Gary Dvorchak - Investor Relations, The Blueshirt Group Asia Rebecca Shen - Investor Relations Xianshou Li - Director and Chief Executive Officer Maggie Ma - Chief Financial Officer

Philip Shen - Roth Capital Partners, LLC Maheep Mandloi - Credit Suisse

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2016 ReneSola Ltd. Earnings Conference Call. [Operator Instructions] I must advice you that this call is being recorded today, August 24, 2016. Now, I will turn the call over to Mr. Gary Dvorchak. Thank you. Please go ahead.

Hello, everyone. Thank you for joining us on ReneSola’s conference call to discuss second quarter results. We released the results earlier today, and they are available on the company’s website as well as from newswire services. You can also follow along with today’s call by downloading a short presentation available on the company’s website at www.renesola.com. On the call with me today are Mr. Xianshou Li, Chief Executive Officer; Ms. Maggie Ma, Chief Financial Officer; and Ms. Rebecca Shen, Director of Investor Relations. Rebecca will read Mr. Li’s prepared remarks regarding ReneSola’s operational highlights and strategy, and Maggie will then review our second quarter 2016 financial results in detail. Before we continue, please note on slide 2 that today’s discussion will contain forward-looking statements made under the Safe Harbor provision of US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company’s Annual Report on Form 20-F and other documents filed with the US Securities and Exchange Commission. ReneSola does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars. Let me now turn the call to Rebecca, who will translate Mr. Li’s prepared remarks. Rebecca?

Thank you, Gary. The following are Mr. Li’s prepared remarks. Thank you, everyone, for joining our call this morning. We appreciate your interest in ReneSola. I will begin our call with important strategic comments about business and our performance. Then, Maggie Ma, our CFO, will present operating and financial details for the second quarter and our updated guidance. We will open the call to Q&A. I’d like to start with a recap of the second quarter. Please turn to slide 3. We’re satisfied with the overall second quarter performance. We operated profitably despite headwinds that caused the decline in revenue; net income of $5.5 million compared to net loss of $2.3 million a year ago; EBITDA grew 7% as well. Furthermore, we met our objectives in our downstream project efforts with sales, connections and pipeline expansions. Also, the LED business showed strong top line growth and gross margins fueling our optimism about the long term prospects for this new business. Consolidated revenue of $215 million was down in single digits both year over year and sequentially, coming in lighter than our guidance of $280 million to 290 million. The shortfall was primarily due to the timing of revenue recognition for the four UK projects that we sold in Q2, reduced shipments in module and lower ASP in wafers further affected us. Despite the softness we’re staying on strategy by continuing to scale back OEMs, which is now an immaterial portion of our manufacturing business. The rise of poly prices software for ASP also affected our gross margin. We did hold it flat with last year at 16.5%, but it ticked down from Q1. You’re all probably aware that conditions in the solar industry are challenging. Accordingly, we’re operating conservatively going into the second half of the year. Demand is slowing in most regions of the world pressuring sales growth and margins. At this point in the quarter, we can see the slowdown quite clearly in China and other regions. Our strategy has always been to keep the company stable in tougher times and strive in good times. Again, we intend to be flexible and resilient as the industry cycles through a sluggish period in the next couple of quarters. Now, let me elaborate on downstream project development, which is at the core of our transformation. We have a robust pipeline of future projects across different geographies at various stages of development. Our late-stage pipeline features 324 megawatt in the US, the UK, Turkey, Japan, Canada and China rooftop. Our early to mid stage pipeline features power projects around the world, including the US, UK, France, Spain, Poland, Canada, Thailand and China rooftop. The early to mid stage pipeline sums to a capacity of approximately 614 megawatts. [indiscernible] the UK remains an excellent market for us. Recent activity highlights our competitive advantages there. During the quarter, we sold four utility-scale projects in the UK with capacity of 20 megawatts, with revenue of £21.1 million to be recognized in Q3. We already collected 90% of the proceeds in July. Furthermore, we completed construction and connected six utility-scale projects, with a combined capacity of approximately 26 megawatts. We expect those projects to be sold in the third quarter and revenue recognized before year-end. North America remains a large and robust market and most attractive to us for project development. Our US pipeline is up to 170 megawatts project. Notably, the dispute with Pristine Sun is behind us. As a result of the binding settlement, the transfer is complete of projects under development in California, North America and Minnesota. We now directly own 100% of the 85 megawatt of projects in that portfolio. Our plans remain intact to build a further 107 megawatt of solar projects in California, Massachusetts, Minnesota and North Carolina. We intend to commence construction in the second half of this year. Layering on our extensive work in mature markets around the world, we are selectively starting to develop rooftop DG projects here in China. We believe smaller rooftop projects can be attractive because they still have guaranteed uptake, but are now subject to delay FIT payments or curtailments. We now have around 35 megawatt of domestic DG in our early stage pipeline. This is a good start and further diversifies our portfolio, but it remains a fraction of the overall pipeline size. We believe that the project business is a key component of the enterprise value we have built at ReneSola. It is our primary growth driver and layers on top of the solar manufacturing that is on solid and stable foundation. In order to drive growth while continuing to improve our balance sheet, we intend to secure project level financing for some of the new projects we are developing. Despite the headwinds facing our industry, I remain optimistic of our prospects for 2016 and beyond. The disciplined execution of our strategic plan remains the focus of the entire ReneSola team. We remain our commitment to delivering high quality products and projects, which only strengthen our competitive advantage. Meanwhile, we retain our focus on tight cost control and cash generation that will strengthen our balance sheet over time. Let me now turn the call over to Maggie for details on our project operations and financial performance. Maggie?

Thank you, Mr. Li and Rebecca, and thank you, everyone, for joining us on the call today. I will review our operations and the financial performance for the second quarter 2016 and discuss our outlook. Let’s begin with slide 4. As Mr. Li highlighted during his prepared remarks, we are satisfied with our second quarter financial performance. Revenue of $250 million for the second quarter fell short of our guidance range of $280 million to $290 million. As discussed, the shortfall was due to the timing of revenue recognition in the four solar projects sold in Q2. Our original guidance anticipated recognizing those sales in this quarter. We expect to recognize a net proceed of £21.2 million in the third quarter. As Mr. Li mentioned, we have already collected 90% of the proceeds. Q2 revenue was down 4% sequentially and down 7% year over year. The revenue decline on both sequential and year over year basis reflects the unrecognized projects as well as the decline in ASP of our products. Gross profit of $41.2 million declined 8% sequentially and 7% year over year, and it was below our guidance of 18% to 19%. Q2 gross margin was 16.5%, down from 17.1% in Q1 2016, but it was flat year over year. The sequential reduction resulted from margin pressure from lower ASP wafer sales. Operating income for the second quarter was $6.4 million, down 48% sequentially. Operating margin for Q2 was 2.5% versus 4.7% in Q1. Flat gross margin was offset by higher operating expenses. Operating expenses for the second quarter of 2016 were $34.8 million or 13.9% of revenue, up from $32.3 million or 12.4% of revenue in the prior quarter and up from $33.9 million or 12.6% of revenue in the prior year period. The increase in operating expenses in the quarter reflects higher sales commissions. Sequentially, SG&A expenses increased 7%, while R&D expenses decreased 9%. We are taking a more cautious approach to spending in a number of areas. In particular, we’re prudently managing our discretionary expenses across the company. As Mr. Li noted, we intend to remain healthy and a vibrant company during the down cycle, but be ready for higher growth and better profit as the industry recovers. Below the operating line, non-operating expenses of $0.4 million include net interest expense of $7.8 million, offset by gains on derivatives of $2.9 million, and foreign exchange gains of $4.3 million. Net income for the second quarter was $5.5 million, which compares to $5.7 million in Q1 2016 and a net loss of $2.3 million in the same quarter last year. Earning per ADS in the quarter was $0.05. Slide 5 provides a summary of the key line items of our income statement over the last several quarters. Please turn now to slides 6 and 7, which highlight portions of our balance sheet. Cash and equivalents including restricted cash was $163 million at the end of second quarter, down $27 million during the period. Total debt was $717 million, down from $737 million as of March 31, 2016. The $20.7 million decrease was due to currency translation. Although we didn’t pay down any debt this quarter, our long-term objective remains to reduce debt substantially. We have built significant enterprise value in ReneSola and we believe firmly that each dollar of debt reduction will yield a similar increase in the value of the company’s equity. Now, let me offer details on our project pipelines. Slide 8 shows our recent history of sales, including the four UK projects this quarter. Slide 9 notes the Romania projects we continue to own and operate. Slide 10 shows our geographic footprint and slide 11 breaks out the pipeline by country. We added 153 megawatt of projects in the quarter, bringing the total pipeline to [933] 938 (sic) megawatt of projects in various stages of development, of which 918 megawatt are solar projects and 20 megawatts are wind related projects. 324 megawatt projects are late-stage. Slide 12 summarizes the results for LED. Revenue of $7.8 million represented about 26% growth sequentially. Gross margin remained at over 30% in the quarter. As of the end of June, we have accumulated over 3,500 active LED customers. Penetration around the world continues. We’re building distribution channels on every continent. Now, let me quickly summarize our modules and wafer product shipments in the quarter, shown on slide 13. Our module and wafer business is still attractive, given the cost reduction initiatives we put in place. Our in-house manufacturing cost per watt at the end of Q2 2016 was below $0.40 and we expect the cost per watt to further decrease in the coming quarters. Total solar module shipment in the second quarter was 282 megawatts, compared to 351 megawatts in Q1 of 2016 and 322 megawatts in Q2 of 2015. The year over year decrease continues to reflect our gradual exit from the OEM business as we successfully transition our business model to focus on project development. Wafer shipments were 423 megawatts, compared to 351 megawatts in Q1 of 2016 and 282 megawatts in Q2 of 2015. The pie chart on the right highlights the geographic breakdown of module shipments in the second quarter. Strong demand in China drove that country to 59% of our total shipments in the quarter. Japan is an important market for us, representing over 13% of our total shipments in Q2. Europe was about 6%. The US represented 4%; India, 11%; and the rest of the world was about 7%. Our module ASP increased modestly to $0.53 per watt in Q2 2016 from $0.52 per watt in the first quarter of 2016. Finally, we conclude with guidance, which is in slide 14. In the third quarter of 2016, we expect revenue to be approximately $200 million and gross margin to be around 10%. This outlook reflects the impact from high polysilicon price combined with declined wafer prices. For the full year, we are lowering revenue to $900 million to $1.1 billion compared with previous guidance of $1 billion to $1.2 billion. The lower revenue outlook reflects a slowdown in shipment and lower ASP. We would now like to open up the call for any questions that you may have for us. Operator, please go ahead.

[Operator Instructions] Your first question comes from the line of Mr. Philip Shen of Roth Capital Partners.

I was wondering if we could explore your Q3 guidance a bit more. You’re currently guiding to $200 million of revenue in the quarter. You’ve given us some clues as to what project revenue could be with your commentary, but was wondering if you could spell out what the mix might be between wafer, module and project revenue in the third quarter?

[Foreign Language] For the module and wafer, we are about to ship about 220 megawatts module in Q3 and about 350 megawatt wafer in Q3. And for the project, it is about 20 megawatts plus 2 megawatts in Japan.

Okay, great. That is helpful. Thank you. And then can you comment on what the margin outlook is for each of the segments in Q3?

[Foreign Language] Actually, for the module and wafer, the margin is quite limited because the price decline of the wafer price and plus the polysilicon price still in a high level. You can see that if compared to Q2 and Q1, actually the wafer price decreased about 20%, so actually, for the wafer sales sold to external customers that we actually generated [active] gross margin for Q3. So that’s why our wafer and module can only generate about only 10% gross margin in Q3. But we could expect that along with the decline of polysilicon price, our gross margin in Q4 will go up.

Okay, that’s helpful. With your nice pipeline nearing 1 gigawatt for both early and late stage and so forth, how much of that do you think could be sold – built and sold for 2017?

[Foreign Language]

[Foreign Language]

So let me translate. Mr. Li just said 300 megawatts to 350 megawatts for next year.

Okay, great. As for the LED business, I think you guys generated $8 million of revenue in Q2. On the last conference call, you said that you plan to be at $20 million a quarter of revenue for LEDs and potentially as much as more than 40% gross margin. Can you give us an update on this target? Are you still on track for hitting this by Q4?

[Foreign Language]

[Foreign Language]

Yes. He said $20 million of revenue is our target and we’ll work hard on this. It is still our target.

Okay, great. And is the margin outlook the same or has it changed since the last quarter?

For LED, right?

Yes, for LED.

[Foreign Language]

[Foreign Language]

No, it’s still the same.

Okay, great, and then one last one from me. Your accounts receivables increased substantially to $185 million from $90 million in Q2 of 2015. What is the right amount of AR for you guys from a days perspective, especially as we head into this downturn? With your shift to a distribution model, is this a natural outcome? If not, what’s your plan to address the AR in the coming quarters?

[Foreign Language]

[Foreign Language]

Actually, the increase of AR is because we shipped more to China and where we actually get the banknotes from the customer. However, for the notes receivable, it still sits in the accounts receivable. That’s why you can see that there is an increase there. But however, this AR, I assure we can get it because we already got the banknotes.

Your next question comes from the line of Patrick Jobin of Credit Suisse.

This is Maheep on behalf of Patrick Jobin. Just on the wafer ASPs, how did that trend in Q2 and what are your expectations for wafer and module ASPs in Q3 and Q4?

[Foreign Language]

He said both wafer and module pricing will decline by 20% in Q3. And though it’s still in a process of decline, Mr. Li sees the price to stabilize.

And would that be a stabilization in 2017 or in Q4?

[Foreign Language]

[Foreign Language]

He said the price will tend to stabilize in September.

And how should we think about your polysilicon price right now, what you had in Q2 and what you’re seeing in Q3 and how low do you think it can go down in Q4?

[Foreign Language]

[Foreign Language]

He said the current price for polysilicon is around $16 and he believes that it will continue to fall.

And just looking at your OpEx, you did mention, I think, it increased in this quarter compared to the last quarter because of sales commissions. Is that sales commissions on the LED business or on the solar business? And as a follow-up, just wanted to see how we should think about operating profit from the LED business in the coming quarters.

That sales commission is for PV module. It is a one-off expense, only happened in Q2. Regarding to the net profit of LED business, actually since we are still at a start-up stage, we still don’t generate a sizable net profit there. So along with the expansion of LED business, we can both see significant net profit there.

And just last question from me before I get back in the queue, how should I think about CapEx in Q3 and Q4? And of that 324 megawatts of late-stage projects, how much more do you need to spend to build those projects either in the next one and a half years?

[Foreign Language]

[Foreign Language]

Maheep, Mr. Li said that we have 30 megawatts projects. It is under negotiation of projects. And we believe that we will be able to collect the money in a short time. And in the US, we have 70 – we have 37 megawatts that’s going to start construction very soon. And we are in touch with the banks and we believe the projects will be able to get the project financing as well.

So does that mean you would be spending – just building 37 megawatts in the second half and the rest would be built next year?

You mean the US, right?

In all the portfolio, yes, US, UK, Japan, all.

[Foreign Language]

[Foreign Language]

So he said 37 megawatts of the US projects will start construction probably in Q4 this year. And we will start construction of 20 megawatts projects in China rooftop projects. So that makes 57 megawatts totally for this year.

[Operator Instructions] There is another question from the line of Patrick Jobin of Credit Suisse.

Maheep here again. So just following up on my last question on system sales this year or next year, how should we think about the project financing you’re getting, can you just discuss any details on those? And what levels of project returns do you expect or any clarity on ASPs on these projects, given the increased competition in the downstream business?

[Foreign Language]

[Foreign Language]

So Maheep, Mr. Li says in terms of the project, we have a late-stage project pipeline also. We have 107 megawatts in the US and we plan to finish the construction by next year. So right now, we’re looking for buyers before the construction. Mr. Li thinks that they’re actually very good quality projects. We secured the project rights last year. And since the construction cost, the BOS cost is going down, so that actually gives us high returns on the US projects. And we’re looking for buyers already and we are in the process of signing LOIs. And regarding our Turkey pipeline, it is actually a JV. So the projects are already at the shovel-ready stage. But due to the countervailing and antidumping in Turkey and instability in the political situation in Turkey, so there has been some delay in the project in Turkey. But regarding the Turkey project, we have obtained support from European buyers as well as the banks. And we are looking at setting up a JV in module production to solve the problems we met in Turkey. And for China rooftop, we target to sell – we target to construct 150 megawatts to 200 megawatts next year. So in terms of pricing, for US, we’re looking at the pricing of above $2 per watt. And in Turkey, we’re looking at €1.2 per watt. And in China, it should be above RMB6.5 per watt.

Your next question comes from the line of Philip Shen of Roth Capital Partners.

Just had a quick follow-up here. Earlier, Mr. Li mentioned that he expects ASPs to stabilize at the end of September. Can you ask him to comment on what he sees changing for the stabilization to happen in Q4? And can you ask him what he expects for the supply/demand balance for 2017? How long does he expect this downturn to last?

[Foreign Language]

[Foreign Language]

So he thinks there was actually no demand in China in July and in August because it’s a very special period after the Chinese government cut the FIT. But he thinks that we will be running at full capacity in September. And he thinks that the demand will pick up in Q4, the demand will be much better in Q4 than in Q3. So that’s what makes him think that the price is going to stabilize. He thinks that it’s very hard to predict how long the downturn is going to last. He thinks that perhaps after Chinese New Year next year, there will be new demand in China.

Great. Speaking of which, can he help us understand how much demand he sees in China for 2017 and how does that compare to 2016? Do you think there’s an increase in demand in China relative to 2016 or a decrease? And what is his view on what he thinks the government will do with the 5-year plan?

What the government will do to...

The 5-year plan, the next 5-year plan as it relates to solar.

Okay. [Foreign Language]

[Foreign Language]

He thinks that the demand for next year will not be worse than this year. He thinks that the China DG market is going to pick up largely next year. And in the Chinese government’s new plans, we plan to build 18 gigawatts of utility projects and DG is not included. And we have other solar plants, like supporting the poor.

[Foreign Language]

Yes, supporting the poverty-related, solar plants. So he thinks that there’s going to be 25 gigawatts for solar industry in China. He thinks that there will be a strong demand in China in the next three to five years. But he said it’s very hard to predict what’s going to happen after five years.

[Operator Instructions] There are no further questions at this time. I would now like to hand the conference back to Mr. Gary Dvorchak. Please go ahead.

Thank you, operator. Let me make some closing remarks on behalf of Mr. Li. We’re pleased with the direction of our company. Our strategic shift to project development continues to gain traction. Our pipeline continues to grow and we expect to cross 1 gigawatt threshold soon. We remain committed to rapid monetization and are exploring ways to improve our capital efficiency through project financing. Our focus remains on creating long-term shareholder value with a balanced growth strategy and strong focus on profitability through operational excellence. Our business remains strong and we’re committed to performing well and build financial strength relative to industry peers in a challenging environment during the second half of 2016. That concludes our call today and you may all disconnect.