Q1 2024 Emeren Group Ltd Earnings Call
Okay.
Hello, Ladies and gentlemen, thank you for standing by for Amarin Group Limited's first quarter 2024 earnings Conference call. Please note that we are recording today's conference call I will now turn over the call to Suzanne Wilson.
Rector of Investor Relations at Ameren Group. Please go ahead Mr. Wilson.
Suzanne Wilson: Thank you operator, and Hello, everyone. Thank you for joining us today to discuss our first quarter 'twenty 'twenty four results, we released our shareholder letter after the market close today and is available on our website at IR Ameren Dotcom. We also provided a supplemental presentation that's posted on our IR web.
Site that we will reference during the prepared remarks on the call with me today are Mr. Even Lal Chief Executive Officer, and Mr. Cod, Chen Chief Financial Officer.
Before we continue please turn to slide two let me remind you that remarks made during this call may include predictions estimates or other information that might be considered forward. Looking these forward looking statements represent our brand groups current judgment for the future. However, they are subject to risks and uncertainties.
That could cause actual results to differ materially.
Risks are described under risk factors and elsewhere in MRE grip filings with the SEC. Please do not to place undue reliance on these forward looking statements, which reflect every groups opinions only as of the date of this call.
Speaker Change: One group is not obliged to update you on any revisions to this forward looking statements. In addition, please note that all punish numbers are discussed on this call are unaudited also please note that unless otherwise stated all figures mentioned during the conference call are in U S. D dollars with that let me turn the call over to Mr.
Even with humans.
Thank you Suzanne.
Every one for joining our call today.
I'll begin by providing an overview of our operational performance in Q1 'twenty.
And Carl will discuss our financial results for Q1.
Carl: In Q1.
We generated $14 8 million.
Marking a 15% increase year over year.
Our gross profit soared to forming.
More than doubling from the previous year.
With a gross margin reached 27, 3%.
Operating loss was approximately <unk> 7 million.
It can lead to reduced from last year.
This substantial growth in revenue was primarily driven by our expanding service.
DSA.
Which generated over $5 million.
Our efforts to improve operational efficiency across all regions.
Carl: You all.
We decreased operating expenses by over 50% sort of strategic cut cost control measures.
That progress was offset this quarter by 7 million write offs of counsel U S. Early stage projects due to our shifting focus on advanced stage projects and I realized foreign exchange loss or $3 20.
Which constituted.
Carl: All of our net loss.
Speaker Change: Well give you a quick one.
Rob you of each of our businesses business lines, starting with the quarterly primary catalysts.
Well circle back with more details later.
Art yesterday initiatives.
Tribute to our stable.
Speaker Change: Predictable in response.
Putting the revenue recognition at the early stage of the project.
This approach is proving of cement demand.
Managing risks and maximizing cash flow and efficiency across the product lifecycle.
Speaker Change: In Q1.
Speaker Change: <unk> revenue accounted for 34% of our call.
No.
Largely driven by battery energy storage system.
Speaker Change: S projects.
Speaker Change: Looking ahead, we are working to broaden our DSA partnerships on a global scale.
I'm sorry.
Our best pipeline continues to grow steadily.
We recently signed up yesterday agreement for our best projects.
In south and eastern Norway infrastructure, formerly known as Glenn loan partners.
One of the words.
<unk> fund managers specializing in synergy.
Aiming for a total power capacity of 199 months.
Or up to one five Nike.
In April we secured an additional agreement.
Or $1 55 megawatts are at 2124 Gigawatts of battery storage projects.
Bringing the partnership model.
Our capacity of 354 megawatts or up to two eight gigawatt hours.
Well Q1.
Our IPP assets.
Primary drivers of growth and profitability.
Contributing to 38% of our revenue with a gross margin of 44%.
IPP continues to be a pivotal component of our business model.
Providing a dependable source of stable and predictable cash flow.
Our ICP available rooms.
Between Europe and China.
There's a modest presence in the U S as of today.
In Europe we.
Speaker Change: 67 megawatt of IPP assets that generate sustainable revenue.
For legacy leases.
We have IP assets in China.
Located five coastal provinces.
Power prices start economics economies and robust regulatory environments.
We are now 40, finding those assets by adding battery storage to the portfolio.
As of the end of Q1, our bedroom storage portfolio COVID-19 megawatt hours fully integrated into the virtual power plant.
Nobody P P platform one.
And operated by quantum power International one of the largest ITT operators in China.
<unk> market in China is expanding rapidly.
Speaker Change: During the quarter, we continued to be one solar and storage projects.
As of the end of Q1 2024, we had over two six gigawatts of otherwise stage high quality solar projects.
We maintain our expectation to monetize.
<unk> 400 to 500 megawatts of projects in 2024 and young.
At the end of Q1.
Our total energy storage project pipeline.
<unk> increased to <unk> eight or.
<unk> 32 gigawatt hours.
In conclusion.
Speaker Change: We are optimistic about our revenue growth potential.
This is fueled by our strategic initiatives and our robust project pipeline.
And our ability to achieve gross margin of over 30%.
We are also copies.
We have continued to lower operating expenses.
Now, let me turn the call over to our CFO Gotcha.
Gotcha: Our financial performance or guidance.
Uh huh.
Thank you you mean.
And thanks, everyone again for joining us on the call today.
Our revenue of $14 8 million, representing an increase of 15% year over year from Q1 turned into new Street and it.
The decrease of 66.
Percent from Q4 2023.
This sequential decline was due to normal seasonality, while the year over year increase in revenue was partly driven by our growing TSA business, which accounted for 34, 4% of our revenue.
Gross profit was $4 million compared to stray current stray meaning in Q4, 2023, and $1 6 million in Q1 'twenty fiduciary.
Gross margin was 27, 2% compared to seven 6% in Q4 tenets of New Street, and a 12, 4% in Q1 2023.
The gross margin improved sequentially.
Gotcha: Barely driven by high margin business.
Built into from TSA business.
Operating expenses were $4 seven meeting.
An improvement from $9 five Minting, Inc. Q4, 2020 Street and are comparable to $4 6 million in Q1, and if interest rates are.
Our Q1 operating expenses were impacted by.
The airports 7 million write off of a cancelled the early stage projects in the U S.
Net loss attributed to Ameren MTGE common shareholder was $4 4 million.
Compared to net loss of $8 1 million in Q4, turning to new Street and it.
Net loss of <unk> 2 million in Q1 2023.
Gotcha: Diluted net loss attributed to Emerald Coupe Ltd's common shareholder.
<unk> was <unk> <unk> compared to diluted net loss of <unk> 15.
In Q4 to an interest rate and a diluted loss of zero cents in Q1 2023.
Cash used in operating activities was $3 3 million.
Cash used in investing activity was two 6 million in.
Gotcha: Cash used in financing activities was $8 4 million.
<unk> operating cash flow was primarily due to delayed payment from Polish projects.
Speaker Change: Looking at our balance sheet cash cash equivalents at end of Q1, 2024, where our 15th.
Five well, meaning compared to $70 2 million in Q4 2023.
Net asset value well anyway.
He is possibly 6.5 per avs.
Our debt to asset ratio at the end of Q1, 2024 was nine 9% compared to $9 four 4%.
The end of Q4 turning to industry.
Additionally, during Q1, we purchased approximately USD $6 3 million.
Worst of Aes.
Moving to our outlook.
We anticipate that our Q2 revenue will fall within the range of 20 to 23 meeting, whereas at gross margins between 42.
45%.
For the full year 'twenty 'twenty four.
Reconfirm reaffirm our expectation for revenue to range from $150 million to $60 million and therefore gross margin of approximately 30%.
Additionally, we expect our net income for 2000 before to be around 22 meeting.
With concentration of a foreign exchange impact.
And expect earnings to be approximately 43 cents.
We reiterate our expectation for our ICT revenue in 2004 to be between 24, meaning.
226 meeting with.
With a gross margin of approximately 50%.
Yeah.
We expect gross margin contributed by TSA globally to be within the range of 15% to 20%.
With that let's open up the call for any questions.
Operator, Please go ahead.
Thank you.
A reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Our first question comes from Philip Shen with Roth Cam can you May proceed.
Everyone. Thanks for taking my questions.
Wanted to talk about your guidance, So Q1 was.
A little bit light Q2 is also your guide was a little light versus our expectations and so theres a big ramp in Q3 and four I was wondering.
Youre going to you plan on monetizing it.
250 megawatts in 'twenty four.
Speaker Change: What do you think.
The monetization of it might be by quarter just.
Just to give us a rough cadence of.
The monetization thanks.
Sure.
Again like I said, we confirm all.
Full year revenue guidance, our gross margin guidance, yes.
We do expect a ramp up in the second half.
And again some of the project are under negotiation right now so we do expect.
Again ramp up both in Q3 and Q.
Q4.
Alright, so what do you expect to happen to allow for that ramp up and what have the delay the reasons for the delays.
Okay.
Again for some of the pool.
<unk>, we still expect that but.
In the <unk>.
Those to happen in the second half.
Speaker Change: And also again.
Speaker Change: We are.
Executing some of the negotiated some of the contract right now and we expect those contracts to be executed in Q3 and Q4.
Yeah.
Speaker Change: Right.
Sorry, I'm not asking about the timing I'm asking about the reasons for the delay so.
In the U S. I know, there's a lot of reasons.
Your connection transmission queues.
Long lead time high voltage equipment.
Yes.
Hi elevated rates.
What else.
Ever constraints EPC constraints. So those are all <unk>.
Resulting in delays in the U S projects on the margin.
Speaker Change: What are you seeing in Europe are those the same issues in Europe or is it I'm imagining it's a different set of issues. So can you give us some color as to you know.
What is causing them to delay or is it just bilateral negotiation kind of.
Yes, let me.
First of all you asked what are you.
You mentioned it is the correct, but what we are.
Speaker Change: Our focus in the U S actually community solar.
Speaker Change: And.
Again.
We are focused on like in New York for example.
That's actually helped us because some of the latter others added before they SEDAR so allow us to get a better price. So instead of what we sold to a project in Q4, we already negotiated the contract about getting better priced so that will help us.
Q2, starting Q2, and many Q3 hundred before so you ask you hit a good point there.
For Europe, I think as we experienced continued to experience.
Anniversary I think do I for example, prospect, but we are but those happen in Q4.
So.
And again some of the.
Project, we mentioned a hungry, while we're expecting some delays.
Okay respect those happen again in the second half.
Okay.
Did you say their administration delay so there appear.
It's based on the local government and challenges.
Some of the Permian of course bank be specific.
The allowance.
Speaker Change: More than like.
Speaker Change: Up to tell musculature in some other regions. So rather we are pushing through August approvals.
Okay.
So.
But there.
Okay. So there's a chance that this could extend Israel as well right I mean, some of these challenges could sustain beyond 'twenty four.
What's the potential that it could take longer than you think.
Our team is working very hard to minimize this impact so like I said a R.
We have negotiated this contract try to get us talking to several people.
Let me add some color on this one Phil. Thank you mean, so for example, Spain.
We signed the contract SBA back too.
Over six months ago.
And I'm excited that to be done we feel Q1 timeframe.
As already as last Q4, but it will happen.
This new garmin issues, the rule, which allows the local industry.
Speaker Change: Adding office to not to have 14 months up to 14 months time to get product approved.
The priority of the deal.
Speaker Change: So we now consider thats one of the deals we are supposed to close we of course have but now it goes to second half or most likely will be in Q4. Okay. So that is one example in Hungary. The same thing that the every single deal.
They both serve the foreign buyer it won't be until the local GAAP.
<unk> policy you cannot.
It will be on local Karma regulation.
Speaker Change: Not easy to sell to foreign buyers. So we have to switch local buyers now are longer process of the negotiations.
The Oh, those delays will happen but.
We are fully.
Confident that those closed loop will happen in the second.
Speaker Change: Okay, well, one last question and I'll pass it on as it relates to the Polish payments.
I guess that was an issue for Q1.
One what exactly was going on there and then do you expect.
Speaker Change: That challenge jus to sustain in Q2.
Or I'm even through the.
Speaker Change: The back half of the year. Thanks.
We are working with.
The buyers to settle this so we're expecting the payoffs in June so and.
We are not expecting further delay anymore.
But what is the root cause of the issue well what happened.
Again, there is a package like the local.
Polish government same thing they have to prove this car.
Our plan to be collected so there is a so called the <unk> certificate.
Speaker Change:
Speaker Change: Certification show.
Basically that the.
Powered power plants to be constructed you see move so called Pak performance acceptance certification.
After the hour.
We got paid but theres a lot of Murphy senior staff.
Speaker Change: The proxy center.
I know stage of closings financial.
They are supposed to be done in the next several weeks. So that's why coordination.
Speaker Change: But the payments starting in June.
Okay.
Okay, Great best of luck as you get through the year I'll pass it on.
Thank you Phil.
Phil: Thank you.
Thank you one moment for questions.
Our next question comes from Pablo Woken up with Raymond James You May proceed.
Thanks for taking the question.
Speaker Change: Zooming out first are there any.
Complications with module supply on either side of the Atlantic and do you envision.
The supply situation worsening with the new tariffs announced in Washington.
Speaker Change: Yes, I know that the U S.
The good part of our story as we go.
Speaker Change: Don't plan to do much of the EPC work that you won.
We flipped it before or at the peak, but we do have some considerations do less multi year, which we are too.
Speaker Change: Oh, the modules has been secured for small deal Ukraine. So that part that we are less impacted and but going into the future that may limit. Many other utility scale players.
All of the module supply, but any case that we see that happen.
Speaker Change: But not really impacting us much faster.
For Europe, we don't see that yet at this time steel carrying suits.
Speaker Change: Their pricing.
Speaker Change: Any additional tariff so that is why we need to be double or triple our growth potential in Europe compared to what we are doing in the U S.
Speaker Change: Okay.
When I look at your.
Speaker Change: Project pipeline, the advanced stage looks relatively balanced by country.
Speaker Change: Early stage is more than two thirds, Spain.
What explains the the scale of these early stage opportunities in the Spanish market.
Speaker Change: That's a very interesting question that the Spanish market is one of the most focused market for our company will Europe.
All right.
<unk> Spanish market steel or continues presenting loss could potential okay.
Speaker Change: We have.
Lots of time developing partnerships with local smaller developers.
Speaker Change: Also if you want partnerships going forward with the <unk>.
Our joint venture partners like Apple.
Speaker Change: To see if we can put more resources into the already states all the way obviously moment.
Okay.
I will see that.
Spence market continuous to be strong.
Speaker Change: Firstly, we learned that the spend is <unk>, considering adding battery storage into the marketplace.
Speaker Change: So with that new initiative.
Speaker Change: Milton copied and deposit growth.
Speaker Change: Okay interesting.
Speaker Change: Last question you've.
Speaker Change: Continue to repurchase shares.
Speaker Change: Obviously, the stock is still down quite a bit year to date.
How much more.
Are you willing to allocate towards buyback.
Uh huh.
Speaker Change: How about we still have who I think roughly.
15 million left from the board authorization.
So.
That has improved so.
That's why we could use.
Speaker Change: 15, one 5 million yes.
Okay. Thanks very much.
Okay Paolo.
Thank you.
Moment for questions.
Our next question comes from Donovan Schafer with Northland Capital markets. You May proceed.
Donovan Due Schafer: Hey, guys. Thanks for taking the questions. So first I want to ask for Spain for the.
<unk>.
For the storage project pipeline so.
Looking at the letter to shareholders from last quarter, there was about a gigawatt of.
Donovan Due Schafer: Gigawatt hour of battery storage.
That was advanced stage for Spain.
And this.
The letter from this quarter that was it looks like that was essentially eliminated it went from about a gigawatt down to 36 megawatts.
Is there it.
It looks like the early stage really jumped with Pas puzzle was kind of commenting on that.
It also went up for solar as well, but.
So is that a reclassification from advanced stage.
Donovan Due Schafer: Spain to classify it back to bring it back down to early stage or what happened to that gigawatt of advanced stage Spanish.
Speaker Change: Hello, and thank you.
Speaker Change: Very interesting question and also you hit the right spot.
Speaker Change: We are becoming more and more conservative consideration of a global level. He took the next bottleneck.
Spain is also one of the countries are the markets facing the challenges of the connections.
So the.
Speaker Change: When you pass through all markets are conservative view, so called re categorize or otherwise states, where early stage projects.
And that resulted in this moving this one gigawatt or delay from the main stage to early stage to be more conservative.
That is the reason that the.
We are continuing developing those projects.
Speaker Change: Yes.
Nothing nothing nothing wrong, but the only thing is that the way.
We foresee the inter connection approval delays, which is less optimistic than last quarter that is why we moved that from the worst days too early stage.
Okay. Okay, one thing Darwin I have to point out our advanced stage pipeline in Europe is continuing growing.
So we had more than last quarter.
Okay. Okay.
And then turning to the solar pipeline so for Germany, as we talk here Im looking at.
Darwin: The early stage so the advanced stage for Germany that stayed the same so it doesn't look like there's any movement there, but the early stage dropped from 690 megawatts to 360 megawatts.
You mentioned there was a there was a write down or impairment for early stage projects in the U S.
Is there with that kind of thing trigger.
Yes.
What caused the reduction in Germany, but then secondly.
Secondly.
Why why was that not also an impairment or.
Darwin: Write down of some kind or did that did that have an impact on the financials.
Let me, let me answer all of them actually.
<unk> two project being in Germany, which we.
What fell so so it didn't win the bid so that pipeline getting.
Remove.
There is some small very small impairment in Germany.
Also but that's very small compared to what we mentioned here in the U S. It's only like this at 50 K U S stock.
Okay got it.
And then just one more for me.
You've got some IPP assets.
China you do you do Youre doing some development work there.
Speaker Change: You know there is.
Speaker Change: Theres still maybe Cayman Island based they are not.
Not technically a U S company, but the question is is there any risk of sort of like retaliation or anything that could impact you guys.
Someone already asked about module supply into the U S, but just.
In terms of.
Inside China or even.
In European countries or other places, where maybe you work with Chinese.
Chinese companies.
Or source panels from China or anything is there any risk of you guys being negatively impacted if.
The Chinese government or to take some kind of a retaliation against the United States.
No I don't think so and we don't see that either.
Currently.
Speaker Change: Solar market, China represent over 60% of the housing market in the world, while the supply chain side, not only modules, but also battery storage, China, Robert Lee <unk>.
Over 80% or even a lot more okay. So the.
Definitely U S 201.
Speaker Change: One tariffs Vale set some limitations.
Chip.
For China sell in potentially in the future to battery storage, how cold it is coming to us, but the as I answer Pablos question that the wheat growing not growing very fast in Europe, but also we are.
We are sizing not hoping.
201, small one U S term will not impact our U S activities going back to China definitely we don't see any negative impacts.
In China, our Capex, continuing going down down down.
Let me start goes to about $70 per kilowatt hour.
Apple to Apple comparison.
Also.
Speaker Change: The molecule goes to below my sense so.
Speaker Change: Everything looks so good.
The market is strong and we feel confident in that.
It's not bring any of that could impact the company.
But none of them.
Mecca correction, we are <unk> our company.
And again, we don't see the impact because we're running I keep your business in China or the off taker is individual enterprise.
Speaker Change: In China, and leaned out of five of most economy.
Speaker Change: Heico's area.
I don't think any impact because those business are still ongoing.
Okay, Alright, thanks, guys I'll take the rest of my questions offline.
Thank you.
Thank you one moment for questions.
Our next question comes from Amit Dayal with H C. Wainwright you May proceed.
Thank you good afternoon, everyone.
So with respect to the.
Speaker Change: Heavier contribution.
With respect to the outlook coming in the second half is there any particular projects.
Makeup the majority of these the expected revenues in the second half just trying to see if there's any concentration.
Concentration risk with respect to any projects that you are looking to monetize in the second half.
Yes.
I think we mentioned this.
Speaker Change: Hungry projects.
That's the one we are.
Under negotiation right now so, but we are confident it will happen in the second half.
Okay. Thank you.
The higher gross margins into Q, you're expecting is it.
Hmm.
And then just so coming from.
The China business and DSA revenues.
Speaker Change: Yes, so for Q2.
Speaker Change: Higher margin first of all this is.
Higher season in terms of IPP for sure so that help.
To help with the margin secondly, we continued doing out DSA business and the GSA business like we mentioned that in the first quarter bring does it stay at a higher margin and.
Also we have again inspect project some project sale.
In Europe those are like NTP sales, so that maintain high margin. So overall, that's bringing the higher <unk>.
Gross margin guidance.
Okay understood. Thank you for that last one you do still have a pretty.
Good balance sheet.
I know in the last call you gave guidance that you might end the year with $100 million in cash.
Is that still in play.
Of course, we are still confident about that at this point.
Okay, and then with that kind of balance sheet do you think you might want to pursue more IPP opportunities given sort of the margin strength, you're seeing with that segment.
Of course, the way we mentioned this.
The last few calls we are.
Like IPP business model to continue to identify high return activities.
Especially out of Europe. So we are going to continue looking at those opportunities.
Okay.
It's all about taking my questions offline. Thank you.
Speaker Change: Thank you and as a reminder to ask a question. Please press star one on your telephone.
Speaker Change: Yeah.
Okay.
And I'm not showing any further questions in queue I'd like to turn the conference back to Mr. Lu for any closing remarks.
Thank you operator.
Despite challenges at such a high emphasis on the U S election cycle.
We are strengthening our positions in fast growing solar markets. Thanks.
Thanks to increasing demand for clean energy is supportive policies.
Speaker Change: Our expertise and strong industry partnerships.
<unk> us toward becoming a leading global renewable energy company.
We are excited about solar energy's future are grateful to our employees customers partners and shareholders for their continued support.
Thank you again for joining our call today.
May now disconnect.
Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
Okay.
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Okay.
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Okay.
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Speaker Change: Okay.
Speaker Change: Yes.
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