Gary Dvorchak - Managing Director, The Blueshirt Group Asia Xianshou Li - Chief Executive Officer Xiaoliang Liang - Chief Financial Officer Doran Hole - Vice President of Strategy Jessie Jang - Director of Financial Reporting Johnny Pan - Director of Investor Relations

Justin Clare - ROTH Capital Partners

Hello, ladies and gentlemen, thank you for standing by for ReneSola's Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation, followed by question-and-answer session. [Operator Instructions] Please note that we're recording today's conference call, Monday 19th November 2018. I'll now turn over the call to the Gary Dvorchak, Managing Director of The Blueshirt Group Asia. Thank you. Please go ahead, Mr. Dvorchak.

Thank you, Annie, and hello, everyone. Thank you for joining us on this conference call to discuss ReneSola's third quarter results. We distributed the press release earlier today. It's available on the company's website and from newswire services. Furthermore, in this conference there will be a short presentation that which you can download from our website. On the call with me today are Mr. Xianshou Li, Chief Executive Officer; Mr. Xiaoliang Liang, Chief Financial Officer; Mr. Doran Hole, Group's Vice President of Strategy; Mrs. Jessie Jang, Director of Financial Reporting; and Mr. Johnny Pan, Director of Investor Relations. Johnny will read Mr. Li’s prepared remarks regarding ReneSola’s operating highlights, and Mr. Liang, will then review our third quarter 2018 financial results. Before we continue, please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as shown on Slide 2. 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 U.S. SEC. ReneSola does not assume any obligation to update any forward-looking information. Also please note that unless otherwise stated, all figures we mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to Johnny, who will translate Mr. Li’s prepared remarks. Johnny?

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. To get started, I will provide a summary of our Q3 financial performance and review our operating highlights. I will then turn the call to our CFO, Xiaoliang Liang, who will cover the financial results for the third quarter and provide guidance for Q4. We will then open the call to questions. First, we delivered solid financial performance this quarter and then are pleased with our continued execution in the quarter. Revenue came in at higher end of our guidance. Gross margin exceeded our expectations. Operating margin increased by more than 900 basis points sequentially. Net income increased approximately 750% quarter-over-quarter. Equally important is that our Q3 operating KPIs were solid as of our financial results. As you know, there are two elements to our business. The project we developed on the sale and the project we own and operate. Our focus is development. Due to the lower capital requirements, so we are evolving to an eventual development model. However, by pursuing both models now, we reduce our risks and better utilize the capital we have. The development business recycles kept quickly, while operating assets generated stable high margins in the recurring revenue. Let me take a quick look at each. The development pipeline is strong as around 1.5 gigawatts, of which 783 megawatts are late-stage. This late-stage features 783.3 megawatts in the U.S., Canada, Poland, France, Hungary, Spain, India, South Korea and China. Approximately 134 megawatts of late-stage is under construction, while 6.2 megawatts was connected in Q3. The connected projects were all China rooftop DG. Also, we sold 13.9 megawatts of community solar projects in the U.S. State of Minnesota to Nautilus Solar Energy. As many of you know, Nautilus is a leading U.S. company that starts projects acquisition, development and assets management. Our owned and operated portfolio serve our high-margin recurring revenue. It’s totaled 231.7 megawatts. Of that, we operate 212 megawatts of rooftop projects in China, 15 megawatts in Romania and 4 megawatts of rooftop projects in UK. Looking ahead, we have nearly 70 megawatts of rooftop projects under construction in China. Slide 3 provides our projects in more detail. Now let us cover some details under various regions. First, China, show on Slide 6. We now operate approximately 212 megawatts of rooftop solar, concentrated in a few eastern provinces with favorable development environment. The commercial and industrial electricity prices in those provinces are relatively high and the electricity offtakers are generally credit worthy enterprises. Self-consumption/DG projects in those provinces are attractive investments. In order to invoke the company into an asset-light solar project developer, we expect eventually to monetize our China DG assets. This will further strengthen our balance sheet, reduce leverage and improve cash flow. We will remain highly focused on China due to the attractiveness of unsubsidized liquidity priority projects that are free of regulatory risk and subsidy delays. In addition to the DG project, we intend to development and monetize 300 megawatts of ground-mounted unsubsidized projects located in the Northern provinces in 2019, as shown on Slide 6. So U.S. remains a large and important market for us. As highlighted on Slide 6 and Slide 7. Our late-stage projects, there are total of 347 megawatts, of which are approximately 124 megawatts are community solar in Minnesota and in New York. Additionally, we are pursuing small utility projects in Utah, Texas, Florida, Arizona, Colorado and California. During the quarter, we recognized revenue from the sale of 13.9 megawatts of community solar projects in Minnesota to Nautilus. These projects first represented Nautilus second acquisition of solar that was developed by ReneSola. Similar to last year’s first acquisition, community solar for portfolio is also qualified under Xcel Energy’s rapidly expanding community solar program in Minnesota. Construction of the asset is expected to be completed in 2018 and become online during the first quarter of 2019. We look forward to working closely with Nautilus on future projects. In Canada, shown on Slide 8, we have 706 megawatts of late-stage projects, all of which are under construction and shall be connected to the grid by the end of 2018. These projects are eligible for the FIT3 scheme. We show Poland on Slide 9. We have total projects there of 55 megawatts, of which 41 megawatts are under construction and 14 megawatts are operating. We plan for the 41 to come online gradually throughout fourth quarter and the first quarter of 2019. These are all parts of the projects awarded to us in the government auction last year. Importantly, in September, we entered into a Letter of Intent to sell all 55 megawatts of projects in Poland to Chroma Impact Investment. Chroma a global investor in renewable energy that focuses on large-scale solar B2B and storage projects. Our Polish portfolio consists of 55 installations of 1 megawatt each. All of the projects were solar power and Poland's contracts were difference regime and are eligible for 15-years guaranteed tariff. Poland is a key market for us and we are one of the largest project developers in that regime. We believe this is a positive development as the LOI validates our ability to develop and monetize solar projects across different geographies. Slide 10 shows Hungary where we continued to invest in small scale DG projects. Our latest pipeline has more than 17 micro projects each was a size of 0.5 megawatts, bringing total capacity to approximately 43 megawatts. All of these micro projects are under construction and shall connect to the grid throughout fourth quarter and the first quarter of 2019. We show India on Slide 11. We are making meaningful progress in India with the projects pipeline of 236 megawatts. Most projects there are on ground-mounted urban access projects, similar to the U.S. community solar. Indian projects consider electricity to different commercial and industrial offtakers under the long-term PPAs. Our strategy in India is a pure project developer model. We want to develop a project to the shovel-ready stage and then sell the projects right to investors. This model allows us to leverage our expertise in project developments and our global network of solar projects investors. Now turn to Slide 12 where we cover other regions. In France, in the third quarter, we've recognized revenue from the sales of 6.7 megawatts of projects. It came out of the strategic partnership with Green City Energy that we announced earlier this year. That year cost was joint development of four solar parks in the south of France. We expect the COD for the park in 2019. With the total storage capacity of 69 megawatts, the four parks were generated approximately 105 million kilowatt hour of electricity per year. Additionally, in the last tender we won projects with combined capacity of 2.5 megawatts. We took our total projects pipeline in France is now 71.5 megawatts. Beyond the source geographies, I just discussed, we are actively pursuing opportunities in other international markets, including Spain, South Korea and Vietnam. In Spain, we'll have late-stage pipeline of 12 megawatts of private PPA projects. And in South Korea, we secured 9 megawatts ground-mounted projects. In sum, we have a geographically diversified projects portfolio. And I'm optimistic about the opportunity ahead of us. Before I turn the call over to Xiaoliang, I would like to take a minute to reiterate our business model and the strategy. We continue to execute a global asset-light project development model with a focus on distribution, generation and community solar. Either with they're shovel-ready projects right or their good and transfer projects after grid connection. We typically attribute high gross margin from monetizing project rights, downstream projects represented our large opportunity globally for us. And we are excited about our business prospects. Our talented team diversified geographic coverage and record of accomplishment puts us in a prime position to grow profitably. With that, let me now turn the call over to Xiaoliang for comments on our financial performance. Xiaoliang?

Okay. Thank you, Mr. Li and Johnny, and thank you everyone, for joining us on the call today. I will review our financial performance for the third quarter of 2018, and then discuss our outlook. Please turn to Slide 14. For the third quarter, revenue was $18.8 million compared to $27.8 million last quarter and $36.3 million in the same period last year. Here is our revenue breakdown by segment in Q3. Project development was $5.5 million, as we recognized the revenue from the sale of 13.9 megawatts of utility projects in Minnesota and 6.7 megawatts of projects in France. EPC revenue was $3.3 million, mostly from EPC services of 3.7 megawatts of DG in China. Electricity sales were $10 million mainly from 66.1 million kilowatt hour of electricity generated by the companies operate in DG projects in China. Gross profit was $8.6 million compared to a gross profit of $8.2 million last quarter and $6.4 million in the same quarter last year. Gross margin was nearly 46%, well ahead of our expectations of 35% to 40%, and up from 29.5% last quarter. The sequential increase in gross margin was attributable to revenue mix with small high margin electricity sales due to the seasonality of high radiance during the summer months. Recently, some high margin project development business also contributed to the overall increase in gross margin. Operating income was $5.7 million, slightly flat when compared to Q2 of 2018. Operating margin was 30.4%, up from 21.2% last quarter. Third quarter operating expenses were $2.9 million, up from $2.3 million last quarter and up from $2.5 million in the same period last year. Sales and marketing expenses in Q3 was $0.1 million, down slightly from $0.2 million in Q2 2018. General and administrative expenses were $2.6 million, down slightly from $2.7 million in Q2 2018. Below the line, third quarter non-operating expenses totaled $2.1 million, down from $2.5 million last quarter. Q3 non-operating expenses include interest expense of $2.6 million interest income of $0.1 million partly offset their foreign exchange gains of $0.4 million. The forex gain was due to the appreciation of Polish zloty against the Euro. Net income was $3.6 million compared to an income of $0.4 million in Q2 2018. Third quarter EBITDA was $3.9 million compared $5.2 million last quarter. Now the balance sheet, shown on Slide 15, we had cash and equivalents of $8.1 million as of September 30, 2018, a decrease of about $70 million during the quarter. We used the cash primarily for the construction of our projects in Poland and Hungary in Q3. Long-term borrowings of approximately $73.3 million as of September 30, 2018, essentially flat when compared to last quarter. We have long-term liabilities related to capital leases and build sale leasebacks of approximately $80 million, a decrease of $5 million during the quarter. This relates mainly to rooftop projects in China. Finally, we will discuss guidance shown on Slide 18. For the fourth quarter of 2018, we expect revenue in the range of $20 million to $30 million, and the gross margin in the range of 20% to 25%. With that, we would now like to open up the call for any questions that you may have for us. Operator, please go ahead.

Thank you. Ladies and gentlemen, it’s now our Q&A session. [Operator Instructions] We have one from Justin Clare of ROTH Capital Partners. Please ask your question.

So first half, I wanted to ask -- can you share what the margin was for your electricity sales, EPC services and then your project sales in Q3?

[Foreign Language]

Hi, Justin. For Q3, the project investment margin -- gross margin was around 15%, and the gross margin by IPP around almost 75%.

Okay, great. That's helpful.

Gross margin was 10%.

10%. Okay. All right. And then for Q4, can you share which projects you plan to sell? And how much of your revenue you expect from those project sales versus EPC services and then electricity sales?

Okay. [Foreign Language] The revenue for IPP around $500.34 million revenue, and project development around $28 million, and EPC around $0.4 million.

And we're going to sell the project in U.S.

[Foreign Language]

And there are 14 megawatts project in Poland, and 7 megawatts in Hungary -- 7 megawatts project in Hungary.

Okay. And those numbers are in RMB, right?

No. That number in U.S. dollar.

U.S.? Sorry, did you say $500 million? I missed what you said, I guess?

$500.3 IPP -- electricity generated on our IPP projects.

Okay. All right. So then, if we look into 2019, I know you haven't provided guidance here, but can you give us a rough sense for how many megawatts you plan to sell in 2019? And if you could share the cadence of when you plan to sell those projects, will it be weighted more towards the first half or the back half that could be helpful?

[Foreign Language]

Let’s start with China DG. We were monetizing our China DG operating assets. So, probably in Q1 next year, we will sell 150 megawatts in China. And then, in the first half of next year, we will sell our project in Poland that is 41 megawatts, and also 35 megawatts in Hungary. And for the second half of 2019, we will sell shovel-ready projects rights for our projects developed in China, India and U.S. total around 600 megawatts.

Okay. So then just ….

And then we have IPP revenue.

Okay. IPP revenue. Can you share approximately how much IPP revenue you expect?

It's around 100 to 106 megawatts operating assets. We will sell -- electricity next year for our IPP business.

Okay. So then those are generally… Go ahead.

Okay, what’s your question?

All right. You were going to say the revenue? Please go ahead.

[Foreign Language]

It's around $14 million.

Okay. And then I just wanted ask a little more broadly about the China market. So you’ve announced plans to build and sell 600 megawatts in the China market that are unsubsidized projects. But it looks like the NEA could announce an updated solar policy within the next few months or maybe early next year. And that policy could have new subsidies. So I was wondering -- can you just share your expectations for what new policy could potentially be announced and how that might affect your development plans in 2019?

Okay. [Foreign Language]

Hi, Justin. I need to correct that you said we were to 6 megawatts projects in China, but actually 6 megawatts -- 600 megawatts for China, India and the U.S. In China, we planned to do 300 megawatts. And for your question of new policies in China with the subsidy, actually Mr. Li said, we are developing unsubsidized projects [indiscernible], because EPC cost is low enough to unsubsidized the projects in many provinces in China.

Okay. So if a new solar policy were to be announced, that would not change your development plans for the year? Is that right?

That's right.

Okay. I think those are the questions. I have -- so, I can pass it on.

Thank you. The next question is from Kevin Wong of [indiscernible]. Please ask your question.

Just let me ask question about the Chinese market so that’s not enough information. So I want to ask, will ReneSola continue to build an own DG project?

Yes. Where to build our DG project? Sorry.

Yes. Will you continue to build an own DG project?

Okay. [Foreign Language]

Hi, Kevin. Mr. Li said, for next year, for DG, we don’t have the support for financial institutions because the financing cost is increasing. So we would like to spend more time on the ground-mounted grid priority projects.

Okay, thank you.

[Foreign Language]

Thank you. [Operator Instructions] There are no questions at this time. I would like to hand the conference back to Mr. Johnny Pan. Please go ahead, sir.

Thank you, Operator. Let me make some closing remarks on behalf of Mr. Li. We're very pleased with our Q3 results, and our continued execution of project development strategy. We remain committed to growing profitability, managing our operations and strengthening our financial position. We'll optimistic about our opportunities around the world. And I look forward to providing our business update in few months. Thank you all again for your participation. This concludes our call today. You may all disconnect.

Thank you, ladies and gentlemen. This does conclude the conference for today. Thank you for participating. You may all disconnect.