Q4 2025 Canadian Solar Inc Earnings Call

March 19, 2026

Operator 2: Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Q4 2025 Earnings Conference Call. My name is Melissa, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Q4 2025 Earnings Conference Call. My name is Melissa, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Speaker #1: 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.

Speaker #1: I would now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Speaker #2: Thank you, operator, and welcome everyone to Canadian Solar's fourth 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 Presentation section.

Wina Huang: Thank you, operator, and welcome everyone to Canadian Solar's Q4 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. Shawn Qu, Chairman and CEO, Colin Parkin, President of Canadian Solar and President of e-STORAGE, Ismael Guerrero, Corporate VP and President, Recurrent Energy, and Xinbo Zhu, Senior VP and CFO. All company executives will participate in the Q&A session after management's formal remarks. On this call, Shawn Qu will go over some key messages for the quarter. Colin Parkin and Ismael Guerrero will review business highlights for manufacturing and Recurrent Energy, respectively, and Xinbo Zhu will go through the financial results. Colin Parkin will conclude the prepared remarks with the business outlook, after which we will have time for questions.

Speaker #2: Joining us today are Dr. Sean Chu, Chairman and CEO; Colin Parkin, President of Canadian Solar and President of e-Storage; Ismael Guerrero, Corporate VP and President of Canadian Solar subsidiary Recurrent Energy; and Xinbo Zhu, Senior VP and CFO.

Speaker #2: 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.

Speaker #2: Colin and Ismael will review business highlights for Manufacturing and Recurrent Energy, respectively, and Xinbo will go through the financial results. Colin will conclude the prepared remarks with the business outlook, after which we will have time for questions.

Speaker #2: Before we begin, I would like to remind listeners that management's prepared remarks today, as well as their answers to questions, will contain 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 contain forward-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 1995. Actual results may differ from management's current expectations. Any projections of the company's future performance represent management's estimate 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.

Speaker #2: The company claims protection under the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

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. Shawn Qu. Shawn, please go ahead.

Speaker #2: 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.

Speaker #2: 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. Sean Chu.

Speaker #2: Sean, please go ahead.

Speaker #3: Thank you, Wina, and thank you all for joining our fourth quarter earnings call. 2025 was another challenging year marked by persistent market headwinds and a shifting regulatory landscape.

Shawn Qu: Thank you, Wina, and thank you all for joining our Q4 earnings call. 2025 was another challenging year marked by persistent market headwinds and a shifting regulatory landscape. Through these turbulent conditions, we demonstrated strategic resilience and operational discipline. We prioritized the margin and diversified our profit drivers, particularly in energy storage. Now, let's review our operating and financial results. Please turn to slide 3. In the fourth quarter, we shipped 4.3GW of solar modules, bringing total shipments to global customers to 24.3GW for the year. In response to the prolonged solar downturn, we have pivoted away from industry's traditional focus on shipment volumes. Instead, we are concentrating on strategic high-value markets. Notably, in US market, we continue to build on our historically strong track record. In 2025, we delivered a record 8.1GW to the United States.

Shawn Qu: Thank you, Wina, and thank you all for joining our Q4 earnings call. 2025 was another challenging year marked by persistent market headwinds and a shifting regulatory landscape. Through these turbulent conditions, we demonstrated strategic resilience and operational discipline. We prioritized the margin and diversified our profit drivers, particularly in energy storage. Now, let's review our operating and financial results. Please turn to slide three. In the fourth quarter, we shipped 4.3GW of solar modules, bringing total shipments to global customers to 24.3GW for the year. In response to the prolonged solar downturn, we have pivoted away from industry's traditional focus on shipment volumes. Instead, we are concentrating on strategic high-value markets. Notably, in US market, we continue to build on our historically strong track record. In 2025, we delivered a record 8.1GW to the United States.

Speaker #3: Through these turbulent conditions, we demonstrated strategic resilience and operational discipline. We prioritized the margin and diversified our profit drivers, particularly in energy storage. Now, let's review our operating and financial results.

Speaker #3: Please turn to slide three. In the fourth quarter, we shipped 4.3 gigawatts of solar modules, bringing total shipments to global customers to 24.3 gigawatts for the year.

Speaker #3: In response to the prolonged solar downturn, we have pivoted away from the industry’s traditional focus on shipment volumes. Instead, we are concentrating on strategic, high-value markets.

Speaker #3: Notably, in US market, we continue to build on our historically strong track record. In 2025, we delivered a record 8.1 gigawatts to the United States.

Shawn Qu: In energy storage, the volatile tariff environment shifted some shipment volumes into 2026. Even so, we ended the year with a record 7.8 gigawatt-hours of global shipments, including 3.9 gigawatt-hours delivered to the United States. Given downward adjustments in both solar modules and energy storage volumes, along with lighter project sales from Recurrent Energy, our total revenue of 2025 was $5.6 billion. Gross margin improved by 160 basis points year-over-year. This was driven by a higher mix of module shipments to high-value regions and a larger shares of storage volumes delivered under third-party contracts. We maintained tight control over operating expenses and achieved operating income of $43 million for the full year. However, a volatile macro environment increased FX losses and interest costs grew as we increased debt to support our IPP build-out.

Speaker #3: The energy storage, the volatile tariff environment shifted some shipment volumes into 2026. Even so, we ended the year with a record 7.8 gigawatt-hours of global shipments, including 3.9 gigawatt-hours delivered to the United States.

Speaker #3: Given downward adjustments in both solar modules and energy storage volumes, along with lighter project sales from Recurrent Energy, our total revenue for 2025 was $5.6 billion.

Speaker #3: Gross margin improved by 160 basis points year over year. This was driven by a higher mix of module shipments to high-value regions and a larger share of storage volumes delivered under third-party contracts.

Speaker #3: We maintained tight control over operating expenses and achieved operating income of 43 million dollars for the full year. However, a volatile macro environment increased FX losses and interest costs grew as we increased debt to support our IPP build-out.

Speaker #3: As a result, we recorded a net loss attributable to Canadian Solar of $104 million, or $2.50 per diluted share. Canadian Solar has continuously evolved over more than two decades in the renewable industry.

Shawn Qu: As a result, we recorded a net loss attributable to Canadian Solar of $104 million, or $2.50 per diluted share. Canadian Solar has continuously evolved over more than two decades in the renewable industry. Global opportunities have shifted over time, and we have built a strong global track record across solar manufacturing, storage manufacturing, and project development. Today, we see a compelling opportunity to create value by returning to our home base in North America. In December 2025, we announced a strategic initiative to resume direct oversight of our US operations by forming our new US manufacturing platform, CS PowerTech. For an update on our US manufacturing roadmap, please turn to slide 4. Canadian Solar is spearheading the effort to reshore manufacturing to North America.

Speaker #3: Global opportunities have shifted over time, and we have built a strong global track record across solar manufacturing, storage manufacturing, and project development. Today, we see a compelling opportunity to create value by returning to our home base in North America.

Speaker #3: In December 2025, we announced a strategic initiative to resume direct oversight of our US operations by forming our new US manufacturing platform, CS PowerTech.

Speaker #3: When updated on our US manufacturing roadmap, please turn to slide four. Canadian Solar is spearheading the effort to reshore manufacturing to North America. In Mesquite, Texas, we have successfully ramped our solar module factory to an annual production run rate exceeding 5 gigawatts, supported by 1,500 local employees.

Shawn Qu: In Mesquite, Texas, we have successfully ramped our solar module factory to an annual production run rate exceeding 5 gigawatts, supported by 1,500 local employees. As we have previously noted, we believe the United States is best served by resilient domestic supply chain. Consistent with this view, we are doubling our nameplate capacity to 10 gigawatt peak by the end of 2026. This expansion is expected to increase our local workforce to 1,700 employees. This will make us the largest crystalline silicon solar module manufacturer in the country. We are also pleased to report progress at our flagship solar cell factory in Jeffersonville, Indiana. In response to strong customer demand, we're expanding our initial nameplate capacity beyond the originally planned 5 gigawatt peak as we install and commission additional production lines through 2026.

Speaker #3: As we have previously noted, we believe the United States is best served by resilient domestic supply chain. Consistent with this view, we are doubling our nameplate capacity to 10 gigawatt peak.

Speaker #3: By the end of 2026, this expansion is expected to increase our local workforce to 1,700 employees. This will make us the largest crystalline silicon solar module manufacturer in the country.

Speaker #3: We are also pleased to report progress at our flagship solar cell factory in Jeffersonville, Indiana, in response to strong customer demand. We are expanding our initial nameplate capacity beyond the originally planned 5 gigawatt-peak as we install and commission additional production lines through 2026.

Shawn Qu: Phase one will have a nameplate capacity of 2.1 gigawatt peak and will use state-of-the-art heterojunction technology or HJT. Trial production is scheduled to begin next month. Phase one will represent the only commercially operational HJT solar cell facility in the United States. Phase two will add 4.2 gigawatt of capacity, bringing our total US solar cell nameplate capacity to 6.3 gigawatt peak. This will make us the largest crystalline silicon solar cell manufacturer in the country. We expect the trial production of phase two to begin by the end of 2026. We recognize the significant value of adding phase two to our solar cell facility, and we believe the market does as well. This was demonstrated by our recently completed $230 million convertible bond issuing. Demand for storage in US also continues to grow strongly.

Speaker #3: Phase one will have a nameplate capacity of 2.1 gigawatt peak and will use state-of-art hydrogen technology or HJT. Trial production is scheduled to begin next month.

Speaker #3: Phase one will represent the only commercially operational HJT solar cell facility in the United States. Phase two will add 4.2 gigawatts of capacity, bringing our total US solar cell nameplate to 6.3 gigawatt peak.

Speaker #3: This will make us the largest crystalline silicon solar cell manufacturer in the country. We expect the trial production of phase two to begin by the end of 2026.

Speaker #3: We recognize the significant value of adding phase two to our solar cell facility and we believe the market does as well. This was demonstrated by our recently completed 230 million dollar convertible bond issuing.

Speaker #3: Demand for storage in the U.S. also continues to grow strongly. The record build-out of data centers to support AI growth is driving increasing power demand for data center infrastructure.

Shawn Qu: The record build-out of data centers to support AI growth is driving increase in power demand for data center infrastructure. Our OBBBA compliant storage solutions produced in Southeast Asia have seen very strong demand. As a result, we plan to scale the resources there to increase both system and battery cell capacity throughout 2026. Hence, we'll be both expanding our Southeast Asia energy storage manufacturing capacity and advancing phase 2 of our CS-US solar cell factory in tandem. Given the commercial priority of these two significant investments, we are strategically delaying progress at our battery cell and BASS production facility in Shelbyville, Kentucky. Given our long-term commitment to US manufacturing, Recurrent Energy will proactively rebalance its business towards monetizing in construction and operating assets in order to optimize cash flow and manage leverage.

Speaker #3: Our OBBBA compliant storage solutions produce in Southeast Asia have seen very strong demand. As a result, we plan to scale the resources there to increase both system and battery cell capacity throughout 2026.

Speaker #3: Hence, we will be both expanding our Southeast Asia and the storage manufacturing capacity and advancing phase two of our US solar cell factory in tandem. Given the commercial priority of these two significant investments, we are strategically delaying progress at our battery cell and batch production facility in Shelbyville, Kentucky.

Speaker #3: Given our long-term commitment to US manufacturing, Recurrent Energy will proactively rebalance its business towards monetizing in-construction and operating assets in order to optimize cash flow and manage leverage.

Speaker #3: In conclusion, I am proud of our team for delivering strong performance this year, and I look forward to the continued momentum we are building in our U.S. manufacturing initiatives.

Shawn Qu: In conclusion, I am proud of our team for delivering strong performance this year, and I look forward to continue the momentum we are building in our US manufacturing initiatives. With that, I will now turn the call over to Colin, who will provide more details on our manufacturing business. Colin, please go ahead.

Speaker #3: With that, I will now turn the call over to Colleen, who will provide more details on our manufacturing business. Colleen, please go ahead.

Speaker #1: Thank you, Sean. Please turn to slide five. In the fourth quarter, we continued to operate against a challenging solar market backdrop. Upstream cost increases, particularly in silver, along with the costs associated with underutilization across our global solar supply chain, required careful volume management to protect margins.

Colin Parkin: Thank you, Sean. Please turn to slide five. In Q4, we continued to operate against a challenging solar market backdrop. Upstream cost increases, particularly in silver, along with the cost associated with underutilization across our global solar supply chain, required careful volume management to protect margins. As a result, we delivered 4.3 gigawatts of solar modules below our guidance. In storage, shipments were delayed into Q1 2026 due to construction delays at one of our customer sites. As a result, we delivered 2 gigawatt-hours slightly below our guidance. These two volume shortfalls resulted in lower than expected revenue of $1.3 billion. Solar module ASPs remained at record lows throughout 2025. We have been an industry leader in pivoting away from volume growth towards value growth.

Speaker #1: As a result, we delivered 4.3 gigawatts of solar modules below our guidance. In storage, shipments were delayed into the first quarter of 2026 due to construction delays at one of our customer sites.

Speaker #1: As a result, we delivered 2 gigawatt hours, slightly below our guidance. These two volume shortfalls resulted in lower than expected revenue of $1.3 billion.

Speaker #1: Solar module ASPs remained at record lows throughout 2025. We have been an industry leader in pivoting away from volume growth towards value growth. By controlling shipments to less profitable markets and increasing shipments to the U.S. market, we maintain blended pricing above the industry average.

Colin Parkin: By controlling shipments to less profitable markets and increasing shipments to the US market, we maintain blended pricing above the industry average. In 2025, the US accounted for approximately 1/3 of our global module shipments. Meanwhile, our storage business in 2025 faced challenges created by tariff volatility and the passage of the One Big Beautiful Bill Act. These policy uncertainties materially impacted customers' project planning. While we did not lose any opportunities, some volume shifted into 2026 as we work closely with customers to navigate these trials. Margins normalized in the second half of the year as we delivered more recently signed contracts. With the increase in lithium carbonate prices, we are actively managing our exposure. Today, the two most important drivers of our manufacturing margin are the mix of solar module shipments to the US and the performance of our storage business.

Speaker #1: In 2025, the US accounted for approximately one-third of our global module shipments. Meanwhile, our storage business in 2025 faced challenges created by tariff volatility and the passage of the One Big Beautiful Bill Act.

Speaker #1: These policy uncertainties materially impacted customers' project planning. While we did not lose any opportunities, some volume shifted into 2026 as we work closely with customers to navigate these trials.

Speaker #1: Margins normalized in the second half of the year as we delivered more recently signed contracts. With the increase in lithium carbonate prices, we are actively managing our exposure.

Speaker #1: Today, the two most important drivers of our manufacturing margin are the mix of solar module shipments to the US and the performance of our storage business.

Speaker #1: Within U.S. module shipments, domestic manufacturing is becoming increasingly important to margin as we reshore production and deliver a greater portion of our strategy through our own domestic capacity.

Colin Parkin: Within US module shipments, domestic manufacturing is becoming increasingly important to margin as we reshore production and deliver a greater portion of our strategy through our own domestic capacity. Now let me walk you through the latest updates on our battery energy storage business. Please turn to slide six. We delivered 2 gigawatt-hours in Q4, corresponding to $297 million in revenue after accounting for volumes delivered to our own projects. Despite the delays caused by policy changes, we ended the year with a record 7.8 gigawatt-hours of energy storage shipments delivered globally, a year-over-year increase of 19%. Over the past three years, we have tripled our sales in this business. Our momentum is further reflected in our record contracting backlog of $3.6 billion as of 13 March 2026.

Speaker #1: Now let me walk you through the latest updates on our battery energy storage business. Please turn to slide six. We delivered 2 gigawatt hours in the fourth quarter.

Speaker #1: Corresponding to $297 million in revenue after accounting for volumes delivered to our own projects. Despite the delays caused by policy changes, we ended the year with a record 7.8 gigawatt hours of energy storage shipments delivered globally.

Speaker #1: A year-over-year increase of 19%. Over the past three years, we have tripled our sales in this business. Our momentum is further reflected in our record contracting backlog of $3.6 billion as of March 13, 2026.

Speaker #1: This includes contracted long-term service agreements covering 29 gigawatt-hours of projects. Today, we are the market leader in our home country of Canada in terms of contracted volume, with multiple gigawatt-hours under contract.

Colin Parkin: This includes contracted long-term service agreements covering 29 gigawatt-hours of projects. Today, we are the market leader in our home country of Canada in terms of contracted volume with multiple gigawatt-hours under contract. We maintain a strong presence in key markets, including the United States, and the United Kingdom, while scaling delivery in newer markets such as Australia, and Latin America. At the same time, we continue to actively engage in markets such as Japan, and mainland Europe, where we see attractive new opportunities. In terms of applications, we see a significant opportunity driven by the rapid build-out of data centers. For example, the 2.5 gigawatt-hour supply agreement we recently signed with a major US utility reflects the sharp increase in electricity demand driven by AI and hyperscale data center development.

Speaker #1: We maintain a strong presence in key markets, including the United States and the United Kingdom, while scaling delivery in newer markets such as Australia and Latin America.

Speaker #1: At the same time, we continue to actively engage in markets such as Japan and mainland Europe, where we see attractive new opportunities. In terms of applications, we see a significant opportunity driven by the rapid build-out of data centers.

Speaker #1: For example, the 2.5 gigawatt-hour supply agreement we recently signed with a major U.S. utility reflects a sharp increase in electricity demand driven by AI and hyperscale data center development.

Speaker #1: Battery energy storage is playing an increasingly critical role in supporting the additional power requirements of data center infrastructure. By strengthening regional grid capacity, our storage solutions help ensure reliable power for these emerging loads.

Colin Parkin: Battery energy storage is playing an increasingly critical role in supporting the additional power requirements of data center infrastructure. By strengthening regional grid capacity, our storage solutions help ensure reliable power for these emerging loads. We have built a dedicated team focused specifically on the requirements of data centers and related infrastructure, and we are beginning to see the strong results from that effort. Our focus is on delivering comprehensive power solutions, including support for data centers and long-duration applications. Our differentiation lies in providing cost-competitive and reliable total solutions. We combine strong execution capabilities, deep experience in complex grid interconnection and commissioning, and long-term service expertise with a proven product platform and track record. This allows us to deliver the value our customers are seeking as they navigate the changing demands created by rapidly growing electricity loads.

Speaker #1: We have built a dedicated team focused specifically on the requirements of data centers and related infrastructure, and we are beginning to see strong results from that effort.

Speaker #1: Our focus is on delivering comprehensive power solutions, including support for data centers and long-duration applications. Our differentiation lies in providing compatible, competitive, and reliable total solutions.

Speaker #1: We combine strong execution capabilities, deep experience in complex grid interconnection and commissioning, and long-term service expertise with a proven product platform and track record.

Speaker #1: This allows us to deliver the value our customers are seeking as they navigate the changing demands created by rapidly growing electricity loads. Now, let me hand the call over to Ismael, who will provide an overview of Recurrent Energy.

Colin Parkin: Now let me hand the call over to Ismael, who will provide an overview of Recurrent Energy, Canadian Solar's global project development business. Ismael, please go ahead.

Speaker #1: Canadian Solar's global project development business. Ismael, please go ahead.

Speaker #2: Thank you, Colin. Please turn to slide seven. In the fourth quarter, we saw the fewest small PV projects in Japan, bringing total full-year 2025 sales to nearly one gigawatt.

Ismael Guerrero Arias: Thank you, Colin. Please turn to slide 7. In the Q4, we sold a few small PV projects in Japan, bringing total full year 2025 sales to nearly 1 gigawatt. Revenues from operating solar and battery energy storage projects decreased sequentially due to seasonality, while power services performance remained stable. Two major project sales originally planned for the Q4 have now shifted into 2026. One of these projects has already been sold in the Q1. Gross margin was further pressured by impairments to project assets within our pipeline. Moreover, without sufficient scale from project sales during the quarter, we were unable to cover operating expenses, resulting in an operating loss of $69 million. We continue to shift our business mix towards the monetization of operating and under-construction assets in order to strengthen our balance sheet and improve cash flow.

Speaker #2: Revenues from operating solar and battery energy storage projects decreased sequentially due to seasonality, while power services performance remained stable. Two major project sales originally planned for the fourth quarter have now shifted into 2026.

Speaker #2: One of these projects has already been sold in the first quarter. Gross margin was further pressured by impairments to project assets within our pipeline.

Speaker #2: Moreover, without sufficient scale from project sales during the quarter, we were unable to cover operating expenses resulting in an operating loss of 69 million dollars.

Speaker #2: We continue to shift our business mix towards the divestment of operating and under-construction assets in order to strengthen our balance sheet and improve cash flow.

Speaker #2: As we manage the pace of construction activities, we are also optimizing our pipeline for quality, focusing on generating value from existing opportunities. Please turn to slide eight for an update on our pipeline.

Ismael Guerrero Arias: As we manage the pace of construction activities, we are also optimizing our pipeline for quality, focusing on generating value from existing opportunities. Please turn to slide 8 for an update on our pipeline. As of December 2025, we have secured interconnections for around 7 gigawatts of solar and 15 gigawatt-hours of energy storage globally, excluding projects already in operation. As part of our continued effort to streamline our pipeline, we have removed projects that have been impaired this quarter. Following these adjustments, our total project pipeline now stands at 24 gigawatts of solar and 83 gigawatt-hours of energy storage. Now let me hand the call over to Xinbo, who will go through our financial results in more detail. Xinbo, please go ahead.

Speaker #2: As of December 2025, we have secured interconnections for around 7 gigawatts of solar and 15 gigawatt hours of energy storage globally, excluding projects already in operation.

Speaker #2: As part of our continued effort to streamline our pipeline, we have removed projects that have been in part this quarter. Following this adjustment, our total project pipeline now stands at 24 gigawatts of solar and 83 gigawatt-hours of energy storage.

Speaker #2: Now let me hand the call over to Shimbo, who will go through our financial results in more detail. Shimbo, please go ahead.

Speaker #3: Thank you, Ismael. Please turn to slide nine. In the fourth quarter, we delivered revenue of $1.2 billion. Revenue was below guidance due to project sales delayed into 2026.

Xinbo Zhu: Thank you, Ismael. Please turn to slide 9. In Q4, we delivered revenue of $1.2 billion. Revenue was below guidance due to project sales delayed into 2026, and lower than expected volumes in both solar and storage. Gross margin was 10.2%, impacted by project asset impairments at Recurrent Energy and the inventory write-down in our manufacturing business. Selling and distribution expenses decreased 20% sequentially, primarily due to lower shipping costs associated with reduced shipment volumes. Channel and administrative expenses decreased 8% sequentially, driven by continued cost control measures. Net interest expense in Q4 was $39 million, up $10 million from the prior quarter. This increase was driven by a modest rise in total debt balances.

Speaker #3: And lower than expected volumes in both solar and storage. Gross margin was 10.2%, impacted by project asset impairments in Recurrent Energy and the inventory write-down in our manufacturing business.

Speaker #3: Selling and distribution expenses decreased 20% sequentially, primarily due to lower shipping costs associated with reduced shipment volumes. Channel and administrative expenses decreased 8% sequentially, driven by continued cost control measures.

Speaker #3: Net interest expense in the fourth quarter was $39 million, up $10 million from the prior quarter. This increase was driven by a modest rise in total debt balances.

Speaker #3: Net foreign exchange loss in the fourth quarter was 15 million dollars. Driven by a weaker US dollar and a stronger Chinese renminbi. Total net loss for the quarter was 131 million dollars.

Xinbo Zhu: Net foreign exchange loss in Q4 was $15 million, driven by a weaker US dollar and a stronger Chinese RMB. Total net loss for the quarter was $131 million. Net loss attributable to Canadian Solar shareholders was $86 million or $1.66 per diluted share. Now let's turn to cash flow and the balance sheet. Please turn to slide 10. In Q4, net cash flow used in operating activities was $65 million, driven by change in working capital, specifically an increase in project assets, partially offset by a decrease in inventories, as inventory in the prior quarter had increased in anticipation of higher input costs. Capital expenditures for the year totaled $962 million, slightly below forecast. This was primarily due to payment timing, which we expect to occur in 2026.

Speaker #3: Net loss attributable to Canadian Solar shareholders was $86 million, or $1.66 per diluted share. Now, let's turn to cash flow and the balance sheet.

Speaker #3: Please turn to slide 10. In the fourth quarter, net cash flow used in operating activities was $65 million, driven by a change in working capital, specifically an increase in project assets.

Speaker #3: Partially offset by a decrease in inventories, as inventory in the prior quarter had increased in anticipation of higher input costs. Capital expenditures for the year totaled $962 million.

Speaker #3: Slightly below forecast. This was primarily due to payment timing, which we expect to occur in 2026. Net cash provided by financing activities was $22 million.

Xinbo Zhu: Net cash provided by financing activities was $22 million, as debt increased incrementally to provide additional financial flexibility for the group. Of our $6.5 billion in gross debt, non-recourse debt under Recurrent Energy as of 31 December 2025 was $2.2 billion. We ended the year with a cash balance of $1.9 billion, which we will deploy prudently in line with our strategic priorities. Now let me turn the call back to Colin, who will conclude with our guidance and business outlook. Colin, please go ahead.

Speaker #3: As that increased incrementally to provide additional financial flexibility for the group. Of our $6.5 billion in gross debt, non-Recurrence debt under Recurrent Energy as of December 31, 2025, was $2.2 billion.

Speaker #3: We ended the year with a cash balance of $1.9 billion, which we will deploy prudently in line with our strategic priorities. Now, let me turn the call back to Colleen.

Speaker #3: Who will conclude with our guidance and business outlook. Colleen, please go ahead.

Speaker #4: Thank you, Shimbo. Please turn to slide 11. For the first quarter of 2026, we expect our manufacturing segment to deliver solar module shipments between 2.2 to 2.4 gigawatts.

Colin Parkin: Thank you, Xinbo. Please turn to slide 11. For Q1 2026, we expect our manufacturing segment to deliver solar module shipments between 2.2 to 2.4 gigawatts. For energy storage, we expect shipments between 1.7 to 1.9 gigawatt-hours. We forecast total revenue for the first quarter to be between $900 million and $1.1 billion, with gross margin expected to range from 13% to 15%. Margins in the first quarter are expected to remain soft across both the manufacturing segment and Recurrent Energy. This reflects cost increases across the solar supply chain as well as delayed project sales at Recurrent Energy. For the full year of 2026, we are issuing new guidance.

Speaker #4: For energy storage, we expect shipments between 1.7 to 1.9 gigawatt-hours. We forecast total revenue for the first quarter to be between $900 million and $1.1 billion, with gross margin expected to range from 13 to 15 percent.

Speaker #4: Margins in the first quarter are expected to remain soft across both the manufacturing segment and Recurrent Energy. This reflects cost increases across the solar supply chain, as well as delayed project sales at Recurrent Energy.

Speaker #4: For the full year of 2026, we are issuing new guidance. We expect to deliver 6.5 to 7 gigawatts of module shipments and between 4.5 to 5.5 gigawatt hours of energy storage shipments to the U.S. market.

Colin Parkin: We expect to deliver 6.5 to 7 gigawatts of module shipments and between 4.5 to 5.5 gigawatt-hours of energy storage shipments to the US market. Our solar module shipments in the US are expected to be slightly lower in 2026 compared with 2025. This is due to a limited supply of solar cells qualified as non-PFE under the BABA during the first half of the year. The elevated cost of these cells will also affect profitability. We believe this constraint will be temporary as our own domestic solar cell production ramps during Q2 and Q3. Similarly, battery energy storage shipments are expected to be weighted towards the second half of the year. Within our project development business, our focus remains on rebalancing the portfolio towards asset monetization while continuing to optimize our cost structure.

Speaker #4: Our solar module shipments in the US are expected to be slightly lower in 2026 compared with 2025. This is due to a limited supply of solar cells qualified as non-PFE under the OBBBA during the first half of the year.

Speaker #4: The elevated cost of these cells will also affect profitability. We believe this constraint will be temporary as our own domestic solar cell production ramps during the second and third quarters.

Speaker #4: Similarly, battery energy storage shipments are expected to be weighted towards the second half of the year. Within our project development business, our focus remains on rebalancing the portfolio towards asset monetization while continuing to optimize our cost structure.

Speaker #4: Overall, 2026 will be a transition year as we accelerate our US manufacturing roadmap and further diversify our long-term profitability drivers. With that, I would now like to open the floor for questions.

Colin Parkin: Overall, 2026 will be a transition year as we accelerate our US manufacturing roadmap and further diversify our long-term profitability drivers. With that, I would now like to open the floor for questions. Operator?

Speaker #4: Operator?

Speaker #5: Thank you. If you'd 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.

Operator 2: Thank you. If you'd 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 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Colin Rusch with Oppenheimer & Company. Please proceed with your question.

Operator: Thank you. If you'd 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 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Colin Rusch with Oppenheimer & Company. Please proceed with your question.

Speaker #5: You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #5: Our first question comes from the line of Colin Rush with Oppenheimer & Company. Please proceed with your question.

Speaker #6: Thanks so much, guys, and congratulations on being able to shift the business so aggressively here. I'm curious about the pricing environment in the US.

Colin Rusch: Thanks so much, guys, and congratulations on being able to ship the business so aggressively here. You know, I'm curious about the pricing environment in the US. You know, what are you guys seeing in terms of trend lines here and long-term support for pricing that supports the aggressive capacity expansion?

Speaker #6: What are you guys seeing in terms of trend lines here and long-term support for pricing that supports the aggressive capacity expansion?

Shawn Qu: Yeah, Colin, this is Shawn speaking. I guess you mean the solar pricing.

Speaker #7: Yeah. Colleen, this is Charles speaking. I guess you mean the solar pricing. Solar. Long-term price—solar long-term pricing in the U.S. is stable. And as a matter of fact, we see—I mean, our main market in the U.S. is the utility-scale project market, which I usually like—largest-scale projects, big orders, and with a few quarters of lead time in general.

Shawn Qu: Yeah, Colin, this is Shawn speaking. I guess you mean the solar pricing.

Colin Rusch: That's correct.

Shawn Qu: Long-term price. Solar long-term pricing in US is stable. As a matter of fact, we see. I mean, our main market in US is the utility scale project market, which are usually like larger scale project, big orders, and with a few quarters of lead time, in general. In this market, we have seen the pricing per watt going up. For example, from the beginning of the year to now, we have seen the US, you know, average pricing go up for like $0.02 to $0.03, some more, mainly in response to, I think, number one, the tight supply of the so-called OBBA compliant solar cell supply, but also response to the higher material cost, especially the silver cost.

Speaker #7: So in this market, we have seen the pricing, the pricing per watt going up. And for example, for the beginning of the year to now, we have seen the US pricing in average go up like two to three cents US, some more.

Speaker #7: Mainly in response to, I think, number one, the tight supply of the so-called OBBBA-compliant solar cell supply, but also in response to the higher material cost, especially the silver cost.

Speaker #7: So, I think this will allow us to sustain the margin in the US market. Now, for the storage, we also see the price stable.

Shawn Qu: I think this will allow us to sustain the margin in the US market. Now, for the storage, we also see the price stable and also respond to the higher lithium price. As you probably know, the lithium price, lithium carbonate price also went up along with other commodities. Major commodity prices also went up. You know, the lithium carbonate price also went up this year, you know, since late December. The current new price have reflected this, and this will allow us to maintain the growth margin more or less for the US market, Colin.

Speaker #7: And also, respond to the higher lithium price, as you probably know. The lithium price—the lithium carbonate price—also went up, along with other commodities. Major commodity prices also went up.

Speaker #7: The lithium carbonate price also went up this year, since late December. So, the current new pricing reflected this, and so this will allow us to maintain the gross margin more or less for the US market, Colleen.

Speaker #6: Thank you so much—super helpful. And then, just from an organizational perspective, as you look at a different strategy around revenue and margin, how should we be thinking about the operating expenses and the baseline there, and how that allows for some significant operating leverage as you start to grow again on the top line?

Colin Rusch: Thank you so much, Shawn. That's super helpful. Just from an organizational perspective, as you know look at a different strategy around revenue and margin, how should we be thinking about the operating expenses and you know the baseline there, and how that allows for some you know some significant operating leverage as you start to grow again on the top line?

Speaker #7: Yeah. In terms of operating expenses, we see that going down, proportional to the shipment volume, because a large part of the operating expenses is the shipping cost.

Shawn Qu: Yeah. In terms of operating expenses, we see it going down, like, proportional to the shipment volume because a large part of operating expenses is the shipping cost and also the overhead cost to support the volume. If the volume grow, then the operating expenses also grow. But if the volume go down, this operating expenses also go down. That's in case of. In June, we will see some increase of operating costs for the energy storage. But meanwhile, we'll see operating cost reduction in the solar area. I think moving forward, the challenge is the solar. If the solar price continue to go down, then that will make the like percentage operating expenses for solar bigger.

Speaker #7: And also the overhead cost to support the volume. So if the volume grows, then the operating expenses also grow. But if the volume goes down, the operating expenses also go down.

Speaker #7: That's in case of so we will see some increase of operating costs for the added storage but meanwhile we'll see operating cost reduction in the solar area.

Speaker #7: I think moving forward, the challenge is that in the solar if the solar price continues to go down, then that will make the percentage operating expenses for solar bigger however, fortunately, I mean, since Q1 I mean, since January this year, we don't see the absolute ASP of solar module going down anymore.

Shawn Qu: However, fortunately, I mean, since Q1, I mean, since January this year, we don't see the absolute ASP of solar module going down anymore. We actually see it go up. Also, we don't see the energy storage price going down. It is also going up. I think, as long as we can continue to control and operating expenses and make our operation more, more efficient, we'll be able to grow the bottom line. I think that you will see that happen starting from Q2, I believe.

Speaker #7: We actually see it go up. And also, we don't see the added storage price going down. It is also going up. So, I think as long as we can continue to control and operate expenses and make our operation more efficient, we'll be able to grow the bottom line.

Speaker #7: I think that you will see that happen starting from Q2, I believe.

Speaker #6: Perfect. Thanks so much, guys.

Colin Rusch: Perfect. Thanks so much, guys.

Speaker #7: Thanks, Colleen.

Shawn Qu: Thanks, Colin.

Speaker #5: Thank you. Our next question comes from the line of Philip Shin with Roth Capital Partners. Please proceed with your question.

Operator 2: Thank you. Our next question comes from the line of Philip Shen with ROTH Capital Partners. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Philip Shen with ROTH Capital Partners. Please proceed with your question.

Speaker #8: Hi. Well, thanks for taking my questions. On the project delays, sorry if I missed, but what drove the project sale delays from Q4 into '26?

Philip Shen: Hi, all. Thanks for taking my questions. On the project delays, sorry if I missed, but what drove the project sales delays from Q4 into 2026? Can you give some additional color also on the impairments that you guys experienced? Thanks.

Speaker #8: Can you give some additional color also on the impairments that you guys experienced? Thanks.

Speaker #7: Yeah. I'll ask Ismael to address this question. And Xinbo to make any supplement if necessary. Israel.

Shawn Qu: Yeah. I'll ask Ismael to address this question and Xinbo to make any supplement if necessary. Ismael?

Speaker #6: Sure, thank you, Sean. Thank you. Look, there were a couple of projects that were delayed mainly due to permitting delays. One of them was already finalized.

Ismael Guerrero Arias: Sure.

Shawn Qu: Ismael?

Ismael Guerrero Arias: Thank you, Shawn. Thank you. Look, there were a couple of projects that delayed mainly due to permitting delays. One of them was already finalized. The other one is under exclusivity, so it should be finalized soon, hopefully. Mainly permitting delays. Look, the impairments are on. I mean, the main reasons are twofold. One is changes in legislation in some of the countries we play, and many projects that we were developing early stage, we believe might not be making sense anymore, and we stopped putting capital into them with the changes in the regulations. There were a bunch of them on that part, and some others in which interconnection suddenly the interconnection costs went through the roof, and we don't see them viable, not for us and not for anyone. We also decided to stop investing on.

Speaker #6: The other one is under exclusivity, so it should be finalized soon, hopefully. Mainly permitting delays. And look, the impairments are on—I mean, the main reasons are twofold.

Speaker #6: One is change in legislation in some of the countries where we play. And many projects that we were developing at an early stage, we believe might not be making sense anymore.

Speaker #6: And we stopped putting capital into them with the changes on the regulations. So there were a bunch of them on that part. And some others on which interconnections suddenly the interconnection cost went to the roof and we don't see them viable not for us and not for anyone.

Speaker #6: We also decided to stop investing on. So those are the two main drivers.

Ismael Guerrero Arias: Those are the two main drivers.

Speaker #8: Got it, Ismael. Thanks. Can you share which countries and that had their where you might be down sizing your efforts? Either due to legislation or to the interconnection costs.

Philip Shen: Got it, Ismael. Thanks. Can you share which countries where you might be downsizing your efforts, either due to legislation or to the interconnection costs? Thanks.

Speaker #8: Thanks.

Ismael Guerrero Arias: The biggest bulk on solar in US because of the changes in regulation there. Italy also because of the grid reform, also a little bit in France. Those are the main three. A little bit in Spain also, but not major.

Speaker #6: The biggest bulk in solar is in the US because of the changes in regulation there. And Italy also, because of the grid reform. Also, a little bit in France.

Speaker #6: So those are the main three. A little bit in Spain also, but not major.

Speaker #8: Great. Thanks. And then shifting over to the guidance for if you can, can you explain a little bit more why the '26 guidance is only focused on the US?

Philip Shen: Great. Thanks. Shifting over to the guidance for 2026. If you can explain a little bit more why the 2026 guidance is only focused on the US. Although Q1 has global numbers there, was wondering if you could also share what the US mix for Q1 might be. Then also, what the 2026 CapEx might be. Thanks.

Speaker #8: Although Q1 has global numbers there. And so I was wondering if you could also share what the US mix for Q1 might be. And then also what the 2026 CapEx might be.

Speaker #8: Thanks.

Shawn Qu: Yeah, Philip. Again, this is Shawn. We have already provided global guidance in November last year. We only added the new guidance for US, which we usually mention during the call, but we don't put it in writing. This time we put it in writing for the US guidance. In terms of CapEx, I will let Xinbo to address. I want to mention that the new CapEx for 2026 is mainly in United States. We have some remaining payment for the capacity in other place, but most of the CapEx are in United States. But we also have some new CapEx in Southeast Asia for the energy storage, you know, production and the lithium battery energy storage production.

Speaker #7: Yeah, Philip, again, this is Sean. We have already provided global guidance in November last year. And so we only added the new guidance for the US, which, as we usually mention during the call, we don't put in writing.

Speaker #7: So this time we put it on writing for the US guidance. In terms of CapEx, I will let Xinbo to address. I want to mention that the new CapEx for 2026 is mainly in the United States.

Speaker #7: We have some remaining payment for the capacity in other places, but most of the CapEx is in the United States. But we also have some new CapEx in Southeastern Asia for the added storage production, and the lithium battery and its storage production.

Speaker #7: But those capacities are mainly prepared for the US. Now, Xinbo, do you have some new numbers to share?

Shawn Qu: Those capacity are mainly prepared for US. Now, Xinbo, do you have some new numbers to share?

Speaker #9: Yes. It's not new numbers. The same as what we guided in last earning call. It's around 1.2 billion dollars for this year, the CapEx.

Xinbo Zhu: Yes. It's not new numbers. The same as what we guided in last earnings call. It's around $1.2 billion for this year, the CapEx. There might be some uncertainties because of, hopefully, the lower tariff to the US.

Speaker #9: There might be some uncertainties. Because of the hopefully, the lower tariffs to the US.

Speaker #8: Great. Okay. Thank you, Shinbo and Sean. One more, if I may. As it relates to the Section 337 and that investigation, I was wondering if you might be able to provide some color on that as well as I think the USPTO recently rejected your attempt to invalidate the first solar TOPCon ad lawsuit.

Philip Shen: Great. Okay. Thank you, Xinbo Zhu and Shawn Qu. One more, if I may. As it relates to the Section 337, and that investigation, I was wondering if you might be able to provide some color on that as well as, I think the USPTO recently rejected your attempt to invalidate the First Solar TopCon patent lawsuits. Just if you can give us some perspective on the IP situation. It looks like you're focused more on heterojunction, so maybe it's not that relevant. Just wanted to touch on this for a bit. Thanks.

Speaker #8: And so, just if you can give us some perspective on the IP situation—it looks like you're focused more on heterojunction, so maybe it's not that relevant.

Speaker #8: Just wanted to touch on this for a bit. Thanks.

Shawn Qu: First of all, Philip, we have decided to use a heterojunction, HJT technology for our US domestic solar cell factory a few years ago, before the legal challenge from First Solar. We made a decision independently, you know, because we believe we are a master of the HJT technology, and this technology has some very distinguished advantages. First of all, HJT has higher, you know, theoretical efficiency limit than the TopCon solar cell. Second, although both TopCon and HJT are N-type, you know, for the application on Earth, it's N-type, right? For the application in the space, some scholars believe P-type HJT has more advantage.

Speaker #7: First of all, Philip, we have decided to use heterojunction, HET technology, for our US domestic solar cell factory. A few years ago, before the legal challenge from First Solar.

Speaker #7: So we made that decision independently. And because we believe we are a master of the HET technology and this technology has some very distinguished advantages.

Speaker #7: First of all, HJT has higher theoretical efficiency limit than the TOPCon solar cell. And second, although both TOPCon and HJT are N-type, for the application on Earth, it's N-type, right?

Speaker #7: For the application in space, some scholars believe P-type, HJT, is more has more advantage. But although the TOPCon and the HJT are both N-type, HJT does have higher efficiency and also thinner wafers.

Shawn Qu: You know, although TopCon and HJT are both N-type, HJT does have higher efficiency and also thinner wafers. It has the potential to go thin wafers, therefore further reduce the cost. Also, there was another advantage of HJT technology which just appeared, you know, become more significant recently, which is the low silver use. You know, when we decided to use HJT for the US factory, the silver cost was not that high. Like two, three years ago, polysilicon cost is still number one. Now like today, silver cost all of a sudden become number one. HJT use the so-called low temperature process.

Speaker #7: It has the potential to go to thin wafers, therefore, further reducing the cost. Also, it was another advantage of HJT technology, which just appeared to become more significant recently, which is the low silver use when we decided to use HJT for the US factory.

Speaker #7: And the silver cost was not that high, like two, three years ago. Polysilicon cost was still the number one, not like today. Silver cost all of a sudden became number one.

Speaker #7: But the HJT use the so-called low temperature process as you probably know. The processing temperature, the highest processing temperature is around 200 degrees C rather than for N-type TOPCon, which have to go through some 800, 900 degrees C process.

Shawn Qu: As you probably know, the processing temperature, the highest processing temperature is around 200 degrees Celsius, rather than for N-type or TopCon, which you have to go through some 800, 900 degrees Celsius process. Because it's low temperature, we can potentially use less silver and more copper in the paste. Therefore, it will have very significant savings in terms of, you know, silver costs. Recently I have called the R&D team in our company to focus on what I call the zero silver technology. For zero silver, we can see that the HJT will go faster than the TopCon technology. Because of those elements, also, you know, HJT is a more automated and equipment-dependent process than operator-dependent.

Speaker #7: Because it's low temperature, we can potentially use less silver and more copper in the paste. Therefore, it will have very significant saving in terms of silver cost.

Speaker #7: Recently, I have called the R&D team in our company to focus on what I call the zero silver technology. And for zero silver, we can see that the HJT will go faster than the TOPCon technology.

Speaker #7: So because of those advantages, also, HJT is more of a it's a more automated and equipment-dependent process than operators-dependent. And it's operator per watt capacity is much less than the TOPCon.

Shawn Qu: Its operator per watt capacity is much less than the TopCon. It will reduce the initial operator training burden for us in US. That's why we choose HJT. As I said in my remark, we will see the first piece of HJT cells off our lines in Jeffersonville, Indiana by the end of this month. Next quarter, we will start the ramp-up process for this one. I think that the result today, you know, what happened today shows that we made the right decision on the technology selection. Also showed our depths in the R&D and technology reserve in the company.

Speaker #7: So it will let me reduce the initial operator training burden for us in the US. That's why we chose HJT. And as I said in my remark, we will see the first piece of HJT cells off our lines in Jeffersonville, Indiana.

Speaker #7: By the end of this month. So next quarter, we will start the ramp-up process for the phase one. So we think I think that the result today what happened today shows that we made the right decision.

Speaker #7: On the technology selection, also showed our depths in the R&D and technology reserve in the company. Now, turning to the on the legal patent side, I don't want to comment too much on the legal cases.

Shawn Qu: Now, turning to the legal patent side, I don't want to comment too much on the legal cases. But I do want to emphasize that USPTO pretty much rejected all the review request for patents. It's not specific to us, but it's rather a change of their practice. I don't think it affect or it will weaken our position in front of the court. We have you know, we firmly believe that our technology is sound. And also, we have not infringed any of you know, other patents. Now, in terms of Section 337, it's going to be approximately a one-year process or more than one year. You know, it's a process in front of ITC.

Speaker #7: I do want but I do want to emphasize that USPTO pretty much rejected all the review requests for patents is not specific to us, but it's rather a change of their practice.

Speaker #7: I don't think it affect or it will weaken our position in front of the court. We have we firmly believe that our technology is sound and also we have not infringed any of other patents.

Speaker #7: Now, in terms of 337, it's going to be a approximately one-year process or more than one year. So it's a process in front of ITC.

Shawn Qu: We'll let the process go. As I said, we are confident our technology and our patent determination. Meanwhile, we have flexibility. As you see that we have the HJT technology going in US already. By the end of this year, we'll be ramping up the phase 2. In Q1 next year, you will start to see 6 gigawatt, 6.3 gigawatt of nameplate capacity running in United States. That will more or less cover a large part of our solar cell requirement of our Mesquite solar module factory. As I also said, we increased our nameplate capacity of the solar module factory, you know, in Mesquite, Texas, to 10 gigawatt.

Speaker #7: So, we'll let the process go. But as I said, we are confident in our technology and our patent determination. Meanwhile, we also have flexibility.

Speaker #7: As you see, we have the HJT technology going in the US already. And by the end of this year, we'll be ramping up phase two.

Speaker #7: So in Q1 next year, it will start to see six gigawatts, 6.3 gigawatts of nameplate capacity running in the United States. That will more or less cover a large part of our solar cell, our Mesquite solar module factory.

Speaker #7: As I also said, we increased our nameplate capacity of the solar module factory in Mesquite, Texas, to 10 gigawatts. So for the remaining 3 gigawatts, we will either use TOPCon to supplement, or we might use PERC technology.

Shawn Qu: For the remaining 3 gigawatts, we will either use TopCon to supplement, or we might use a PERC technology. Altogether, I'm confident that right now, what you are seeing right now is a transition process, you know, ongoing. Starting from second half of this year, overall, you will see the result of this transition. I think we are one of the most stable players in the global market, especially in the US market. Phil.

Speaker #7: So altogether, I'm confident that right now, what I've seen is a transition process ongoing. But starting from the second half of this year, we will—you will—see the result of this transition.

Speaker #7: So, I think we are one of the most—we'll be most stable players in the global market, especially in the US market still.

Philip Shen: John, thank you very much for the comprehensive answer. I'll pass it on.

Speaker #1: John, thank you very much for the comprehensive answer. I'll pass it on.

Operator 3: Thank you. Our next question comes from the line of Maheep Mandloi with Mizuho Securities. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Maheep Mandloi with Mizuho Securities. Please proceed with your question.

Speaker #3: Thank you. Our next question comes from the line of Mahip Mandalay with Missoula Securities. Please proceed with your question.

Maheep Mandloi: Hey, hello, and thanks for the questions here. On the HJT expansion, and even the module expansion, can you talk about like the capital needs or CapEx needs for those, and then separately on the FIOC side or compliance with FIOC, and just touch upon that with this new strategy. Did you still need the 45X, or how do you plan to address the material assistance or any other rules around the foreign entity of concern language in the OBBBA? Thanks.

Speaker #4: Hey, I'm hello. Thanks for the questions here. On the JD expansion and even the model expansion, can you talk about the capital needs or CapEx needs for those and separately on the Pheox side or compliance with Pheox?

Speaker #4: Can you just touch upon that with this new strategy? Did you still need the 45X or how do you plan to address the material systems or any other rules around the foreign industry of concern language in the OBVA?

Speaker #4: Thanks.

Shawn Qu: Yeah. This is Shawn Qu. Also, as we said in the remark, we are more or less completed our restructuring necessary to be compliant to the OBBBA by December. We formed a new entity, which is called CS PowerTech. For US manufacturing, this is, you know, the OBBBA. CS PowerTech and all the subsidiary under it has 75.1% ownership from Canadian Solar. Canadian Solar is headquartered in Kitchener, Ontario. Canadian Solar, I mean, actually, we just had our first board meeting of 2026 in Kitchener, Ontario.

Speaker #5: Yeah. This is Sean. As I also as we said, in a remark, we more or less completed our restructuring. Necessary to be compliant to the OBVBA by December.

Speaker #5: We formed a new entity called CS PowerTech for U.S. manufacturing. This is the CS PowerTech, and all the subsidiaries under it have 75.1% ownership from Canadian Solar. Canadian Solar is headquartered in Kitchener, Ontario.

Speaker #5: And Canadian Solar I mean, we actually just completed or we just have had our first board meeting of 2026 in Kitchener Ontario. And we will have the second board meeting in Kitchener Ontario very soon by May.

Shawn Qu: We will have the second board meeting in Kitchener, Ontario, very soon by May. As you'll see, the major decision-making and those corporate activities are all in Canada, which makes Canadian Solar clear, you know, Canadian operating company. With this structure, we believe we are compliant with the OBBBA. In terms of CapEx, most of CapEx for 2026 will happen in United States. There are some CapEx spending for the Mesquite factory in the solar module factory. We mentioned that we expanded the capacity there from 5 gigawatts to 10 gigawatts. That will add a little equipment, but the buildings there, most of the facilities there.

Speaker #5: So, as you see, the major decision-making and those corporate activities are all in Canada, which makes Canadian Solar clearly a Canadian operating company. So, with this structure, we believe we are compliant with the OBVBA.

Speaker #5: In terms of CapEx, most of CapEx x happened for 2026 will happen in the United States. There are some CapEx spending for the Mesquite factory in the solar module factory.

Speaker #5: We mentioned that we expanded the capacity there from 5 gigawatts to 10 gigawatts. That will add a little bit of equipment, but the buildings, most of the facilities are there.

Shawn Qu: The expansion cost is way lower proportional to, you know, compare with the historical spending. That's a very. I think there is a very efficient expansion. For the Mesquite solar cell phase one and phase two all together, the total CapEx will be over $1 billion. That's why you see the numbers. Most of the CapEx numbers for 2026 occurred in Jeffersonville, Indiana, for the solar cell phase one and phase two. However, the phase one is pretty much already there. All the equipment are there. Now we are adding the phase two there.

Speaker #5: So the expanding cost expansion cost is way lower proportional to compare with the historical spending. So that's a very I think very efficient expansion.

Speaker #5: And for the Mesquite solar cell, phase one and phase two altogether the total CapEx will be over $1 billion US dollar. That's why you see the numbers most of the CapEx numbers for 2026 happened in the occurred in Jeffersonville, Indiana, for the solar cell phase one and phase two.

Speaker #5: However, the phase one is pretty much already there. All the equipment are there. Now we are adding the phase two there. There are also some CapEx expansion in Southeastern Asia for the lithium battery and its storage factory.

Shawn Qu: There are also some CapEx expansion in Southeast Asia for the lithium battery and energy storage factory. Those are where the expansion and new CapEx are happening this year.

Speaker #5: So those are where the expansion and new CapEx happening this year.

Maheep Mandloi: Got it. No, appreciate the clarity there. Maybe just a follow-up on the manufacturing for the US. Any thoughts on what gross margins you're targeting for either the cell or module or the battery manufacturing in the US? Secondly, if you could just talk about any orders you've received for the manufacturing for 2027 or 2028 at this stage, in the US factories.

Speaker #1: Got it. And I appreciate the clarity there. And let me just follow up on the manufacturing for the US. Any thoughts on what gross margins you're targeting for either the cell or module or the battery manufacturing in the US and certainly click if you can just talk about any orders you've received for the manufacturing for 2027 or 2028 at this stage.

Speaker #1: In the US factories?

Shawn Qu: Yeah. For the US factory, first of all, we typically don't guide the gross margin for future quarter and future years. However, I can share that for the solar module manufacturing, the typical gross margin. The gross margin demonstrated in previous years, in 2025, is more than 20% for the US, you know, manufacturing and US orders. This year, for this first half of the year, the margin might be a little bit, you know, tight because of the tight supply of the so-called BABA compliant solar cell supply, as I mentioned in my call, and also because we are waiting for our Jeffersonville solar cell factory to contribute for the second part of the year.

Speaker #5: Yeah. For the US factory, first of all, we typically don't guide the gross margin. For future quarter and future years, however, I do share that I can share that for the solar module manufacturing the typical gross margin the gross margin demonstrated in previous years in 2025 is more than 20%.

Speaker #5: For the US manufacturing and US orders, this year for this first half of the year, the margin might be a little bit tight because of the tight supply of the so-called OBVBA compliant solar cell supply.

Speaker #5: As I mentioned in my call and also because we are waiting for our Jeffersonville solar cell factory to contribute for the second part of here.

Shawn Qu: That tight supply caused a little bit, you know, reduced the volume in US, also as we guided, and also a little bit high price for the, you know, solar cell supply to the US. However, I think this is purely transitional. First of all, When I addressed the one of previous question, I said that the US market seems to be able to respond to the cost increase when we told our customer that the cost increased because of the silver and also because of the tight supply of the BABA compliant solar cells. Most of our customers are willing to shoulder some of this cost.

Speaker #5: And so that tight supply caused a little bit reduced volume in the US also, as we guided, and also a little bit higher price for the solar cell supply to the US.

Speaker #5: However, I think this is pure transitional. First of all, as I when I addressed the one of the previous questions, I said that the US market seems to be able to respond to the cost increase when we told tell our customer that the cost increase because of the silver and also because of the tight supply of the OBVA compliant solar cells and our customers are willing to most of our customers are willing to shoulder some of this cost.

Shawn Qu: I also want to mention that, from now on, looks like we'll see less tariff impact on the cost. I don't know how long it'll last, but I do know that for at least in Q2 we'll see the benefit of a lower tariff. Moving into second half and moving into next year, when we start to switch more and more into our domestic manufactured solar cell, the tariff will become a small question. To repeat, historically, we do see over 20% gross margin for US solar manufacturing. Now, for the energy battery, we did say that we are targeting, like 20% or higher gross margin for global shipment, including US and non-US.

Speaker #5: But I also want to mention that from now on looks like we'll see less tariff impact on the cost. I don't know how long will last, but I do know that for at least in Q2, we'll see the benefit of a lower tariff.

Speaker #5: But moving into second half and moving into next year, when we start to switch more and more into our domestic manufactured solar cell, the tariff will become small question.

Speaker #5: So to repeat, historically, we do see over 20% gross margin for US solar manufacturing. Now for the energy battery, we did say that we are targeting like 20% or higher gross margin.

Speaker #5: For global shipment, including US and non-US. Now, call it—do you want to—do you have additional comment on this topic, Pauline? That's okay.

Shawn Qu: Now, Colin, do you have additional comment on this topic? Colin? That's okay. I think we can move on.

Speaker #5: I think we can just move on.

Maheep Mandloi: Yeah, maybe. Nothing else on that, but just like quick clarification just on the 25 to 30 gigawatts of shipments you previously guided for 2026. That still applies or is that something you'll guide later or revise that later?

Speaker #1: Yeah, maybe. And nothing else on that, but quick clarification just on the 2025 to 30 gigawatts of shipments that you previously got for 2026.

Speaker #1: That's still applies or is that something you'll guide later or revise that later?

Shawn Qu: Can you repeat? I repeat your question.

Speaker #5: Can you repeat? Repeat your question.

Maheep Mandloi: Yeah, sure. You previously guided 25 to 30 GW of solar shipments for 2026, right? Does that still hold or that’s something you’ll revise in coming quarters?

Speaker #1: Yeah, no, sure. The previously guided 2025 to 30 gigawatts of solar shipments for 2026, right? So does that still hold, or is that something you'll revise in coming quarters?

Shawn Qu: Yeah. Yep. Well, first of all, we didn't provide any new guidance this year. However, as we see at this point, we think the volume target for 2026, yes, you know, it's not our priority, but rather the profit is our priority. This is due to, number one, the increase of cost of the solar cell. And number two, you'll see that our total volume in US will go down a little bit compared with last year, but it's more due to the supply chain issue, you know, before we bounce back next year for the US shipment. The current conflict in Middle East will also, I think, impact the market, especially the demand from the Middle East.

Speaker #5: Yeah, yeah. Well, first of all, we didn't provide any new guidance. This year, however, as we see at this point, we think the volume target for 2026 is not a priority, but rather profit is a priority.

Speaker #5: This is due to number one, the increase of cost. Of the solar cell. And number two, you see that our total volume in US will go down a little bit compared with last year, but it's more due to the supply chain issue.

Speaker #5: Before we bounce back next year for the US shipment. And the current conflict in Middle East will also I think impact the market, especially the demand from the Middle East.

Shawn Qu: You know, it hasn't materialized yet, but we do expect some turbulence there. For the volume, the megawatt volume of solar, we think it's getting challenging, and we are not focusing on that for this year. However, we are still early. We are still in March. You know, I have been in the solar industry for 30 years, and Canadian Solar has been operating for 25 years. We do see in turbulent years, sometimes the volume can switch off and on very fast. We will provide the annual global guidance on volumes in later quarters when we have more clarity.

Speaker #5: So it hasn't materialized yet, but we do expect some turbulence there. So for the volume, the volume, the megawatt volume of solar we think it's getting challenging and we are not focusing on that for this year.

Speaker #5: However, we are still earning. We're still in March. I have been in the solar industry for 30 years, and Canadian Solar has been operating for 25 years.

Speaker #5: So, we do see some turbulence here. Sometimes, the volume can switch off and on very fast. So, we will provide the annual global guidance on volumes in later quarters when we have more clarity.

Maheep Mandloi: Thank you. Appreciate it.

Speaker #1: Thank you. Appreciate it.

Operator 3: Thank you. Our next question comes from the line of Alan Lau with Jefferies. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Alan Lau with Jefferies. Please proceed with your question.

Speaker #3: Thank you. Our next question comes from the line of Alan Lau with Jefferies. Please proceed with your question.

Alan Lau: Thank you for taking my question. Congratulations on winning a major orders in relation to data center for energy storage. Would like to know, how does that project works? Like, do you sell power to the utility company, which in turns a house or where it is supplying the power to a data center? Do you know how big is the load for the data center?

Speaker #4: Thank you for taking my question. First, congratulations on winning a major order in relation to data centers for energy storage. I would like to know, how does that project work?

Speaker #4: Do you sell power to the utility company, which in turn houses or supplies the power to a data center, and do you know how big the load is for the data center?

Shawn Qu: Oh, I think you are asking the question about our new press release, right? On the-

Speaker #5: Oh, I think you're asking the question about our new press release, right? On the 2.5 gigawatt-hour order. Now calling is the president for Canadian Solar.

Alan Lau: Yes.

Shawn Qu: 2.5 gigawatt-hours order. Now, Colin is the president for Canadian Solar as well as our subsidiary e-STORAGE. Colin, do you want to comment on this question?

Alan Lau: Yes.

Shawn Qu: 2.5 gigawatt-hours order. Now, Colin is the president for Canadian Solar as well as our subsidiary e-STORAGE. Colin, do you want to comment on this question?

Speaker #5: As well as our subsidiary eStorage. So calling do you want to comment on this question?

Colin Parkin: Sure. Thanks, Alan, for your question. That particular project, although we can't name the customer, is for a major US utility, and it is part of their strategy to build out a power supply for a major hyperscale investment. That is a front-of-the-meter solution. What we're seeing right now is much of the utilities and infrastructure is being formed around the additional power demands for data centers front-of-the-meter. We're also seeing trends for behind-the-meter and direct connected data centers, which this is not the case. This is an infrastructure support project.

Speaker #1: Sure. Thanks, Alan, for your question. That particular project, although we can't name the customer, is for a major US utility. And it is part of their strategy to build out power supply for a major hyperscale investment.

Speaker #1: That is a front-of-the-meter solution. And what we're seeing right now is much of the utilities and infrastructure is being formed around the additional power demands for data centers front-of-the-meter.

Speaker #1: We're also seeing trends for behind-the-meter and direct-connected data centers, which is not the case here. This is an infrastructure support project. But we do expect to see the trend moving towards more behind-the-meter total power solutions for data centers.

Colin Parkin: We do expect to see the trend moving towards more behind-the-meter total power solutions for data centers, which is why we mentioned in our commentary earlier that we are focusing on providing total power solutions to address both front-of-the-meter and direct behind-the-meter connections for data centers. Part of that is the modeling, understanding the modeling and the requirements for the data centers particular application load flow requirements and response requirements, which are very stringent, and testing those requirements in advance, doing hardware-in-the-loop testing and configuring our total solutions to support the complex needs for data centers.

Speaker #1: Which is why we mentioned in our commentary earlier that we are focusing on providing total power solutions to address both front-of-the-meter and direct behind-the-meter connections for data centers.

Speaker #1: And part of that is the modeling, understanding the modeling and the requirements for the data center's particular application load flow requirements and response requirements, which are very stringent, and testing those requirements in advance—doing hardware-in-the-loop testing and configuring our total solutions to support the complex needs for data centers.

Colin Parkin: As I mentioned, we're seeing both the front of the meter and behind the meter, but more, this particular one is the front of the meter, and we'll see more of that as well. Did that answer your question, Alan Lau?

Speaker #1: But as I mentioned, we're seeing both front-of-the-meter and behind-the-meter, but more this particular one is a front-of-the-meter and we'll see more of that as well.

Speaker #1: Did that answer your question, Alan?

Alan Lau: That's clear. Just a quick follow-up on that. For the behind the meter discussion ongoing, you mentioned about a total power solution. Does it mean that you also have to consider the grid connection requirement to stabilize the load requirement from the data center drawing power from the grid? Is it part of the package in on top of powering the data center?

Speaker #4: I guess, clear. Just a quick follow-up on that. So, for the behind-the-meter discussion ongoing, you mentioned a total power solution. So, does it mean that you also have to consider the grid connection requirement to stabilize the load requirement from the data center drawing power from the grid?

Speaker #4: Is it part of the package on top of powering the data center?

Colin Parkin: That's right. That's part of the total solution that we're looking at. We're in some cases auxiliary equipment, power supply equipment, and even potentially generation equipment completes the total power solution. We can do some or part of that with partners, but we're looking at the data center opportunities in a much more holistic power solution approach. We think that's part of the value that we'll be adding as we look forward to participating in the AIDC markets. I think you'll see more coming from us in terms of our advancement of technologies beyond just the known capabilities that we have with our battery technology.

Speaker #1: That's right. That's part of the total solution that we're looking at. We're in some cases auxiliary equipment power supply equipment and even potentially generation equipment completes the total power solution.

Speaker #1: And we can do some part of that with partners. But we're looking at the data center opportunities in a much more holistic power solution approach.

Speaker #1: And we think that's part of the value that we'll be adding as we look forward to participating in the AIDC markets. So I think you'll see more coming from us in terms of our advancement of technologies beyond just the known capabilities that we have with our battery technology.

Colin Parkin: The other thing that I think we've mentioned earlier is we're focusing on how to bring that additional value to our customer in terms of executing projects, servicing, and supporting the equipment with long-term performance and guarantees to meet the specific requirements for data centers.

Speaker #1: And the other thing that I think we've mentioned earlier is we're focusing on how to bring that additional value to our customer. In terms of executing projects, servicing, and supporting the equipment for the long-term performance and guarantees to meet the specific requirements for data centers.

Alan Lau: Thank you. Thank you.

Speaker #4: Thank you. Thank you.

Colin Parkin: Thank you, Alan.

Speaker #1: Thank you, Alan.

Alan Lau: Thank you.

Operator 2: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for any final comments.

Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for any final comments.

Speaker #3: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for any final comments.

Shawn Qu: All right. Thank you for joining us today and also for your continuing support. If you have any questions or would like to set up a call, please contact our investor relations team. Take care and have a great day.

Speaker #5: All right, and thank you for joining us today, and also for your continued support. If you have any questions or would like to set up a call, please contact our Investor Relations team.

Speaker #5: Take care and have a great day.

Operator 2: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Q4 2025 Canadian Solar Inc Earnings Call

Request a DemoDemo

CSIQ

Canadian Solar

Earnings