Q3 2024 Emeren Group Ltd Earnings Call
Okay.
Speaker Change: Hello, Ladies and gentlemen, welcome and thank you for standing by for Admiral Group Limited third quarter 2024 earnings Conference call.
Speaker Change: Please note that we are recording today's conference call.
Speaker Change: To ask a question during the session you will need to press star one on your telephone.
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Speaker Change: I will now turn the call to Gary Divulge, a managing director of the Blue shirt group. Please go ahead Mr. Wojciech.
Gary Divulge: Thank you operator, and Hello, everyone. Thank you for joining us today to discuss third quarter 2024 results. We released our shareholder letter after the market closed today and it's available on our website at IR <unk> Com. We also provided a supplemental presentation. That's posted on our IR website that will reference during our prepared.
Gary Divulge: Remarks on the call with me today are Mr. Human Bu, Chief Executive Officer, and Mr. <unk>, 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.
Gary Divulge: Forward looking statements represent Ameren group's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under risk factors and elsewhere in amarin group's filings with the SEC.
Gary Divulge: Please do not place undue reliance on these forward looking statements, which reflect ameren groups opinions only as of the date of this call Ameren group is not obliged to update you on any revisions to these forward looking statements. In addition, please note that all financial numbers discussed in this call are unaudited also please note that unless otherwise stated.
Speaker Change: Figures mentioned during the conference call are in U S dollars with that let me now turn the call over to Mr. Human humans go ahead.
Speaker Change: Thank you Gary thank.
Speaker Change: Thank you everyone for joining our call today.
Speaker Change: To start I'll provide an overview of our operational performance for Q3 'twenty 'twenty four.
Speaker Change: The North Sea, a cold cold chain will walk through our Q3 financial results and our outlook.
Speaker Change: In Q3, our company executed August Balkan right Oh gosh.
Achieving solid profitability.
Speaker Change: By softer than anticipated revenue, resulting from delays in closings scheduled projects six.
Speaker Change: We used $12 nine you didn't get remedied, we achieved gross profit of approximately 5.6 minutes.
Speaker Change: You would think about solid gross margin of 43, 8%.
Speaker Change: Two point that you can get it sorry.
Speaker Change: Sorry, $2 1 million in operating profit and 4.8 minute Nike income attributable to <unk> group limited common shareholders.
Speaker Change: You bet, Oh 8.5 million further reflects our commitment to sustainable profitability and core business Richard.
Speaker Change: Yeah.
Speaker Change: Our net income was supported by Frank Chan scan exceeding 4.6 minutes.
Speaker Change: As the euro strengthened during the quarter.
Speaker Change: Offsetting a similar a foreign exchange loss already in the year.
Speaker Change: Whereas Europe generates a majority of our revenue in Q3.
Speaker Change: We benefited from a strong euro.
Speaker Change: Yeah.
Our focus on high margin growth remains robust.
Speaker Change: The independent power producer or I P. P segment generate at night for a minute.
Speaker Change: Children by seasonal strength in European assets.
Speaker Change: Or do you want the service agreement or DSD model.
Speaker Change: Also expanded your key markets.
Speaker Change: Adding 1.3 million from Italy, one bidding from France, and point I mean from our first lightweight energy storage system, our best product portfolio in the U S.
Speaker Change: Revenue was lower than anticipated due to a timing issue.
Speaker Change: Political late delays in government approvals for three projects in New York.
Speaker Change: This remains in our pipeline and are expected to contribute to revenue once the approvals are secured.
Speaker Change: Let's move to the <unk>.
Speaker Change: Progress of each of our business segments.
Speaker Change: First a borrower with yesterday.
Speaker Change: In Q3, we executed a 394 megawatt SaaS DSA with P. L P in that year.
Speaker Change: And completed the sale of 57 megawatt solar projects to China through.
Speaker Change: Through our mixed USA slash S P a structure.
Speaker Change: Our TSA approach is a game changing reliable.
Speaker Change: Scalable business model that enables us to monetize projects at early to mid stages, while securing high quality contract to your revenue.
Speaker Change: This is a strategic model.
Is it worse unique benefits, including positive cash flow.
So I feel risk mitigation throughout the project lifecycle.
Speaker Change: Building on this momentum we also signed our first yesterday contract in the U S for our 72 megawatt project portfolio in California.
Speaker Change: As of September 30.
Speaker Change: We have secured contracts with Knight partners, including Glenmark partners matrix renewables M. P. L. T energia covering 28 projects totaling over 2.1 gigawatt.
Speaker Change: With 84% allocated to battery energy storage system for bass.
Speaker Change: 16% allocated to P V.
Speaker Change: Resulting in an expected contracted revenue exceeding 69 million to be monetized within the next two to three years.
Speaker Change: Additionally.
Speaker Change: We're two gigawatt D assays are under negotiation.
They made it to bring another one country minute and get revenue.
Speaker Change: This robust DSA pipeline.
Speaker Change: In comparison, both contracted projects.
Speaker Change: Potential agreements and was nearly 90% leased.
Speaker Change: What you see in Europe.
Speaker Change: Underlying our strong seed markets.
Speaker Change: They were renewable energy driving our financial stability and growth.
Speaker Change: In November we announced that yesterday with RP pingo for US 300 megawatt battery storage portfolio you saw some easily.
Speaker Change: This partnership or force, we're saying, yes, she focused eater strengthens our position in each of its battery storage market.
Speaker Change: We have approximately two gigawatts in the permitting process.
Speaker Change: The collaboration supports equally as clean energy transition goals and aligns with our focus on high value growth opportunities battery storage market.
Speaker Change: Second.
Regarding our solar power project development.
Speaker Change: Q3, we successfully closed the sale of our solar project portfolio of 42 megawatts, you spring to a C D E spending.
Speaker Change: Over the past few years. This portfolio is projected to generate approximately 92.8 gigawatt hours or solar power annually.
Speaker Change: Setting nearly 20000 tons of carbon dioxide emissions each year.
Speaker Change: Additionally, we sold a 57 megawatt solar project portfolio to Trina solar.
Speaker Change: So case in the storms off our European development efforts.
Speaker Change: Due to project delays the sales of our U S community Solar project portfolio, and some projects in Spain and Italy.
Speaker Change: I'll get closed by the end of Q3.
Speaker Change: For example, certain closings expected with C D E and Spain were delayed due to lengthy local and I'm sure you two approvals.
Speaker Change: Some of those delayed projects.
Speaker Change: Sales.
Speaker Change: I expect it to close in Q4.
Speaker Change: Last but not least our IPP assets demonstrated robust growth and profitability throughout the third quarter.
Speaker Change: Contributing approximately 73.2% of our total revenue for the period.
Speaker Change: We continue to optimize operations across our solar farms, including Braxton.
Speaker Change: Reinforcing the I P. P segment as a cornerstone of our business model that offers dependable stable and predictable cash flow.
Speaker Change: Yes September.
Speaker Change: Energize, our 4.5 megawatt solar power plant and not sure I tap.
Laser facility have a luxury of precision gosh encompass corpus is limited.
Public company this skit.
Tien Tsin stock exchange in China.
A prominent IP suppliers I tip in Iqos supplier clean energy program.
Speaker Change: This collaboration reflects our shared commitment between environmental responsibility and address expanding renewable energy presents.
In Q3, 2024, we connected 7.2 megawatt of solar projects across China.
Speaker Change: Our certified megawatt hour battery storage portfolio was fully integrated into one in power internationals virtual power plant platform.
Speaker Change: In consideration of our strategy to grow IPP assets.
Speaker Change: We've decided to retain a 52.4 megawatt project portfolio highway.
Speaker Change: Previously planned for sale.
Speaker Change: It's an IPP I said today.
Speaker Change: Certainly Michael but over the portfolio is already operational.
Speaker Change: As a remainder set to be energized by the year end.
Speaker Change: This decision Leverages strong project returns.
Speaker Change: However, these positive economic outlook.
Speaker Change: Significant foreign investment into the country.
I would just come inventory novo's evident.
Speaker Change: M pieces solar goes and updated energy plan.
Speaker Change: Furthering our houses the portfolio's value adds that night P. P.
Speaker Change: While this shift impacts full year's revenue.
It aligns with our long term growth and value creation goes I made.
Speaker Change: Favorable market conditions.
Speaker Change: But the more.
Speaker Change: With supportive local policies here Hungary's energy storage market.
Speaker Change: You see expanding opportunities in the country.
Speaker Change: Battery storage facilities are now planned for several projects in this portfolio.
Speaker Change: As we approach the close of 2020 for a look to 'twenty to 'twenty five wouldn't be out.
Speaker Change: We are strengthening our presence in some of the words fastest growing solar and battery storage market.
Speaker Change: We saw supported by increasing demand.
Speaker Change: For clean energy.
Speaker Change: Favorable government policies and the ones in technologies.
Speaker Change: Our primary objectives remain clear.
Speaker Change: Otherwise you have early stage projects expanding.
Speaker Change: Expanding our DSA partnerships across Europe and U S.
Speaker Change: And refining our strategies to unlock the full potential.
Speaker Change: Our development portfolio.
Speaker Change: While certain project sales in Europe makes them into 2025 due to the delays in government approvals, our core business lines remain robust and.
And we are confident in our ability to do there were some substantial growth in the fourth quarter, two driven by a strong pipeline and favorable market conditions.
Speaker Change: With that let me turn the call over to our CFO to discuss our financial performance and guidance.
Speaker Change: Alright.
Speaker Change: Yeah.
Speaker Change: Thank you Amy and thanks, everyone again for joining us on the call today.
Speaker Change: Our third quarter revenue totaled 12.9, meaning coming in below expectation due to delayed project closing pending.
Pending government approvals.
Speaker Change: Revenue was boosted by strong performance in our high margin I P. P segment, and expanding yes, they activity across Europe and the U S.
Speaker Change: With a robust pipeline well well positioned for growth as this delayed projects are sold.
Speaker Change: Turning to our revenue by segment I P. P was primary driver contributing 73% of our total revenue.
Part of the Baidu yesterday at a 10%.
Speaker Change: Notably yesterday includes revenue generated from development reverse throughout through the project lifecycle.
Speaker Change: Well revenue from TSA project ownership transfer is generated Jeremy.
Speaker Change: Tara is generally recognized as project revenue.
Speaker Change: Regarding our gross profit in Q3, it was 5.6 meeting compared to nine point for me my.
Speaker Change: $5 4 million in Q2, 'twenty 'twenty four.
Speaker Change: 5.7 million in Q3 came from New Street.
Speaker Change: Gross margin was 43, 8% compared to 61, 2% in Q2, 2024 and 48% in Q3 2023.
Speaker Change: The year over year increase was due to the favorable margin was in the revenue from TSA and I P. P projects.
Speaker Change: Our operating expenses were 3.5, meaning south Bronx, $6 4 million in Q2.
A $9 6 million in Q3, 27th Street.
Speaker Change: Decrease was mainly due to lower G&A expenses.
Speaker Change: Thanks to our continued cost optimization program.
Speaker Change: Net income attributed to Ameren Corp, common shareholder was 4.8 meeting.
Speaker Change: Significant rebound from lapping the one 4 million in Q2 'twenty 'twenty four.
Speaker Change: That's fair.
As well as the net loss of $5 4 million in Q straight 2020th Street.
Speaker Change: Diluted net income attributed to Ameren <unk> common shareholders per.
Speaker Change: Hey, Jess was my sense.
Speaker Change: Compared to a diluted net income one cents in Q2 before.
Speaker Change: Diluted net loss of <unk> 17 in Q3 2020 at St.
Cash used in operating activities was $5 six meaning cash used in investing activities was $4 two meaning.
Speaker Change: And cash used in financing activities was 2 million.
Speaker Change: Moving to balance sheet cash and cash equivalent at the end of Q3, and 24 were $35 8 million compared to 58.
8 million in Q2 attendance before.
Speaker Change: Our debt to asset ratio at the end of Q straight something before it wasn't 10 point.
Speaker Change: 8%.
<unk> to $10 two 2% at end of Q2 before.
Speaker Change: Shifting gears to our outlook for.
Speaker Change: For Q4.
Speaker Change: We anticipated revenue between 40 and 45 minutes.
With our project gross margin of 20% to 25%.
Speaker Change: I was a statistical move from cell to I P. P.
Speaker Change: 52.4 megawatt Hungary projects and they're the right timing of some project sales.
We have adjusted our four year revenue guidance to a range of 97 to 102 meeting.
Speaker Change: With respect to gross margin of possibilities certainly per cent.
Speaker Change: We do expect to achieve EBITDA of 15 million to 20 meeting in 2024.
Speaker Change: Our I T P M DSA segment.
Speaker Change: Demonstrating starting to progress for 'twenty to 'twenty four.
Speaker Change: Firm always pacing for IPP and revenue to be between 24 meeting and a 26 meeting with gross margin of around 50%.
Speaker Change: We expect our TSA to come to bid more than 20 meeting in revenue during 2034.
Speaker Change: <unk> maintained a disciplined approach to cost efficiency and operational excellence.
Speaker Change: We remain focused on advancing our renewable energy initiative and capture new opportunities or subset.
Speaker Change: Sustainable value creation.
Speaker Change: In 2025, EBITDA contribution from I P. P and the DSA segment are expected to exceed 15 minutes.
Speaker Change: With that let's open up the call for any questions.
Speaker Change: Operator, Please go ahead.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone.
Speaker Change: For your name to be announced she left Joe Your question. Please press star one again.
Speaker Change: Please standby as we compile the Q&A roster.
Our first question comes from the line of Philip Shen of Roth Capital Partners. Please go ahead.
Philip Shen: Hi, everyone. Thanks for taking my questions.
Philip Shen: First one is on the election results, we have a red sweep officially now.
Philip Shen: And the inflation reduction act could be changed.
Speaker Change: So was wondering you just signed a DSA.
Philip Shen: With.
Philip Shen: In the U S with a partner in the U S.
Speaker Change: And I was wondering if you have any automatic adjusters or how are you accounting for this potential risk to the ITC.
You try to sign more DSA.
Speaker Change: In the states.
Speaker Change: It's a very good question.
Speaker Change: In fact, we do have.
Speaker Change: Land for this election results.
Speaker Change: And our action in the U S are the whole team's practice remains unchanged.
Speaker Change: But do you see that the.
Speaker Change: Oh, the changes potential upcoming changes.
Speaker Change: We will call a significant.
Speaker Change: Matt too.
Speaker Change: We will have significant negative impacts.
Speaker Change: City to upstream.
Speaker Change: But to the downstream.
Speaker Change: <unk>.
Speaker Change: We do have time to execute.
Speaker Change: Available the assays and the contracts to be negotiated.
Speaker Change: And the TSA suites signed.
Speaker Change: In California.
Speaker Change: Including one very near term project.
Speaker Change: Which will be executed starting early next year.
Speaker Change: In our humble opinion.
Speaker Change: We don't think that will be much impacted.
And others will continue the development paths.
Speaker Change: And I think.
Speaker Change: E.
Speaker Change: Is the impact to the whole industry.
Speaker Change: Our portfolio will remain to be.
Speaker Change: Baidu a bowl.
Speaker Change: In the whole development process.
Okay, Oh, you mean in terms of the.
Speaker Change: Potential changes, we published on Monday that the base, 30% ITC may require.
Speaker Change: Mr content.
Speaker Change: Just to get the 30%.
Speaker Change: So.
Speaker Change: If that kind of a change happens or have you factored that in to.
Speaker Change: You're planning.
Speaker Change: In fact.
Speaker Change: After we signed the DSA.
Speaker Change: But the weather risk.
Speaker Change: Has been passed to the investor.
Speaker Change: Although they are planning ahead.
Speaker Change: Our ponder Slashy investor.
Speaker Change: Two phase the upcoming challenges.
Speaker Change: But at this time I think we have a good handle for it is.
Speaker Change: Especially we do see.
Speaker Change: The significant downside.
Speaker Change: Oh.
Speaker Change: The the price cut.
Speaker Change: Oh from the Capex side.
Speaker Change: Okay.
And they failed.
Speaker Change: I will say we mentioned this TSA is.
Speaker Change: A link to the storage space. So the investors are looking at.
Speaker Change: Again, the pricing arbitrage, there or not depending on the there at this moment.
Speaker Change: Okay. So your your.
Speaker Change: Battery DSA.
Speaker Change: It does not require that.
I T C.
Speaker Change: It does require a ITC.
Speaker Change: Okay.
Speaker Change: So if the ITC requires domestic content do you think you have the ability to meet.
Speaker Change: Domestic content for that battery solution.
Speaker Change: We are actively seeking solutions to prepare for this challenge.
Speaker Change: At this time, we are working on it.
Yes.
Speaker Change: We don't know the details yet and we're still very early.
Speaker Change: Okay, So let's shift gears.
Speaker Change: To the.
Speaker Change: Revenue Miss for Q3, others.
Speaker Change: Projects that were pushed out into Q4 I think you mean, you said that you expect.
Speaker Change: That these projects should you get.
Speaker Change: Approved and Q4.
Speaker Change: What is the risk of that.
Speaker Change: These delays sustained.
Speaker Change: I will give you one small jump all of that.
Speaker Change: I don't know if you remember that Oh were 12 months ago about 14 months ago, we closed the deal.
Speaker Change: In Spain, 29 megawatts solar so far will be sold to a party.
Speaker Change: And Les forecast at the deal will be finally closed by the end of this year.
But unfortunately after 14 months, we are still waiting.
Speaker Change: They do have received just last week the positive views that the final approval.
Speaker Change: As to be expected.
Speaker Change: It's early as we did this months.
Speaker Change: But the holiday season is coming so.
Speaker Change: We do expect the most likely the closing will happen in Q1 next year.
Speaker Change: So this is one example of that the the extended delay.
Speaker Change: More than 14 months or 15 months.
So like along the whole the whole whole closing of the projects.
And that's one example, and also we have other three projects we received approvals in the last two weeks, but they need time to get the final use permit which take about six to eight weeks.
Speaker Change: If we are lucky we can get them done by the end of the year if not.
It has to be pushed into January.
Speaker Change: So those are the examples that the.
Speaker Change: Extremely long approval process.
Speaker Change: Was never expected.
Speaker Change: By the management team and it will come to you. So that's the reason.
Speaker Change: Okay, So I understand and so when we look at your 2025 guidance.
Speaker Change: Do you think you have factored in enough conservatism into your guidance.
Speaker Change: Yes.
Speaker Change: Have you increased the conservatism for this guide relative to maybe one year ago or six months ago.
Speaker Change: Yes.
Speaker Change: Okay, well, we're talking about the EBITDA for next year over 50 milling.
Speaker Change: Again, we're looking at I P. P O DSA business model only because those two are very predictable.
Speaker Change: And our IPP businesses were stable and growing steadily. So we were confident that it will be around 18 to 20 million you'd be starting next year.
Speaker Change: And we're looking at our T. A state contract will look kind of the order milestone going to happen.
Speaker Change: In the 605, but we're confident the retro danville coming from that yesterday.
Speaker Change: Our business model, we're talking about like a contract at 69 million and the potential to be saying.
Speaker Change: A lot of hundred meaning so well we're conservative in terms of the the rest of the TSA contribution of EBITDA in 2025, So we believe without some very conservative.
Speaker Change: Okay. Thank you okay in terms of the.
Speaker Change: The $50 million.
Speaker Change: What percentages IPP versus DSA.
Speaker Change: For 25.
I said 50, meaning around.
Say 18 to 20 minutes from IPP rest of it yesterday.
Speaker Change: Okay.
Then so let's say its 20 million for IPP.
Speaker Change:
Speaker Change: Certainly.
Speaker Change: $30 million for TSA.
And what percentage of that 30 million is U S versus Europe.
Speaker Change: Okay.
Speaker Change: About 80% of the whole cultural is coming from Europe.
Speaker Change: And only a little less than 10% from <unk>.
Speaker Change: Okay, great. Okay as the U S goes through changes I think that's.
Speaker Change: That mix focus on Europe is good.
Speaker Change: Great well. Thank you for taking my questions I'll pause here and pass it on.
Bill: Thank you Bill.
Bill: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: I am not showing any further questions in the queue I would like to turn the conference back to Mr. Li for any closing remarks.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you operator.
Speaker Change: The global shift towards renewable energy is fueling strong momentum in the solar industry.
Speaker Change: Positioning solar and battery storage as a key component of the future energy mix.
Speaker Change: The demand for solar power to support energy intensive technologies like AI and blockchain is especially promising.
Speaker Change: <unk> provides a scalable cost effective solution.
Speaker Change: Looking ahead, we are well positioned to capitalize on the accelerating adoption of the <unk> technology.
Speaker Change: With our expertise strategic partnerships and strong financial foundation, we are advancing towards our goal of becoming a global leader in renewable energy and excited to drive a more sustainable future.
Speaker Change: Thank you again for joining our call today.
Speaker Change: You may now disconnect. Thank you and have a great day.
Thank you operator.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.