Q2 2025 Canadian Solar Inc Earnings Call

Today at.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes I would now like to turn the call over to win along head of Investor Relations at Canadian Solar. Please go ahead.

Thank you operator, and welcome everyone to Canadian Solar second quarter 2025 Conference call. Please note that today's conference call is accompanied with the slides, which are available on our Canadian <unk> Investor Relations website within the events and presentations section.

Speaker #2: Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's second quarter 2025 earnings conference call. My name is Daryl, and I will be your operator for today.

Darrell: Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's second quarter 2025 earnings conference call. My name is Darrell, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Speaker #2: At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

Joining us today are Dr. Sean <unk>.

Chairman and CEO.

<unk> drunk president of Canadian Solar subsidiary CSI filter is margaritaville corporate VP and president of Canadian Solar subsidiary recurrent energy and similar to senior VP and CFO All company executives will participate in the Q&A session. After management's formal remarks on the.

Speaker #2: I will now turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Speaker #3: Thank you, Operator, and welcome everyone to Canadian Solar's second quarter 2025 conference call. Please note that today's conference call is accompanied by slides, which are available on Canadian Solar's Investor Relations website, within the Events and Presentations section.

Wina Huang: Thank you, Operator, and welcome everyone to Canadian Solar's second quarter 2025 conference call. Please note that today's conference call is accompanied with slides which are available on Canadian Solar's Investor Relations website within the events and presentation section. Joining us today are Dr. Sean Chu, Chairman and CEO, Yan Zhuang, President of Canadian Solar's subsidiary CSI Solar, Ismael Guerrero, Corporate Vice President and President of Canadian Solar's subsidiary Recurrent Energy, and Xinbo Zhu, Senior Vice President and CFO. All company executives will participate in the Q&A session after management's formal remarks. On this call, Sean will go over some key messages for the quarter. Yan and Ismael will review business highlights for CSI Solar and Recurrent Energy respectively. Xinbo will go through the financial results. Sean will conclude the prepared remarks with the business outlook, after which we will have time for questions.

This call Shawn will go over some key messages for the quarter yen and this model will review business highlights for PSA Stoller and recurrent energy respectively.

We will go through the financial results.

Speaker #3: Joining us today are Dr. Xiaohua Qu, Chairman and CEO; Yan Zhuang, President of Canadian Solar Subsidiary CSI Solar; Ismael Guerrero, Corporate VP and President of Canadian Solar Subsidiary Recurrent Energy; and Xinghua Zhu, Senior VP and CFO.

John will conclude the prepared remarks with the business outlook after which we will have time for questions.

Before we begin I would like to remind listeners that management's prepared remarks today as well as their answers to questions.

We're looking statements that are subject to risks and uncertainties. The company claims protection under the Safe Harbor for forward looking statements that is contained in the private Securities Litigation Reform Act of 1095.

Speaker #3: All company executives will participate in the Q&A session after management's formal remarks. On this call, Xiaohua Qu will go over some key messages for the quarter.

Speaker #3: Yan and Ismael will review business highlights for CSI Solar and Recurrent Energy, respectively. Xinghua will go through the financial results. Xiaohua will conclude the prepared remarks with the business outlook.

Actual results may differ from management's current expectations any.

Any projections of the company's future performance represent managements estimates as of today.

Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law.

Speaker #3: After this, we will have time for questions. Before we begin, I would like to remind listeners that management's prepared remarks today, as well as their answers to questions, will include forward-looking statements that are subject to risks and uncertainties.

Wina Huang: Before we begin, I would like to remind listeners that management's prepared remarks today, as well as their answers to questions, will be forward-looking statements that are subject to risks and uncertainties. The company claims protection under the Safe Harbor, forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations. Any projections of the company's future performance represent management's estimates as of today. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law. A more detailed discussion of risks and uncertainties can be found in the company's annual report on Form 20-F filed with the Securities and Exchange Commission. Management's prepared remarks will be presented within the requirements of SEC Regulation G regarding generally accepted accounting principles or GAAP.

More detailed discussion of risks and uncertainties can be found in the company's annual report on form 20-F filed with the Securities and Exchange Commission.

Speaker #3: The company claims protection under the Safe Harbor, and we're making forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations.

Management's prepared remarks will be presented within the requirements of SEC regulation G regarding generally accepted accounting principles or GAAP.

Some financial information presented during the call will be provided on both a GAAP and non-GAAP basis.

Speaker #3: Any projections of the company's future performance represent management's estimates as of today. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law.

By disclosing certain non-GAAP information management intends to provide investors with additional information to enable further analysis of the company's performance and underlying trends.

Management uses non-GAAP measures to better assess operating performance and to establish operational goals non.

Speaker #3: A more detailed discussion of risks and uncertainties can be found in the company's annual report on Form 20-F, filed with the Securities and Exchange Commission.

non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP and now I would like to turn the call over to Canadian <unk>, Chairman and CEO Dr. Shawn.

Speaker #3: Management's prepared remarks will be presented within the requirements of SEC Regulation G, regarding generally accepted accounting principles, or GAAP. Some financial information presented during the call will be provided on both a GAAP and non-GAAP basis.

John Please go ahead.

Wina Huang: Some financial information presented during the call will be provided on both a GAAP and non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to enable further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP. Now I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Sean. Sean, please go ahead.

Juliana Thank you one for John.

Our second quarter earnings call. Please turn to slide three.

Speaker #3: By disclosing certain non-GAAP information, management intends to provide investors with additional information to enable further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals.

And then sorry during the quarter, we delivered a 7.9 gigawatts of modules.

At the end of our guidance near the high end of our guidance shipment reached a good 0.2 gigawatt hours below guidance due to.

Speaker #3: Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP. And now, I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Xiaohua Qu.

Tariff impacts we shifted deliveries into the second half.

Speaker #4: Xiaohua, please go ahead.

Revenue totaled $1 7 billion owners.

Speaker #5: Thank you, Wina, and thank you all for joining our second quarter earnings call. Please turn to slide three. In the second quarter, we delivered 7.9 gigawatts of modules, near the end of our guidance.

Dr. Sean Chu: Thank you, Wina, and thank you all for joining our second quarter earnings call. Please turn to slide three. In the second quarter, we delivered 7.9 GW of modules near the high end of our guidance. Storage shipment reached 2.2 GWh, below guidance due to tariff impacts, which shifted deliveries into the second half. Revenue totaled $1.7 billion for the quarter, also impacted from certain project sales delays. Gross margin exceeded guidance at 29.8%, driven by a higher mix of North America module shipments, with notable contributions from our Texas module factory, which has made strong progress in ramping up. Robust storage performance further supported margins. Profitability was weighted down by certain non-recurring operating expenses, including the impairment of remaining legacy manufacturing assets.

Water.

So impacted from certain project sales.

Okay.

Gross margin exceeded guidance.

Currently in 9.8% driven by a higher mix of North America modular shipments with notable contributions from our taxes module factory, which has made strong progress in ramping up robust.

Speaker #5: Near the high end of our guidance, storage shipments reached 2.2 gigawatt hours, below guidance due to tariff impacts, which shifted deliveries into the second half.

Average performance further.

Speaker #5: Revenue totaled $1.7 billion for the quarter, also impacted by certain project sales delays. Gross margin exceeded guidance at 29.8%, driven by a higher mix of North America module shipments, with notable contributions from our Texas module factory, which has made strong progress in ramping up.

Reported margins.

Profitability was related to talent.

Certain non recurring operating expenses.

Crude in the impairment of our remaining legacy manufacturing assets.

As a result, we reported net income attributable to shareholders.

$7 million.

Our net loss of eight cents per diluted share due to the key K accounted for preferred shareholder.

Speaker #5: Robust storage performance further supported margins. Profitability was weighed down by certain non-recurring operating expenses, including the impairment of remaining legacy manufacturing assets. As a result, we reported net income attributable to shareholders of $7 million, compared to a net loss of $0.08 per diluted share, due to the PIK accounting for a preferred shareholder of recurrent.

Recurrent.

Over the past few months.

Our industry.

These are challenging policy environment well.

While the industry continues to adjust to the recently passed one.

Dr. Sean Chu: As a result, we reported net income attributable to shareholders of $7 million and net loss of $0.08 per diluted share due to the PIK accounting for a preferred shareholder of Recurrent Energy. Over the past few months, our industry faced a challenging policy environment. While the industry continues to adjust to the recently passed One Big Beautiful Build Act, I would like to discuss some potential impacts at this time. Please turn to slide four. The One Big Beautiful Build Act has striking implications for both supply and demand in the U.S. On the supply side, solar and storage domestic onshoring is challenged by increasingly stringent FEOC requirements and higher support duties on both equipment and components. According to Wood Mackenzie, up to 23 GW of operating solar module capacity could be affected. Cell capacity, which requires more complex manufacturing processes and higher capital expenditure, could also moderate.

Big Beautiful Bill Act.

Also discussed some potential impacts at this time, please turn to slide four.

The one big Beautiful balanced act.

<unk> implications for both supply and demand in the U S.

Speaker #5: Over the past few months, our industry has faced a challenging policy environment. While the industry continues to adjust to the recently passed "One Big Beautiful Bill Act," I would like to discuss some potential impacts at this time.

The supplier side solar storage domestic onshoring.

<unk> engine <unk>.

Increasingly strengthened.

Oc requirements.

Higher.

For two days.

Both the equipment and components.

According to wood Mackenzie up to 203 gigawatt of operating solar module capacity could be a factor.

Speaker #5: Please turn to slide four. The one big beautiful bills act, as swapping implications for both supply and demand in the US. On the supply side, solar and storage domestic onshoring is challenging, but increasingly strengthened FEOC requirements and higher import duties on both equipment and components.

<unk> capacity, which requires more complex.

More complex.

Manufacturing process.

Higher capital expenditure.

Also moderate.

On the demand side.

Outlooks across solar and storage and distributed generation a peer mix.

Speaker #5: According to Wood Mackenzie, up to 23 gigawatts of operating solar module capacity could be affected. Cell capacity, which requires more complex manufacturing processes and higher capital expenditure, could also moderate.

Other than one project that have been safe harbored.

Investment tax credit.

While solar well for your solid.

And I'll turn the turn the assignment Meanwhile, energy storage project.

Navigate and U E Oses last call to maintain developer.

Despite this near term uncertainty the long term outlook of our industry remains strong.

Speaker #5: On the demand side, all looks across solar energy storage and distributed generation appear mixed. Other than for projects that have been safe harbored, the Investment Tax Credit (ITC) for solar will phase out by the end of 2027.

Dr. Sean Chu: On the demand side, outlooks across solar, energy storage, and distributed generation appear mixed. Other than for projects that have been safe harbored, the Investment Tax Credit or ITC for solar will phase out by the end of 2027. Meanwhile, energy storage projects must navigate annual FEOC thresholds to maintain developer credits. Despite this near-term uncertainty, the long-term outlook of our industry remains strong. AI, cryptocurrency, and other energy-intensive applications are driving rising electricity demand, and solar plus storage is among the most cost-competitive solutions to meet this demand. Future growth will continue to be underpinned by solid fundamentals. As with challenges we have overcome in the past two decades, we believe that a new paradigm creates new opportunities. Today, every part of our business is deeply engaged in the U.S. market. We deliver both solar and storage solutions across utility scale, CNI, and residential applications.

Crypto currency and other energy intensive applications are driving rising electricity demand and solar plus storage.

Among the most cost competitive solutions to meet this demand.

Speaker #5: Meanwhile, energy storage projects must navigate the annual FEOC stress code to maintain developer credits. Despite this near-term uncertainty, the long-term outlook for our industry remains strong.

Future growth will continue to be underpinned by solid fundamentals.

As always challenges we have overcome in the past two decades, we believe that a new paradigm.

Speaker #5: AI, cryptocurrency, and other energy-intensive applications are driving rising electricity demand, and solar plus storage is among the most cost-competitive solutions to meet this demand.

New.

Thanks.

Today.

Every part of our business is deeply engaged in the U S market.

Deliver both solar and storage solutions.

Utility scale C&I and residential applications.

Speaker #5: Future growth will continue to be underpinned by solid fundamentals. As with challenges we have overcome in the past two decades, we believe that a new paradigm creates new opportunities.

Domestic manufacturer and a local project developer.

We remain committed.

We'll do what is necessary to continue prioritizing this market.

Another ongoing commitment is our forecast.

Speaker #5: Today, every part of our business is deeply engaged in the U.S. market. We deliver both solar and storage solutions across utility scale, DNI, and residential applications.

<unk> ability.

On May 29, we released our triangle return therefore sustainability report please.

To slide five.

We are proud of our continued progress in our sustainability journey and reporting standards.

Speaker #5: We are a domestic manufacturer and a local project developer. We remain committed and will do what is necessary to continue prioritizing this market. Another ongoing commitment is our focus on sustainability.

Dr. Sean Chu: We are a domestic manufacturer and a local project developer. We remain committed and will do what is necessary to continue prioritizing this market. Another ongoing commitment is our focus on sustainability. On May 29th, we released our 2024 sustainability report. Please turn to slide five. We are proud of our continued progress in our sustainability journey and reporting standards. In 2024, Canadian Solar Inc. reduced greenhouse gas emissions, energy, water, and waste intensities by 54%, 37%, 75%, and 53%, respectively, compared to 2017 levels. Consistent with our commitment to improving our environmental footprint, we increased the percentage of recycled and reused waste to 94% in 2024, while maintaining 100% recycling or reuse of all packaging materials used in our production process. We also continue to uphold the highest standards of ethical business conduct across our supply chain.

In terms of attorney for Canadian solar reduced greenhouse gas emissions.

Energy water and waste intensities by 54%.

It is 7%, 7% to 5% and 53% respectively compared to 2017 levels.

Speaker #5: On May 29th, we released our 2024 Sustainability Report. Please turn to slide five. We are proud of our continued progress in our sustainability journey and reporting standards.

Consistent with our commitment to improving our environmental footprint.

Increase.

Speaker #5: In 2024, Canadian Solar reduced greenhouse gas emissions and energy, water, and waste intensities by 54%, 37%, 75%, and 53%, respectively, compared to 2017. Consistent with our commitment to improving our environmental footprint, we increased the percentage of recycled and reused waste to 94% in 2024, while maintaining 100% recycling or reuse of all packaging materials used in our production process.

The percentage of recycled.

We used waste to 94% in China, and therefore, we are maintaining 100% recycling or reuse of our packaging materials used in our production process.

We also continue to uphold the highest standards of ethical business conduct across our supply chain.

After receiving silver level recognition in China joined US three four the RBA.

All of that.

Our Thailand module facility, we achieved another silver silver level recognition this year.

Our solar cell factory in Suzhou, Johnson Province, China.

We intend to adhere and therefore, we conducted 147 supplier ESG audits, including 31 onsite evaluation, surpassing our trend returning three totals.

Speaker #5: We also continue to uphold the highest standards of ethical business conduct across our supply chain. After receiving silver-level recognition in 2023 for the RBA VAP audit of our Thailand module facility, we achieved another silver-level recognition this year for our solar cell factory in Sichuan, Jiangsu Province, China.

Dr. Sean Chu: After receiving silver-level recognition in 2023 for the RBA VAP audit of our Thailand module facility, we achieved another silver-level recognition this year for our solar cell factory in Suzhan, Jiangsu Province, China. In 2024, we conducted 147 supplier ESG audits, including 31 on-site evaluations, surpassing our 2023 totals. Following collaborative consultations and corrective action plans, all suppliers met our stringent ESG criteria. With that, I will now turn the call over to Yan, who will provide more details on our CSI Solar business. Yan, please go ahead.

Following collaborative consultations and corrective action plans.

Suppliers, Matt our strengthen.

ESG criteria.

In fact, our now turn the call over to Ian or provide more details.

Our CSI solar business Yan. Please go ahead.

Speaker #5: In 2024, we conducted 147 supplier ESG audits, including 31 on-site evaluations, surpassing our 2023 totals. Following collaborative consultations and collective action plans, all suppliers met our strengthened ESG criteria.

Thank you Sean please turn to slide six.

In the second quarter of 2025 module shipments reached seven nine gigawatts near the high end of our expectations.

<unk> storage deliveries were below guidance due to tariff impacts shifting some shipments to the second half.

Speaker #5: With that, I will now turn the call over to Yan, who will provide more details on our CSI Solar business. Yan, please go ahead.

Despite this we still delivered one of our strongest quarter with two two gigawatt hours of storage shipments.

Revenue reached $1 $7 billion.

Speaker #6: Thank you, Xiaohua. Please turn to slide six. In the second quarter of 2025, module shipments reached 7.9 gigawatts, near the high end of our expectations.

Yan Zhuang: Thank you, Sean. Please turn to slide six. In the second quarter of 2025, module shipments reached 7.9 GW, near the high end of our expectations. Energy storage deliveries were below guidance due to tariff impacts, shifting some shipments to the second half. Despite this, we still delivered one of our strongest quarters with 2.2 GWh of storage shipments. Revenue reached $1.7 billion, with gross margin expanded 890 basis points quarter over quarter to 22.3%. This increase was primarily driven by a stronger mix of North American module volumes and the installation surge in China, which increased both industry-wide volumes and pricing. As a result, we achieved a sequentially higher average selling price in our module business. Strong storage volumes and a healthy margin further reinforced gross margin performance. Given the phase-out of legacy PERC technology, we wrote down our remaining related assets.

Gross margin expanded 890 basis points quarter over quarter to 22, 3%. This increase was primarily driven by a stronger mix of North American module volumes and the installation search in China, which.

Speaker #6: Energy storage deliveries were below guidance due to tariff impacts, shifting some shipments to the second half. Despite this, we still delivered one of our strongest quarters, with 2.2 gigawatt-hours of storage shipments.

Increased both industry wide volumes and pricing.

As a result, we achieved a sequentially higher average selling price in our module business.

Speaker #6: Revenue reached $1.7 billion, with gross margin expanded 890 basis points quarter over quarter to 22.3%. This increase was primarily driven by a stronger mix of North American module volumes and the installation surge in China, which increased both industry-wide volumes and pricing.

Strong storage volumes in the healthy margin further reinforced to gross margin performance.

Given the three sort of legacy PERC technology, we wrote down our remaining related assets.

Together with other smaller non recurring items.

Operating expenses rose sequentially from 13, 2% to 15, 3% of revenue.

And we delivered $121 million in operating income.

Speaker #6: As a result, we achieved a sequentially higher average selling price in our module business. Strong storage volumes and a healthy margin further reinforced gross margin performance.

Although costs in the module business remained stable in the second quarter. We are now seeing rising supply chain costs, driven by the anti involution compounded in China.

Speaker #6: Given the phase-out of legacy perk technology, we wrote down our remaining related assets. Together, with other smaller non-recurring items, operating expenses rose sequentially from 13.2% to 15.3% of revenue.

Combined with tariffs duties and the incremental impact of under utilization.

Yan Zhuang: Together with other smaller non-recurring items, operating expenses rose sequentially from 13.2% to 15.3% of revenue, and we delivered $121 million in operating income. Although costs in the module business remained stable in the second quarter, we are now seeing rising supply chain costs driven by the anti-involution content in China. Combined with tariffs, duties, and the incremental impact of underutilization, these factors will raise unit costs in the second half. While module pricing shows signs of improvement, we expect price increases to lag rising costs, creating pressure on module profitability. We expect additional pressure from normalizing storage margins. The cost benefit from decreasing lithium carbonate prices, which supported gains in 2024 and the first half of this year, is now tapering off. For more details on this business, please turn to slide seven.

These factors will raise unit costs in the second half while module pricing shows signs of improvement, we expect price increases to lack rising costs, creating pressure on module profitability.

Speaker #6: And we delivered $121 million in operating income. Although costs in the module business remained stable in the second quarter, we are now seeing rising supply chain costs.

We expect additional pressure from normalizing storage margins.

Speaker #6: Driven by the anti-evolution campaign in China, combined with tariffs, duties, and the incremental impact of underutilization, these factors will raise unit costs in the second half.

The cost benefit from decreasing lithium carbonate prices, which supported gains in 2024 and the first half of this year is now.

<unk>.

For more details on this this is please turn to slide seven.

Speaker #6: While module pricing shows signs of improvement, we expect price increases to lag rising costs, creating pressure on module profitability. We expect additional pressure from normalizing storage margins.

In the second quarter, we recognized revenue on.

Two two gigawatt hours of storage solutions with sizeable deliveries to customers in Europe, North America, and Latin America due to tariffs.

Some opportunities shifted into the second half and 2026 importantly, these are not lost opportunities.

Speaker #6: The cost-benefit from decreasing lithium carbonate prices, which supported gains in 2024 and the first half of this year, is now tapering off. For more details on this business, please turn to slide seven.

Demand remains robust and we continue to actively support customers in navigating trade related uncertainties.

As of June 30.

Contracted backlog, including long term service agreement was $3 billion.

Speaker #6: In the second quarter, we recognized revenue on 2.2 gigawatt-hours of storage solutions, with sizable deliveries to customers in Europe, North America, and Latin America.

Yan Zhuang: In the second quarter, we recognized revenue on 2.2 GWh of storage solutions with sizable deliveries to customers in Europe, North America, and Latin America. Due to tariffs, some opportunities shifted into the second half in 2026. Importantly, these are not lost opportunities. Demand remains robust, and we continue to actively support customers in navigating trade-related uncertainties. As of June 30th, contracted backlog, including long-term service agreements, was $3 billion. To support our growth, we are expanding our globally diversified capacities from 10 GWh of NES and 3 GWh of battery cell today to 24 GWh and 9 GWh, respectively, by 2026 year-end. The expanded NES capacity will enable us to scale shipments as needed from quarter to quarter, with additional headroom if we add working shifts.

To support our growth.

We are expanding our globally diversified capacities from 10 gigawatt hours and three gigawatt hours of battery cell today to 'twenty four gigawatt hours of mine gigawatt hours, respectively, respectively by 2026 year end.

Speaker #6: Due to tariffs, some opportunities shifted into the second half of 2026. Importantly, these are not lost opportunities. Demand remains robust, and we continue to actively support customers in navigating trade-related uncertainties.

We expanded <unk> capacity will enable us to scale shipments as needed from quarter to quarter.

Speaker #6: As of June 30th, contracted backlog, including long-term service agreements, was $3 billion. To support our growth, we are expanding our globally diversified capacities from 10 gigawatt hours of gas and 3 gigawatt hours of battery cells today, to 24 gigawatt hours and 9 gigawatt hours, respectively, by the end of 2026.

With additional headroom, if we act working shifts.

Our battery cell capacity also strengthens our upstream strategy by helping us manage risk across cycles, while providing customers with greater supply chain flexibility.

The market is growing quickly and we are scaling alongside it.

To remain competitive we must continue to uphold the highest safety standards and drive product innovation. Please.

Speaker #6: The expanded gas capacity will enable us to scale shipments as needed from quarter to quarter. With additional headroom, if we add working shifts, our battery cell capacity also strengthens our upstream strategy by helping us manage risk across cycles while providing customers with greater supply chain flexibility.

Please turn to slide eight.

In June we successfully completed large scale fire testing for our <unk> 3.0 energy storage system.

Yan Zhuang: Our battery cell capacity also strengthens our upstream strategy by helping us manage risk across cycles while providing customers with greater supply chain flexibility. The market is growing quickly, and we are scaling alongside it. To remain competitive, we must continue to uphold the highest safety standards and drive product innovation. Please turn to slide eight. In June, we successfully completed large-scale fire testing for our Solbank 3.0 energy storage system. The test confirmed that our system meets key fire safety criteria by containing thermal events within the single enclosure. The results were independently witnessed and verified by both CSA Group and the Energy Safety Responses Group. In residential storage, EPQ won the Japan International Pioneer Design Award, or IDPA, in the electrical products category. This award was established in 2018 in Tokyo and has since become one of the most influential international design awards for pioneering design globally.

<unk> confirmed that our system meets key fire safety criteria by continuing thermo events within a single enclosure.

The results were independently witnessed and verified by both CSC group and the energy safety responses.

Speaker #6: The market is growing quickly, and we are scaling alongside it. To remain competitive, we must continue to uphold the highest safety standards and drive product innovation.

In residential storage EP Q1 that Japan International Pioneer design award or DTA in the electrical products category.

Speaker #6: Please turn to slide eight. In June, we successfully completed large-scale fire testing for our SolBank 3.0 energy storage system. The test confirmed that our system meets key fire safety criteria by containing thermal events within the single enclosure.

This award was established in 2018, Tokyo and has since become one of the most influential international design awards for pioneering design globally.

Speaker #6: The results were independently witnessed and verified by both CSA Group and the Energy Safety Response Group. In residential storage, EPQ won the Japan International Pioneer Design Award, or IDPA.

This quarter our priority <unk>.

Residential storage energy storage system also earned the prestigious Red Dot Award often described as the Oscars of industrial design.

These recognitions are in addition to the IAF Design Award and the Muse design Gold Award that <unk> received earlier this year.

Speaker #6: In the electrical products category, this award was established in 2018 in Tokyo and has since become one of the most influential international design awards for pioneering design globally.

<unk> has made strong progress in its target markets. Since we earned the prestigious debt compliance certification shipments to Japan have searched.

Speaker #6: This quarter, our priority residential storage energy storage system also earned the prestigious Red Dot Award, often described as the Oscars of industrial design. These recognitions are in addition to the IF Design Award and the MUSE Design Gold Award that EPQ received earlier this year.

Yan Zhuang: This quarter, our proprietary residential energy storage system also earned the prestigious Red Dot Award, often described as the Oscars of industrial design. These recognitions are in addition to the IF Design Award and the Muse Design Gold Award that EPQ received earlier this year. EPQ has made strong progress in its target markets since we earned the prestigious JET compliance certification. Shipments to Japan have surged, now approaching 1,000 units per month. We are also steadily advancing in Europe and the U.S. We expect significant growth ahead in this business, and we continue to develop other emerging profit drivers such as bundled cell solutions. With that, let me hand the call over to Ismael, who will provide an update on Recurrent Energy, Canadian Solar's global project development business. Ismael, please go ahead.

Now approaching 1000 units per month.

We're also steadily advancing in Europe, and the U S.

We expect significant growth ahead in this business and we continue to develop other emerging profit drivers such as bundled sales solutions with that let me hand, the call over to Ismael, who will provide an update on <unk> and recurrent energy Canadian solar global.

Speaker #6: EPQ has made strong progress in its target markets. Since we earned the prestigious JET Compliance Certification, shipments to Japan have surged, now approaching 1,000 units per month.

Our development business.

Ismael. Please go ahead.

Thank you Jim.

Please turn to slide nine.

In the second quarter, we generated $106 million in revenue.

Speaker #6: We're also steadily advancing in Europe and the U.S. We expect significant growth ahead in this business, and we continue to develop other emerging profit drivers such as bundled cell solutions.

Revenue was sequentially lower primarily due to lighter project sales.

We want it by just over 200 megawatts of projects in Europe, and Japan, including our first profitable sale of about the storage project in Italy.

Speaker #6: With that, let me hand the call over to Ismael Arias, who will provide an update on Recurrent Energy, Canadian Solar's global project development business. Ismael, please go ahead.

While a large product sale in Latin America shifted into the second half of the year.

Gross margin was 32, 4%.

Speaker #7: Thank you, Yan. Please turn to slide nine. In the second quarter, we generated $106 million in revenue. Revenue was sequentially lower, primarily due to lighter project sales.

<unk> healthy project.

Ismael Guerrero: Thank you, Yan. Please turn to slide nine. In the second quarter, we generated $106 million in revenue. Revenue was sequentially lower, primarily due to lighter project sales. We monetized over 200 megawatts of projects in Europe and Japan, including our first profitable sale of a battery storage project in Italy, while a large project sale in Latin America shifted into the second half of the year. Gross margin was 32.4%, reflecting healthy project sales returns and stable margins in electricity sales from our operating portfolio and growing power services business. The solar power system breakdown in Latin America, combined with other non-recurring expenses, led to elevated operating expenses and an operating loss of $74 million. We remain focused on disciplined execution while managing ongoing trade and policy risks. We energized our first merchant 200 megawatt-hour Duncan Storage Project in Texas.

On a stable margins in electricity sales from our operating portfolio.

In growing our services business.

The solar power system breakdown in Elektron America combined with other nonrecurring expenses led to elevated operating expenses and.

Speaker #7: We monetized over 200 megawatts of projects in Europe and Japan, including our first profitable sale of a battery storage project in Italy. While a large project sale in Latin America shifted into the second half of the year.

Operating loss of $74 million.

We remain focused on disciplined execution, while managing ongoing trade and policy risks.

Speaker #7: Gross margin was 32.4%, reflecting healthy project sales returns and a stable margin in electricity sales from our operating portfolio and growing power services business.

We energized our first Martin 200 megawatt hour for Duncan startups project in Texas.

Despite for bank and being a merchant.

Thats a project we were able to secure both project finance and tax equity for this project.

Speaker #7: The solar power system breakdown in Latin America, combined with other non-recurring expenses, led to elevated operating expenses and an operating loss of $74 million.

Within the quarter. We also achieved an important milestone blum on solar in Kentucky closing $260 million of project financing and tax equity.

Speaker #7: We remain focused on disciplined execution while managing ongoing trade and policy risks. We energized our first merchant 200 megawatt-hour storage project in Texas.

Do you have taken for this project and Scott deletion.

<unk> power and renewable energy certificates generated about this nearly 100 megawatts facility.

Please turn to slide 10 for an update on our pipeline.

Speaker #7: Despite Duncan being a merchant storage project, we were able to secure both project finance and tax equity for this project. Within the quarter, we also achieved an important milestone at Blue Moon Solar in Kentucky, closing $260 million of project financing and tax equity.

Ismael Guerrero: Despite Duncan being a merchant storage project, we were able to secure both project finance and tax equity for this project. Within the quarter, we also achieved an important milestone at Blue Moon Solar in Kentucky, closing $260 million of project financing and tax equity. The off-taker for this project is Constellation, who will purchase power and renewable energy certificates generating at this nearly 100 megawatt facility. Please turn to slide 10 for an update on our pipeline. As of June 30, 2025, we own interconnections for 8 GW of solar and 16 GWh of storage globally, excluding projects already in operation. Our total pipeline now stands at 27 GW of solar and 80 GWh of storage. In the U.S. and Europe, we have 500 megawatts of solar and about 1.7 GWh of storage already in operation.

Okay.

As of June 32025, we own interconnections four eight gigawatts of solar on 16 gigawatt hour Silverstone globally.

Excluding projects already in operation.

Our total pipeline, notwithstanding 27, gigawatts of solar and 80 gigawatt hours of storage.

Speaker #7: The off-taker for this project is Constellation, who will purchase power and renewable energy certificates generated by this nearly 100-megawatt facility. Please turn to slide 10 for an update on our pipeline.

In the U S and Europe, and we have 500 megawatts of solar.

One seven gigawatt hours of storage already in operation.

Meanwhile, we are building more than one three gigawatts of solar on 600 megawatts of storage in this markets as we speak.

Speaker #7: As of June 30, 2025, we own interconnections for 8 gigawatts of solar and 16 gigawatt-hours of storage globally, excluding projects already in operation.

This positions us with one of the largest and most globally diversified pipelines in the industry.

Given us significant runway to grow in the future and the flexibility to focus our resources.

Speaker #7: Our total pipeline now stands at 27 gigawatts of solar and 80 gigawatt hours of storage. In the U.S. and Europe, we have 500 megawatts of solar and about 1.7 gigawatt hours of storage already in operation.

To advance the most attractive projects some markets.

In the U S. We have already safe Harbor, one six gigawatts of solar projects that are in execution or late stage development.

Speaker #7: Meanwhile, we are building more than 1.3 gigawatts of solar and 600 megawatts of storage in these markets as we speak. This position says we have one of the largest and most globally diversified pipelines in the industry.

Ismael Guerrero: Meanwhile, we are building more than 1.3 GW of solar and 600 megawatts of storage in these markets as we speak. This positions us with one of the largest and most globally diversified pipelines in the industry, giving us significant runway to grow in the future and the flexibility to focus our resources to advance the most attractive projects and markets. In the U.S., we have already safe-harbored 1.6 GW of solar projects that are in execution or late-stage development. We continue to execute our safe-harbor strategy on an additional 2.3 GW of solar through offsite start of construction, providing both increased flexibility over the coming years and a competitive advantage as U.S. assets gain value under the updated tax credit policies. At the same time, we are expanding our battery storage pipeline, particularly in the U.S., Europe, and Japan, where we already hold strong market positions.

We continue to execute with our safe Harbor strategy on an additional two eight gigawatts of solar.

Offsite.

Construction.

Providing both increased flexibility over the coming years, and our competitive advantage as U S assets gain value under the updated tax credit policies.

Speaker #7: Given a significant runway to grow in the future and the flexibility to focus our resources to advance the most attractive projects and markets. In the U.S., we have already Safe Harbor 1.6 gigawatts of solar projects that are in execution or late-stage development.

At the same time, we have.

Spend an hour battery storage pipeline, particularly in the U S Europe and Japan.

We already hold a solid market positions.

Our O&M business continues to gain traction with 10, five gigawatts Scott only in operation.

Speaker #7: We continue to execute our Safe Harbor strategy on an additional 2.3 gigawatts of solar through offsite start of construction, providing both increased flexibility over the coming years and a competitive advantage as U.S. assets gain value under the updated tax credit policies.

Three two gigawatts constructed coming into service in the next quarters.

Finally, we are advancing development of our data center sites in both the U S and Spain.

We expect to have the first breaks ready within the next few quarters.

Now I will hand, the call to Shimbun to review our financial results.

Speaker #7: At the same time, we are expanding our battery storage pipeline, particularly in the U.S., Europe, and Japan, where we already hold strong market positions.

Timber. Please go ahead.

Thank you smell.

Please turn to slide 11.

Speaker #7: Our O&M business continues to gain traction, with 10.5 gigawatts currently in operation and 3.2 gigawatts contracted coming into service in the next quarters. Finally, we are advancing the development of our data center sites in both the U.S. and Spain, where we expect to have the first projects ready within the next few quarters.

Ismael Guerrero: Our O&M business continues to gain traction with 10.5 GW currently in operation and 3.2 GW contracted coming into service in the next quarters. Finally, we are advancing the development of our data center sites in both the U.S. and Spain, where we expect to have the first projects ready within the next few quarters. Now, I will hand the call to Xinbo to review our financial results. Xinbo, please go ahead.

In the second quarter, we delivered seven nine gigawatts of solar modules.

The high end of our guidance.

We ship to two gigawatt hours of storage.

Below expectations due to delayed shipments.

With the additional impact of delayed projects sales total revenue was $1 $7 billion.

Speaker #7: Now, I will hand the call to Xinghua to review our financial results. Xinghua, please go ahead.

Gross margin was 29, 8% and the weighted by a cell type fees related to our U S project.

Speaker #6: Thank you, Ismael. Please turn to slide 11. In the second quarter, we delivered 7.9 gigawatts of modules, near the high end of our guidance.

Xinbo Zhu: Thank you, Ismael. Please turn to slide 11. In the second quarter, we delivered 7.9 GW of modules near the high end of our guidance. We shipped 2.2 GWh of storage, below expectations due to delayed shipments. With the additional impact of delayed project sales, total revenue was $1.7 billion. Gross margin was 29.8%, elevated by a cell type that is related to a U.S. project and an AD/CVD 2R adjustment. Excluding this one-time impact, gross margin would have been 21.6%, sequentially higher due to a stronger North American module mix and the storage volumes. Operating expenses increased to $378 million, primarily due to non-recurring items, including impairment charges related to certain solar and storage assets, as well as manufacturing assets. Without these items, operating expenses would have been $259 million, or 15.3% of revenue, compared to 16.3% in the first quarter.

And then a DCP two adjustments.

Excluding this onetime impact gross margin would have been 21, 6%.

Speaker #6: We shifted 2.2 gigawatt hours of storage below expectations due to delayed shipments. With the additional impact of delayed project sales, total revenue was $1.7 billion, and gross margin was 29.8%, elevated by a cell type D related to a U.S. project.

Sequentially higher.

Yes.

Due to a stronger North America module mix.

The storage volumes.

Operating expenses increased to $378 million.

Primarily due to non recurring items.

Including impairment charge related to certain solar and storage assets as well as manufacturing assets.

Speaker #6: And an ADCVD to our adjustments. Excluding these one-time impacts, gross margin would have been 21.6%, sequentially higher due to a stronger North American module mix.

Without these items.

Operating expenses would have been $259 million.

For 15, 3% of Raymond.

Speaker #6: And the storage volumes. Operating expenses increased to $378 million, primarily due to non-recurring items, including an impairment charge related to certain solar and storage assets, as well as manufacturing assets.

Compared to 16, 3% in the fourth quarter.

Net interest expense rose from $28 million in the first quarter.

So the $35 million.

Reflecting higher borrowings and recurrent energy and lower interest income.

Speaker #6: Without these items, operating expenses would have been $259 million, or 15.3% of revenue, compared to 16.3% in the first quarter. Net interest expense rose from $28 million in the first quarter to $35 million, reflecting higher borrowings and recurrent energy, and the lower interest income.

Net foreign exchange loss was $13 million.

Primarily driven by.

<unk> weakness.

Net income attributable to shareholders was $7 million.

Or not.

Net loss of <unk> <unk> per diluted share.

Xinbo Zhu: Net interest expense rose from $28 million in the first quarter to $35 million, reflecting higher borrowings at Recurrent Energy and the lower interest income. Net forwarding exchange loss was $13 million, primarily driven by dollar weakness. Net income attributable to shareholders was $7 million, or a net loss of $0.08 per diluted share. This result included a positive $30 million HLBV impact, or $0.45 per share, from tax equity arrangements tied to certain U.S. projects. $0.19 per diluted share of preferred dividend impact led to the diluted loss per share to shareholders. Please turn to slide 12 for cash flow and the balance sheet. Net cash inflow from operating activities was $189 million, compared with an outflow of $264 million in the first quarter. Cash inflow was primarily driven by change in working capital, specifically a decrease in inventories.

This result included a positive $13 million at Shelbyville.

Or <unk> 45 per share from.

From tax equity arrangements tied to certain U S projects.

Speaker #6: Net forwarding exchange loss was $13 million, primarily driven by dollar weakness. Net income attributable to shareholders was $7 million, or a net loss of $0.08 per diluted share.

19 cents per.

Diluted share of preferred dividend impact linked to the diluted loss per share to shareholders.

Please turn to slides 12 for cash flow and the balance sheet.

Net cash inflow from operating activities was $189 million.

Speaker #6: These results included a positive $30 million HLBV impact, or $0.45 per share, from tax equity arrangements tied to certain U.S. projects. A $0.19 per diluted share of preferred dividend impact led to a diluted loss per share for shareholders.

Compared with an outflow of $264 million in the first quarter.

Cash inflow was primarily driven by chance in working capital specifically a decrease in inventory.

Okay.

Total assets grew.

14 $8 billion.

Speaker #6: Please turn to slide 12 for cash flow and the balance sheet. Net cash inflow from operating activities was $189 million, compared with an outflow of $264 million in the first quarter.

With project assets rising to a one to $1 7 billion.

Solar power systems, and battery energy storage systems now stand at $2 billion.

Capex totaled $173 million.

Speaker #6: Cash inflow was primarily driven by change in working capital, specifically a decrease in inventories. Total assets grew to $14.8 billion, with project assets rising to $1.7 billion.

Mainly reflecting payments for our existing capacities.

Our full year 2025, capex outlook remains unchanged.

Xinbo Zhu: Total assets grew $14.8 billion, with project assets rising to $1.7 billion. Solar power systems and battery energy storage systems now stand at $2 billion. CapEx totaled $173 million, mainly reflecting payments for existing capacities. Our full-year 2025 CapEx Outlook remains unchanged at approximately $1.2 billion, primarily driven by investment in U.S. manufacturing initiatives. Total debt increased to $6.3 billion, mainly due to new borrowings for project development and operational assets. We closed the quarter with a cash position of $2.3 billion. Looking ahead, we remain focused on disciplined debt management and the prudent liquidity oversight, aligned with industry dynamics and our financial fundamentals. In light of ongoing profitability pressures in both manufacturing and the project development businesses, we expect to gradually reduce leverage from current levels over the next month. Now, let me turn the call back to Sean, who will conclude with our guidance and the business outlook.

The proximal.

Approximately $1 2 billion.

Primarily driven by investment in U S manufacturing initiatives.

Speaker #6: Solar power systems and battery energy storage systems now stand at $2 billion. CapEx totaled $173 million, mainly reflecting payments for existing capacities.

Total debt increased to $6 3 billion.

Mainly fields with new borrowings for our project development and the operational assets.

We closed the quarter with a cash position of $2 3 billion.

Speaker #6: Our full year 2025 CapEx outlook remains unchanged at approximately $1.2 billion, primarily driven by investment in U.S. manufacturing initiatives. Total debt increased to $6.3 billion, mainly due to new borrowings for project development and operational assets.

Looking ahead, we remain focused on discipline that management and the prudent liquidity oversight.

Aligned with industry dynamics, and our financial fundamentals.

In light of ongoing profitability pressures in both manufacturing and the project to run the businesses.

We expect to gradually reduce leverage from current levels over the next months.

Speaker #6: We closed the quarter with a cash position of $2.3 billion. Looking ahead, we remain focused on disciplined debt management and prudent liquidity oversight.

Now, let me turn the call back to Sean.

All will come.

With our guidance and business outlook.

Tom. Please go ahead. Thank you assemble please turn to slide 13.

Speaker #6: Aligned with industry dynamics and our financial fundamentals. In light of ongoing profitability pressures in both manufacturing and the project development businesses, we expect to gradually reduce leverage from current levels over the next month.

Third quarter alternate agenda five.

Back to deliver module volumes through June 5253, gigawatt, Brian into storage shipments, we expect to deliver 2.1% to two three gigawatt hours, including about 250 megawatt hours to our own project.

Speaker #6: Now, let me turn the call back to Xiaohua, who will conclude with our guidance and the business outlook. Xiaohua, please go ahead.

Projected third quarter revenue to be in the range of $1 three to $1 5 billion with gross margin expected to be between 14% to 16%.

Xinbo Zhu: Sean, please go ahead.

Speaker #8: Thank you, Xinghua. Please turn to slide 13. For the third quarter of 2025, we expect to deliver module volumes between 5.0 to 5.3 gigawatts. For energy storage shipments, we expect to deliver 2.1 to 2.3 gigawatt hours, including about 250 megawatt hours to our own project.

Dr. Sean Chu: Thank you, Xinbo Zhu. Please turn to slide 13. For the third quarter of 2025, we expect to deliver module volumes between 5 to 5.3 GW. For energy storage shipments, we expect to deliver 2.1 to 2.3 GWh, including about 250 MWh to our own projects. We project third-quarter revenue to be in the range of $1.3 to $1.5 billion, with gross margin expected to be between 14% to 16%. Sequential lower margins reflect the impact of rising solar manufacturing costs, driven in part by supply chain price increases and normalizing storage margins. For the full year of 2025, we are narrowing our module volume guidance to 25 to 27 GW, including approximately 1 GW to our own projects. The reduced midpoint of our module guidance primarily reflects our self-restraint, which results in a decision to reduce exposure to less profitable markets.

The initial lower margins reflect the impact of rising solar manufacturing cost.

In part by a supplier price increases and normalizing storage margins.

For the full year of 205, we are narrowing our module volume guidance to $5, two Chinese seven gigawatt, including approximately one gigawatt.

Speaker #8: We project third quarter revenue to be in the range of $1.3 billion to $1.5 billion, with gross margin expected to be between 14% and 16%.

Our own project.

The midpoint of our March module guidance.

Speaker #8: Sequential lower margins reflect the impact of rising solar manufacturing costs, driven in part by supply chain price increases and normalizing storage margins. For the full year of 2025, we are narrowing our module volume guidance to 25 to 27 gigawatts, including approximately 1 gigawatt to our own project.

Primarily reflect our self restraint, which result in a decision to reduce exposure to less profitable markets.

Brian <unk> storage shipments.

Given increased near term visibility in the trade environment.

Maintaining our storage shipment guidance.

Evan.

Gigawatt hours for the full year of trying to twenty-five including approximately one gigawatt hour allocated to our own project.

Speaker #8: The reduced midpoint of our marked module guidance primarily reflects our self-restraint, which results in a decision to reduce exposure to less profitable markets. For energy storage shipments, given increased near-term visibility in the trade environment, we are maintaining our storage shipment guidance of 7 to 9 gigawatt-hours for the full year of 2025.

We are revising our full year revenue guidance to between five and six.

<unk>.

By a point.

$6 $3 billion.

Dr. Sean Chu: For energy storage shipments, given increased near-term visibility in the trade environment, we are maintaining our storage shipment guidance of 7 to 9 GWh for the full year of 2025, including approximately 1 GWh allocated to our own projects. We are revising our full-year revenue guidance to between $5.6 and $6.3 billion. This reflects the delay of certain project sales into 2026 and more conservative module pricing in the second half, driven by weakening demand in China. With that, I would like to now open the floor for questions. Operator?

This reflects the delay of certain project sales into China into an ASIC.

A more conservative module pricing in the second half driven by weakening demand in China.

With that I would like to now open the floor for questions operator.

Speaker #8: Including approximately one gigawatt-hour allocated to our own project, we are revising our full-year revenue guidance to between $5.6 billion and $5.63 billion. This reflects the delay of certain project sales into 2026 and more conservative module pricing in the second half, driven by weakening demand in China.

Okay.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

One moment for your first question.

Okay.

Our first questions come from the line of Colin Rusch with Oppenheimer. Please proceed with your questions.

Speaker #8: With that, I would like to now open the floor for questions. Operator,

Thanks, so much guys.

Can you talk a little bit about the perk right down here and the impact ultimately on margins Im just trying to get a sense of how much that really impacts.

Speaker #2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Darrell: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment for your first question. Our first questions come from the line of Colin Rush with Oppenheimer. Please proceed with your questions.

Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press *2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

From a percentage basis on your margin. So earn your model sales does that start to look like two or three points or is a little bit more than that.

Speaker #2: One moment for your first questions. Our first questions come from the line of Colin Rush with Oppenheimer. Please proceed with your questions.

Well, we decided to.

ROE at all.

Pretty much all of the.

The equipment.

In this quarter because that.

Speaker #9: Thanks so much, guys. You know, could you talk a little bit about the perk write-down here and the impact, ultimately, on margins? I'm just trying to get a sense of how much that really impacts, from a percentage basis, on your margin sale or on your model sales?

Speaker 8: Thanks so much, guys. Could you talk a little bit about the PERC write-down here and the impact ultimately on margins? I am just trying to get a sense of how much that really impacts, you know, from a percentage basis on your module sales. Does that start to look like, you know, 2 or 3 points or is it a little bit more than that?

In Q2.

<unk> stopped.

Matter of fact drop PERC product.

This is the right time.

To the to the write off now the write off was that I believe it was.

Speaker #9: Does that start to look like two or three points, or is it a little bit more than that?

They have an impact.

Yes.

Thanks.

Speaker #8: Well, we decided to roll off pretty much all of our perk equipment and assets this quarter because in Q2, we stopped the manufacturing of perk products.

Lynn.

Dr. Sean Chu: We decided to roll it off, pretty much off PERC equipment asset this quarter because in Q2, we stopped the manufacturing of PERC products. We think this is the right time for the write-off. The write-off was, I believe, quite a big impact. It is $4.6 million.

Got it.

Okay. Okay.

A follow up on the on the manufacturing afterwards.

Just with the Treasury rules that have come out of it I think everybody is trying to understand how developers are going to approach their safe Harbor strategy.

And qualification can you get you guys give us a sense of where you're at from a safe harboring perspective, what youre seeing from any of your customers on the module side.

Speaker #8: So, we think this is the right time for the write-off. Now, the write-off was, I believe, quite a big impact. Yeah, it's $406 million.

And how you anticipate some of the enforcement.

Reality is for the industry.

Kevin just your first look in less than a week of being able to evaluate the new rules.

Speaker #8: Yeah.

Speaker 8: Okay, I will follow up on the manufacturing afterwards. With the treasury rules that have come out, I think everybody is trying to understand how developers are going to approach their safe harboring strategy and qualification. Can you guys give us a sense of where you are at from a safe harboring perspective, what you are seeing from any of your customers on the module side, and how you anticipate some of the enforcement realities for the industry, given your first look in less than a week of being able to evaluate the new rules?

Speaker #9: Okay. But I'll follow up on the manufacturing afterwards. You know, just with the treasury rules that have come out, I think everybody's trying to understand how developers are going to approach their Safe Harboring strategy and qualification.

Yes, Colin as you know.

Our subsidiary recurrent.

Long term player we're trying to solve.

Speaker #9: Can you guys give us a sense of where you're at from a Safe Harboring perspective? You know, what you're seeing from any of your customers on the module side, and how you anticipate some of the enforcement realities for the industry?

Operating in the U S market, though we have being safe harboring.

Because that ITC reached.

The that line several times in the past.

13 years.

We approach the deadline, we safe Harbor.

Speaker #9: Given just your first look and less than a week of being able to evaluate the new rules.

Very we have a very we are very familiar with their role so.

Speaker #8: Yeah, Colin, as you know, our subsidiary Recurrent is a long-term player, with 20 years of operating in the U.S. market. So we have been safe harboring several times because ITC reached the deadline several times in the past 10 to 13 years.

Dr. Sean Chu: Colin, as you know, our subsidiary Recurrent Energy is a long-term player with 20 years of operating in the U.S. market. We have been safe harboring several times because ITC reached the deadline several times in the past 10, 13 years. Every time we approach the deadline, we safe harbor. We are very familiar with the role. We are pleased to see that the newly released guidance, the new guidance for the safe harbor, pretty much confirmed that our standard and strategy for safe harbor is correct and also is prudent. Our current safe harbor project, we see no change. As Ismael Guerrero said in his speech, we are safe harboring a little bit more. Actually, we are safe harboring 2.3 GW more of projects. If Recurrent Energy achieves this goal, then 1.6 plus 2.3, we will be able to safe harbor somewhere close to 4 GW.

We're pleased to see that.

The newly released.

All right.

Our guidance for the Safe Harbor.

Pretty much confirmed that our standard strategy for Safe Harbor, Yes, correct.

The <unk> product.

Our current safe harbored.

Derek.

We see no change and.

Speaker #8: So every time we approach the deadline, we Safe Harbor. So we are very, we have a very, we are very familiar with the role.

Yes.

In his speech.

Safe Harbor needing a little bit more while Arturo our safe harboring <unk> three gigawatt more of project. So.

Speaker #8: We are pleased to see that the newly released guidance for the Safe Harbor pretty much confirms that our standard strategy for Safe Harbor is correct.

Recurrent achieved this call then.

<unk> Plaza three.

<unk> three <unk> three <unk> six class III, well, we will be able to safe harbor somewhere close to one gigawatt.

Speaker #8: And also is prudent. So our current Safe Harbor project we see no change. And as Ismael said in his speech, we are Safe Harboring a little bit more.

That will give us a very strong.

Pipeline in U S.

Four gigawatt is almost equal to one gigawatt each year.

You can see that for four years a farmer.

Speaker #8: Well, actually, we are Safe Harboring 2.3 gigawatts more of project. So if Recurrent achieves this goal, then 1.6 plus 2.3 no, 1.6 plus 2.3, well, we will be able to Safe Harbor somewhere close to four gigawatts.

It's pretty significant.

This shows our strong ability recurrent strong ability.

Consolidated properties.

The development procedural.

As for the whole industry, that's a good question.

Our we have been sending out or.

Speaker #8: So now we'll give us a very strong pipeline in the U.S. You know, four gigawatts is almost equal to one gigawatt each year. So you can see that for four years, Safe Harbor is pretty significant for us.

Dr. Sean Chu: That will give us a very strong pipeline in the U.S. Four GW is almost equal to 1 GW each year. You can see that for four years safe harbor is pretty significant for us. It shows our strong ability, Recurrent Energy's strong ability, and very solid practice in the development procedure. As for the whole industry, that is a good question. We have been sending our antenna up, but it has only been a few days, so I do not have that much industry-wide safe harbor information. However, I would say for the developers who have similar experience, they should see the same thing as Recurrent Energy. I think the industry is relieved that at least their work so far has been recognized. Ismael Guerrero, do you want to add some more colors?

Oh.

Continent.

Up.

And.

But.

He has only been a few days so I don't have that much and that's why in.

<unk> safe harboring information, however, I want to say for the developers who have similar experience. This you'll see the same thing.

Speaker #8: It shows our strong ability recurrent, the strong ability and very solid practice in the development procedure. As for the whole industry, that's a good question.

Alright. Thanks.

<unk> the industry, yes.

Relief.

At least now ORC.

Speaker #8: We have been sending our incident up, but it has only been a few days, so I don't have that much industry-wide Safe Harbor information.

So far.

Has been recognized.

Do you want to.

Add.

Some more colors.

Thank you Sean look I think Colin Thanks for the question I think we've been a little bit lucky too because many of our projects hub local community others.

Speaker #8: However, I would say for the developers who have similar experience, they should see the same thing as Recurrent. So I think the industry is relieved that at least their work so far has been recognized.

So we started to safe Harbor.

To make sure that we enjoyed those others.

As a result, we have a pretty robust pipeline of safe Harbor.

Already online.

Deal with fuel sale side the start of construction so.

It looks like the current regulation.

Speaker #8: Ismael, do you want to add some more colors?

This is not changing.

So within within a little bit lucky to strength.

Speaker #9: Thank you, Xiaohua. Look, I think Colin, thanks for the question. I think we've been a little bit lucky too, because many of our projects had local community partners.

Ismael Guerrero: Thank you, Sean. Look, I think, Colin, thanks for the question. I think we've been a little bit lucky too because many of our projects had local community others. We started to safe harbor to make sure that we enjoy those others. As a result, we have a pretty advanced pipeline of safe harbor already online. We always use the offsite start of construction. It looks like the current regulation is not changing that. We've been a little bit lucky this time.

Yeah.

Okay. Thanks, so much guys.

Thank you. Our next question will come from the line of Philip Shen with Roth Capital Partners. Please proceed with your question.

Speaker #9: So, we started to Safe Harbor to make sure that we enjoy those others. As a result, we have a pretty advanced pipeline of Safe Harbor already online, and we always use the offsite start of construction.

Hi, This is Matt Ingram on for Phil. Thank you for taking our questions given the BBB and <unk> in the U S. Do you believe Canadian solar and its subsidiaries are currently compliant if so could you. Please give some details around what gives you confidence and then if not like what steps are you taking.

Speaker #9: So it looks like the current regulation is not changing that. So we've been a little bit lucky this time. Okay. Thanks so much, guys.

To comply with <unk> and then lastly on <unk>, how are you planning for potentially stricter Fiat IRS guidance that could come out sometime next year.

Speaker 8: Okay. Thanks so much, guys.

Speaker #2: Thank you. Our next questions come from the line of Philip Shen with Roth Capital Partners. Please proceed with your questions.

Darrell: Thank you. Our next questions come from the line of Philip Shen with Roth Capital Partners. Please proceed with your question.

Mark. Thank you for the question I kind of expected. This question now I assume no op.

Speaker #10: Hi, this is Matt Ingram on for Phil. Thank you for taking our questions. You know, given the OBVB and Fioc in the US, do you believe Canadian solar and its subsidiaries are currently Fioc compliant?

Speaker 8: Hi, this is Matt Ingram on for Phil. Thank you for taking our questions. Given the OBBBA and FEOC in the U.S., do you believe Canadian Solar Inc. and its subsidiaries are currently FEOC compliant? If so, could you please give some details around what gives you confidence? If not, what steps are you taking to comply with FEOC? Lastly, on FEOC, how are you planning for potentially stricter FEOC IRS guidance that could come out sometime next year?

Uh huh.

Different than <unk>.

The requirement for a different a year.

Based on data.

Speaker #10: If so, could you please give some details around what gives you confidence? And then if not, what steps are you taking to comply with Fioc?

Yearly.

Requirement, yes, Canadian solar, yes, comply with or be a requirement to this moment and we will continue we believe we will continue to be complied for.

Speaker #10: And then lastly, on Fioc, how are you planning for potentially stricter Fioc IRS guidance that could come out, you know, sometime next year?

In future years as you know every year.

Dr <unk>.

Speaker #8: Mark, thank you for the question. I kind of expected this question. Now, as you know, OBVA have different Fioc requirements for different years. So based on that, yearly Fioc requirement, yes, Canadian solar is compliant with OBVA requirement at this moment.

Dr. Sean Chu: Mark, thank you for the question. I kind of expected this question. As you know, OBBBA has different FEOC requirements for different years. Based on that yearly FEOC requirement, yes, Canadian Solar is compliant with OBBBA requirements at this moment. We believe we will continue to be compliant for the future years. As you know, every year the FEOC condition changes, including the percentage change. We have a plan to make sure that Canadian Solar's three factories, which is the solar module factory, solar cell factory, and also the energy storage factory, continue to meet the OBBBA requirement this year.

Conditions change, including the percentage change so.

We have a plan to make sure that the Canadian solar is the refractory.

Which is a solar module factory.

Sal factory and also the <unk> tolerant factoring continue.

Eight.

<unk> requirement this year.

Speaker #8: And we will continue we believe we will continue to be compliant for the future years. As you know, every year the Fioc condition changes including the percentage change.

And just on.

Potential guidance, they're going to release guidance on the theocracy frictions and those potentially could be a little bit stricter.

Then kind of the language in the Bill are you. How are you guys planning for that kind of situation.

Speaker #8: So we have a plan to make sure that the Canadian solar is refactored which is a solar module factory. Solar cell factory. And also the energy storage factory continue to meet the OBVA requirement each year.

Well we.

Our internal legal and.

The accounting team.

External team.

Debate here and.

Diligence.

Pass a pasta, one a month well ever saying SaaS.

Speaker #10: And just on, you know, potential guidance, you know, they're going to release guidance on the Fioc restrictions and those potentially could be, you know, a little bit stricter.

Speaker 8: On, you know, potential guidance, they are going to release guidance on the FEOC restrictions, and those potentially could be, you know, a little bit stricter than kind of the language that is in the bill. How are you guys planning for that kind of situation?

July for us when the OBP da was signed into law, we have been studying it and debating and doing due diligence.

Speaker #10: Then, kind of the language that's in the bill. How are you guys planning for that kind of situation?

We think our understanding of the bill yes.

Pretty conservative and.

Speaker #8: Well, our internal legal team, accounting team, and the external team have debated and conducted due diligence for more than a month. Ever since July 4th, when the OBVA was signed into law, we have been studying it and debating while doing due diligence.

Dr. Sean Chu: Our internal legal team, accounting team, and the external teams have debated and done due diligence in the past, more than a month. Ever since July 4th, when the OBBBA was signed into law, we have been studying it and debating and doing due diligence. We think our understanding of the bill is pretty conservative. While there may be some changes or some clarifications of the guidance, the IRS guidance might clarify some of the points. I believe as long as those are the guidance to interpret the OBBBA, it cannot change very much from the legal language itself in the bill. Therefore, we believe a little bit more restrictive or a little bit less restrictive guidance from IRS will not change our judgment call.

While there may be some.

Changed.

Some clarification.

Of the guidance.

Well I mean, the Ars IRS guidance might clarify some of the point.

And.

But I believe a small loss.

Those are the guidance to interpret that the bebe.

B B.

Speaker #8: So, we think our understanding of the bill is pretty conservative. And, well, now maybe some change or some clarifications of the guidance, you know, well, I mean, the IRS guidance might clarify some of the points.

The accounting change very much from the.

Legal language.

And the Bill now for.

We believe.

Well, a little bit more restrictive on less and less restrictive guidance.

Erez will not change our.

Sure.

Charter meant call. So I think our current strategy.

Speaker #8: And, but I believe as long as those are the guidance to interpret it, the OBVA can't change very much from the legal language itself in the bill.

Quiet on it.

So.

First of all we'll make sure our customers well be able to claim.

IPC P.

<unk>.

Our chairman.

Speaker #8: Therefore, we believe that some, well, a little bit more restrictive or a little bit less restrictive guidance from the IRS will not change our judgment call.

The <unk> rule of that particular year and also.

Our factory so your factories in U S well be able to claim the.

45 acts.

For any of the.

Speaker #8: So, I think our current strategy is quite solid. To do that, we can first of all, make sure our customers will be able to claim their ITC because our shipments meet the OBVA rule of that particular year.

Dr. Sean Chu: I think our current strategy is quite solid so that we can, first of all, make sure our customers will be able to claim their ITC because our shipments meet the OBBBA rule of that particular year.

A particular year.

Great really appreciate the color there Sean if I could just squeeze in one more on policy given like the upcoming section 232 case on polysilicon and its derivatives as well as it seems like they are reinforcing <unk> with Q cells getting recently the teams. How are you guys looking at your upstream supply chain and may be different.

<unk> there for the U S capacity.

Speaker #8: And also, our three factories in the U.S. will be able to claim the 45X for any of the particular years.

Well you probably know.

Wina Huang: factory, three factories in the U.S., will be able to claim the 45X for any of the particular year.

Canadian solar filed.

Our comment.

<unk> Department now.

Commerce.

For the.

Speaker #10: Great, I really appreciate the color there, Xiaohua. If I could just squeeze in one more on policy: you know, given the upcoming Section 232 case on policy and its derivatives, as well as it seems like they’re reinforcing the UFLPA with Q cells getting recently detained.

Yan Zhuang: I really appreciate the color there, Sean. If I could just squeeze in one more on policy, given the upcoming Section 232 case on polysilicon and its derivatives, as well as it seems like they are reinforcing UFLPA with Q cells getting recently detained, how are you guys looking at your upstream supply chain and maybe different strategies there for the U.S. capacity?

For the.

Section 232.

And I believe you.

Got access to our finance that sort of all your lawyer or whatever.

Basic but basically.

Speaker #10: You know, how are you guys looking at your upstream supply chain? And maybe different strategies there for the U.S. capacity?

We believe that polysilicon.

Solar not a national security concerns recall.

I don't think you Ed given a lot in IMAX solar anyway. So why is taller great partner silica Nash.

Wina Huang: You probably know that Canadian Solar Inc. filed our comment to the Department of Commerce for the Section 232 on polysilicon. I believe you can get access to our filings through your lawyer or whatever. Basically, we believe that polysilicon for solar is not a national security concern because I do not think the U.S. even wants that much solar. Why is solar polysilicon a national security concern? The country has enough coal, oil, gas, you know, everything, right? The country is very fossil-free planted. Based on that, we do not feel like polysilicon for solar should be a national security concern. However, we are waiting for the process to run to the end. At this moment, I do not want to speculate.

National Security control well, considering the current drive enough.

Coal oil and gas.

Right.

As Barry also fell.

Planted so.

Based on that we don't feel like.

Polysilicon.

<unk> is a national security control, however, while waiting for the process to run until the end and this moment I don't want to <unk>.

Speculate.

Okay, great. Thanks for the answer Sean.

Okay.

Thank you our next questions come from the line of Mohit, Matt Loy with Mizuho Securities. Please proceed with your questions.

Hey, Hi.

Thanks for taking the questions maybe for them on the PEO side I appreciate the color there.

But can you just talk more about the fortify eligibility for the U S assets.

The U S manufacturing line.

I'm, just trying to do to be compliant.

Or do you need more information.

Yan Zhuang: Okay, great. Thanks for the answer, Sean.

That's a good guide.

And then I have a follow up.

Darrell: All set.

Okay.

Yan Zhuang: Thank you. Our next questions come from the line of Mahit Manloy with Mizuho Securities. Please proceed with your questions.

Yes.

<unk>.

Our team, including our internal legal team and our external counsel believe that op.

Dr. Sean Chu: Hi. Thanks for taking the questions. Maybe just one more on the FEOC side. I appreciate the color there. Can you just talk more about the 45X eligibility for the U.S. assets, so you have the U.S. manufacturing line, or the strategy to be compliant there? Do you need more information from Treasury guidance to help with that? Then I have a follow-up question on the tariff side.

VA is quite clear in terms of the.

Oc and the material assistance.

Definition a requirement so.

We pretty much understand the meaning of dose language and the causes.

I mentioned that the IRS guidance may clarify a few points, but allow us so all of us.

Wina Huang: Yeah, I think our team, including our internal legal team and our external counsels, believe that OBBBA is quite clear in terms of the FEOC and the material assistance definition and requirement. We pretty much understand the meaning of those language and clauses. As I mentioned, the IRS guidance may clarify a few points, but as long as those guidance follow the language in the OBBBA itself, then I think our strategy is, you know, we have a good understanding. Therefore, our assessment is solid. For 45X, both the 45X and for any storage and for solar will continue according to the previous schedule. As you know, there's no change on the, like, in terms of the schedule, in terms of the timeframe, and also the run-down schedule of those incentives. However, there are different material assistance tables for each year.

Those guidance falloff.

The language in the <unk> BBA.

So then I.

I think our strategy yes.

We have a good understanding therefore assessment yes.

So net and 445 X.

Both the 45 and.

And as storage and for solar well continue.

According to the.

The premiums.

Schedule.

As you know there is no change.

Like in terms of the.

The schedule.

In terms of the timeframe and also.

<unk>.

Ramp schedule of those incentives and however, there are different.

Different mature assistance.

Table.

For each year. So we just have to every year, we do too.

Due diligence and calculate and just to make sure that.

Our products meet on stable and.

Fortunately.

Sure.

Our global manufacturing.

Storage is also more or less a global manufacturer.

Our suppliers of the key material for both solar and for androgen stories from several different countries. So.

I believe that gave us the ability to navigate the navigate and to meet to.

Wina Huang: We just have to, every year, we do our due diligence and calculate just to make sure that our product meets those tables. Fortunately, solar is a global manufacturing. Energy storage is also more or less a global manufacturer. There are suppliers of the key material for both solar and for energy storage from several different countries. I believe that gives us the ability to navigate and to meet, to comply with the material assistance requirement, the percentage for each year. You mentioned IRS guidance. People have been speculating, oh, how much, you know, maybe the IRS guidance can help people a little bit. For example, IRS published a table for the domestic content in the past, which stopped gassing, you know, each component, a guidance specified percentage. It makes the job easy and also standardizes.

We will comply with the material materially assistant.

Requirement per se.

H.

Each year now you mentioned IRS guidance well people are happy expect new speculated.

Our global manufacturing and energy storage is also one that's a global manufacturer. So they are all suppliers of key material for both solar and I need to install rate from several different countries. So.

How much.

Maybe the IRS guidance.

Okay help people on Internet.

<unk> alright.

Publish a table for the domestic content in the past.

I believe that gave us the ability to navigate the navigate and to meet.

Stop casting.

Component.

Guidance.

To comply with the material mature assistant.

Specify.

Percentage so it makes a job using and also time horizon. So we'll see whether the IRS guidance for material assets that follow that same thought same path.

Requirement per se.

Oh boy.

Each year now.

Mention I R. S guidance well you know people are happy expect Neil speculated Oh, how much share you know maybe the IRS guidance.

For our different paths.

So for me that's something we are waiting to see if somehow they follow the same path well his thought.

Okay help people on Internet.

All right.

Publish a table for the domestic content and a path, which are stopped gasoline should component.

Then at least ever body.

Or use the same table.

But maybe one follow a different path for a mature asset.

A guidance.

It's something we're all waiting to see however.

Specify.

Percentage so it makes a job easy and also time horizon. So we'll see whether they are as guidance for material assets that follow that same oh same path I'll, maybe follow different paths.

As I said the op.

Wina Huang: We will see whether the IRS guidance for material assistance follows the same path or maybe follows a different path. For me, that's something we are waiting to see. If somehow it follows the same path, well, it stopped, then at least everybody will use the same table. But maybe it will follow a different path for material assistance. That's something we are waiting to see. However, as I said, the OBBBA itself is already quite clear. For example, it defined the component to be, for example, over 60% for 2026 for energy storage, and I believe 55%, right? Or 50% for solar. That's pretty clear. Any company who have employed a few capable content can do their calculation. So, yeah, just with this language, we had, we can already calculate our percentage. But if IRS instead publishes a table for everybody to use, that also works.

<unk> itself is already quite clear for us now.

Define the.

Component.

Right.

To be.

For me that's all.

For example over 60% with China Chinese thanks for storage and that believe 55% right, 15%, while solar so thats pretty clear.

Im doing well, we tend to see if somehow they follow the same path well stop then.

And then at least ever body.

Or are you still saying table.

But maybe you are for a lot of different path for mature assets that so that's something we're all waiting to see however.

Company will have the employ a few capable content can do that calculation. So yes, just with this language.

As I said the O P. B P. A itself is already quite clear for example, you define the component.

We can already calculated.

Our percentage.

If IRS IRS.

Stat published a table if I ever bought interview.

Right.

To be.

Mark.

For example over 60% with China Chinese thanks.

So I think we'll one way or another.

I need to storage and that believe 55% right at 15% plus solar so that's pretty clear at a company who have employ a few cable ball content can do that calculation. So yeah, just with this language we have weekend alright.

We already calculate look at our product what we think our so far at this moment our percentage.

Well be way over.

All the minimal requirement.

For the next few years, so that's why.

I think we all right.

California, anytime our percentage, but if IRS areas in stat publish a table if I ever body to redo all its all work well.

Well, we have a good strategy to be.

Obi BBA compliant.

Thanks for the.

Color on the materials.

But maybe just a quick one on the qualified rate.

Wina Huang: I think one way or another, we already calculated, looked at our product. We think our, so so so far at this moment, our percentage will be way over above the minimum requirement for the next few years. So that is why I think we are, we are, we have a good strategy to be OBBBA compliant.

Well, I say, well one way or another.

Bob.

Great.

Rick how clean look at all product, we think our so so so far at this moment all our percentage yeah.

Do you think CSI, so does the ownership in the U S.

Manufacturing.

I'm just trying to understand like the <unk> bed in the timeline on <unk> like any J&J.

Well be way over a ball the minimal requirement.

The structures of the use my budget.

For the next few years well that's why.

Yes. This year, we don't have to structure complex next year.

I think we all are.

Well, we have a good strategy to be Oh, B B B a complaint.

The year after.

We will ever mainland company, where I have to do something to make sure.

Dr. Sean Chu: Thanks. I appreciate the call on the materials. Maybe just a quick one on the 45X to get that. Do you anticipate reducing CSI Solar ownership in the U.S. manufacturing? Just trying to understand the strategy there and the timeline on when to expect any changes in the structures of the U.S. manufacturing.

Thanks.

Color on the materials.

Maybe just a quick one on the party probably like Oh.

<unk> always compliant, whereas the Ob.

Get that you anticipate are there.

Canadian solar want to do the same.

Do you think CSI. So does the ownership in the U S. A.

We have a strategy so we will be able to be more be.

Manufacturing.

I'm, just trying to understand like the sadly bed and the timeline on red thread like banking Chengdu and the structures out there he was my budget.

The.

Hi.

I think we'll have a solid strategy to be or BBB.

Alright.

Wina Huang: This year, we do not have to, our structure complies. Next year, and the year after, every company will have to do something to make sure they always comply with the OBBBA. Canadian Solar Inc. will do the same. As I said, we have a strategy, so we will be able to be, I think we have a solid strategy to be OBBBA compliant every year.

Yes.

This year, we don't have to you know all star Trek and Black next year.

Okay.

Got it thanks for the color I'll take the rest offline.

And the year after.

Thank you. Thank you.

We will ever minute company, where I have to do something to make sure.

Our next question is come from the line of Alan Lau with Jefferies. Please proceed with your questions.

They always compliant, whereas the OBP Inc.

Thanks for taking my question.

I would like to ask on.

Canadian solar went through the same <unk>.

It was a new thing in China I think it was.

We have a strategy so we will be able to be O b.

It's probably Tuesday.

In the Ministry of Bob.

Well, let you know.

Industry.

I think we have a solid strategy to be Oh BBB.

So first of all I would like to know.

Canadian solar has participated.

At that meeting and then.

Right.

Yeah.

<unk>.

Okay.

Dr. Sean Chu: Yeah, thanks for the call. I'll take it as often.

Do you think the price hike.

Got it thanks for the color I'll take the rest offline.

China.

Each of price hike in the rest of the world as well.

Darrell: Thank you.

Yan Zhuang: Thank you. Our next questions come from the line of Alan Lau with Jefferies. Please proceed with your questions.

Thank you. Thank you.

Our next questions come from the line of Alan Lau with Jefferies. Please proceed with your questions.

Canadian Solar is representative.

Darrell: Thanks for taking my question. I would like to ask, there was a meeting in China. I think it was probably on Tuesday in the Ministry of Industry and Information Technology. First of all, we would like to know if Canadian Solar Inc. has participated in that meeting. Secondly, do you think the price hike in China would lead to a price hike in the rest of the world as well?

Well, the Canadian solar China factories.

Thanks for taking my question I.

I would like to ask them on.

So you have the <unk>.

Imitations always then.

It was a new thing in China, I think it was puppy.

Presented to the park to the media and.

Puppy Tuesday.

The government.

Oh in the Ministry of Bob.

And yesterday, you can find it in fact.

Beijing is trying to.

So first of all would like to know.

Canadian solar has participated.

Resolved.

The.

Beating and then secondly, it so do.

<unk>.

<unk>.

Some of the.

Do you think the price hike in China.

Okay.

The.

Each of price hike at the rest of the world as well.

Supply demand balance issues.

So.

Wina Huang: Canadian Solar's representative, the Canadian Solar China factories, received the invitation, so we sent the representative to the meeting. The government in Beijing is trying to resolve some of the supply-demand balance issues. I think it is a good approach. This is also what other countries have been expecting China to do. I am glad that the Chinese government got the message and started to work with the industry for a better balance of supply and demand.

I think it's a good approach and.

Canadian solar is represented here.

Well, the Canadian solar China factories.

This is also I think this is what other countries has been expecting China to do so.

Received the invitation it's always been represented to the park to the media.

Chinese government.

And did.

<unk> message.

Good government.

And start to work with the industry.

Beijing is trying to.

Two.

For a better.

Resolved.

Balance of supply and demand.

Some of the eye.

Okay.

Right.

So I hope that was clear guidance on a higher module price after the meeting.

<unk>.

Supply demand balance issues.

So.

I think it's a good approach.

No.

Uh huh.

Okay.

<unk>.

This is also I think this is what other contracts being expecting China to do so I'm caught up and the Chinese gum and mint.

Leaving.

I remember we mentioned that.

We expect this Manny.

Manufacturing costs I guess, it's.

Cause hiking polysilicon and wafer but if.

Kaka message and start to work with the industry.

Module prices are higher do you think that would actually improve your margins.

Two.

<unk> bought better.

Well I think yes answer to your question, yes, we have seen upstream material price.

Like balance of supply and demand.

Okay.

Darrell: I see. I heard there was clear guidance on a higher module price after the meeting. In the results briefing, I remember we mentioned that we expect this manufacturing cost hike, I guess it is the cost hike in polysilicon and wafer. If module prices are higher, do you think that would actually improve your margins?

So I hope that was clear guidance on.

I am not going to say.

Mike.

Higher module price after the meeting.

We saw some inquiry.

No because the.

Especially the.

Okay, we felt spoofing I I remember, we mentioned that we expect this manufacturing cost hike I guess just.

Polysilicon ingot and wafer.

And.

Yes.

We expect the module price to go up maybe lack the.

Cause hiking, our silicon wafer, but if module prices are high as you would think that would actually improve your margins.

The movement of the materials.

Yes. So there is no top down our minimum pricing our module. However, there is the industry feel theres, a company's volunteered to actually go down some more disciplined pricing.

Wina Huang: I think, to answer your question, Yan said we have seen upstream material price increase. I am not going to say hike that much, but we saw some increase, especially the polysilicon in-game wafer. Yan said he expects the module price to go up, but maybe lack the movement of the materials. Yan, you want to?

Well I think yes answer to your question, yes that we have seen upstream material price.

I'm not going to say.

Mike how much but we saw some inquiry.

Some some pre defined price, but thats not a top down and confusion for that price was not carried high efficiency. It's all I have to say so it's basically a few mostly market driven.

Especially the <unk>.

Polysilicon ingot and wafer.

And yes that.

We expect the module price to go up and maybe lack the.

<unk> Jim.

Hi.

Lee price went up because it's easier bar for stream because the lack of a number of players.

The movement of the materials and.

Darrell: There is no top-down minimum pricing on module. However, there are a few companies that volunteered to actually put on some more discipline, some predefined price, but that is not a top-down. The execution for that price was not carried with high efficiency, I have to say. It is basically few, mostly market-driven. The upstream is actually price went up because it is easier for upstream because of the lack of a number of players. That is why I said module price is likely to go up as well, but maybe not as much as the upstream.

Dan you want to yeah. So there's no top dong a minimum pricing on module. However, there's the industry feel theres a company volunteered to actually put down some are more disciplined.

So that's why I said module price likely to go up as well.

Maybe not as much assets off of our strength.

Yeah.

Okay.

You know some some pre defined price, but that's not a top down and.

Okay.

Okay.

Yes.

That price was not to carry that meet high efficiency. So I have to say so it's basically a few mostly market driven.

Yesterday night.

The breakdown of Trump youre breaking up.

Sorry, you were breaking.

Hear you.

The office team is actually price went up because it's easier bar for stream because the lack of a number of our players.

Hello, Good evening.

Yes.

Can you hear me.

So that's why I said multi price likely to go up as well that.

Yes.

Yes.

Yes.

Yes, so we would like to know your view on the U S solar demand because president Trump yesterday has.

Maybe not as much assets off of our stream.

Uh huh.

Posed at that.

Okay.

He would not approve any projects et cetera, So how do you think.

Hum.

Uh huh.

Dr. Sean Chu: I see.

Darrell: Yesterday night, President Donald Trump had.

The demand in U S and how much projects might be affected with the federal land.

Yesterday, Mike.

Dr. Sean Chu: are breaking. Sorry, you were breaking. We can hear you.

Great.

You're breaking up.

Sorry, you were breaking.

Hear you.

Approval requirement.

Darrell: Hello, can you hear me?

Hello, Good evening.

Okay.

Okay.

I don't know why not.

Dr. Sean Chu: Yeah, now it is clear.

Yeah no.

Darrell: Can you hear me?

Mark.

Hello can you hear me.

Alright company.

Dr. Sean Chu: Yes, now it is clear.

Yes.

I'll ask Ron.

Yes.

<unk>.

Yeah.

Darrell: Yeah, so we would like to know your view on the U.S. solar demand because President Trump yesterday has posted that kind of he would not approve any projects. How do you think the demand in the U.S. and how much projects might be affected with the federal land approval requirement?

And I don't want to comment.

Yeah, So I would like to know your view on the U S sort of demand because the president Trump yesterday has post at that he would not approve any projects et cetera. So how how do you think like it did.

Buying a house.

Speech.

Also I don't want to comment.

Okay.

Thanks, a lot.

Thank you our next.

In U S and how much project might be affected with the federal land.

Our next question is come from the line of Vikram <unk> with Citi. Please proceed with your questions.

Absolutely climate.

Hi, good morning, everyone.

Wina Huang: I do not know. We are not a market survey company, so you are asking the wrong person. I do not want to comment on White House speech. Also, I do not want to comment.

Apologize in advance for asking another question on fees.

I don't know why not.

Marquette Alright.

The press release mentioned that there has been some push outs.

Alright company.

Oh, you're asking.

Ron person.

And I saw that the storage backlog declined marginally also in second quarter I didn't see a pipeline number in the presentation. I was wondering if you saw any cancellations in the quarter and if there is a common theme that explains the pushout ARX slash cancellations in the quarter is we are playing a role.

And I don't Wanna comment Paul Whitehouse.

Yeah.

Speech.

I also I don't want to comment.

Darrell: I see. Yes, ma'am. Thanks a lot.

Okay. Thanks.

Thanks, a lot.

Yeah.

Yan Zhuang: Thank you. Our next questions come from the line of Vikram Bagry with Citi. Please proceed with your questions.

Thank you our next our next questions come from the line of Vikram <unk> with Citi. Please proceed with your questions.

Are customers asking for confirmation of compliance in a contract before signing a contract and that sort of like creating an uncertainty or slowdown in backlog bookings.

Dr. Sean Chu: Hi. Good morning, everyone. I apologize in advance for asking another question on FEOC. The press release mentioned that there have been some push-outs. I saw that the storage backlog declined marginally also in Q2. I did not see a pipeline number in the presentation. I was wondering if you saw any cancellations in the quarter and if there is a common theme that explains the push-outs or cancellations in the quarter. Is FEOC playing a role? Are customers asking for confirmation of compliance in a contract before signing a contract? That is sort of creating an uncertainty or slowdown in backlog bookings. If you can just explain the push-outs and cancellations and if it is somehow related to FEOC.

Hi, good morning, everyone and I apologize in advance for asking another question on Fiori.

But yeah. The press release mentioned that there has been some push outs and I saw it saw that the storage backlog declined marginally also in second quarter I didn't see a pipeline number in the presentation. I was wondering if you saw any cancellations in the quarter and if there is a common theme that XP.

If you can just explain the push outs and cancellations and if its somehow related to field.

The new <unk>.

Requirement also thank you in fact next year. So this year's program probably got Richa.

Yes.

Reached.

This year.

The push outs are slash cancellations in the quarter.

Yes no.

The new <unk>.

We are playing a role are customers asking for confirmation of compliance in a contract before signing a contract and that's sort of like creating an uncertainty or slowdown in backlog bookings. If you can just explain the push outs and cancellations and if its somehow related to Fiat.

Our requirement. So however, I mean, we mentioned.

Some project.

A portion of two second half due to tariff issues.

The tariff is different from <unk>.

<unk>.

Got it.

One two.

Wina Huang: The new FEOC requirement also takes effect next year. This year's project, the project which reached COD this year, there is no new FEOC requirement. However, we mentioned that there are some projects pushed to the second half due to tariff issues. Tariff is different from FEOC. I also want to clarify that our pipeline did not go down. We delivered 2.3 GWh, but we added a new pipeline. Our new energy storage pipeline, in terms of dollar value, actually went up a little bit. You can find that in our press release. We do have some major deals that are at the very last stage of negotiation. There are some big numbers there.

And you'll see a requirement also thank you in fact next year. So this year's program.

I also want to clarify that.

Our pipeline didn't go down well delivered too.

We gotta Richa.

One three gigawatt hour, but we are new pipeline now our new <unk>.

Rich C O D. This year.

Yes no.

New <unk>.

Storage pipeline.

Requirement. So however, I mean, we mentioned there are.

In terms of dollar Ivano actually went up a little bit.

Some project.

I find that in our press release.

A portion of two second half due to tariff issues.

So actually we do have some major deals that is at the very last.

The tariff is different from <unk>.

Yeah.

A stage of negotiation.

Got it I also want to.

There's some big numbers there.

I also want to clarify that our pipeline didn't go down well deliver two.

Got it and as a follow up.

You mentioned that the storage margins without the benefit of falling lithium carbonate pricing have been normalizing historically, you mentioned, 20% margins and later on 15% to 17% margins.

<unk>.

0.3 gigawatt hour.

We at new pipeline, so our new.

Storage pipeline.

It's the second half lower than 15% any indication on current margins on margin on backlog would be helpful.

In terms of all our Ivano actually went up a little bit.

How are you going to find that in our pricing. So actually we do have some major deals that is at the very last.

We are working on the 20% target.

A stage of negotiation so there's.

Got it thank you.

There's some big numbers there.

Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to management for any closing comments.

Dr. Sean Chu: Got it. As a follow-up, you mentioned that the storage margins without the benefit of falling lithium carbonate pricing have been normalizing. Historically, you've mentioned 20% margins and later on 15% to 17% margins. Is the second half lower than 15%? Any indication on current margins or margin on backlog would be helpful?

Got it and as a follow up you mentioned that the storage margins without the benefit of falling lithium carbonate pricing have had been normalizing historically, you've mentioned, 20% margins and later on 15% to 17% margins.

Thank you for joining us today and for your continued support.

You have any question.

I'd like to start our call please contact our Investor relations team.

It's the second half lower than 15% any indication on current margins on margin on backlog would be helpful.

Take care and have a great.

Wina Huang: are working on the 20% as a target.

We're working on that 20% target.

Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time and enjoy the rest of your day.

Dr. Sean Chu: Got it. Thank you.

Got it thank you.

Yeah.

Yan Zhuang: Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to management for any closing comments.

Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to management for any closing comments.

Wina Huang: Thank you for joining us today and for your continued support. If you have any questions, I would like to set up a call. Please contact our investor relations team. Take care and have a great day.

Thank you for joining us today, and well you're continuing with some poor if you have any question Oh, what I'd like to start off the call. Please contact our investor relations team.

Take care and have a great day.

Yan Zhuang: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time and enjoy the rest of your day.

[music].

Yes.