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Hello, ladies and gentlemen. Thank you for standing by for Emeren Group Limited's Second Quarter 2024 Earnings Conference Call. Please note that we are recording today's conference call. I will now turn over the call to Gary Dvorchak, Managing Director of The Blueshirt Group. Please go ahead, Mr. Dvorchak.

Okay. Thank you, operator, and hello, everyone. Thank you for joining us today to discuss second quarter 2024 results. We released our shareholder letter before the market opened today and it is available on our website at ir.emeren.com. We also provided a supplemental presentation that's posted on our IR website as well and we'll reference that during our prepared remarks. Yesterday, we filed our Forms 10-K -- 10-Q, excuse me, for both the first and the second quarters, so we are now fully compliant with SEC reporting requirements. On the call with me today are Mr. Yumin Liu, Chief Executive Officer, and Mr. Ke Chen, Chief Financial Officer. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward-looking. These forward-looking statements represent Emeren Group's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under Risk Factors and elsewhere in Emeren Group's filings with the SEC. Please do not place undue reliance on these forward-looking statements, which reflect Emeren Group's opinions only as of the date of this call. Emeren Group is not obliged to update you on any revisions to these forward-looking statements. In addition, please note that all financial numbers discussed in this call are unaudited. Also, please note that unless otherwise stated, all figures mentioned during the call are in US dollars. With that, let me now turn the call over to Mr. Yumin Liu. Yumin, go ahead.

Thank you, Gary. Thank you, everyone, for joining our call today. I'll begin by providing an overview of our operational performance in Q2 2024, and Ke will discuss our financial results for Q2 and our outlook. In Q2, our company achieved solid progress, generating $30.1 million in revenue. This performance was underpinned by gross profit of $9.4 million, translating to a robust gross margin of 31.2%. Operating profit was $3 million, and net income attributable to Emeren Group Limited was $0.4 million. These results reflect our disciplined approach to growth, particularly through the execution of our development service agreements, DSA, strategy across Europe and US. Our relentless focus on improving efficiency across all regions has paid off, enabling us to maintain strong operating discipline and control cost effectively. Offsetting our solid operating profit, net income was reduced by around $2 million write offs related to canceled projects and unrealized foreign exchange loss of $0.8 million. Despite these setbacks, our ability to deliver a solid operating profit underscores the resilience and adaptability of our business model. In terms of our business lines, first, our DIC structure has established a stable and predictable business model, enabling us to monetize projects at the early stages of development and secure higher-quality contracted revenue. This approach is crucial for managing risk and maximizing cash flow throughout the project lifecycle. By end of second quarter of 2024, we had signed over 2 gigawatt of projects with eight DSA partners in Europe to monetize these early- and mid-stage projects. The total contracted revenue of over $60 million is expected to be recognized over the next two to three years based on the development milestones. In the first half of 2024, we achieved $8.2 million of DSA revenue, already surpassing the full year of 2023 DSA revenue total of $6.5 million. Looking ahead, we are committed to expanding our DSA partnerships on a global scale, leveraging our expertise and track record to enter new markets and forge strategic alliance. Currently, we have over 2 gigawatts of DSA contracts under negotiation. These contracts are expected to close within the next six to eight months, bringing the company an estimated $100 million in revenue to be recognized over the next three to four years. In parallel, our best projects are gaining momentum, particularly in Italy. We recently finalized a DSA agreement for BESS projects with PLT energia, one of Italy's largest independent renewable power producers, specializing in wind and solar. This transaction comprises a BESS portfolio totaling 394 megawatts, demonstrating the growth of our BESS strategy in Italy, where we now have a total of 1.7 gigawatt BESS projects in the DSA structure. In Q2, we signed a contract to sell a 42 megawatt RTB solar project portfolio in Spain to CVE España, a subsidiary of French independent power producer CVE. Developed by Emeren since 2021, this diverse portfolio is comprised of eight greenfield projects ranging from 5 megawatts to 6 megawatts. Together, these eight projects will generate approximately 92.8 gigawatt hour per year of energy, serving around 28,000 households in the region. The avoided carbon emissions will amount to about 20,000 tons of carbon dioxide per year. Additionally, in Q2, we completed the delivery of 13 megawatt COD project in Hungary, further solidifying our presence in the country. This accomplishment builds on our December 2023 sale of a 53.6 megawatt solar portfolio in Hungary to Kronospan/Douglas Renewables. These six projects, set to power approximately 9,500 households, reinforce our commitment to providing sustainable energy solutions across Europe. Furthermore, our IPP assets exhibited strong growth and profitability, contributing approximately 30% of our total revenue for the quarter. We continued to optimize the operation of our solar farms, including Branston in the UK. The IPP segment is a crucial component of our business model, providing a reliable source of stable and predictable cash flow. IPP revenue is balanced between Europe and China with a modest presence in the US. In Europe, we have 67 megawatt of IPP assets generating recurring revenue. Our IPP assets in China, the majority of which are located in the five coastal provinces with favorable power prices, strong economies and robust regulatory environments, are being fortified with the addition of battery storage projects. As of the end of Q2 2024, our battery storage portfolio in China comprised 26 megawatt hours, all integrated into our Virtual Power Plant, or VPP, platform owned and operated by Huaneng Power International, one of China's largest IPP operators. Looking ahead of the remainder of 2024 and beyond, we are well-positioned in many of the world's fastest-growing solar markets. These markets are supported by rising clean energy demand, favorable government policies and advancing technologies. Our priorities include advancing early-stage projects, securing additional DSA partnerships in Europe and the US, and optimizing strategies to maximize the value of our development pipeline. With that, let me turn the call over to our CFO, Ke Chen, to discuss our financial performance and guidance. Ke?

Yeah. Thank you, Yumin, and thanks, everyone, again, for joining us on the call today. Our revenue rose to $30.1 million, doubling quarter-over-quarter, driven by significant growth in the EPC, or COD projects development, and DSA segments, fueled by project completion and increased demand for development services. However, revenue declined 11% year-over-year, primarily due to the reduced RTB sales in Europe. Despite these challenges, strong performance in COD and DSA highlights the company's strategic focus and operational resilience. Gross profit was $9.4 million compared to $4.3 million in Q1 2024 and $12.7 million in Q2 2023. Gross margin was 31.2% compared to 29.6% in Q1 2024 and 37.4% in Q2 2023. The year-over-year decrease in gross margin was primarily due to shift in revenue mix towards COD sales. Operating expenses were $6.4 million, down from $7.6 million in Q2 2023, but higher than the $5.5 million in Q1 2024, primarily due to the -- around $2 million write-off related to canceled projects. Net income attributable to Emeren Group Ltd.'s common shareholders was $0.4 million, a $6.3 million rebound from a net loss of $5.9 million in Q1 2024, though lower than $8.3 million a year ago. This was impacted by around $2 million write-off related to canceled projects and unrealized foreign exchange loss of $0.8 million. Diluted net income attributable to Emeren Group Ltd.'s common shareholder per ADS was $0.01 compared to diluted net loss of $0.11 in Q1 2024 and diluted net income of $0.14 in Q2 2023. Cash used in operating activity was $2.2 million; cash used in investing activity was $3.8 million, and cash provided by financing activity was $1.5 million. Moving to balance sheet. Cash and cash equivalents at the end of Q2 2024 were $50.8 million compared to $55.1 million in Q1 2024. Net asset value, or NAV, is approximately $6 per ADS. Our debt-to-asset ratio at the end of Q2 2024 was 10.2% compared to 9.99% at the end of Q1 2024. Shifting gears to our outlook. We anticipate that our Q3 revenue will fall within the range of $25 million to $28 million, with gross margin between 35% and 38%. For the full year 2024, we reaffirm our expectation for revenue range from $150 million to $160 million, and for gross margin of approximately 30%. Additionally, we reaffirm our expectation for net income in 2024 to be around $22 million, taking into account the impact of foreign exchange and we expect earnings per ADS to be approximately $0.43. Operating profit is expected to grow in line with revenue, with a continued focus on cost management and efficiency. While full year net income will be affected by the earlier write-offs and foreign exchange losses, we remain confident in delivering solid financial performance for the year. Additionally, we affirm our expectation for 2024 IPP revenue to be between $24 million and $26 million, with a gross margin of approximately 50%. We expect DSA revenue to be around $20 million in the second half of 2024. With that, let's open up the call for any questions.

Operator, please go ahead.

Thank you. [Operator Instructions] Our first question comes from Graham Price with Raymond James. You may proceed.

Hi, good afternoon, and thanks for taking the questions. First one, just on the early-stage pipeline, looks like Spain was revised down by about 1.3 gigawatts versus Q1. Just wondering what the reason was for that.

Okay. It's a good question. And, we are facing -- we have been facing some challenges in the approval process from the government in Spain, especially in some regions we have activities. And balancing the risk and award, the company decided to slow down or even cancel projects in some regions. That is the reason we lowered our early-stage pipeline in Spain. Literally, we canceled those projects.

Got it. Understood. Then for my follow-up, I guess, kind of a two-parter on the DSA sales. First one, just looking at the second half forecast of $20 million, I was wondering what the quarterly cadence is there. And then, looking at the contracted versus negotiated, it looks like you've got 2 gigawatts in kind of each bucket, but it looks like contracted is for $60 million versus negotiated $100 million. So, was wondering if those -- that are still in negotiation are a bit more involved or later-stage projects. Just wondering why the difference in size there.

Yes, Graham, let me answer the first part and Yumin will answer the second part. The first part, we do expect $20 million revenue coming out of DSA in the second half, and I will say half, more than 50% has already contracted. And, again, the second half, less than the 50% is under negotiation. In terms of quarter-over-quarter, I think we could expect evenly distributed in the next two quarters. And I will let Yumin answer you about the contract and the projected difference.

Okay. Our existing DSAs mainly comes from the Italy market. And now in the following months or the following, as I mentioned, six to eight months, we have over 2 gigawatts of contracts or DSA contracts we target to close and that is on global scale, both on solar and also on the storage, including four to five countries in Europe and plus the US. That portfolio of 2 gigawatts also include not only early-stage, but also some middle- or even more advanced-stages projects. That is why the DSA number will be a lot higher in some cases compared to the early-stage ones.

Got it. Okay. Perfect. That's exactly what I was looking for. Thank you very much. I'll jump back in the queue.

Thank you, Graham.

Thank you. Our next question comes from Philip Shen with Roth Capital Partners. You may proceed.

Hey, all. Thanks for the questions or taking the questions. Your implied Q4 revenue ramp is pretty high, about $84 million. And so, wanted to understand how confident you feel in that implied Q4, given you reiterated your full year revenue number. And so, what's the confidence level? How much conservatism is baked in? And what are the risks that you miss the target? Thanks.

Thank you, Phil. It's a very, very good and challenging question, too. As the teams across the board has been working on those expected closings, literally speaking, as early as two, three months ago, even for the closings to be expected in Q4 or sometime may happen late Q3. That is where our confidence come from. We are going to the direction closing the deals with the ones negotiation with the partners starting from as early as two to three months ago. Bunch of deals to be closed are under the due diligence process and bunch of them are on the exclusive basis with some targeted buyers. Another point to be noted is we do have several COD -- planned COD sales, while those projects are either already CODed in the past one or two months or will be CODed within Q3, that is within next 45 days. So, we have the confidence that those COD assets are so valuable and people are even today are visiting our COD sites. So, we feel good by closing those deals. But definitely, as I see your question is challenging that we do have one deal in Europe. It's a pretty high revenue expectation and margin the same. So, I expect some risk, but at this time, we have very high confidence to close all those expected deals.

Great. And deal in Europe that has high revenue, can you share the megawatts, maybe what country it's in?

We cannot go into that detail as those are on [exclusive] (ph) basis with the buyers -- targeted buyers. And the -- I think by the time when we go into next earning call, we do plan to give more details on the closing targets.

Okay. Great. Thanks, Yumin. Shifting over to your $2 million of write-offs of canceled projects, I think you guys had a similar amount on the last quarter, Q1, and wanted to see if we should expect $2 million for this coming Q3, maybe even Q4. How much more is there? And what are the root causes of these canceled projects? Is it like you were saying earlier in terms of Spain, the government is changing some of the situation? Or is it -- like is it more concentrated in US, or Europe, my guess is? So, just give us some more color on what to expect ahead for the canceled and write-off projects? Thanks.

Yes. Phil, again, the specific write-off related to US, again, you probably know the challenge of interconnecting those kind of normal stuffs happen in US. However, going forward, we are not expecting that -- especially in the second half, we don't expect any big write-off going forward, in the second half.

Got it. Great. Thank you. And then, one last thing. You guys talked about having $100 million of cash by the end of '24 in the past and being positive operating cash flow for the remaining of -- for the year or at least certain quarters of this year. What's your -- I don't see -- we don't see it in this material for this quarter. Can you share if you think $100 million is reasonable still by year-end '24? Or if not, what's the burn that you expect? And how much cash do you think you could have by year-end? Thanks.

Yes. Based on our forecast, again, we're confident about our outlook here. As we mentioned -- Yumin mentioned part of this COD sales will happen in the fourth quarter, so we are still confident to collect all this cash by end of this year and also expect on a full-year basis, we should be operating cash flow positive.

Great. Appreciate that, Ke. Okay, I'll pass it on.

Thank you, Phil.

Thank you.

Thank you. Our next question comes from Amit Dayal with H.C. Wainwright. You may proceed.

Thank you. Good afternoon, everyone. So, Yumin, with respect to the guidance for the remainder of the year, you're saying you could potentially do $28 million in net income on roughly, let's say, $100 million to -- $110 million to $120 million in sales. I'm just trying to get a sense of what's driving this significant level of profitability for the revenues that you are expecting to recognize in the second half?

I think the -- I will say three reasons coming to our confidence level. One is, as I mentioned, that we have worked on bunch of expected closings starting over two, three months ago, and we do expect to close them in the second half. The second is the significant part of the revenue may come or will come from the COD sales, and those COD are either [reached] (ph) or are to be reached within Q3. So, the COD assets are pretty valuable and hotspot to be chased upon by buyers. And as I mentioned also that we even have one COD buyer visiting our site today. So, those are all [on exclusive] (ph) basis, and we are so confident those will be done. And definitely, we have all those contracts, including TSAs, under the negotiation, we believe we can close them.

Understood. And my question is more on margins. So, you feel that the price you will receive for these assets will support these levels of margin expectations that you have for the second half?

Yes. Although COD margin is normally lower, but in general, our business model on the NTP or RTB sale plus DSA provide very healthy margin, and including our IPP assets, those are also high-margin deals.

Amit, again, we talked about COD sales, but the margin -- our main focus is still be on the RTB/NTP sale, both in Europe and the US. So, margin contribution will also come from our strengths of NTP/RTB plus DSA and IPP, which Yumin just mentioned. So, we're confident about the margin in the second half.

Understood. Thank you for that. And related to that again, is any of this dependent on interest rates going lower, any of these deals in the second half? Are folks maybe waiting to pencil these deals once they have clarity on where interest rates will head in the next few months?

Very good question and very good point. I really hope that the buyers will pay a better price with better interest rate or lower interest rate environment. And we believe that should be the case.

Okay. Thank you. Just last one for me with respect to these DSA revenues. Looks like you're getting good traction on that front. Are these DSA revenues, 30% gross margins or higher or lower? Can you give us a sense of what kind of gross margin we should expect from DSA revenues?

I could not release this margin number, but it is absolutely a very good model. Literally speaking, in our company, I say there are three key words: solar, battery storage and DSA. It is very important to the company operation, but unfortunately, I don't think I can release the margin number. And by the way, as we are doing DSA in multiple countries, also on both PV and storage projects, so the margin varies really pretty bigly.

Okay. Understood. That's all I have. I will take my other question offline. Thank you.

Thank you very much.

Thank you. Our next question comes from Donovan Schafer with Northland Capital Markets. You may proceed.

Hey, guys. My first question is just for the 1.7 gigawatts of the DSA contracts for BESS in Italy that you have. Is that a subset within the 2 gigawatts of contracted DSA that you have? So, does the implication that 85%, 90% of the 2 gigawatts you have signed contracted for DSA, that 85% of that is BESS in Italy? Or are these like different buckets?

You are right. In fact, it is the case. Our DSA under BESS projects, storage projects, represent over 80% of the whole DSA portfolio.

Okay, got it. Helpful. Thank you. And then, for, let's see, the write-off, can you clarify just what it was that triggered the write-off? Was it specifically an interconnection delay? Or what was the specific bottleneck or parameter or event that triggered the write-off?

I think the write-off comes mostly from -- by the way, it's a norm for any development company. When we have failed projects, then we have to have the write-offs on the accrued G&As or the capitalized cost on the projects. But those $2 million specifically are connecting to the interconnection. Non-approval are challenges we are seeing. Just as I mentioned, for example, in Spain, for example, in US, the interconnection approvals got delayed and delayed. So for some cases, some deals will have to be written-off as of the -- those interconnection challenges.

Okay. Got it. And then, if I can squeeze one more in. In the past, you've talked about monetizing 400 megawatts to 500 megawatts this year. Is that -- and I noticed in the letter to shareholders, it says that the priority -- let's see, is -- let's see, you said that your priorities include advancing early stage projects, securing additional DSA partnerships in Europe and US, and maximizing value of development pipeline. So, it's not -- does that include monetizing advanced stage? It just seems like advanced-stage projects -- you've got a lot of megawatts in the advanced-stage category. Are you do you plan on monetizing those? Is that part of -- do you still see 400 megawatts to 500 megawatts monetization of advanced stage?

Yes. Absolutely true.

And is it a priority?

We did not really mention that because monetizing or selling the advanced-stage pipeline is in our -- we consider as normal business. We have been doing so in the past years, but the DSA is new. So, we mentioned the DSA more and especially monetizing are the ones in the early-stage portfolio is also the focus, literally speaking in the last almost 12 months.

Okay. That's helpful. All right, I'll take the rest of my questions offline. Thank you, guys.

Thank you, Donovan.

Thank you. [Operator Instructions] Our next question comes from Graham Price with Raymond James. You may proceed. Graham, your line is now open.

Hey, guys. Thanks. I was the first questioner, so you already got to mine. Thanks, though.

Well, thank you, Graham.

Thank you. And I'm not showing any further questions at this time. I'd like to turn the conference back to Mr. Liu for any closing remarks.

Thank you, operator. The solar industry is experiencing strong momentum due to the global commitment to renewable energy. This shift towards clean energy sources positions solar and battery storage as a key part of the future energy mix. The growing demand for solar power to support AI and blockchain operations is particularly exciting, as these technologies require substantial energy, and solar plus battery storage offers a scalable cost-effective solution. In conclusion, the future of solar energy is promising, and we are strategically positioned to capitalize on the accelerating adoption of solar and battery storage technology worldwide. With our expertise, industry partnerships and strong financial foundation, we are advancing towards our goal of becoming a leading global solar and battery storage company. We are enthusiastic about the future and proud to be driving the transition to a more sustainable world. Thank you, again, for joining our call today. You may now disconnect.