Q2 2026 Canadian Solar Inc Earnings Call

August 27, 2026

Speaker #1: Ladies and gentlemen , thank you for standing by and welcome to Canadian Solar . S Second quarter 2020 Earnings Conference Call My name is Melissa and I will be your operator for today At this time , all participants are to listen only mode Later we will conduct a question and answer session .

Operator: Ladies and gentlemen, thank you for standing by and welcome to Canadian Solar's Q2 2026 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'd now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Speaker #1: As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar.

Speaker #1: Please go ahead. Thank you.

Wina Huang: Thank you, operator, and welcome everyone to Canadian Solar's Q2 2026 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 presentations section. Joining us today are Colin Parkin, CEO, Dylan Marx, CEO of Canadian Solar subsidiary Recurrent Energy, Xinbo Zhu, Senior VP and CFO, and Dr. Shawn Qu, Executive Chairman and CTO. All company executives will participate in the Q&A session after management's formal remarks. On this call, Colin will deliver key messages for the quarter. Dylan will share updates for Recurrent Energy, Xinbo will go through the financial results, and Shawn will discuss sustainability and technology highlights. Colin will conclude the prepared remarks with the business outlook, after which we will have time for questions.

Speaker #2: Operator , and welcome , everyone to Canadian Solar . Second quarter 2026 Conference call . Please note that today's conference call is accompanied with slides , which are available on Canadian Solar Investor Relations website .

Speaker #2: Within the Events and Presentations section: Joining us today are Colin Parkin, CEO; Dylan Marks, CEO of Canadian Solar subsidiary Recurrent Energy; Xinbo Zhu, Senior VP and CFO; and Dr. Sean, Executive Chairman and CTO. All company executives will participate in the Q&A session after management's formal remarks on this call.

Speaker #2: Colin will deliver key messages for the quarter. Dylan will share updates for Recurrent Energy. Symbol will go through the financial results, and Shaun will discuss sustainability and technology highlights. 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 certain 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 certain 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 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 reports 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.

Speaker #2: Actual results may differ from management's current expectations, and 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. Management's prepared remarks will be presented within the requirements of SEC Regulation G regarding generally accepted accounting principles, or GAAP.

Speaker #2: 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.

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 provided in accordance with GAAP. Now I would like to turn the call over to Canadian Solar's CEO, Colin Parkin. Colin, please go ahead.

Speaker #2: Non-GAAP information should not be viewed by investors as a substitute for data provided in accordance with GAAP. And now, I'd like to turn the call over to Canadian Solar CEO, Colin Parkin.

Speaker #2: Colin , please go ahead

Speaker #3: Thank you. And thank you all for joining our second quarter earnings call. Beginning on slide three, we recognized 3.1 GW of solar modules within guidance.

Colin Parkin: Thank you, Wina, and thank you all for joining our Q2 earnings call. Beginning on slide 3, we recognized 3.1 GW of solar modules within guidance. We exceeded our storage guidance, shipping 3.7 GWh and recognizing revenue on 3.3 GWh within the quarter. Revenue totaled $1.2 billion at the high end of guidance. Gross margin was in line with guidance at 13.9%. Profitability was impacted by elevated freight costs from ongoing geopolitical uncertainties. We also faced near-term ramp-up costs for our solar cell manufacturing facility in Jeffersonville. These factors led to a net loss attributable to shareholders of $77 million, or $1.40 per share. Turning now to slide 4. Our manufacturing segment remains the key driver of our financial performance today. It is also where our strategic priorities lie. In our solar business, we continue to prioritize high-margin regions.

Speaker #3: We exceeded our storage guidance, shipping 3.7 GWh hours and recognizing revenue on 3.3 GWh hours within the quarter. Revenue totaled $1.2 billion, at the high end of guidance. Gross margin was in line with guidance at 13.9%.

Speaker #3: Profitability was impacted by elevated freight costs from ongoing geopolitical uncertainties. We also faced near-term ramp-up costs for our solar cell manufacturing facility in Jeffersonville.

Speaker #3: These factors led to a net loss attributable to shareholders of $77 million, or $1.40 per share. Turning now to slide four. Our manufacturing segment remains the key driver of our financial performance today.

Speaker #3: It is also where our strategic priorities lie in our solar business. We continue to prioritize high-margin regions, and shipped nearly half of our quarterly module volumes to our North America home base.

Colin Parkin: We shipped nearly half of our quarterly module volumes to our North America home base. In our energy storage business, we are scaling rapidly and executing well globally. In a single quarter, we delivered to utility scale projects across North America, EMEA, Asia Pacific, and Latin America. We outperformed guidance due to accelerated deliveries for two projects in the US and Canada. Higher unit shipping costs and ramp-up expenses led to an operating loss of $49 million. As we finish ramping phase I of our solar cell facility and expand through phase II, these costs will normalize. We expect overall module margins to improve as a result. Now turning to slide 5. A major highlight this quarter was the official opening of our state-of-the-art HJT solar cell facility. This marks a historic milestone. Canadian Solar is now the first commercially operational HJT manufacturer in the United States.

Speaker #3: In our energy storage business , we are scaling rapidly and executing well globally in a single quarter . We delivered to utility scale projects across North America , EMEA , Asia Pacific and Latin America .

Speaker #3: We outperformed guidance due to accelerated deliveries for two projects in the US and Canada. Higher unit shipping costs and ramp-up expenses led to an operating loss of $49 million.

Speaker #3: As we finished ramping phase one of our solar cell facility and expand through phase two, these costs will normalize. We expect overall module margins to improve as a result.

Speaker #3: Now , turning to slide five , a major highlight this quarter was the official opening of our state of the art Hjt solar cell facility This marks a historic milestone .

Speaker #3: Canadian Solar is now the first commercially operational HJT manufacturer in the United States. We are also proud of the facility's meaningful impact and contribution to the local economy and community.

Colin Parkin: We are also proud of the facility's meaningful impact and contribution to the local economy and community. We are currently ramping up phase I capacity to 2.1 GW peak. Phase I is set to enter full-scale production on 1 October. Before the end of the year, we will begin installing equipment for phase II, which will bring our Jeffersonville total nameplate cell capacity to 6.3 GW peak in 2027. This facility will be the largest crystalline silicon cell manufacturing plant in North America. Paired with our 10 GW peak module facility in Texas, CS PowerTech solidifies its place as one of North America's largest and premier integrated photovoltaic manufacturers. These expansions are backed up by strong customer demand for our high-performance US solar products, which offer valuable domestic content benefits. Turning, please, to slide 6.

Speaker #3: We are currently ramping up phase one capacity to 2.1 GW peak. Phase one is set to enter full-scale production on October 1st, before the end of the year.

Speaker #3: We will begin installing equipment for phase two, which will bring our Jeffersonville total nameplate cell capacity to 6.3 GW, peaking in 2027.

Speaker #3: This facility will be the largest crystalline silicon cell manufacturing plant in North America . Paired with our ten gigawatt peak module facility in Texas , CS Powertech solidifies its place as one of North America's largest and premier integrated photovoltaic manufacturers These expansions are backed up by strong customer demand for our high performance U.S.

Speaker #3: Solar products, which offer valuable domestic content benefits. Turning to slide six, DS Powertech has secured over 13 gigawatt peak in contracted backlog for our domestically manufactured HJT and TOPCon N-type bifacial modules.

Colin Parkin: CS PowerTech has secured over 13 gigawatt peak in contracted backlog for our domestically manufactured HJT and TOPCon n-type bifacial modules. Deliveries are scheduled through 2029. This backlog includes multiple long-term master service agreements with leading US utilities, IPPs, developers, and EPCs. These commitments continue to grow daily and already represent north of $4.5 billion in value. On the policy front, President Trump released a new Section 232 announcement this month, which is focused on imported polysilicon and its derivative products. We view this new policy structure as supportive of our long-term investment in domestic manufacturing. Key details include minimum import pricing, tariff provisions, and potential manufacturing offsets for companies investing in domestic manufacturing capacity. The Department of Commerce will work to approve US investment plans. We will continue to be active, constructive, ongoing dialogue with Department of Commerce and will continue to participate throughout the 120-day implementation period.

Speaker #3: Deliveries are scheduled through 2029 . This backlog includes multiple long term master service agreements with leading us utilities . It developers and EPCs These commitments continue to grow daily and already represent north of $4.5 billion in value on the policy front , President Trump released a new section 232 announcement this month , which is focused on imported polysilicon and its derivative products .

Speaker #3: We view this new policy structure as supportive of our long-term investment in domestic manufacturing. The details include minimum import pricing, tariff provisions, and potential manufacturing offsets for companies investing in domestic manufacturing capacity.

Speaker #3: The Department of Commerce will work to approve U.S. investment plans. We will continue to be active, constructive, and maintain ongoing dialogue with the Department of Commerce, and will continue to participate throughout the 120-day implementation period.

Speaker #3: Our current evaluation indicates that these measures will reinforce U.S. solar pricing , and we are actively working with our customers to navigate this period of uncertainty Overall , we view this policy direction as net positive for Canadian Solar , and we welcome the administration's support for American industrial growth Now , turning to slide seven .

Colin Parkin: Our current evaluation indicates that these measures will reinforce US solar pricing, and we are actively working with our customers to navigate this period of uncertainty. Overall, we view this policy direction as net positive for Canadian Solar, and we welcome the administration's support for American industrial growth. Now turning to slide 7. For e-STORAGE, we shipped 3.7 gigawatt hours of energy storage solutions this quarter and recognized revenue on 3.3 gigawatt hours after accounting for the more than 400 megawatt hours to internal projects under execution. At the end of this quarter, our contracted backlog stood at $3.5 billion. This includes long-term service agreements covering 34 gigawatt hours of contracted projects. We see demand from data centers transitioning from conversations to contracted opportunities.

Speaker #3: We storage . We shipped 3.7GW hours of energy storage solutions this quarter . And recognized revenue on 3.3GW hours after accounting for the more than 400 megawatt hours to internal projects under execution at the end of this quarter , our contracted backlog stood at $3.5 billion .

Speaker #3: This includes long-term service agreements covering 34 gigawatt-hours of contracted projects. We see demand from data centers transitioning from conversations to contracted opportunities.

Speaker #3: Earlier this year , Istorage secured a contract with a major U.S. utility for a 500 megawatt , 2.5GW hour DC project designed to support data center grid infrastructure and resiliency , energy intensive data centers and their stakeholders face two primary hurdles securing power and maintaining grid stability , interconnection approvals and transmission builds require years to complete .

Colin Parkin: Earlier this year, e-STORAGE secured a contract with a major US utility for a 500-megawatt, 2.5-gigawatt hour DC project designed to support data center grid infrastructure and resiliency. Energy-intensive data centers and their stakeholders face two primary hurdles: securing power and maintaining grid stability. Interconnection approvals and transmission builds require years to complete. Battery energy storage unlocks the higher throughput from existing infrastructure, responds dynamically to load swings, fortifies grid resilience, and protects mission-critical computing hardware from power disruptions. For on-site behind-the-meter facilities, energy storage integrates seamlessly with other energy generation technology, including natural gas and renewable power generation. We are actively engaging with data center hyperscalers, developers, and utility customers to deliver solutions that help overcome these challenges. Our market value extends well beyond supplying battery containers.

Speaker #3: Battery energy storage unlocks the higher throughput , throughput from existing infrastructure . Responds dynamically to load swings . Fortifies grid resilience , and protects mission critical computing hardware from power disruptions for on site , behind the meter facilities .

Speaker #3: Energy storage integrates seamlessly with other energy technology generation technology , including natural gas and renewable power generation . We are actively engaging with data center hyperscalers , developers and utility customers to deliver solutions that help overcome these challenges .

Speaker #3: Our market value extends well beyond supplying battery containers . We produce our own battery cells , designed the Sol Bank platform , integrate the power conversion , and proprietary energy management controls , and deliver full EPC and commissioning services and provide ongoing support through long term service agreements .

Colin Parkin: We produce our own battery cells, design the SolBank platform, integrate the power conversion and proprietary energy management controls, and deliver full EPC and commissioning services, and provide ongoing support through long-term service agreements. This end-to-end full stack model offers customers a single accountable partner while supplying us with real-world operating data to refine future solutions. Now let me hand the call over to Dylan to review updates for Recurrent Energy, Canadian Solar's global project development business. Dylan, please go ahead.

Speaker #3: This end to end , full stack model offers customers a single accountable partner while supplying us with real world operating data to refine future solutions Now , let me hand the call over to Dylan to review updates for recurrent energy .

Speaker #3: Canadian Solar's global project development business. Dylan, please go ahead. Thank you, Colin.

Dylan Marx: Thank you, Colin. Starting on slide 8, we generated $117 million of revenue in Q2. Revenue declined sequentially, primarily because several project sales moved into the H2 of the year. Electricity sales revenue rose quarter-over-quarter, supported by the commercial operation of a large solar asset in Spain. With muted project sales during the quarter and a $24 million impairment charge related to an upcoming project sale in Latin America, operating expenses rose quarter-over-quarter. As a result, we recorded an operating loss of $19 million. Despite the lowered financial performance, we continued to hit key operational milestones throughout Q2. Earlier in the quarter, we brought a 426 MW solar asset in Spain into commercial operation, which began contributing recurring energy. Our partnerships with leading global technology companies further validate our development platform.

Speaker #4: Starting on slide eight. We generated $117 million of revenue in the second quarter. Revenue declined sequentially, primarily because several project sales moved into the second half of the year.

Speaker #4: Electricity sales revenue rose quarter over quarter, supported by the commercial operation of a large solar asset in Spain, with muted project sales during the quarter and a $24 million impairment charge related to an upcoming project sale in Latin America.

Speaker #4: Operating expenses rose quarter over quarter. As a result, we recorded an operating loss of $19 million. Despite the lowered financial performance, we continued to hit key operational milestones throughout the second quarter.

Speaker #4: Earlier in the quarter , we brought a 426 megawatt solar asset in Spain into commercial operation , which began contributing recurring energy Our partnerships with leading global technology companies further validate our development platform in recently connected the 150 megawatt Karwar project , which is backed by a long term power purchase agreement with Microsoft We also continue to secure competitive , large scale project financing .

Dylan Marx: In Australia, we recently connected the 150 MW Carwarp project, which is backed by a long-term power purchase agreement with Microsoft. We also continue to secure competitive large-scale project financing. Recently, we closed a $695 million construction financing tax equity package for our 330 MW Cobalt solar facility in California. MUFG and NordLB provided the construction loans while Wells Fargo provided the tax equity. Turning to slide 9 for our portfolio pipeline update. As of 30 June 2026, we have secured grid interconnections for approximately 6 GW of solar and 13 GWh of energy storage globally, excluding projects already in operation. Our total development pipeline stands at nearly 22 GW of solar and 84 GWh of energy storage. Our strategy for this pipeline remains focused on high-quality, high-margin opportunities that drive real value. We are actively pruning lower-margin assets.

Speaker #4: Recently , we closed a $695 million construction financing , tax equity package for our 330 megawatt solar facility in California , Mufg and Nord Elbe provided the construction loans , while Wells Fargo provided the tax equity Turning to slide nine for our portfolio pipeline update as of June 30th , 2026 , we have secured grid interconnections for approximately six gigawatts of solar and 13 gigawatt hours of energy storage globally , excluding projects already in operation .

Speaker #4: Our total development pipeline stands at nearly 22GW of solar and 84 gigawatt hours of energy storage . Our strategy for this pipeline remains focused on high quality , high margin opportunities that drive real value .

Speaker #4: We are actively pruning lower margin assets . For instance , we scaled back our EMEA pipeline following detailed evaluations of permitting technical and commercial viability At the same time , we are moving decisively where we see attractive upside .

Dylan Marx: For instance, we scaled back our EMEA pipeline following detailed evaluations of permitting, technical, and commercial viability. At the same time, we are moving decisively where we see attractive upside. Our team is actively positioning us to compete in Brazil's upcoming energy storage auction, which expanded our early-stage pipeline in Latin America. For the H2 of the year, our priority remains the selective monetization of certain operating assets under construction and development assets. These transactions are intended to support our capital recycling strategy, improve financial flexibility, and address leverage levels over time, while preserving our ability to invest in high-return growth opportunities. Now, let me hand the call over to Xinbo, who will go through our financial results in more detail. Xinbo, please go ahead.

Speaker #4: Our team is actively positioning us to compete in Brazil's upcoming energy storage auction, which expanded our early-stage pipeline in Latin America. For the second half of the year, our priority remains the selective monetization of certain operating assets, as well as assets under construction and development.

Speaker #4: These transactions are intended to support our capital recycling strategy , improve financial flexibility and address leverage levels over time . While preserving our ability to invest in high return growth opportunities Now , let me hand the call over to .

Speaker #4: Xinbo Zhu, who will go through our financial results in more detail. Xinbo, please go ahead. Thank you.

Xinbo Zhu: Thank you, Dylan. Beginning on slide 10. In Q2, we recognized revenue on 3.1 GW of modules and 3.3 GWh of energy storage solutions, both sequentially higher. Module performance was bolstered by strong US volumes, while storage beat guidance due to accelerated project deliveries in North America. Despite light contributions from recurring due to deferred project sales, solid execution in the manufacturing segment lifted total revenue to $1.2 billion, reaching the high end of our guidance. Gross margin was 13.9%, in line with guidance. The sequential and year-over-year margin drops reflect two non-recurring items. First, the tariff refund benefits recognized last quarter, and second, the release of unrealized profit upon sales currently of our US projects in the prior year period. Operating expenses rose 21% sequentially. This was driven by a combination of elevated freight rates and non-logistic ramp-up costs at our Jeffersonville solar cell plant.

Speaker #3: Dylan .

Speaker #4: On slide .

Speaker #5: Then, in the second quarter, we recognized revenue on 3.1 GW of modules and 3.3 GWh of energy storage solutions, both sequentially higher. Module performance was bolstered by strong US volumes.

Speaker #5: While storage guidance was due to accelerated project deliveries in North America, despite light contributions from Recurrent due to deferred project sales, solid execution in the manufacturing segment lifted total revenue to $1.2 billion, reaching the high end of our guidance.

Speaker #5: Gross margin was 13.9% , in line with guidance . The sequential and year over year margin jobs reflect two non-recurring items . First , the tariff refund benefits recognized last quarter and second , the release of unrealized profit upon sales type lease of a US projects in the prior year period .

Speaker #5: Operating expenses rose 21% sequentially . This was driven by a combination of elevated freight rates and non logistic ramp up costs at our Jefferson well solar cell plant .

Speaker #5: Net interest expense rose to $43 million from $1,336 million in the first quarter , primarily due to lower capitalized interest . We recorded a net foreign exchange loss of $9 million , primarily driven by strong appreciation in the Chinese yuan Solar recorded a $41 million mark to market gain in investment income from its equity investment in a battery equipment company , helping buffer our bottom line .

Xinbo Zhu: Net interest expense rose to $43 million from $36 million in Q1, primarily due to lower capitalized interest. We recorded a net foreign exchange loss of $9 million, primarily driven by strong appreciation in the Chinese yuan. CSI Solar recorded a $41 million mark-to-market gain in investment income from its equity investment in a battery equipment company, helping buffer our bottom line. As a result, Canadian Solar recorded total net loss attributable to shareholders of $77 million or $1.40 per share. Now, let's turn to cash flow and the balance sheet on slide 11. Net cash flow used in operating activities during Q2 2026 was $181 million, driven primarily by changes in working capital. Total assets grew to $16.1 billion. This increase primarily reflects ongoing construction of US solar and storage projects, along with inventory expansion to support our US manufacturing strategy.

Speaker #5: As a result, Canadian Solar recorded a total net loss attributable to shareholders of $77 million, or $1.40 per share. Now, let's turn to cash flow and the balance sheet on slide 11.

Speaker #5: Net cash flow used in operating activities during the second quarter of 2026 was $181 million, driven primarily by changes in working capital. Total assets grew to $16.1 billion.

Speaker #5: This increase primarily reflects ongoing construction of U.S. solar and storage projects, along with inventory expansion to support our U.S. manufacturing strategy. Total debt increased to $7.1 billion, mainly from non-recourse construction financing for solar and storage projects under Recurrent Energy in the U.S.

Xinbo Zhu: Total debt increased to $7.1 billion, mainly from non-recourse construction financing for solar and storage projects under Recurrent Energy in the US. As we monetize operating under construction and the development assets, we expect to deleverage the project's development business. At the same time, our manufacturing segment will take on incremental debt to fund strategic US manufacturing investments, which we expect to expand profitability and cash flow in 2027 and beyond. Capital expenditures in Q2 were $172 million, primarily directed toward our US manufacturing initiatives. We anticipate full year 2026 CapEx to total around $1.3 billion. This implies higher capital outlays in H2 as we begin phase 2 equipment installation at Jeffersonville, double capacity at our Mesquite module plant, and scale up our energy storage facility in Southeast Asia.

Speaker #5: As we monetize operating under construction and development assets, we expect to deleverage the projects development business. At the same time, our manufacturing segment will take on incremental debt to fund strategic U.S. manufacturing investments, which we expect to expand profitability and cash flow in 2027.

Speaker #5: And beyond, capital expenditures in the second quarter were $172 million, primarily directed toward our U.S. manufacturing initiatives. We anticipate full-year 2026 FX to total around $1.3 billion.

Speaker #5: This implies higher capital outlays in the second half, as we begin phase two equipment installation at Jeffersonville, double capacity at our module plant, and scale up our energy storage facility in Southeast Asia.

Speaker #5: It closed the quarter with a cash balance of $1.9 billion, providing us with solid liquidity to execute on our strategic priorities. Now, let me turn the call to Sean, who will discuss our sustainability achievements and the technology roadmap.

Xinbo Zhu: We closed the quarter with a cash balance of $1.9 billion, providing us with solid liquidity to execute on our strategic priorities. Now let me turn the call to Shawn, who will discuss our sustainability achievements and the technology roadmap. Shawn, please go ahead.

Speaker #5: Sean , please go ahead . Thank you . Jim Turning to slide 12 . In June , we published our 2025 Corporate Sustainability Report .

Shawn Qu: Thank you, Xinbo. Turning to slide 12. in June, we published our 2025 corporate sustainability report. This highlights our commitment to driving the global clean energy transition through sustainable and responsible business practices. The report tracks our focus on value-driven growth, notably the science-based target initiative that validated our net zero greenhouse gas target. We also advanced our resource efficiency, achieving significant energy and water savings alongside two zero carbon factory certifications. Furthermore, we reinforced our supply chain transparency and ethical labor standards. These efforts are backed by independent audits and certifications across our manufacturing footprint and key suppliers. Overall, this report demonstrates that environmental stewardship, social responsibility, and strong governance are fundamental to how we build long-term stakeholder value. At the core of everything we do is technological innovation. Turning to slide 13.

Speaker #5: This highlights our commitment to driving the global clean energy transition through sustainable and responsible business practices. The report tracks our focus on value-driven growth.

Speaker #5: Notably , the science based Targets initiative then validated our net zero greenhouse gas target . We also advanced our resource efficiency , achieving significant energy and water savings alongside two zero carbon factory certifications Furthermore , we reinforced our supply chain transparency and ethical labor standards These efforts are backed by independent audits and certifications across our manufacturing footprint and treat suppliers .

Speaker #5: Overall, this report demonstrates that environmental stewardship, social responsibility, and strong governance are fundamental to how we build long-term stakeholder value. At the core of everything we do is technological innovation. Turning to slide 13.

Speaker #5: We continue to execute on a multi-generation technology roadmap across both solar PV and energy storage solutions. Starting with solar PV, our near-term priority through 2028 is the mass production and optimization of our next-generation HJT.

Shawn Qu: We continue to execute on a multi-generation technology roadmap across both solar PV and energy storage solutions. Starting with solar PV, our near-term priority through 2028 is the mass production and optimization of our next generation HJT, our heterojunction and TOPCon architectures. Across our core utility, C&I, and residential market, we are scaling module efficiency from 23.2% up to 24.4%, while aggressively reducing silver consumption from 6.5 milligram per watt down to 3 milligram per watt to drive down this key input cost. Looking slightly further ahead, we expect mass production of our premium 2PC architecture by 2028. Designed primarily for the premium residential market, 2PC aims to deliver efficiencies between 24.8% and 25.2%, with ultra-low silver usage of just 1 to 2 milligrams per watt.

Speaker #5: Our hydrogen and topcon architectures across our core utility CNI and residential market . We are scaling module efficiency from 23.2% up to 24.4% , with aggressively reducing well , aggressively reducing silver consumption from 6.5mg/W , down to 3mg/W to drive down this key input cost Looking slightly further ahead , we expect mass production of our premium two PC architecture by 2028 .

Speaker #5: Designed primarily for the premium residential market, two-PC aims to deliver efficiencies between 24.8% and 25.2%, with actual low silver usage of just 1 to 2 mg/W.

Speaker #5: Beyond terrestrial single-junction silicon, where we approach the physical limit at around 25% to 26% module efficiency, we are expanding into frontier applications and multi-junction technologies.

Shawn Qu: Beyond terrestrial single-junction silicon, where we approach physical limit at around 25% to 26% module efficiency, we are expanding into frontier applications and multi-junction technologies. We have already began collaborating on space PV opportunities using our HJT cell technology with planned shipment in 2029 for extreme space environment, where radiation tolerance and thermal cycling resilience are critical. For long-term utility scale expansion, our ultimate efficiency frontier lies in tandem cells targeted for commercial shipments in 2030 to break through the 30% module efficiency barrier. Given that Perovskite reliability will require another 5 to 10 years of validation before large-scale ground deployment. Space applications may well serve as the initial commercial steppingstones to these next-generation tandem structures. Turning to our energy storage and power electronics roadmap on slide 14. We are building a foundation for sustainable, high-density, and long-duration storage assets.

Speaker #5: We have already begun collaborating on the space PV opportunity using our etched cell technology, with planned shipments in 2029 for extreme space environments where radiation tolerance and thermal cycling resilience are critical for long-term, utility-scale expansion.

Speaker #5: Our our ultimate efficiency from tier lies in tandem cells targeted for commercial shipments in 2032 . Break through with 30% module efficiency barrier .

Speaker #5: Given that Earth Guy reliability will require another 5 to 10 years of validation before large scale ground deployment space applications may well serve as the initial commercial stepping stones to these next generation tandem structures Turning to our energy storage and power electronics roadmap on slide 14 , we are building our foundation for sustainable , high density and long duration storage assets .

Speaker #5: We are currently mass producing SoftBank's 3.0 , which delivers five megawatt hours in a standard 20 foot enclosure using 314 M . Our l P cells .

Shawn Qu: We are currently mass-producing SolBank 3.0, which delivers 5 MWh in a standard 20-foot enclosure using 314 MWh LFP cells. We will soon begin shipping the next iteration, SolBank 4.0, starting 2027. This solution increases energy density by 25%, delivering 6.25 MWh in the same 20-foot footprint, utilizing high-capacity 588 MWh LFP cells. To complement these larger battery systems, our power electronics hardware is scaling in tandem. We are transitioning from our air-cooled mid-voltage SCAD 1.0 to our liquid-cooled mid-voltage SCAD 2.0, which integrates 32 of 450 kilowatt inverters to achieve 14.4 megawatts in a 40-foot layout. Further out on our 2030 roadmap, we are exploring solid-state transformers, a 2.5 megawatt, 34.5 kilovolts AC to 800 volts DC solution, achieving over 98.5% conversion efficiency. That has the potential to replace traditional PCS units and integrate directly into BESS platforms as cost and reliability mature.

Speaker #5: We will assume we begin shipping the next iteration, 4.0, starting in 2027. This solution increases energy density by 25%, delivering 6.25 megawatt-hours in the same 24-footprint.

Speaker #5: Utilizing high capacity 588 M , our L P cells To complement these larger battery systems , our power electronics hardware is scaling in tandem .

Speaker #5: We are transitioning from our air cooled mid voltage , gate 1.0 to our liquid cooled mid voltage scan , 2.0 , which integrates 32 of 450 kilowatt inverters to achieve 14.4MW in a 40 foot layout .

Speaker #5: Further out on our 2030 roadmap, we are exploring solid-state transformers at 2.5 MW, 34.5 kilovolts AC to 800V DC solutions, achieving over 98.5% conversion efficiency. This has the potential to replace traditional PCS units and integrate directly into base platforms, as cost and reliability improve.

Speaker #5: Mature to address long duration storage and harsh environment requirements at a potentially lower levelized cost of storage or LC o s , we are actively validating our containerized sodium ion platform .

Shawn Qu: To address long-duration storage and harsh environment requirements at a potentially lower levelized cost of storage, or LCOS, we are actively validating our containerized sodium-ion platform. This will eventually deliver an exceptional cycle time of over 15,000 cycles. Sodium-ion technologies offers compelling structural advantages, abundant raw materials free from geopolitical restraints, superior performance in extreme cold temperature, and simplified cooling requirements that could meaningfully reduce long-term operational expenditures. It also delivers important safety advantages, such as significantly reduced thermal runaway risk. We are also developing a high-capacity energy storage product designed for deployment inside AIDC server room to deliver millisecond-scale energy management solutions. Ultimately, unifying these solar and storage developments advances our vision of Canadian Solar as a total energy technologies provider.

Speaker #5: This will eventually deliver a an exceptional cycle time of over 15,000 cycles . Sodium ion technologies offers compelling structural advantages . Abandoned raw materials free from geopolitical restraints to prayer performance in extreme cold temperature and simplified cooling requirements that could meaningfully reduce long term operational expenditures .

Speaker #5: It also delivers important safety advantages , such as significantly reduced thermal runaway risk . We are also developing a high capacity energy storage product designed for deployment inside ADC server room to deliver millisecond scale energy management solutions .

Speaker #5: Ultimately unifying these solar and storage developments advances our vision of Canadian Solar as a total energy technologies provider by pairing these technology roadmaps with robust end to end capabilities and full visibility across our supply chain , we are uniquely positioned to deliver the mission critical clean energy infrastructure of tomorrow to our global customers .

Shawn Qu: By pairing these technology roadmaps with robust end-to-end capabilities and full visibilities across our supply chain, we are uniquely positioned to deliver the mission-critical clean energy infrastructure of tomorrow to our global customers. We will unveil more cutting-edge energy technologies in the future, so stay tuned. Now, let me turn the call back to Colin, who will conclude with our guidance and business outlook. Colin, please go ahead.

Speaker #5: We will unveil more cutting edge . Energy technologies in the future , so stay tuned . Now , let me turn the call back to Colin , who will conclude our guidance and business out .

Speaker #5: Colin will now conclude with our guidance and business outlook. Colin, please go ahead.

Speaker #3: Thank you . Sean . Turning now to slide 15 . For the third quarter of 2026 , we expect to recognize revenue from 3.5 to 3.8 gigawatts of solar modules .

Colin Parkin: Thank you, Shawn. Turning now to slide 15. For Q3 2026, we expect to recognize revenue from 3.5 to 3.8 GW of solar modules. We expect energy storage deliveries to range between 3.4 and 3.8 GWh. Driven by sequentially higher manufacturing volumes, we project Q3 revenue to be between $1.3 and $1.5 billion, with gross margin expected to range between 13.5% and 15.5%. We anticipate US solar and storage shipments to accelerate in the H2, with each remaining quarter delivering higher volumes than the last. At Recurrent, we expect to finalize the project sales delayed from Q2. This will drive a sequentially stronger Q3. For the full year of 2026, we reiterate our US volume guidance of 6.5 to 7 GW of module shipments and 4.5 to 5.5 GWh of energy storage shipments.

Speaker #3: We expect energy storage deliveries to range between 3.4 and 3.8GW hours , driven by sequentially higher manufacturing volumes . We project third quarter revenue to be between 1.3 and $1.5 billion , with growth , gross margin expected to range between 13.5 and 15.5% .

Speaker #3: We anticipate U.S. solar and storage shipments to accelerate in the second half, with each remaining quarter delivering higher volumes than the last. At Recurrent, we expect to finalize project sales delayed from the second quarter.

Speaker #3: This will drive sequentially stronger third quarter results for the full year of 2026. We reiterate our U.S. volume guidance of 6.5 to 7 GW of module shipments and 4.5 to 5.5 GWh of energy storage shipments.

Speaker #3: With that, I would now like to open the floor for questions. Operator, please go ahead.

Colin Parkin: With that, I would now like to open the floor for questions. Operator, please go ahead.

Speaker #1: 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: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 key. We do ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Colin Rusch with Oppenheimer & Co. Please proceed with your question.

Speaker #1: 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 key.

Speaker #1: We do ask that you each keep to one question and one follow up . Thank you Our first question comes from the line of Colin Rusch with Oppenheimer and Company .

Speaker #1: Please proceed with your question .

Speaker #6: Thanks so much , guys . You know , Sean , as you look at the roadmap that you just articulated from the technology perspective , it's pretty robust .

Colin Rusch: Thanks so much, guys. Shawn, as you look at the roadmap that you just articulated from the technology perspective, it is pretty robust. There is a lot of activity. I want to understand two dynamics. One, just trend lines on overall spending on the R&D line to bring all of this to fruition. Secondarily, from a regionalization perspective, where is that work going to happen and where is the IP going to sit as you bring, looks like, five or six pretty significant technology evolutions to market?

Speaker #6: There's a lot of activity . So I want to understand two dynamics . One , just trend lines on overall spending on R&D line to bring all of this to fruition .

Speaker #6: And then secondarily , where from a regionalization perspective , where is that work going to happen ? And where is the IP going to sit ?

Speaker #6: You know , as you bring , you know , looks like , you know , 5 or 6 pretty significant , you know , technology evolutions to market .

Speaker #5: Yeah . Thank you . Because our revenue base is big . So . Although the R&D is spending significant , but usually it typically is around 1 to 2% of the total revenue .

Shawn Qu: Yeah, Colin, thank you. Because our revenue base is big, so although the R&D spending is significant, but usually, typically, it is around 1% to 2% of the total revenue. We are controlling it well.

Speaker #5: So we are controlling it. Well,

Speaker #6: And from a , from an IP perspective , where is that going to sit in in the US . Is it going sit outside the U.S.

Colin Rusch: From an IP perspective, where is that going to sit in the US? Is it going to sit outside the US? Is that not a concern? Is it more around just know-how and understanding how to manufacture these things, where you guys feel like you have an advantage?

Speaker #6: ? Is that not a concern . Is it more around , you know , just know how and in understanding how to manufacture these things where you guys feel like you have an advantage ?

Speaker #5: Yeah . Calling this is a good question . So yes , we develop more and more the manufacturing and also process R&D capabilities in the US .

Shawn Qu: Yeah, Colin, this is a good question. Yes, we develop more and more the manufacturing, and also process R&D capabilities in US. We will see more and more IP sit in US. Meanwhile, we also develop a lot of good technology in Canada, so I also see more and more IP sit in Canada, especially the IP related to the power electronics and either from the inverter to the PCS half for the energy storage system.

Speaker #5: We will see more and more IP set with the, you know, in the US. But meanwhile, we also develop a lot of good technology in Canada.

Speaker #5: So I also see more and more IP set in Canada, especially the IP related to power electronics. And you know, either from inverters to the PCs for the energy storage system.

Speaker #6: Excellent . And then just the follow up here is really around shipping expense . And kind of practical ways that you guys can manage that or start passing that on in a more material way to customers here over the next 6 to 12 months

Colin Rusch: Excellent. Then just the follow-up here is really around shipping expense and practical ways that you guys can manage that or start passing that on in a more material way to customers here over the next 6 to 12 months.

Speaker #3: Yeah . Good morning and thanks for the question , Colin , here regarding the shipping expense , we do . We do build that into our contracts and pass that along .

Colin Parkin: Yeah. Good morning, Colin. Thanks for the question. Colin here. Regarding the shipping expense, yeah, we do build that into our contracts and pass that along. But of course, the dynamic of the shipping cost, logistics costs start to change when we look at us continuing to scale in North America. Obviously, we don't have as significant overseas freight, so we'll start to see that shipping cost start to decrease just as primarily due to the onshoring in the US.

Speaker #3: But of course, the dynamics of shipping costs and logistics costs start to change when you look at us continuing to scale in North America.

Speaker #3: Obviously we don't have the as significant overseas freight . So we'll start to see that shipping cost start to decrease just as primarily due to the Onshoring in in the US .

Speaker #6: Okay . Thanks , guys

Colin Rusch: Okay. Thanks, guys.

Speaker #1: Thank you. Our next question comes from the line of Mahi Mandalay with Mizuho Securities. Please proceed with your question.

Operator: Thank you.

Colin Parkin: Thank you.

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

Speaker #7: Hey, thanks for taking the questions and for the color on the new bookings. One question on that: you talked about the 13 GW of bookings through '29, and the pricing seems to be in the mid $0.30 per watt.

Maheep Mandloi: Hey, thanks for taking the questions and for the color on the new bookings. One question on that, you talked about the 13 GW of bookings through 2029. The pricing seems to be mid $0.30 per watt. Could you clarify, if that already includes any impact of the new Section 232 on polysilicon? If not, then what prices are you seeing, and is there any flexibility to go to the existing customers on higher prices if the spot prices move up on Section 232? Thanks.

Speaker #7: Could you clarify , like if the that already includes any impact of this new section ? 232 on polysilicon and if not , then what prices are you seeing ?

Speaker #7: And is there any flexibility to go to the existing customers and, on higher prices, if the spot prices move up on Section 232?

Speaker #7: Thanks .

Speaker #3: Yeah . Good morning . Majid . Thanks for the question . Calling here . And we have Thomas on the line as well .

Colin Parkin: Yeah. Good morning, Maheep. Thanks for the question. Colin here, and we have Thomas on the line as well, but I will start. Our contracts are structured with change in law and adjustment mechanisms with all this anticipated. What we see is, this is all very new. I think as you know, this is only fresh in the last couple of weeks with the new Poly 232. But we already see the market adjusting. We think it will definitely drive for accelerated deliveries in the H2 of this year in advance of the proclamation implementation, I think on 4 December. So we are going to see a rush, and with that, it is driving increase in price and correlating demand. So we are seeing that start to adjust. We are seeing the market start to adjust, but it is a relatively new change to the market.

Speaker #3: But I'll start , you know , our contracts are structured with with change in law and , and adjustment mechanisms with , with all this anticipated .

Speaker #3: So, what we see is this is all very new. I think, as you know, this is only fresh in the last couple of weeks with the new Polly.

Speaker #3: 232 but we already see the market adjusting . We think it's , it will definitely drive for accelerated deliveries in the second half of , of this year .

Speaker #3: In advance of the proclamation implementation . I think on December 4th . So we're going to see a rush . And with that we .

Speaker #3: It's driving increase in in in price . And demand . And correlating demand . So we are seeing that start to adjust . We are seeing the market start to adjust , but it is a relatively new change to , to the market .

Speaker #3: But I think overall from Canadian Solar standpoint , with the backlog that we mentioned , the 13GW backlog , it shows a strong demand for our our US based products and our customers are certainly willing to work with us as they have to adjust as well .

Colin Parkin: But I think overall, from Canadian Solar's standpoint, with the backlog that we mentioned, the 13 gigawatts backlog, it shows a strong demand for our US-based products, and our customers are certainly willing to work with us as they have to adjust as well. Thomas, would you add anything to that? Do you have anything to add on top of that?

Speaker #3: So, Thomas, would you add anything to that, if you have anything to add on top of that?

Speaker #8: Sure . So good morning , Colin is spot on . The only comment I would make is that this backlog and the respective revenue value does not include a two , three , two adjustment yet .

Thomas Koerner: Sure. Good morning. Colin is spot on. The only comment I would make is that this backlog and the respective revenue value does not include a 232 adjustment yet, so this is going to increase and grow further as we are adjusting contracts and agreements with customer. But it includes, of course, a certain portion of down payments, certain shipment costs. Some are further away, some are closer away, so you can take that all into account. But the 232 announcement will push the respective value upwards as we discuss and readjust and renegotiate with customers. Hope this answers.

Speaker #8: So this is going to increase and grow further as we are in contracts and agreements with customers. But it includes, of course, a certain portion of down payments and certain shipment costs.

Speaker #8: Some are further away , some are closer away . So you can take that all into account . But the two , three , two announcement will push the respective value upwards as we discuss and readjust and renegotiate with customers I hope this answers .

Speaker #7: That's good. Thanks for the color, and maybe just a different follow-up on the tariff or the duty in lieu with domestic CapEx.

Maheep Mandloi: That's great. Thanks for the color. Maybe just make a different follow-up on the tariff or the duty exemption in view with domestic CapEx. Just want to understand how much could we expect on that for you guys for CapEx. I think there was some language on that exemption is only applicable for new CapEx. So just curious if the R&D CapEx could be used for that or the set CapEx. Thank you.

Speaker #7: Just want to understand like , how much do you could we expect on that for you guys for CapEx ? I think there was some language on that exemption is only applicable for new CapEx .

Speaker #7: Curious if the R&D CapEx would be up—would be—could be used for that, or the CapEx. Thank you.

Speaker #5: Well, the Section 232 does allow the U.S. manufacturing project to offset the tariffs or duties. So, as Colin said, we will actively engage with the Department of Commerce.

Shawn Qu: Well, the poly 232 does allow the US manufacturing project to offset the tariff duties. As Colin said, we will actively engage with Department of Commerce. I think we are in a good standing, and we'll try to go through this process. Yes, we will apply for the tariff and MIP exemptions related to our US manufacturing plan.

Colin Parkin: Well, the poly 232 does allow the US manufacturing project to offset the tariff duties. As Colin said, we will actively engage with Department of Commerce. I think we are in a good standing, and we'll try to go through this process. Yes, we will apply for the tariff and MIP exemptions related to our US manufacturing plan.

Speaker #5: I think we're in a good standing and we'll try to like , go through this process And yes , we will apply apply for the tariff and and , and I p exemptions related to our US manufacturing plant

Maheep Mandloi: All right. Thanks for the color. I will jump back in with you.

Speaker #7: And thanks for the color. I'll jump back in with you.

Speaker #3: Thank you

Colin Parkin: Thank you, Maheep.

Speaker #1: 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 #9: Hi , everyone . Thank you for taking my questions . As a follow up to my heaps second question on the tariff rebate program , Sean , you just mentioned that you have good standing with the Commerce Department .

Philip Shen: Hi, everyone. Thank you for taking my questions. As a follow-up to Maheep's second question on the tariff rebate program, Xiaoran, you just mentioned that you have good standing with the Department of Commerce. So I was wondering if you might be able to elaborate on that. Specifically, do you expect to qualify for the tariff rebate program? If so, can you give us some color on why and how? Thanks.

Speaker #9: So I was wondering if you might be able to elaborate on that. And specifically, do you expect to qualify for the tariff rebate program?

Speaker #9: And if so , can you give us some color on , on , on why ? How ? Thanks

Speaker #5: Well , we do expect we are qualified . We qualify for the tariff relief program because we are the one who invest and really invested into us manufacturing through our solar module factory in Mesquite and also the solar cell factory in Jeffersonville , plus the storage factory in in Shelbyville .

Shawn Qu: Well, we do expect we are qualified. We qualify for the tariff relief program because we are the one who invest and really invested into US manufacturing. So our solar module factory in Mesquite, and also the solar cell factory in Jeffersonville, plus the energy storage factory in Shelbyville. So we are putting real dollars into onshoring the US manufacturing. So we believe we are qualified. However, as I mentioned, we will go through the process. So I guess, I shouldn't comment too much before we finish the dialogue and the process with Department of Commerce.

Colin Parkin: Well, we do expect we are qualified. We qualify for the tariff relief program because we are the one who invest and really invested into US manufacturing. So our solar module factory in Mesquite, and also the solar cell factory in Jeffersonville, plus the energy storage factory in Shelbyville. So we are putting real dollars into onshoring the US manufacturing. So we believe we are qualified. However, as I mentioned, we will go through the process. So I guess, I shouldn't comment too much before we finish the dialogue and the process with Department of Commerce.

Speaker #5: So we are putting real dollars into Onshoring . The US manufacturing . So we believe we are qualified . However , as I mentioned , we will go through the process .

Speaker #5: So I guess I shouldn't comment too much before I finish—before we finish the dialogue and the process with the Department of Commerce.

Speaker #9: Okay . Thank you . And then earlier , Colin and Thomas talked about pricing already up . And so I was wondering if you guys might be able to quantify the magnitude of the price increase that you've seen thus far .

Philip Shen: Okay, thank you. Colin and Thomas talked about pricing already moving. So I was wondering if you guys might be able to quantify the magnitude of the price increase that you've seen thus far, and then where you expect things to change. So if your existing bookings are at X, do you think we see a 5 cent move in pricing to the upside, or do you think it's 10 cents or maybe more? Thanks.

Speaker #9: And then where are you expect things to change ? So if your existing bookings are at ex , you know , do you think , you know , we see a five cent move in , in pricing to the upside , or do you think it's $0.10 or maybe more ?

Speaker #9: Thanks

Speaker #3: Philip . I think we're just like everybody else . We're we're monitoring the market and seeing what the opportunity looks like . I think it might be a little premature for us to speculate how fast those changes and how , how in the magnitude .

Colin Parkin: Philip, I think we're just like everybody else. We're monitoring the market and seeing what the opportunity looks like. I think it might be a little premature for us to speculate how fast those changes and how in the magnitude. So I think we're only a week or 2 into this new proclamation, and we're still waiting for, as a matter of fact, expecting new guidance to come. So that could also shape things as well. So I'd hesitate to give a specific amount, but I can tell you that we do feel it's going to be accretive to CS PowerTech overall.

Speaker #3: So I think , you know , we're only a week or two into into this new new proclamation , and we're still waiting for as a matter of fact , expecting new guidance to come .

Speaker #3: So that could also shape , shape things as well . So I hesitate to give a specific amount , but I can tell you that we , we do feel it's going to be accretive to , to C powertech overall .

Speaker #9: Okay . Thanks , Colin . One last follow up as it relates to the back to the tariff rebates program based on US CapEx , what happens and what do you guys do if you cannot qualify for that tariff rebate program

Philip Shen: Okay. Thanks, Colin. One last follow-up. As it relates back to the tariff rebates program based on US CapEx, what happens and what do you guys do if you cannot qualify for that tariff rebate program?

Speaker #5: Well that's a good question . I think the MIP requirement well help to to to strengthen the US manufacturers advantages . So overall price will go up if the overall solar module price go up , it will help us even in the case that we don't fully receive the rebate related to our CapEx .

Shawn Qu: Well, that's a good question. I think the MIP requirements will help to strengthen the US manufacturer's advantage. So overall price will go up. If the overall solar module price go up, it will help us, even in the case that we don't fully receive the rebate related to our CapEx. So overall, with or without rebate, we think that this decision will be a credit to CSI, to CS PowerTech, and any real meaningful manufacturers investing into US.

Speaker #5: So overall, with or without the rebate, we think that this decision will be, you know, a credit to CSI, to CS Powertech, and any real meaningful manufacturers investing into the US.

Speaker #9: Great . Appreciate the color . Thank you . Sean , and thanks , Colin , as well .

Philip Shen: Great. Appreciate the color. Thank you, Shawn, and thanks, Colin, as well.

Speaker #3: Thank you, Philip. I appreciate the questions.

Colin Parkin: Thank you, Philip. Appreciate the questions.

Speaker #1: Thank you. Our next question comes from the line of Ellen Law 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 #10: Thanks for taking my question. I would like to ask management about the recent policy coming out from the White House last night on the bulk power system.

Alan Lau: Thanks for taking my question. I would like to ask management about the recent policy coming out from the White House last night on the bulk power system. I would like to know, because Canadian Solar actually have a battery cell and pack plant in the US, what is your view on complying to that US manufacturing requirement, especially in relations to energy storage?

Speaker #10: So, I would like to know, because Canadian Solar actually has a battery cell and plant in the U.S., what's your view on complying with that?

Speaker #10: US manufacturing requirement, especially in relation to energy storage.

Speaker #3: Alan . I , I would like to just hold off responding on that because it's , something very new and we haven't had a chance to fully study that .

Colin Parkin: Allen, I would like to just hold off responding on that because it is something very new, and we have not had a chance to fully study that. I will just generally say that, in all respects, our ability to comply to US requirements is strong generally because our supply chain has already evolved to supporting the domestic content requirements, and our US manufacturing plans have been structured around that. I do not want to comment on such a recent policy change, but I would only say that at the moment, I expect we will be able to address any changes.

Speaker #3: I will just generally say that in all respects , our ability to , to comply to , to us requirements is strong generally because of our our supply chain has already evolved to supporting the domestic content requirements and our US manufacturing plans have been structured around that .

Speaker #3: I don't want to comment on such a recent policy change, but I would only say that, at the moment, I expect we'll be able to.

Speaker #3: To address any changes

Alan Lau: Understood. Regarding to another previous FTC investigation, I think there were clarifications, I think on 20 August, on basically for inverters that were produced in the US and is eligible for 45X would not be classified as foreignly produced. I recall the company previously was having third party as supplier for inverters, but also the company is also starting to do PCS as well. I wonder if management has any comment in regards to FTC previous restrictions on this front.

Speaker #10: So, regarding another previous FCC investigation, I think there were clarifications. I think on the 20th of August, basically, for inverters that were produced in the US and are eligible for 45, they would not be classified as foreign produced.

Speaker #10: So, I recall the company previously was having a third party as a supplier for inverters, but also the company is now starting to do PCs as well.

Speaker #10: So I wonder if management has any comment in regards to FDA . Previous restrictions on on , on this front .

Speaker #3: Yeah , a good question First of all , for our our inverters , are not currently being moved into the US . So it's not an issue for us in terms of our our our current supply chain .

Colin Parkin: Allen, a good question. First of all, for our inverters, are not currently being moved into the US, so it is not an issue for us in terms of our current supply chain. As you mentioned, we do procure significant amounts of third-party inverters, PCS, for example. We are actively involved with our supply chain to ensure that they meet all the FCC requirements or have the path to have those FCC requirements in place. We do not see any issues with any of our business activities at this time related to the recent changes. I know there was just recent clarification provided with respect to the communication protocols, which we are looking at very carefully. We do not see any impact to our business at the moment with respect to the new FCC requirements.

Speaker #3: But as you mentioned , we do procure significant amounts of . Third party inverters , PCs for example , and we are actively involved with our our supply chain to ensure that they meet all the FCC requirements and or have have the path to have those FCC requirements in place .

Speaker #3: We don't see any issues with any of our business activities at this time related to the recent changes. I know they just...

Speaker #3: There's just recent clarification provided with respect to the the communication protocols , which we're looking at very carefully , but we don't see any impact to , to our business at the moment with respect to the new FCC requirements .

Speaker #5: Yeah . I would like to add a little bit color comment on top of what Colin just said , but also noted that we require the , the new new guidance and FCC said anything qualified for the 45 X , which means qualified for the local manufacturing and the eligible for 45 X will be considered domestic .

Shawn Qu: Yeah, I would like to add a little color comment on top of what Colin just said. We also noticed that in the new guidance, FCC said anything qualified for the 45X, which means qualified for the local manufacturing and eligible for 45X, will be considered domestic, therefore, will not require FCC approval. I think this is a very interesting policy clarification. As you mentioned, we do have our own PCS. We have that technology centered in Canada. So we have started to actively look into the feasibility of manufacturing that PCS and inverter in US, utilizing the advantage that Canadian Solar already have CS PowerTech, which is the 45X qualified structure in US. So yes, we are actively reviewing the visibility of that.

Speaker #5: Therefore , will not require FCC approval . I think this is a very interesting , very interesting policy clarification . As you mentioned , we do have our own PCs .

Speaker #5: We have that technology centered in Canada. So we have started to actively look into the feasibility of manufacturing the PCs and inverters in the US, utilizing the advantage that Canadian Solar already has.

Speaker #5: CS PowerTech, which is the 45 qualified structural in the US. So yes, we are actively reviewing the visibility of that.

Speaker #10: Thanks . Both . That's very clear because I recall the company actually got a very strong record in US manufacturing and has already secured 45 credits for other products like what you already saw that might actually be the , the , the positive of the opportunity for a company to take share .

Alan Lau: Thanks, both. That's very clear. Because I recall the company actually got a very strong record in US manufacturing and has already secured 45X credits for other products like module already. So that might actually be a positive opportunity for the company to take share. So that's where the question is coming from. So switching gear to the technology path, because I noticed that Shawn has spent quite a lot of time. I think that this is quite new, I think, in this quarterly results briefing. Would like to know, because Shawn has mentioned about space PV, so I suspect if there has already been some form of discussion with major clients in the aerospace industry, or it's more a product development stage, or there's actually already some early-stage navigation already.

Speaker #10: So that's why the question is coming from . So switching gears to the technology path , because I notice that Sean has spent quite a lot of time , I think this is quite new .

Speaker #10: I think in this quarterly results briefing, I would like to know, because John has mentioned about space PV. So, I suspect if this has already been some form of discussion with major clients in the aerospace industry, or if it's more at a product development stage, or if there's actually already some early stage navigation already.

Speaker #5: Yeah , space TV is a very interesting direction , although I don't expect it to contribute meaningfully this next year . But in long run , you know , space is what everybody is looking at , including MSL and you realize that Canadian Solar is a strong , you know Participant in the so-called the h t or hydrogen solar cell architecture .

Shawn Qu: Yeah. Space PV is a very interesting direction, although I don't expect it to contribute meaningfully this or next year. But in long run, space is what everybody looking at, including Canadian Solar and myself. And you realize that Canadian Solar is a strong participant in the so-called HJT or heterojunction solar cell architecture. And this is what the industry consider very favorable for silicon-based space PV applications. And the research so far shows that the so-called p-type heterojunction will have better tolerance to the high-energy particle radiation bombardment in the space. Therefore, p-type heterojunction, especially the thin p-type heterojunction, is considered to be a leading candidate for silicon-based solar cell application in the space. So we do manufacture the p-type. As you know, our Jefferson solar cell factory adopted the heterojunction, the HJT solar cell structure. And so far we use n-type for the terrestrial applications.

Speaker #5: And this is what the industry considered very favorable for silicon based space PV applications . And the research so far shows that the so-called P type hydrogen , where have better tolerance to the high energy particle radiation bombardment in a space .

Speaker #5: Therefore , P type heterojunction , especially the thin P hydrogen junction , is considered to be a leading candidate for silicon based solar cell application in space .

Speaker #5: So we do manufacture the P-type . As you know , solar cell factory adopted the the junction , the high solar cell structure .

Speaker #5: And so far we use N-type for the , you know , for the terrestrial applications . However , it's very easy for us to convert that into P .

Shawn Qu: However, it's very easy for us to convert that into p-type. And we already use very thin wafers. And the wafer to be processed in our Jeffersonville factory average at 110 micron thickness, which is one of the thinnest wafer used for commercial production. Also on the R&D side, we have designed and processed even thinner to 15 micron wafer thickness with p-type heterojunction, and very successful. So we can supply that. So we are at the leading front of space PV. Now we are talking to other space and especially the satellite companies about this application. We are collaborating. I can't disclose the customer name, but yes, we have close collaborations with space-related partners.

Speaker #5: And we are we already use very thin wafers . And the wafer to be processed in our Jeffersonville factory average at 110 micron thickness , which is one of the thickness that wafer used for commercial production .

Speaker #5: Now also on R&D side , we have we have , you know , designed and processed even thinner , thinner to a 50 micron wafer thickness with P-type heterojunction and very successful .

Speaker #5: So we can supply that. So we are at the leading front of space PV. Now we are talking to other space and satellite, especially the satellite companies, about this application.

Speaker #5: We are collaborating now . I can't . Disclose the customer name right now , but yes , we have close collaborations with SpaceX related partners

Alan Lau: Understood. It is also interesting that your view on the space PV is on p-HJT. Having mentioned about HJT, there are some market views that TOPCon might have some issues in relation to the Section 337 patent investigation. Is it one of the reasons that you are selecting HJT technology in the US because it is not the mainstream technology outside of the US? Or is it really other reasons like labor or shorter production process?

Speaker #10: So , so it's also interesting that your view on space TV is on THAT . I haven't mentioned about HCP . There are some market views that top corn might have some issues in relation to the section three , three , seven patent investigation .

Speaker #10: Is it one of the reasons that you are selecting JT technology in the U.S.? Because it is not the mainstream technology outside of the U.S., or is it really other reasons like labor or a shorter production process?

Speaker #5: Yeah , we choose h hydrogen for the US factory for several reasons , not one reason . So number one , yes , our strong R&D effort already into Hjt solar cell as a matter of fact , we have studied the HCP structures as early as 2018 and 2017 and 2018 .

Shawn Qu: Yeah. We choose HJT heterojunction for the US factory for several reasons, not one reason. Number one, yes, our strong R&D effort already into HJT solar cell. As a matter of fact, we have studied the HJT structures as early as 2017 and 2018. We have been doing fine line HJT development for six, seven years already. We have very strong knowledge. By the way, that also explains why our ramp-up of the Jeffersonville solar cell line was so far successful, and I would say pretty smooth. Any ramp-up will hit some issues. That is the point of having the ramp-up, right? Which is to discover and resolve and solve an issue. But our ramp-up in Jeffersonville was very successful. That is a technical side. Second, our HJT process is very neat. It is more equipment-dependent than human-dependent.

Speaker #5: And we have been , you know , doing pilot line development for six , seven years already . So we have very strong knowledge , by the way , that also explains why our ramp

Speaker #6: Of the Jeffersonville Solar Cell line , or so far successful . And I would say pretty smooth . Any ramp up will have some hit , some issues .

Speaker #6: You know , that's the point . Of the ramp up , right ? Which is to discover and resolve and solve any issue .

Speaker #6: But our ramp up in Jeffersonville , it was very successful . So that's a technical side . And the second the our HTTP process is very neat .

Speaker #6: It's more equipment dependent than human dependent . It doesn't require much less operators than a dot com . And we think this is a this is a very unique advantage for the US And it is issue , no about it .

Shawn Qu: It does require much less operators than a TOPCon, and we think this is a specifically, this is a very unique advantage for the US manufacturing. IP is also an issue, no question about it. On one hand, we are fully confident that our TOPCon technology stands alone on its own feet and does not have any conflict with other companies' TOPCon IPs. However, less IP conflict is even better. The HJT IP is clean, much cleaner than TOPCon. That is also one reason for our decision to select HJT for US cell manufacturing. There are multiple, there are quite a few factors. All in all, we believe that HJT is a good technology. Also, as I mentioned, HJT is a leading candidate for the space application. We also consider this factor when we make this decision around two years ago.

Speaker #6: On one hand , we are pretty confident that our . Our top technology stand alone on its own , on its own feet and not have not have any conflict with other companies .

Speaker #6: Top IPS . However , less IP conflict is also is even better . So the IPS clean much cleaner than dot com . That's also one reason for US decision to select a truck .

Speaker #6: H t for the . For us Cell manufacturing . So it's a multiple . There are quite a few factors and all in all , we believe that Haiti is a technology .

Speaker #6: Also , as I mentioned , HDD is a leading candidate for the space application . We also consider the structure . When we make the decision .

Speaker #6: To... Around two years ago,

Speaker #1: Thank you, ladies and gentlemen. That concludes our question and answer session. I'll turn the floor back to Mr. Perkins for final comments.

Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I will turn the floor back to Mr. Parkin for final comments.

Speaker #4: Thank you for joining us today and for your continued support. If you have any questions or would like to set up a call, please contact our Investor Relations team.

Colin Parkin: Thank you for joining us today and for your continued support. If you have any questions or would like to set up a call, please contact our investor relations team. Take care, everybody, and have a great day. Thank you.

Speaker #4: Take care, everybody, and have a great day. Thank you.

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