Ed Job - Director of Investor Relations Shawn Qu - Chairman, Chief Executive Officer and President Michael G. Potter - Chief Financial Officer, Senior Vice President and Director

Daniel Ries Nitin Kumar - Nomura Securities Co. Ltd., Research Division Colin W. Rusch - Northland Capital Markets, Research Division Min Xu - Wedbush Securities Inc., Research Division Vishal Shah - Deutsche Bank AG, Research Division Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division Amy Zhang - Goldman Sachs Group Inc., Research Division

Good day, ladies and gentlemen, and welcome to the Canadian Solar First Quarter 2013 Earnings Conference Call. My name is Shevuana, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to you host for today's call, Mr. Ed Job, Director of Investor Relations. Please proceed, sir.

Thank you, operator. Welcome to Canadian Solar's First Quarter 2013 Earnings Conference Call. Joining us on the call today are Dr. Shawn Qu, our Chairman and Chief Executive Officer; and Mr. Michael Potter, Senior Vice President and Chief Financial Officer. Before we begin, may I remind our listeners that, in today's call, management's prepared remarks 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 of -- on Form 20-F filed with the Securities and Exchange Commission. In addition, any projections as to the company's future performance represent managements estimates as of today, May 28, 2013. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law. At this time, I would like to call -- turn the call over to Dr. Shawn Qu. Shawn, you may start.

Thank you, Ed. And thank you, all, for joining us on today's call. We are very pleased with our results for the first quarter 2013 as we are almost breakeven on our bottom line, which demonstrated the progress we made in execution of our strategy. In Q1, we shipped 340 megawatt, comfortably exceeding our shipment guidance in the quarter. Importantly, the improvement in our growth margin to 9.7% came in at the high end of our expectations despite the sequential decline in the shipment volume. Strength in demand came from Japan, with volume up 76% compared to Q4 2012, as well as from other emerging market such as India and Thailand. Meanwhile, the U.S. market held up well. In the quarter, we substantially reduced our reliance on the European market, which represented less than 25% of our total revenue, with the U.S. representing 79% and Asia 57.4% of total revenue. Clearly, we are well positioned in the right geography and market segments. This reflects our strategic long-term focus in a market we have been developing over the past few years. A great example of both our strategy and our success is Japan. Since entering this market in 2009, we have patiently built a well-recognized brand name, as opposed to being just another white-label supplier like some of our competitors. We're well positioned in both high-margin and long-term sustainable residential rooftop market as well as the high-volume commercial and utility-scale segment. In addition, our strong local presence and market intelligence developed over many years has been instrumental in facilitating the development of our own utility-scale project pipelines in Japan. In addition to making progress in diversifying and expanding our geographic footprint and customer base, in the first quarter, we also made measurable progress on other key elements of our business strategy as we maintained our cost leadership, introduced new innovative technologies and differentiated our business model, positioning Canadian Solar for long-term success in the solar industry. As we've discussed previously, over the past several years, we have adopted a different growth strategy from most of our competitors. We have focused our investments on mid- and downstream manufacturing step [ph] of the value chain such as cells and modules, as well as the development of our downstream total solution business, rather than committing capitals to the upstream polysilicon, ingot and wafer manufacturing. Our asset-light manufacturing strategy has allowed us to maintain an adaptive and low-cost position. Combined with our total solution business and strong position in high-margin geographies, we are on a clear path to be one of the first solar module suppliers to return to profitability. In the first quarter, we have meaningfully expanded our utility-scale pipeline, adding 125-megawatt late-stage development project in Japan. We have developed a large pipeline in China that have been executing carefully given the uncertainty of feed-in tariff dispensed in the country. However, we have recently started the construction of a 30-megawatt project in Xinjiang, China, with secure financing. We are also constructing 2 Golden Sun project, each of 30 megawatt, which we expect to complete by the end of June. Our utility-scale project pipeline now stands at over 780 megawatt DC, with approximately 400 megawatt in Canada, 250 megawatt in U.S. and 125 megawatt in Japan. All these utility-scale project provides us with improved visibility on our business outlook well into 2014. We have been able to secure financing from Chinese as well as international banks to acquire late-stage projects and to build solar power brands, a testament to the quality and bankability of Canadian Solar as a company and our pipeline. We currently have buyers lined up for all of our project in Canada and expect to be making announcement as final sales contract are finalized. On the technology front, we enhanced the cell efficiency of the module power output profile of our product offering with the launch of our Quartech family of modules featuring our 4 bus bar cells. The 4 bus bar cell architecture shortens current transmission path of signals and reduces resistance losses, adding over 5 watts of power to our regular 60-cell module at no additional cost. Clearly, our strategic position in solar industry is strong. This is highlighted by our fast-growing total solution business in low-risk countries such as Canada, the U.S. and Japan; as well as our success in opening new markets in Asia. We remain well positioned to return to profitability and to emerge from the current cycle as a strong and global industry leader. Now let me comment on our guidance for Q2 and the full year 2013. We expect Q2 shipments will be in a range of approximately 380 to 420 megawatt. We expect Q2 demand to be mainly driven by Japan, Canada, the U.S., as well as other emerging markets in Asia. Meanwhile, we have been continuously serving our customers in Europe using our manufacturing base in Canada. Our gross margin in Q2 is expected to be in a range of 9% to 11%, showing further improvement from Q1 level. Three of our solar power project in Ontario, Brockville 1, William Rutley and Brockville 2, were declared to be in commercial operation, connected to the grid and have been generating stable feed-in tariff income for us. These 3 projects are in acceptance test required for the sales-closing process with the end customer. We expect to realize approximately $60 million additional revenue for each project once the transactions are completed. Our current guidance for Q2 does not include the potential sale and revenue recognition of any of these projects. In addition, we have completed the construction of one other project in Ontario and expect this project to start commercial operation in the next 2 weeks. We will also start construction of a 30-megawatt power plant in China and expect to finish by the end of year or early 2014. For the whole year 2013, we maintain our module shipment guidance of approximately 1.6 to 1.8 gigawatt, including modules used in our project. Our forecasted shipment volume maintains our track record of continuous annual shipment growth. However, our main focus for 2013 is not purely the volume but rather to return to profitability for the whole year. This concludes my formal business update. I will now turn the call to Michael Potter, our CFO. Michael? Michael G. Potter: Thank you, Shawn. Net revenue for the first quarter of 2013 was $263.6 million, down 10.6% sequentially and down 19.1% compared to the year-ago period. Gross profit in Q1 was $25.6 million compared to $14.9 million in Q4 and $25.1 million in the comparable period of last year. This sequential increase in gross profit was primarily driven by our focus on higher-ASP markets. Our gross profit in the first quarter of 2013 is net of a $6.1 million depreciation charge, representing 2.3% of revenue, related to the underutilization of our manufacturing assets. Gross margin in Q1 was 9.7% compared to 5% in Q4 and 7.7% in the first quarter of 2011. Operating expenses were $7.5 million in Q1 compared to $106.4 million in Q4 and $38.5 million in the comparable period of last year. The sequential decline in operating expenses was primarily driven by the reversal of the adverse arbitration award provision taken in Q4 2012 as well as by lower marketing and research and development expenses. Interest expense in the first quarter was $14.6 million compared to $9.9 million in the third quarter of 2013 -- in the fourth quarter of 2013 and $13.1 million in the first quarter of 2011. The sequential increase in interest expense was a result of higher bank borrowings and a lower level of project-related interest expense capitalized in Q1 relative to Q4 2012. The year-over-year increase in interest expense is due mostly to higher bank borrowing. Interest income was $3.3 million in Q1 compared to $3.7 million in Q4 and $2.7 million in the year-ago period. In Q1, we recorded a gain on the change of fair value of derivatives of $1.7 million compared to a gain of $2.3 million in Q4 and a loss of $0.2 million in Q1 of last year. Net foreign exchange loss in Q1 was $14.8 million compared to a net foreign exchange loss of $10.8 million in Q4 and a net gain of $0.3 million in Q1 of last year. Income tax benefit in the first quarter of 2013 was $3.4 million compared to income tax benefit of $3.3 million in Q4 and income tax benefit of $2.5 million in Q1 of 2012. Net loss attributable to Canadian Solar shareholders for Q1 2013 was $4.4 million or $0.10 per diluted share compared to a net loss of $105 million or $2.43 per diluted share in Q4 2012 and net loss of $21.3 million or $0.49 per diluted share in Q1 of last year. Moving on to the balance sheet. In Q1, cash and cash equivalents increased to $163.4 million on December 31, 2013, up from $142 million at the end of Q4. The restricted cash balance was $442.6 million at the end of Q1, up from $422.4 million at the end of Q4. Our accounts receivable balance, net of allowance for doubtful accounts, was down slightly to $225.7 million at the end of Q1 from $254.9 million at the end of Q4. Inventories increased to $291.3 million at the end of Q1 compared to $274.5 million at the end of Q4 2012. Short-term borrowings at the end of the first quarter of 2013 totaled $966.3 million, down from 858 -- up from $858 million at the end of the fourth quarter of 2012. Long-term debt at the end of Q1 was $205.3 million compared to $214.6 million at the end of Q4 2012. Short-term borrowings and long-term debt directly related to utility-scale power projects by the end of the first quarter of 2013 totaled $285.8 million. Let me now take a minute to update you on our total solutions business. Our EPC utility-scale projects and solar systems kits business represented about 19.2% of total revenue in Q1 2013. In addition to our thriving residential system kits business in Japan, up 56% sequentially in the first quarter of 2013, we expect to increase recognition of utility-scale projects in Canada and the U.S. to support the rapid growth of our total solutions business, which we expect will account for approximately 50% of revenue in 2013. Starting with the 9 projects in Ontario previously sold to TransCanada. 3 of these projects, Brockville 1, William Rutley and Brockville 2, are in commercial operations; and 1 project, Burritts Rapids, will be in commercial operation in 2 weeks. These plants are functioning and earning the feed-in tariff. As some of the very first projects completed under the fixed structure in Ontario, we suffered from delays in the final permitting as well as customer acceptance testing, which we hope will not be repeated as more projects are completed and the process becomes better defined. An additional 4 of the 9 projects sold to TransCanada are under construction. The Mississippi Mills project is expected to be connected to the grid in Q4, and the 3 projects in New Liskeard are expected to be connected to the grid in either Q4 or Q1 of 2014. Alfred, the remaining project sold to TransCanada, is under Renewable Energy Approval process and is expected to start construction in 2014. Among the 16 Ontario projects acquired from former SkyPower Limited, 4 have received REA approval and the remainder are expected to be approved in 2013. We have started building these 4 solar power plants, with completion expected through 2014. Among the 4 projects recently acquired from SunEdison, 2 have received notice to proceed, 1 has received REA approval and 1 is awaiting REA approval. We have started construction on 2 projects and expect to start construction on the other 2 within the next 12 months. In summary, of the 29 Canadian Solar-owned solar power projects in Ontario, 4 have completed construction, with 3 being in commercial operation and 1 shortly to reach commercial operation. An additional 4 -- additional 5 projects in Ontario are expected to be completed in 2013, 18 in 2014 and 2 in 2015. In addition to our owned projects in Ontario, we are building and plan to operate 3 solar power plants totaling 25 megawatts DC as EPC contractor on behalf of Penn Energy Renewables. These projects are expected to be completed in the second half of 2013. Turning to our U.S. project business. Our utility-scale pipeline now stands at approximately 255 megawatts DC. We expect up to 100 megawatts DC to be recognized in fiscal 2013. For both the non-TransCanada projects in Canada and our projects in the U.S.A., we have secured milestone payments in our sales agreements. Typically, the majority of these payments are financed via debt. Until we transfer title on these projects at the end of the completed contract process, this debt will be recorded on our balance sheet and then will transfer to the end buyer. Each project could lead to $30 million to $40 million of additional short-term debt on our balance sheet as construction progresses. The milestone should keep us net cash flow neutral to slightly positive as we construct the projects. In Japan, as Shawn mentioned, we added approximately 125 megawatts to our utility-scale project pipeline, including approximately 50 megawatts of self-developed projects and 75 megawatts through co-development or acquisitions. We're making feasibility acceptance on approximately 400 megawatts of additional utility-scale power projects in Japan, and we'll update you regularly of our progress in expanding our pipeline. Although final approval is not guaranteed for all of these projects, we hope to obtain final approval for at least some of our Japanese utility-scale projects during 2013 and begin construction of our first utility-scale power plant in Japan in 2014. In China, we're building a 30-megawatt solar power project and expect to complete construction and recognize revenue in the fourth quarter of 2013 or early in 2014. We're taking a very conservative approach to the China market. We think, over the next few years, it will develop into a major solar market for projects. In the immediate term, we are moving forward with projects where we can secure financing for, know we can connect successfully to the grid and have a high-degree confidence in securing a profitable sale to a qualified end buyer. The 30-megawatt project we are starting construction on meets all of these criteria. We've previously indicated that we were evaluating the possibility of recognizing [ph] net revenue for some of our owned solar power projects in Canada under the percentage-of-completion method. After further evaluation, we now expect to recognize revenue under the full-accrual completed contract method after construction and testing is completed and the sale of the project is final for most projects in Canada. Only 4 projects from the company's Ontario pipeline meets the criteria for revenue recognition under the percentage-of-completion method, 2 of which have started construction in the second quarter of 2013. We currently expect to recognize revenue on -- for all of our U.S. projects under percentage of completion. The project business certainly has its challenging goal with its reward -- challenges to go with its rewards, but that is the reason why we've built our initial pipeline with smaller projects in more mature markets. As we grow in experience and improve on our internal infrastructure, we expect to do larger projects and projects in higher-risk emerging markets. Unfortunately, revenue recognition for projects is not always smooth. We will try to keep you informed on our progress in more detail as we ramp up our construction efforts. In summary, we are very pleased with the progress we have made in the transformation of our business from a pure-module supplier to a provider of solar power solutions. As we move through the second quarter, we are within reach of returning our business to profitability for the remaining quarters of 2013. With that, I'd like to now open your call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Daniel Ries representing Maxim Group.

The question I have, one right off the bat. You said you are serving Europe at -- from your Canadian facility. Did you start that already, or is that specifically for after June 5?

Daniel, this is Shawn speaking. We started already. As you know, EU announced a early registration on solar product from -- shipped from China in March. So we started to ship from the -- our Ontario, Canada, factory ever since that time, so we do not have to run any downtime [ph] due to risk.

Okay. And I'm curious how you're handling the shipments to Japan, both the ones that you've done so far and as you get into projects there hopefully later this year or early next year. Are you -- are your receivables in yen or U.S. dollars? And how are you hedging with the yen having moved so much in recent days?

Yes. The -- in Japan, we sell in yen. That's why, in Q1, you saw a foreign exchange loss of $14 million. However, the margin in Japan is high enough, so even with the yen's depreciation, we still make a reasonable margin in Japan. Now the Japanese yen arise unexpectedly since Q4 last year, but now we have stepped up our hedging activities. We're try to lock in the current sales right after we make sales. So I expect the impact from yen depreciation to get less and less in future quarters.

Maybe one last quick question. It seems like more of your business in Japan now is modules, as opposed to kits. Correct me if I'm wrong on that, but I think kits were 23 megawatts where you must have sold 80. How are margins holding up now that it's clear to everyone that Japan is a bigger market than maybe originally thought? Are margins holding up on the standard module sales?

First of all, our margin -- the margin held up on our system kits business very well. We don't have many non-Japanese competitors in the residential rooftop market, so that give us the branding power. For the commercial projects side, we can demand a higher price than the white label producers. And this moment, we still see a reasonable margins. And the margin in Japan, even the commercial product market, is still way higher than our average.

Your next question comes from the line of Nitin Kumar representing Nomura. Nitin Kumar - Nomura Securities Co. Ltd., Research Division: I think, one thing on the module side for the projects, you've raised your expectations, sales expectation, from the Canadian projects. Is the previous 20% to 25% gross margin target still valid?

Yes, it's still valid. Nitin Kumar - Nomura Securities Co. Ltd., Research Division: And I mean, is it going to be better than that, or should we -- I mean, it's just an expansion of the number of projects?

Yes, we'll leave this question to Michael. Michael G. Potter: Yes. The 20% to 25% margin range is the -- it's still valid. That's what we expect it to be. We expect the projects we developed ourselves, which are the projects we're selling to TransCanada, to be higher margin and the projects we acquired from others to be lower margin. Nitin Kumar - Nomura Securities Co. Ltd., Research Division: Understood, Michael. And secondly, I think there's still a lot of unfilled pipeline in Canada. Do you expect yourself to be able to get any of that?

We are starting construction in those project one by one. And... Nitin Kumar - Nomura Securities Co. Ltd., Research Division: And no, actually, I mean the -- I remember that Canadian -- Canada actually approved a much larger amount of projects, but only Canadian Solar's projects are going to be coming up. There's still some pipeline which others have the project rights, but would Canadian Solar actually buy those project rights?

Good question. I -- to be honest, I don't know. But if any opportunity comes, we will look at it because we know that Ontario feed-in tariff is lucrative and Canadian Solar is considered pretty much the only player in the Ontario market. So yes, we'll be interested. Michael G. Potter: Yes. We're active in the market. There is some potential expansion in our Canadian pipeline, but we don't think there's a lot of projects that are available for acquisition now. Most of them have found a home with whoever the person is that wants to own them long term. Nitin Kumar - Nomura Securities Co. Ltd., Research Division: Understood, Michael. And then secondly, on the Japan projects and the U.S. projects, as -- can you possibly give an indicative margin expectation? Michael G. Potter: The U.S. projects are 10-ish to 15, depending on which projects and what the PPA is. The Japanese projects, we're expecting preliminarily to be approximately the lower end of the Canadian projects. It's a little bit harder to tell because there hasn't been a lot of Japanese projects actually built and the full EPC cost in the Japanese construction and permitting environment isn't fully known yet.

Your next question comes from the line of Colin Rusch representing Northland Capital Markets. Colin W. Rusch - Northland Capital Markets, Research Division: Can you guys talk about your potential need for capacity expansion, particularly at the cell level, as you go forward? Michael G. Potter: I -- we don't have a short-term need for expansion right now either at cell or at the module level. We're not pursuing volume, we're pursuing profitable growth. So right now, we have enough room in our factory to serve our short-term needs. The one project where we do see we may need some expansion, and it won't be large to start with but it could grow, is in our ELPS product line. Our line is starting to get relatively full there and the market is starting to accept and like the product, and so we're seeing some pressure on our production lines for ELPS. But our regular modules and cells, no, not in the short term.

I would like to add on Michael's comment. We have significantly increased our internal cell production since March this year. And in Q4 and Q1, we produced around 70 megawatt of cells, solar cells, internally per month. Now moving into June, we are going to produce about 100 megawatt per month. So that will also help us to reduce the cost and also better utilize our capacity. Colin W. Rusch - Northland Capital Markets, Research Division: Great. And then how should we think about cost reduction going forward? Obviously, you'll get about 2% from the new 4 bus bar cells. Are there other initiatives that you're working on that could be material in terms of reducing module manufacturing costs?

Yes. On the efficiency side, we have a clear efficiency improvement roadmap which see us increase our -- the output of our standard 60-cell modules roughly by around 5 watt per quarter or per 2 quarter. And meanwhile, we are also reducing the manufacturing costs. So in the last quarter earning call, I gave a projection of total module, like, all-in cost to move to, like, somewhere around $0.50 or $0.52 by the end of the year. I still stand for that projection. Michael G. Potter: Our all-in costs in Q1 were relatively flat with Q4, so $0.56, $0.57 a watt. Colin W. Rusch - Northland Capital Markets, Research Division: Okay, brilliant. And then just a final one, can you give us a sense of average size of your Japan pipeline in terms of the project size and then just give us some commentary or color on the geographic diversity within the country? Michael G. Potter: The -- we have some smaller projects close to 2 megawatts, but most of them are in the 10- to 20-megawatt range. I think there's one as large as 30 megawatts. And they're in several different regions in Japan. The market in Japan is highly competitive, so we are trying to control the specific location information right now. So unlike Ontario, we had a map where everything is located. Until we have everything secured with an end buyer, we won't necessarily be giving out a map with the details yet.

The only place, though, we don't really go is Hokkaido. It's because the grid capacity is getting limited. So the project there, we may face great connection problems, so we try to avoid Hokkaido.

Your next question comes from the line of Min Xu representing Wedbush. Min Xu - Wedbush Securities Inc., Research Division: My first question is related to your project revenue recognitions. Because you expect to apply a percentage-of-completion rev rec for only 4 of your Ontario projects, do you still expect to do 300 to 500 megawatts of total solutions in 2013? Michael G. Potter: So we expect to bill that much recognizing we will recognize less than that, though, probably, just off the top of my head, about half of that number. Min Xu - Wedbush Securities Inc., Research Division: Okay, good. You mentioned that, for 3 Ontario projects completed, each project sale is expected to generate roughly $60 million of revenues, which means the ASP is roughly $6 per watt versus previously expected $5 per watt. Is that correct?

So, yes, the -- those project typically are 10 megawatt AC, so it's around 12 to 13 megawatt DC. So the -- if you will measure by DC, it's still around $5 per watt. Min Xu - Wedbush Securities Inc., Research Division: One last question. Can you give us some color on the roughly $100 million increase in your short-term borrowing? Michael G. Potter: It's mainly due to the start of construction on our projects. Min Xu - Wedbush Securities Inc., Research Division: And that's for how many megawatts of projects? Michael G. Potter: Well, we've got 4 that are near completion, some of which had some debt increased on them. We started construction on another 2, and they're not TransCanada, so it's probably another 50-odd megawatts of projects in Canada.

Your next question comes from the line of Vishal Shah representing Deutsche Bank. Vishal Shah - Deutsche Bank AG, Research Division: Shawn, Michael, just wanted to clarify your comments on your -- you said that you're shipping most of the European demand from the Canadian operations. Does it mean that you will not be taking any provisions for import duties on from June 6 if, let's say, there were any preliminary duties for your big shipments?

Yes, I don't think so. We are very conservative. Ever since the European -- the EU registration was announced, we immediately suspended the shipment from China -- Chinese factory because we don't want to take any risk. But also because we have well developed other markets like Japan and India and also Thailand, so the volume from those places more than compensate the volume reduction in Europe. And we already have a factory in Canada, so we just ship from -- some volume from Canada to keep our -- some of our key customers going. Vishal Shah - Deutsche Bank AG, Research Division: What percentage of your Q2 shipments will be to Europe? Michael G. Potter: Very small. Total shipments to Europe in Q2 will be very small. It's -- since March, we've only shipped limited amounts from Canada to certain key customers. We have not done large shipments in for Q2.

Yes. I believe it's going to be somewhere around 30 and 40 megawatt in Q2, so around 10% of our total megawatt guidance. However, I -- we are just waiting for the provisional duty clarification on June 6. And I believe, once that duty -- provisional duty is announced, then we will know where to go. We just need that clarity. Vishal Shah - Deutsche Bank AG, Research Division: What is your take on that? Do you think there will be more duties announced? I mean, what's -- what are you understanding from talking to some of the folks in China?

Well, as of this morning, the news said 15 out of 27 EU states voted against the antidumping measures, which is a big surprise, and it shows a strong desire for free trade rather than trade barrier. So I remain hopeful that the final negotiated price concession will be acceptable than the duties people currently talk about. Michael G. Potter: Unfortunately, the vote is just advisory, so the commission makes the decision in the end on the provisional duties. But I think the member states in the EU were sending a message about what they think about the need for duties on solar panel.

Your next question comes from the line of Pranab Sarmah representing Daiwa Capital Markets. Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: It's Pranab from Daiwa. Shawn and Michael, I have one question. What is your products and cost difference between on Canadian plant versus China plant?

Yes, on the full cost basis, module full cost basis, the Canadian plant is more than $0.20 higher -- at more than $0.20 higher cost per watt than the Chinese plant. However, the Canadian plant is to supply to the Ontario market, which has a higher margin. And... Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: And what is your cost-reduction plan on that Canada over next 1 year?

Pardon me, cost-reduction plan? Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: Cost-reduction plan on that Canadian plant, yes.

Yes. When the -- with the more and more Canadian -- our projects start get into construction phase, I see the cost difference move way below $0.20. Our target, our calculation shows that the gap can be -- can come down to around $0.15. Michael G. Potter: Now remember, we're using non-Chinese cells to ship to Europe because we can't use Chinese cells and we can't manufacture the modules in Europe based on preliminary guesses of what the tariff is going to be like. So there is a premium to use non-Chinese cells to ship. If we could use cells from our factory, we could lower the gap more. Pranab Kumar Sarmah - Daiwa Securities Capital Markets Co. Ltd., Research Division: And if you were to putting up a non-Chinese cell, how much premium you [ph] are giving? Say Taiwan [ph] cell, you are putting $0.05 per watt?

Yes, right now, the difference is about $0.05, somewhere around $0.05 per watt.

Your next question comes from the line of Paul Schangler [ph] representing [indiscernible].

Two quick questions. So it's peak 30 to 40 megawatts are going to Europe in Q2, and in your guidance, there's no projects baked in. Where are the other 300 megawatts going? Could you just give us a profile? Michael G. Potter: We do have projects in our guidance for Q2. We do have some projects we're recognizing under percentage of completion. We have some system kits which go into our project revenue in Japan, and we do have some activity going on in the U.S. as well, but the total project megawatt won't be huge. The rest of it is the markets we talked about: Japan is going to be a big market, the Canadian market selling to other people's projects will have some impact. The U.S. looks reasonably good for us in Q2 as well. And other than Japan, there's a few markets in Asia that we can ship to as well.

Got you. And then a second question. Can you just give a sort of a normalized OpEx number for Q1 and then sort of for the rest of the year? Michael G. Potter: I just add back the $30 million reversal. And the SG&A goes up and down based on megawatt shipped, so the more megawatts, the higher the shipping cost. The G&A stays relatively constant.

[Operator Instructions] Your next question comes from the line of Alex Lew representing Goldman Sachs. Amy Zhang - Goldman Sachs Group Inc., Research Division: This is Amy from Goldman. I have a question on your Japan business. It seems like your -- some of your competitor like GCL, ReneSola are starting to talking about the same thing quite a while in Japan. So can you give us a valid picture of the competitive environment in Japan? Maybe break down by 2 sides of the picture: First of all, the pure-commercial module business, so how sustainable the pricing outlook could be especially given the fact Japan had a FIT cut in March. And also, it seem like competition is supposed getting stronger when we're -- we see some tariff fee-ing to be imposed from Europe. So that's one hand, just want to know the competitive environment. Second hand is the project business. It seems like you guys are trying to lock in even more business in Japan. But historically, Japan is a very close-end business in terms of a downstream ITC business. How do you guys do this? And how competitive is Infinity [ph] there? So essentially, what do you different versus other Chinese module makers at this point?

Yes. This is Shawn speaking. First of all, our -- what we are different from other competitor is that we start business earlier. We start our Japan operation in 2009. We have been -- for a long time, we have been the 1 of only -- actually, 1 of the 2 only non-Japanese player in the Japan market. Another one is Suntech. But now Suntech fade away, so we became the only non-Japanese brand name in the Japan market. And even today, this is the case, which make us stand -- make us -- help us to differentiate from all other competitors. So our residential roof market is very sustainable. The price is sustainable. And so far, we haven't seen any brand name competitors in that market. In the commercial project market, we do see some other competitors move in. However, we also, by looking at the China export number, there's -- all other competitors only show a very, varied volume. And the only Canadian Solar and JA shows a high volume. All others are only a fraction of us. Now the -- also, the different from us and JA is that Canadian Solar only sell the brand name product and JA, so far, ships over 90% of their product as white label. Michael G. Potter: Yes, Amy, we've been investing in Japan for quite a while now, and it's a pretty loyal market. The reason why we're able to build a pipeline when others may be haven't been able to is because we've been there a long time. So when the FIT was first introduced as an idea and people started first looking at projects, we were one of the people that got turned to right away. And we try and be as easy to work with as possible. So we try to work with the developers in a way that we both could win if we codevelop the project. I think that sort of Canadian philosophy of working well with your neighbors and your potential business partners has helped us in Japan, that, on top of the fact we've been there for a few years longer than our competitors. And we've spent that time building the relationships which are bearing fruit today. Amy Zhang - Goldman Sachs Group Inc., Research Division: So out of your 1.6 to 1.8 gigawatt shipment guidance, what will be the portion of the Japan looks like for this year, other than you finished in 1Q?

Well, as of -- looking at the trends so far, we see the Japanese volume to be around -- I will say, around 30% of the total revenue. We have forecasted the Japanese volume will be 30%, 40% of this quarter's revenue. I think, for the full year basis, that's mostly will going to be the case. Amy Zhang - Goldman Sachs Group Inc., Research Division: So out of the 30%, 40% shipment, what will be the split between residential rooftop [indiscernible] numbers versus commercial market?

Well, residential is stable and a sustainable growth market. And usually, it's, let's say, around 10, 20 megawatt per quarter. So on annual basis, I'm seeing probably 60, 80 megawatt or a little bit more toward the residential. And so the commercial for this year will probably be over 400 megawatt. So volume wise, the commercial is bigger, megawatt wise. But for the kits, we sell a full kit, so revenue wise, the 2, more or less the same. Well, we make more money on the residential kits. Amy Zhang - Goldman Sachs Group Inc., Research Division: Okay. So should I understand we're -- the competition gets stronger in commercial market and we'll see some ASP declining as a natural trend?

Well, so far now, so far, we actually have been slowly increase our price in Japan in respond -- in response to the depreciation of Japanese yen. And so far, most of customers, they understand and they have accepted this price adjustment. So while we see competition, but so far we have been holding our price well.

[Operator Instructions] At this time, there are no further audio questions. I would now like to turn the call back over Chairman and CEO, Mr. Shawn Qu. Please proceed, sir.

Yes. Thank you, operator. And thank you, everyone, for joining the call today. Thank you for your continued support. And if you have any further questions after today's call, please contact us. And have a great day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.