.
Gener Miao: Definitely, we have the same question as you have. Okay, thanks, General. Last question here for me on the fire.
Speaker Change: The consumptions.
Speaker Change: Oh, the silver paste and so not all the efforts we are doing that on the rehab it internally.
Philip Shen: You know, that you guys disclosed over the weekend. Can you talk about the impact? Shanxi is supposedly a key part of your margin, right? So you did say that there would be an impact in 2024. Can you quantify in any way when you think that facility could come back online, and how destructive? The impact is still being evaluated, but Shanxi Superfactory, remember, this year we do have two phases. Phase one is 14 gigawatts, and phase two is another 14 gigawatts.
Speaker Change: Our worry you know solid target for the cost reductions and the step by step out where we think you know what.
Speaker Change: It's a quarter by quarter the cost will be relatively there.
Speaker Change: So from a will be a relatively quicker, but again you know this.
Speaker Change: Industry situation used to module prices kind of the trough.
Speaker Change: Not really.
Speaker Change: Thanks, you too.
Stabilize and the cost it takes time and.
Speaker Change: We would always how fast you know too.
Speaker Change: Let me pick up the cost structure.
So it literally is it fair to think that Oh that in the coming quarters two to three in Q4.
Speaker Change: With all the improvements that we're making that we can expect our costs to improve by 1% to 2% every quarter.
Unknown Executive: And the second phase, phase two, will stick to the original plan, and I expect it to start operation in Q3 for phase two and be fully operational in early Q4 this year. But we are talking about phase one. Phase one, the file has an impact on the, you know... Cell capacity is 14 gigawatts.
Speaker Change: Ooh.
Speaker Change: It depends you know some of the things you know most of the things that we can't control some of those things where all of our commentary from all kinds of silver.
Speaker Change: Or you know the commodity prices are awful a lot of aloft and you know, there's a mouse, but we're trying to minimize the impact.
Unknown Executive: And we expect the cell capacity to be fully operational by the end of this year. And this is our original plan for the end of the middle year. So it's going to have some kind of impact, two quarters roughly, and estimated 3-5 gigawatts. So the impact is... [inaudible] And for the cost side and the, you know, the impact of the operation, we think it's not significant. However, for the losses of the, you know, file, it's still evaluating, but the equipment is fully insured from the insurance company in China, and we're working on it. Got it. Thank you very much for the color.
Speaker Change: If you look at a corner by corner so out of the year. It's definitely that's the end of this year the cost will be lower.
Speaker Change: And then of course as of today.
Speaker Change: Yeah.
Right, but no, but assuming that the material costs don't change is the 2% per quarter on a sequential basis.
Reasonable assumption to make in terms of how are you out or do you think the clock.
Yeah.
Yeah, we have we intend on there you know even bigger targets under 2% this quarter.
Speaker Change: Show me the material cost is the same.
Speaker Change: But overhaul costs, you know depending on all of those things.
Speaker Change: And Oh I see.
Speaker Change: So it's going to be too bad.
Speaker Change: Again, we think.
Speaker Change: Next to two quarters, the cost improvement and truthfully, we unlocked so stick and Africans and because we have doing all those things and parts.
Speaker Change: Parts of the commodity to acquire small books asset to be keep at a very high level.
Speaker Change: The calciner that way.
Speaker Change: We don't see them as you know the overall hospital would be dramatically lower but it's Laura.
Wade Wu: Thank you. The next question comes from Wade Wu with Jeffries. Please go ahead. Hello, sorry, can you hear me?
Speaker Change: Yes.
Speaker Change: And the next two quarters.
Speaker Change: Okay.
Speaker Change: So that combined with.
Speaker Change: The fact that the ESP well that you'll be selling more product in the United States by the fourth quarter.
Wade Wu: Yes, your line is now. First of all, I would like to follow up the question from Philip. Basically, how many or what is the percentage of the contracts you have signed at least have the language passing through the potential liability of the delays in ADCVD? The background for this question is that some of the peers suffered a lot last year when they procured a high-priced polysilicon and then later on when they failed to deliver the shipment, they even had to pay penalties as per those contracts. I wonder if the language is already there and it's only a matter of working with your clients to solve the problem. Is there any potential liability in delivering the obligations?
Speaker Change: And so yeah, it's possible that it means that actually up somewhat sequentially from Q3 to Q4.
Speaker Change: Your costs are coming down by let's say even 2%.
Speaker Change: Quarter over quarter.
Speaker Change: It looks like you should be able to get the gross margin to.
Speaker Change: It will be in the 16, 17% kind of range by the fourth quarter is that a is that reasonable.
Speaker Change: Hmm is it's difficult to estimate but.
Speaker Change: Where do you think the long and the key thing is what is the capacity of some old capacity.
Speaker Change: I thought you know second half of year, where you're sending the clients will be come to a relatively rational level on top of that we have essentially show per factory, we have more shipments in the U S. And then some are you know a premium market it helps our.
Speaker Change: Our margin even some.
Unknown Executive: Yeah, so again, I don't think we can disclose that level of detail, but definitely, we are, you know, case-by-case working with the customers of this ADCBD RISC, as we always do, right? So we've got a lot of support from the customers regarding what has happened in the U.S. market in the last two years. So definitely, we appreciate the support, and we carry that love for future long-term partnership with most of our customers. That's why we, you know, we never want to end up with a lost-lost solution.
Speaker Change: Some liberal recovery, but it depends on all of those things.
Speaker Change: Since you know we work.
Speaker Change: Right now I'm doing this we do intend on things, we do why are we kind of control.
Speaker Change: I see Okay. My next question is on market share.
Speaker Change: Your market share in the in 'twenty 'twenty T was in excess of 15%.
Speaker Change: Closer to 16% for the year as a whole.
Speaker Change: In the first quarter, it's already in the 17% kind of range do you think that as the capacity comes.
Wade Wu: So even if there's a risk, we definitely go ahead with the customer to look into the solutions together. That's why we can maintain our leadership in many markets. So, the next question is regarding some of what appears to be one-off income in this quarter. So, like the other income, it actually has surged quarter by quarter.
Speaker Change: Offline.
Speaker Change: For the rest of the year that your market share will continue to increase my Snooki would hit the 110 gigawatt kind of number for the year.
Speaker Change: Okay.
Well.
Speaker Change: We never take our market share.
Speaker Change: Let's say our target right. So that's why we it's hard to say and also require separate different definitions theres different ways to calculate it right it's difficult to really define.
Wade Wu: So, I wonder if that's related to a disposal gain on our disposal gain in our Xinjiang capacity and how much of that is related to that. In Q1, we completed a transaction to sell 100% of equity in our Xinjiang facilities, and we neutralized, I think, roughly 800... So 800 minutes to 900 minutes, you know, net income impact.
Speaker Change: That's a fair well accepted the market share of definition, but anyway.
Speaker Change: Appreciate it.
Speaker Change: Our calculations on this numbers.
Speaker Change: Based on my perception of I think you said roughly around 17, 18% market share is.
Speaker Change: Where how we are looking at ourselves today, whether it's that number could go up or go down.
Speaker Change: It depends on what the you know it's a competition it depends on the whole industry, so you'd become dependent on all our peers strategy as well. So that's why it's difficult to say that right now, but definitely you know we ought to be how fast it too to make sure you know we deliver it that's a good result from the financials.
Unknown Executive: Transcribed by https://otter.ai. Further performance, it's kind of like a performance guarantee for the next couple of years. Has that been factored into this $800 million to $900 million, or is that completely separated? We did not record the performance of the variable considerations from the sale of the equity.
Speaker Change: Statement of why for me, while we're doing our best to serve our customers in the long term.
Speaker Change: To keep the long term partnership momentum.
Speaker Change: Okay.
Speaker Change: That is the market share that you have combined with the with the brand name that you are developing.
Speaker Change: Developing as well is that giving you hum.
Speaker Change: Our price premium or an increasing price premium relative to other brands.
Unknown Executive: So we did not account for the bulk. We just recorded the figures. Fixed Parsing for the transaction.
Speaker Change: But definitely we believe that our brands give us a lot of strength in the market.
Speaker Change: <unk> or awareness for sure but the hot.
Unknown Executive: Another thing that is quite impressive compared to a lot of your peers is that you actually do not have any impairment on assets. So I wonder if you will have any impairment risk going forward this year or because you have a super majority of your capacities are top-con already, so you do not foresee any risk going forward from here. Yes, yes, you're right.
Speaker Change: Whether you create a market premium is it depends on what not pursue a comparatively right you feel comparable with nowadays in the market I believe it's a brand salad worse quite a lot, but do you feel comparable with the top two or top three.
Speaker Change: The definition also acceptance of the customers.
Speaker Change: Across such a friend a top brand might not be that much as people you can imagine so and all sorts of brand of premium in the different market sector is different country will vary a lot as well.
Unknown Executive: And we, you know, we have a very small per capacity, and we accelerated depreciation over five years. Sponsored ADR. In the first quarter, the cash flow was positive. Has the company taken initiatives to improve the cash flow? Efficiency is still our focus, you know, operational efficiency. [inaudible] Sponsored ADR Transcribed by https://otter.ai. Our plan is, you know, the preliminary price, and the shareholder return is roughly US$200 million this year. And you can see, you know, with this news, we have spent roughly US$105 million to repurchase back the ADS.
Speaker Change: I see.
A question on the N type products.
Speaker Change: What do you think the industry shipments of N type products.
Speaker Change: Will be in 'twenty 'twenty four.
Speaker Change: Right today, we believe the market a little finished the.
Speaker Change: The transition from Pizza hut for N type, but by end of this year or.
Speaker Change: Technically it's my star from Roth.
Speaker Change: Roughly 35% to 40% range.
Speaker Change: To your hands at Nike, even 95% of the branch that's what we believe.
Speaker Change: So if you think of the other the competitors will also get up to the 90% range by the end of the year.
Speaker Change: I I mean, the whole industry Reits or is this somewhat in mind.
Speaker Change: Take action faster someone may be slower, but at the end.
Speaker Change: We believe that.
Speaker Change: The whole industry will look like.
Speaker Change: Now you have been ahead in terms of cost up and sat down and now Youre N type costs on a comparable two P type what kind of margin.
Speaker Change: Margin premium does that give you over to.
Speaker Change: <unk> companies who are behind.
Speaker Change: Behind the cost curve relative to your guide.
Speaker Change: So let's take this that's the last question. Thank you for the question as to where are we believe.
Speaker Change: If you look into some third party marketing how for example, there's a let's say PV evolving right. So if you compare it to a P type of any type of price so that gap is roughly.
Speaker Change: Why are you a thorough cents per watt peak, so or you feel you can roughly calculate how much it's really reflect our AR.
Speaker Change: In the margin wise right.
Speaker Change: Roughly like 910% of the market difference right. That's the way we are looking into it.
Speaker Change: I see.
Okay, I guess one last question.
Speaker Change: Alright.
Speaker Change: Yeah.
Speaker Change: Hi.
Speaker Change: Sure.
And that's good.
Speaker Change: Mark question for you can you can negotiate.
Unknown Executive: And on top of that, which is subject to board approval, we plan to... Decal Dividend roughly 70 million U.S. dollars to 80 million U.S. dollars. So together with our preliminary plan, this year's shareholder return is roughly $200 million. Thanks a lot.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: No.
Okay.
Okay. The last question comes from Leo Ho with <unk> capital markets. Please go ahead.
Wade Wu: I'll pass on. Once again, if you have a question, please press star one on your telephone and wait for your name to be announced. The next question comes from Rajiv Chaudhri with Intrinsic Edge. Please go ahead.
Leo Ho: Okay. Thanks management, just a question on the a B C D situation.
Leo Ho: I just wonder for all U S capacity are we using like our own solar South and South East Asia, and we've been hearing you know some industry feedback, suggesting that pop up that may be the cancellation of the wafer, possibly Bruce which means that we cannot use so let's now from southeast Asia.
Rajiv Chaudhri: Good morning and congratulations on a strong performance in a very tough first quarter for the industry. My first question is about the gross margin. It seems like your cost per watt for modules was down roughly 10% from the fourth quarter to the first quarter. My question is, first of all, can you give us an idea of how you were able to achieve such a dramatic decline in cost per watt given that the polysilicon costs were down as well, but not as significantly?
Speaker Change: So do you have any view on that thank you.
Speaker Change: I I'm not quite sure what policy, if you are referring to but.
Speaker Change: Based on the Genco situations, we absolutely want to go integrated in.
Speaker Change: And outside China.
Speaker Change: But if they did put out an ingot wafer cell and module and all from non Chinese sources right.
Speaker Change: What we have viewed in the last two years time I don't know if the U F. L. P. A sword that gives us a lot of advantage out of the trustees of the glass market.
Speaker Change: Okay. Just one more question if I may I would like to ask about the usage Haitian aside from you know I think publicly announced actuation regarding lungs, yet and also Shanghai electric are we hearing any like problems regarding Chinese players exporting to the next.
Rajiv Chaudhri: and then I have a follow-up on the gross margin as well. It's a combination of our supply chain, you know, R&D teams, new technology, and improve the, lower the consumption of the materials. And we upgraded the top-down capacity, adopting the NECO technology, and significantly improved our cell efficiencies, while cutting a lot of the consumption of the Shiver page.
Speaker Change: Actually we've been hearing some news, suggesting that probably that's one of the major module maker.
Speaker Change: You had called her being rate I'm not sure you guys are hearing the same attention. Thank you.
Speaker Change: I'm not certain that I'm aware of right now for your product, but I understand that's definitely I will let you know.
Speaker Change: Okay. Thanks, so much.
Speaker Change: Thank you.
Speaker Change: Yeah.
This concludes the conference call.
Charlie Cao: So a lot of effort we are doing that, and internally, we have a very solid target for the cost reduction. [inaudible] Charlie, is it fair to think that in the coming quarters, Q2, Q3, and Q4, with all the improvements that you are making, that we can expect costs to improve by 1% to 2% every quarter? It depends. Most of the things we can control, but some of the things we can't control.
Speaker Change: Disconnect your lines.
Rajiv Chaudhri: If you look at the commodity price, it's up a lot in recent months, but we're trying to minimize the impact. If you look quarter by quarter throughout the year, it's definitely the end, Sponsored ADR, right? But no, but assuming that the material costs don't change, is 2% per quarter on a sequential basis a reasonable assumption to make in terms of how you are reducing the cost? Yeah, we have internally, you know, even bigger targets and 2% each quarter.
Charlie Cao: If I show you the material cost, it's the same, but overall cost, you know, depending on a lot of things. I think for all of them it's going to be improved, but again, we think in the next two quarters, the cost improvement will not be so significant. And because we have a lot of it, and the commodity price now looks to be cheap at a very high level. Sponsored ADR. We don't believe, you know, the overall cost will be dramatically lower, but it's lower, slightly lower on the trend in the next two quarters.
Charlie Cao: So, combined with the fact that ASPs will be selling more product in the United States by the fourth quarter, and so it's possible that ASPs are actually up somewhat sequentially from Q3 to Q4, and your costs are coming down by, let's say, even 2% quarter over quarter. It looks like you should be able to get the gross margin to be in the 16%, 17% kind of range by the fourth quarter. Is that reasonable?
Rajiv Chaudhri: It's difficult to estimate. We think one of the key things is capacity; some of the capacity will phase out in the second half of the year. We think the price will come to a relatively rational level.
Charlie Cao: On top of that, we have Sanxi Superfactory, we have more shipments in the U.S., and some other Premium Markets. It helps our Sponsored ADR. Thank you for watching.
Rajiv Chaudhri: I see. Okay. My next question is on market share. Your market share in 2023 was in excess of 15%, closer to 16% for the year as a whole. And in the first quarter, it's already in the 17% kind of range.
Rajiv Chaudhri: Do you think that as the capacity comes offline for the rest of the year, that your market share will continue to increase, especially if you hit the 110 gigawatt kind of number for the year? Well, we never take market share as our, let's say, our target, right? So that's why it's harder to say. And also, because of the different definitions, there are different ways to calculate it, right?
Unknown Executive: It's difficult to really define, let's say, a fair, well-accepted market share definition. But anyway, we appreciate your calculations on these numbers. Based on my perception, I think it's roughly around 17%, 18% market share is how we look at ourselves today. Whether that number could go up or go down depends on the competition, it depends on the whole industry, and it depends on our peer strategy as well. So that's why it's difficult to say that right now.
Rajiv Chaudhri: But definitely, we are doing our best to make sure we deliver a good result from a financial statement point of view. Meanwhile, we are doing our best to serve our customers in the long term, to keep the long-term partnership momentum. Is the market share that you have combined with the brand name that you are developing as well, giving you a price premium or an increasing price premium relative to other brands?
Rajiv Chaudhri: Definitely, we believe our brand gives us a lot of strength and market acceptance or awareness, for sure. But how, whether it creates a market premium, it depends on what numbers you are comparing it to, right? If you compare it with nobody in the market, definitely, the brand itself works quite a lot.
Unknown Executive: But if you compare with the top two or top three, the definition or the acceptance of customers across the different top brands might not be that much as people imagine. And also, the brand premium in the different market sectors in different countries will vary a lot as well. Question on the n-type products.
Unknown Executive: What do you think the industry's shipments of n-type products will be in 2024? Roughly, we believe the market will finish the transition from P-type to N-type by the end of this year. So technically, it might start from, let's say, roughly the 35% to 40% range and, two years end, the 90% to 95% range. That's what we believe. So you think the competitors will also get up to the 90% range by the end of the year? I mean, the whole industry, right? So someone might take action faster; someone may...
Unknown Executive: Sponsored ADR, Now you have been ahead in terms of getting your cost of N-type down, and now your N-type costs are comparable to P-type. What kind of margin premium does that give you over Tier 2 and Tier 3 companies who are behind the cost curve relative to you guys? So let's take this as the last question. Thank you for your question, sir. We believe if you look into some third-party marketing, for example, there's a, let's say, PVA info link, right? So if you compare the P-type and N-type price, the gap is roughly one US dollar cent per watt peak. So if you can roughly calculate how much it will reflect in the margin, right?
Unknown Executive: So it's roughly like 9, 10% of the margin difference, right? That's the way we are looking into it. Okay, just one last question. Sorry.
Operator: Part of the time limit, we need to connect with the next investor. For more questions, you can... Administration. Operator, please come back to the next section. I don't know. I'll be there. Okay, the last question comes from Leo Ho with Iowa Capital Markets. Please go ahead.
Leo Ho: Okay, thanks management. Just a question on the ADC situation. I just wonder, for our US capacity, are we using our own solar cells from Southeast Asia? And we've been hearing, you know, some industry feedback suggesting that probably there may be the cancellation of the waiver plus three rules, which means that we cannot use a solar cell from Southeast Asia anymore. So do you have any view on that? I'm not quite sure what policies you are referring to, but based on the Jinko situation, we are fully vertical integrated outside China, which means, you know, polysilicon, ingot, wafer, cell module are all from non-Chinese sources, right? So that's what we have built in the last two years under the U.S. LTA. That gives us a lot of advantages and trust in the U.S. market.
Leo Ho: Okay, just one more question, if I may. I would like to ask about the EU situation. Aside from, you know, the publicly announced situation regarding Longji and also Shanghai Electric, are we hearing any troubles regarding Chinese players exporting to Europe? Especially, we've been hearing some weird news suggesting that probably there's one major module maker with its EU headquarters being raided. I'm not sure if you guys are hearing the same thing.
Unknown Executive: Not, not, it's just not something I'm aware of right now, so if I have anything, I'll definitely let you know. Okay, thanks so much. Thank you. This concludes the conference call. Please disconnect your line.