Canadian Solar Inc. (CSIQ) Q2 2018 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Second Quarter 2018 Earnings Conference Call. My name is Kathleen, and I will be your operator for today. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Mary Ma with Canadian Solar's IR Department. Please go ahead.

Thank you, operator, and welcome, everyone, to Canadian Solar's Second Quarter 2018 Earnings Conference Call. Joining us today on the call are Dr. Shawn Qu, our Chairman and Chief Executive Officer; and Dr. Huifeng Chang, our Senior Vice President and Chief Financial Officer. Before we begin, I remind our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the Company claims the protection of 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 and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. In addition, any projections as to the Company's future performance represent management's estimates as of today's call. Canadian Solar assumes no obligation to update these projections in the future, unless otherwise required by applicable law. All prepared remarks will be presented within the requirements of SEC Regulations G, regarding Generally Accepted Accounting Principles or GAAP. Some financial information presented by us during the call will be provided on both the GAAP and non-GAAP basis. By calling through the non-GAAP information, management’s interest to providing our tryst with additional information to permit further analysis of the Company’s performance was without an underlying strength. Management uses non-GAAP measures to better express operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for better propel in accordance with GAAP. At this time, I would like to turn the call over to our Chairman and CEO, Dr. Shawn Qu. Shawn, please go ahead.

Thank you, Mary and we appreciate everyone taking their time to join us today. As you are all aware, the solar industry experienced higher volatility and increased pricing pressure in the second half of the second quarter. Canadian Solar however has successfully navigated theories of volatilities in the past and we are confident in our continuous ability to do it this time. Even with the volatility we achieved our Q2 guidance for both solar module shipments and growth margin. This shipment volume reflects our global channel diversification and the strength of our billable brand. As our partners continue to turn to Canadian Solar for leading edge, high quality and reliable solar products. The gross margin reflects our ability to hold a brand premium and to manage the supply chain combined with our ongoing focus on cost control and manufacturing efficiency. Q2 revenue however, is about 5% below the guidance due to the deferral of certain projects sales that are of course lower than expected solar module ASP, resulting from China’s new solar policy affected on May 31st. So, there are certainly greater headwinds in Q2 than in recent quarters. That‘s nothing our teams has now worked through in the past. In the near-term, we will focus on maintaining our market share and protecting a reasonable profit margin. In the long-term, lower module and other hardware cost by default will make solar energy even more attractive. Our diversified business model has positioned us well to benefit from the potential higher global demand. Our confidence is also based on Canadian Solar’s industry leading technology portfolio. Canadian Solar is probably the only mainstream solar manufacturer, who has mastered Mono-PERC, Multi-PERC, and beneficial solar module technology. We had developed and mass produced P-3, which applied diamond wire-saw with black silicon, multi-crystalline, silicon wafers. Than in 2017, we successfully developed P-4 technology, which added PERC to our P-3 and led our multi-solar cell across the 20% efficiency watermark in mass production. We than successfully developed beneficial solar modules, based on the multi P-4 platform. We produced and shipped more than 100 megawatt of multi-beneficial solar modules in Q2 alone. Clearly the first one in the world, to achieve this shipment volume. We viewed our R&D track record, with additional new products introductions in Q2, to our global customers, including HiKu which we believe is the world’s first multi-silicon solar modules, reaching 400 watt. And HiKu which combined our partial and co-module technology. Separately, we started mass production of our multi-buffer modules, last month. We introduced our high power, high efficiency, high-DM based on the latest Mono-PERC technology, which offers a perfect solution for high premiums residential markets. On the energy side, we remain focused on energizing and expanding our late stage solar project pipeline, and monetizing our solar power project assets. during the quarter, we energized a total of 522 megawatt of solar power project, including 340 megawatt in China, 115 megawatt in Brazil, 56 megawatt in Japan, and 70 megawatt in Australia. With these newly energized projects, our portfolio of solar power plant, in operation, totaled 1.4 gigawatt at end of July with an estimated resale value of $1.6 billion dollar. We continue to recycle our capital into new projects that meet our investment return criteria. While focusing on fortifying our balance sheet to ensure our continued success. Our late stage project pipeline including those in constructions now stands at 2.2 gigawatts at the end of July. Now, let me comment on our guidance for Q3 2018 and a full year 2018. Recurrent net expect totaled Q3 module shipment to be in a range of approximately 1. 5 to 1.6 gigawatt including 210 megawatt of shipments to our own utility scale solar project. Revenue for the third quarter 2018 is expected to be in a range of $709 to $814 million with gross margin expected to be between 20% to 23%. Given the global market change totally in the new policy in China effective of Ma y 31, 2018 and the policy and market change in other key markets. We are revising our full year 2018 total module shipment guidance to be in a range of six to 6.2 gigawatt compared to 6.6 to 7.1 gigawatt previously. We now expect total revenue for the full year 2018 to be in a range of four to 4.2 billion compared to 4.4 to 4.6 billion previously. This revision is in line with the broader industry change and mainly reflects the expected reduction of shipments volume to the Chinese market in the second half of the year and lower module ASP. We have strategically reduced our 2018 manufacturing capacity expansion plan to reflect the near-term market environment or continue to monitor the demand level and adjust our plan. Longer term, we remain confident that global demand for solar powered product will continue to increase in light of solar energy’s compelling lower cost of ownership and ability to accommodate locations underserved by other grid power options. Let me now turn the call over to our CFO, Huifeng Chang for a more detailed review of our results for the second quarter. Huifeng please go ahead.

Thank you Shawn. Net revenue for the second quarter of 2018 was 650.6 million down 54.3% sequentially and down 6 % compared to the year ago period. The sequential change in revenue is due to the fact that the Company closed a large solar project sale in the prior Q1. The year-over-over change reflects the adverse impact of the industry wide ASP declines and our deferral of several planned project sales to later quarters. Gross profit in Q2 was 159.4 million, compared to 143.9 million in Q1. Gross margin in Q2 was 24.5%, compared to 10.1% in Q1. Gross profit in the second quarter of 2018 includes the benefits of two AD/CVD reversals of $13.1 million and $12.6 million, based on the final rates of Solar 2 AD, AR2 and Solar 1 CVD AR4 respectively. Excluding these AD/CVD reversal benefits, gross margin was 20.5% in the second quarter of 2018. Total operating expenses were 105.5 million in Q2 compared to 65.7 million in Q1. Income from operations was 53.9 million in Q2 compared to 78.2 million in Q1. Operating margin was 8.3% in Q2 compared to 5.5% in Q1. Foreign exchange loss in Q2 was 2.5 million compared to foreign exchange loss of 8.5 million in Q1. We recorded a loss unchanged in fair value of derivatives of 7.6 million in Q2 compared to a gain of [$4.5] million in Q1. Income tax expense in Q2 was $7.8 million compared to income tax expense of 4.1 million in Q1. Net income attributable to Canadian Solar shareholders for Q2 was 15.6 million or $0.26 per diluted share compared to net income of 43.4 million or $0.72 per diluted share in Q1. Moving on to the balance sheet. At the end of Q2, our balance of cash and cash equivalents was 452.5 million compared to 567.4 million at the end of Q1. Our restricted cash balance was 538.6 million at the end of Q2 compared to 624.4 million at the end of Q1. Short-term borrowings at the end of the Q2 totaled of 2 billion, compared to 1.86 billion at the end of the Q1. Long-term borrowings at the end of the Q2 was 221.3 million, compared to 328.1 million at the end of Q1. Total debt at the end of second quarter of 2018 were approximately 2.47 billion, of which 852 million was non-recourse. Short-term borrowings and long-term borrowings directly related to utility-scale projects, which include 789 million of non-recourse borrowings, totaled 1.22 billion at the end of Q2 compared to 1.12 billion at the end of Q1. The value of our build-to-sell product sales, product assets at the end of Q2 was 1.3 billion compared to 1.1 billion at the end of Q1. Our continued progress reflects our ongoing actions to improve our balance sheet. With that, I would now like to open the call to your questions. Operator.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Philip Chen from ROTH Capital Partners. Your line is now open.

Hi, everyone thank you for the questions. I would like to start with some of the U.S. - sales specifically for the one to Shenzhen which I believe are the Garland, Mustang and Tranquility project. What is the latest there, I think its publicly out there that, that sale was pulled due to CFIUS. Can you to us about what the expects are, what we can expect there who the new buyer might be and then what the timing of that process might be? Thanks.

So Phil, this is Huifeng. I cannot talk about the new buyers, but let me share with you some facts like the announcement say we voluntarily terminated that process, joint delivery step buyer. The main reason is the timeline impact from the government approval, but we are now in very late stage negotiation for the sale of the three projects to other buyers and I can tell you the assets we see the robust market interest. So therefore, we do not expect any material difference in the financial outcomes of the prior under the current sales efforts.

Okay, great. Any sense of timing of when the process could come to a close, it sounds like you are in late stage negotiations to conclude or to comes to a definitive agreement, but once you reach that time, so how much longer do you think you might need for that process and then how many months thereafter do you need to close?

Certainly not in Q3, if any in Q3 we will see a big number in Q3, right. So you know it’s not going to be in - at least we don’t expect it to be Q3 but I think both side want to conclude the deal as soon as possible. That’s all I can say. This is Shawn by the way Phil.

Thank you very much.

And also we closed the capital deal, right. So that’s probably like the timeline you can reference that as the long end.

Okay, great. So to clarify the points on this. You do have full year guidance, is it fair to say that the sale is not in guidance or let’s be very clear about whether or not this is in guidance or not, especially for an implied Q4.

Well Phil you are asking a very smart question. I will think I will not only disclose what we already said in the press release.

Great, okay. Lets shift gears back. I think your Q3 margin guide looks pretty good, very healthy. Do you expect that strength to continue into Q4, that margin strengths?

It fairly it depends on strategy. Our near-term strategy is to protect margin. Therefore I believe this means it was like a very healthy margin in the near future. But as a result, our volume may not be as high as some of other peer solar companies. You can only choose one, either your protect your margin or you go for volume.

Right, okay, good. And then, I was wondering - a couple of minor questions, I will pass it on. Can you quantify the positive impact of the reminbi on OpEx and then finally, I think you reduced your China pipeline to 400 megawatts to 100 megawatt, now everyone is aware of the May 31 policy, so I was wondering if you could comment on the first line change there as well.

It’s not a pipeline change, it’s because we connected a couple of 100 megawatt before June 30. So those pipeline became regional operating…

Okay, but I think your operating assets increased by a 150 megawatt, so that’s why I wonder quite a bit, but I think your point has been you connected those 300 megawatts. And then thoughts on the positive impact of the reminbi on OpEx.

Well, I guess Chinas salaried start, when you translate into U.S. dollar it probably means lower cost and but for the U.S. salaried start will be no change, right. To be honest, I haven’t really looked into that, we have experienced some foreign exchange loss in Q2, that’s rather related to the currency depreciation in some of the emerging market and we haven’t really look at how much will be the impact to the operating cost. I think there will be some in cost impact, will translate into U.S. dollar, it probably means our cost will be lower, slightly lower, but that shouldn’t be such a significant number.

Okay, great. Thank you Shawn and Huifeng. I will pass it on.

Thank you.

Thank you.

Your next question comes from the line of Colin Rusch from Oppenheimer. Please ask the question.

Thanks so much, Shawn, having gone through a number of these cycles and looking at the potential for some rationalization or consolidation of the supply chain. Can you talk about the pacing of when you could see some of the class coming out of the market and what that might look like in terms of consolidation and when it might come back considering how much technology evolution we are seeing right now in terms of some of the manufacturing approaches.

That’s a very good question. I guess we had only one who somehow to say, look we are going to slowdown our expansion. Other companies will either tell you they will continue to expand or they will see nothing. So the industry as a whole can be more rationale, but I can only hope. Some of the low end capacity will probably get most out is this current market trend continue, but I guess that will only happen in next year not this year. In our case, we slowed down our capacity expansion a little bit, but we are also making sure that all our existing capacity are higher in the capacities, for example we are upgrading almost all of our sale capacities into PERC and as I said in the call we are one of the few companies who introduce the POLY PERC product in the large scale. So we do make sure that the capacity we operate sell off the capacities.

Okay. That’s very helpful. And then can you talk about the market dynamics around India, I mean clearly things split down in China and there is some policy wrangling in India. As you think about that market having done successful there. Is that a core market for clearing inventory in industries specifically for you guys, how should we think about India to this year and into next year.

As a matter of fact, I came back from India about two weeks ago. On one hand, I love that market, it’s very dynamic and lots of volume. We have sold a lot of modules there although it is a [indiscernible] competitive market, but we always manage it to sell with some margins with our premium brand. And so I love that market, but on other hand it is also unpredictable and you are aware of the swing back and forth with the Indian safeguard decisions in the past one weeks, they already have three swings. So we see how many more swings will happen. So we are watching, we are monitoring that market. However, as I also as I mentioned, India is never a high price market. So it shouldn’t make a huge difference for Canadian Solar’s profitability target. It might affect our shipment volume numbers, profitability wise it shouldn’t swing that much.

Okay. thanks so much guys.

Thank you.

Your next question comes from the line of Paul Coster from J.P. Morgan. Please ask your question.

Good morning, this is Mark Strouse on for Paul. Thanks for taking my questions. So just a follow-up to Philip’s earlier question on gross margin and can you send a breakout or provide some more color I guess on the 3Q guidance, just what the impact is from the projects business versus the module business, just I guess maybe directionally speaking how we should think about the module business going forward if you think kind of 2Q is the low point?

We guided around 790 million to 840 million revenue in Q3. I will say roughly, maybe a 60% to 65% came from module, the balance came from the project business and profit wise this quarter, it’s pretty balanced both side will contribute like a low trending gross profit margin.

Okay, interesting. Okay, that’s very helpful, that’s it from us. Thank you very much.

Thank you.

Your next question comes from the line of Carter Driscoll from Riley FBR. Please ask your question.

Good morning. Could you just talk about - obviously we know about what is going on in China and what is happening in the U.S. is there any other regulatory changes, positive, or negative you would like to call out, obviously we have seen the safeguard duties in India, any practical effects there or maybe some other countries that don’t fall below China and U.S. on the radar screen? Thank you.

No, we haven’t seen anything on the radar screen. Actually we are monitoring what you decide in September the MIP, minimum import price scheme on China and they will make a decision whether to terminate that scheme, which means the China module can enter [EU] (Ph) without the minimum import price restriction, or to go into another review period. But that’s not an active, maybe possibly say to terminate than its positive. Well its positive but it also means will be more competitive than - the European market will become much more competitive. But other than that we don’t see near-term policy swing from major market.

So India, not a concern yet, as we…

So India already announced that they are safeguard that as you know than one of the Indian court they issued a preliminary injunction to the government safeguard decision, we are waiting for all these to clear. So, that policy is already announced, we are just waiting for more clarity.

Alright, okay. One other question. So there seems like lot of overcapacity in the marketplace, but realized a lot of that amount has really qualified or financed for half of these, so it tends to be a little misleading, but you made a comment about the brand premium. So really if you could quantify what do you think the premiums where your technology could command particular in the challenging ASP market.

Yes. Well, for example our Q2 ASP is $0.33, $0.34 and I believe that’s higher than most of the other peer solar companies and that shows the premium. I’m talking about Q3, our gross margin also suggests a price premium. So our brand recognition and also our high efficiency on products, that the demand, that command a price premium in the market. But I should also say that seeing any market, there is a premium market, there is also like pricing and pure pricing margin. With our strategy to focus on protecting the margin then we don’t expect to grow our volume that much in a near future. As you know, brand - it takes time for the brand for the company to win the market with brand and that’s a long process.

Maybe just last one from me and apology if I missed this. You called out some of the non kind of Tier 1 markets Australia, can you give us some update on some of the them in Argentina, Mexico, you have got the most movements there. Just any secure market upside of kind of EU, China and the U.S. you would like to highlight is progressing either faster than you had anticipated and or we have a stronger position vis-a-vis the competitors.

Well, Australia is a very active market this year. I also visited Australia a couple of weeks ago, it’s very dynamic, very active and I believe they broke their annual installation record last year, but this year they expect to more than double from last year’s level, so it’s a record market. And Canadian Solar has been active in the Australian market for seven to eight years. So we are reaping the benefit of being in the market in both low highs and high highs. And we also mentioned that in Latin American market, which is also quite active. Canadian Solar made good progress in Brazil and we also win projects in Mexico and Argentina. So those are also very strong market. So the solar market certainly clearly becomes more diversified than past. Like a few years ago, we only shipped to maybe 10, 20 countries, by last month, I mean in June, in the month of June, we shipped to 65 countries in that particular month and I think in May, we shipped to more than 50 countries. So every months Canadian Solar is shipping to 50, 60 different countries. This is something you won’t even imagine four, five years ago. So the market has become very diversified. With the reduced solar module price, I think you will see new market pop up from everywhere. So, that’s the long-term benefit of - that’s a positive side of this round of price decline as I commented in my remarks.

I appreciate that, I think a lot of people forget how much more global the solar market has become, as you mentioned just in the last few years. Thanks for taking my questions.

[Operator instructions] Our next question comes from the line of Brian of Goldman Sachs. Please ask your question.

Hi guys this is Hank on for Brian. I just had a couple quick ones here. You talked about your ASP - but can you share your cost per watt in the second quarter and then how much cost declines do you expect in the second half given the supply chain over supply?

Well, it almost back out our average costs from the gross margin and the ASP, I don’t have that number handy, but you can probably get just do a quicker calculation from number we provided to you.

Got it, I guess if we are seeing the ASPs decline, 15%, 20% since June and you expect to maintain this 20% gross margin, can we assume your costs also go down by a similar amount ?

Our ASP will not decline 15%, 20% from Q2 to Q3, because some of the contract were negotiated liable so some of the old pricing still remain. But going forward, yes, we eventually will see the price come down as the cost come down. For the on market this stage, for newly negotiate contract, you will see the module ASP from anywhere from I will say 31% to 32% down to maybe 25% and 26%, depend on a branding, depend on depending on the types of volumes, the wattage, the higher the efficiency, the higher the price. And also depend on the payment terms. There is a lot of factors there and regarding the cost, I will say the low cost is a China production, we are talking about maybe 22% to 23% out of the factory, but if it’s out of China production we are going to also see maybe 25% or 26% on the South Eastern Asian countries. But if you produce in Brazil for example, we have a factory in Brazil and then all this local tax will make the cost higher, but of course the price also higher. So it depends on where you produce and also like what type of module you are starting. I hope I gave you a picture.

Yes, that’s very helpful. And just to make just a clear, you are talking about cost price per watt not a gross margin percentage, correct?

Yes, I‘m talking about price per watt, also about U.S. cents not percent sorry.

Okay, that’s very helpful. Just one last one then, I think some of your peers have been talking about hopefully demand begins to pick up in the fourth quarter once you get a little bit further from some of the demand disruptions in China and India and even in the U.S. Do you see any signs of things picking up in those markets in the fourth quarter? Do you think it will take longer?

The picking up of the new market?

Associate of the traditional [indiscernible] markets like China, India, U.S. I would say going through a soft spot here. Do you think those begin to recover a little bit in the fourth quarter or it will take longer?

That usually Q4 traditionally yes a strong quarter, so I hope the Q4 is also a strong quarter. But let’s wait until we provide the Q4 guidance, but those are seasonality’s like seasonality as within a year. Those are not material changes, if you are asking me about material change in those markets, I think that will take longer.

Thank you.

[Operator Instructions]. Your next question comes from the line of Sophie Karp from Guggenheim. Please ask your question.

Hi good morning. Thank you for taking my question. Most of my questions have been answered, but I just wanted to ask you guys with what is your view on potentially reaching parity in China with the declines in ASPs that has been seen recently. Is that possible or sort of achievable in the next year or so?

It’s a difficult question. When you just look at the pure cost model financial models, you will say hey good parity is already here. Because some locations already achieved a price as solar price, lower than the coal fired powers. But that’s theoretical calculation. In reality you have to deal with great connection, you have to deal with financing and all these issues and there hasn’t been a sustainable grid parity market in China yet. So, I would expect it to take a while to become a sustainable market, in other words to say, we will see whether we are indeed a grid parity or not. So we are only two months after the policy change. So, people are trying and people are trying to develop great parity project, but I haven’t seen any large runs breaking ground yet.

So if that’s the case, do you foresee that maybe the policy support would be stated or increased next year?

What will increase next year?

With the policy support back would the government go back on the decision to cut the subsidies and increase them again, to support its base.

We are trying to ask the same question to the government. We will let you know when we get a clear answer.

Alright, well thank you for the comments. Appreciate the color.

Thank you.

Your next question comes from the line of John Segrich of Luminus. Please ask your question.

Hi, guys, just a couple of quick clean up questions. Can you give us the CapEx for 1Q, 2Q and maybe what it should be for the full year? And then secondly, can you maybe help us understand, how much 201 payments that were in the cost of goods this quarter?

Yes, I don’t have the CapEx number handy. But if you can send an e-mail, we will try to figure out that number from our financial report, is somewhere we can dig it out from financial report. About 201, I think 201 cost the U.S. market will slowdown quite significantly. But it might also because people have stop clock some solar panels before - took effect. Therefore the new shipments into U.S. after 201 has been quite low and we will see when the U.S. market recover and that all could really have about several impact and we also expect 2019 U.S. volume to be affected by 201. Maybe moving to 2021, 2022 we are in the duty got to reduce maybe the volume will pick up a little bit. That’s my observation.

But in terms of your costs this quarter, did you recognize any payments because of the Tier-1 tariff in your costs or are your cost of goods clean of anything?

We haven’t shipped much, so we shipped very little to U.S. by paying this all on due date. So there is something in the cost, but insignificant.

Okay. Thank you.

We have time for one final question from Bradford Meikle of Williams Trading. Please go ahead.

Hi, thanks for taking the question. With the changes in the China market, I think there has been some reduction in the available capital and liquidity options for suppliers in the market. How do you think this might impact your private plan and can you update us on the timing of that plan and what other options maybe if the capital weren’t readily available for that announced plan. Thank you.

I don’t have any updates for you on this question. If we make progress and we will update the market. We don’t have any new update at this moment.

Okay. Can you comment on if you look at the Hanwha QCL recently announced private base of value the model business at more than Canadians during valuation and that wouldn’t include any of the projects. Can you comment at all on how you see the value of the market and what you are seeing in the required IRRs by region for projects?

I haven’t really analyzed how was the financial results, so I can’t really comment, but as far as how our case the controlling shareholder owns like 80% to 90% of the shares, right. So I thought the floating share is very small, so that’s a different situation than Canadian Solar.

Okay. And I guess do you have any sense for what the ongoing module ASP is going to be and also how much your polysilicon costs have come down due to the recent spot price declines from 17, 18 to now 11, 12 and just how much of cost roadmap will change over the next year from the non-silicon cost production. Thanks.

This is a very tough question, and I don’t have a good answer for you. We try to predict that every time we predict we were wrong. So the module price will definitely go lower in long-term, quarter-to- quarter there might be some fluctuation but if you look at a longer term, it should always go down. And you know from the 2016 through Q1 of this year, the module price were well established for six, seven quarters, very long time. But now it resumed the dollar trend. Personally I think, this trend will continue for probably for a couple of years. Regarding the polysilicon price, the decline after May 31, but then recovered a little bit recently and it’s a good question, whether it would be flat or will continue to recover in next few months. We don’t have very good visibility to say the truth.

Well can you say what your cost providers on some of your leading edge products like the bifacial?

I think I made a comment to one of the earlier question, that if its China production then the module cost a lot would be somewhere around $0.22 to $0.24 somewhere there and the high end product will costs a little bit more.

Okay thanks a lot. Last question is, I love the breakout on the growth of shipments from 10 to 20 countries to 65, could you just lastly comment on your project business and how many countries in aggregate you would be active in and whether that has grown by the same amount of your module sort of business next.

That’s too much details, Brad we can maybe do that in the e-mail that anything - the details with disclosing the public - press release.

So Brad, the project side, we have a successful track record in 11 countries, we are working in more countries. But so far, we have successfully developed viewed and COD the project in 11 countries, so far.

Thanks.

I would like to turn the call back to Canadian Solar’s Chairman and CEO. Dr. Shawn Qu, for closing comments.

Thanks everyone for your continued support and if you have any further follow-up question after today’s call, please contact us. Thank you and have a nice day.