Hello, ladies and gentlemen, thank you for standing by for ReneSola Power's First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please note that we are recording today's conference call. I will now turn over the call to Mr. Gary Dvorchak, Managing Director of The Blueshirt Group Asia. Please go ahead, Mr. Dvorchak.

Thank you, operator, and hello, everyone. Thank you for joining us on today's call to discuss first quarter 2021 results. We released our shareholder letter after the market close today. It is available on our website. There is also a supplemental slide deck posted on the website that we will reference during our prepared remarks. On the call with me today are Mr. Yumin Liu, Chief Executive Officer; Mr. Ke Chen, Chief Financial Officer; and Mr. John Ewen, President of North America. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward-looking. These forward-looking statements represent ReneSola Power's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under the risk factors section and elsewhere in ReneSola Power's filings with the SEC. Please do not place undue reliance on these forward-looking statements, which reflect ReneSola Power's opinions only as of the date of this call. ReneSola Power is not obliged to update you on any revisions to these forward-looking statements. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to Mr. Yumin Liu. Yumin?

Thank you, Gary, and thank you, everyone, for joining the call. Before we disclose our Q1 results, let me quickly start by addressing the inflation of the commodity input costs, one of the key challenges facing the solar industry these days. The good news is by far the higher input costs have not been an issue for ReneSola Power. Now let's turn our attention to Q1 results. I will summarize our financial performance and review our operating highlights in the quarter. I will then turn our call over to Ke, who will cover financial results in more detail and will provide 2021 guidance. We will then open the call to questions. Revenue was $22.8 million, up 39% sequentially and up 8% year-over-year. Gross margin of nearly 30% was well above expectations. Our operating income on GAAP basis was $4.1 million, up significantly, both sequentially and year-over-year. Adjusted EBITDA increased more than 250% from last quarter. Importantly, we reported our fourth consecutive quarter of profitability. Our development pipeline remains strong, ending the quarter with late-stage projects of over 1.3 gigawatts. We see this momentum continues. The expanded pipeline of business activity indicates greater demand for project development, and we remain optimistic about our multi-year growth prospects. We continue to focus on profitable markets, including the U.S. and Europe, where we see tremendous growth opportunities with high-quality projects. Let me now discuss the recent operational highlights. First, we completed the sale of our 12.3 megawatts portfolio of projects in Hungary to Obton, a leading international solar investment company in Denmark. The portfolio comprises 20 solar farms with a combined capacity of 12.3 megawatts. This 20 solar farms are now in operation and are qualified under the Hungary 25-year CAT feed-in tariff scheme. Second, we successfully closed the sale of about 10-megawatt portfolio of solar projects in Utah to Greenbacker Renewable Energy Company. The portfolio consists of three ground-mounted commercial distributed generation sites located in Utah. The projects are so-called "behind the meter" and will sell electricity directly to two off-take parties. The projects were sold at the "Notice to Proceed" stage, and Greenbacker will complete the construction and retain long-term ownership. Third, we executed the JV agreement with Eiffel Investment Group last month. The collaboration between the two companies aims to accelerate the development and financing of our current and future solar projects across Europe. With the signing of the JV agreements, ReneSola Power and Eiffel Investment Group have created European Solar Energy Development JV. The initial portfolio will consist of 340-megawatt advanced stage development projects located in Poland, Spain, and France, which both partners will support and develop to reach ready-to-build stage. The joint venture company intends to fund the development of up to 700-megawatt of solar projects in the next three years across Europe. Fourth, we strengthened our financial position through debt reduction and capital raise in Q1. As shown in our balance sheet, we reduced short-term borrowings by $31 million in the quarter, a major achievement for us. Additionally, we further shored up the balance sheet, leveraging the capital markets to raise capital. In the fourth quarter, we raised $290 million through our registered direct placement of ADS. As a result, we significantly improved our capital structure and debt-to-assets ratio of 0.19. From a capital allocation standpoint, we intend to use the net proceeds to expand our solar project pipeline, further penetrate the solar-plus-storage market, for working capital, and for potential strategic M&A opportunities. We believe the capital infusion will enable us to execute our long-term strategic growth plan as we further consolidate our transformation into an asset-light solar project developer. Fifth, we remain positive on our storage strategy. Energy storage is a large and growing market. The solar storage assets we acquired from Nova Development Management last year are highly complementary to our existing business. Additionally, the acquisition provides us with access to utility projects and development activities in a number of states across the U.S. Building on the successful acquisition of the energy storage business from Nova, we expect to grow our pipeline in the solar-plus-storage market. We are actively evaluating opportunities in both solar-plus-storage and independent storage facility solutions in the U.S. and UK. We are making good progress, and looking forward to capture more market opportunities. Putting it all together, we are making great progress growing our business and achieving our mission to become a leading global project developer. I will now update you on our project pipeline. At quarter-end, our late-stage pipeline was 1.3 gigawatts, up from 1 gigawatt last quarter. We continue to direct resources to the market with the best profit potential. Our objective is to add incremental project pipeline in our core markets to reach 2 gigawatts by the end of 2021. We also intend to monetize approximately 300 megawatt this year. Let's review highlights from certain key geographies. First, let's turn our attention to the U.S. shown on Slide 7. Our late-stage project stand at 340 megawatts, of which 82 megawatts are community solar in Maine, Minnesota and New York. Additionally, we have projects under development with a mix of corporate, municipal and utility off-takers in other states, such as California, Pennsylvania, Florida and Illinois. Meanwhile, we operate 24 megawatts of small-scale utility projects in North Carolina. In Poland, shown on Slide 8, our key asset is a portfolio of project rights. We have a pipeline of 271 megawatts of ground-mounted projects under development and construction. Slide 9 refers to Hungary, where we also invest in small-scale DG projects. Our pipeline has the combined capacity of 42 megawatts in the country. Those projects are all under development. Slide 10 and 11 detail our pipeline in France and Spain. We have 100 megawatt in France and expanded our pipeline to 180 megawatts in Spain, all of which are ground-mounted and under development. We are also getting traction in Germany, as shown on Slide 12. We have a project portfolio of probably 50 megawatts, all of which are ground-mounted projects under development. In the UK, shown on Slide 13, we have a project pipeline of nearly 210 megawatts, including ground-mounted projects and solar-plus-storage. All of those projects are under development. In addition to our development pipeline, we operate a portfolio of 173 megawatts of solar projects that generate high margin recurring revenue. As you'll see on Slide 15, our operating assets, including 148 megawatts of commercial rooftops in China and 24 megawatt of utility solar in the U.S. In China, we are preparing to build at least 100 megawatt of commercial rooftop projects within 2021 and plan to operate them in our light IPP model. In conclusion, we are off to a solid start in 2021. The strong momentum reflects high demand in the markets we serve, the resiliency of our business model and excellent execution by our team. Let me now turn the call over to our CFO, Ke Chen for comments on our financial performance. Ke?

Thank you, Yumin, and thanks again, everyone, for joining us on the call today. Our shareholder letters and the supplemental slides contain all the figures and the comparisons you need. I'm not going to repeat every number. Instead, I'm going to focus on the factors that influence results. As I speak, please keep in mind that we will discuss certain non-GAAP financial measures. We use non-GAAP measures because we believe it provide useful information about our operating performance that should be considered by investors, along with the GAAP measures. A non-GAAP to GAAP reconciliation is included in our shareholder letter. Let's begin with our Q1 financial highlights on Slide 19. Revenue of almost $23 million was up sequentially and year-over-year. As expected, revenue was in line with the updated guidance we provided in our April 30 press release. As discussed, our revenue can vary significantly quarter-to-quarter because of timing. We judge our success over a longer time period that's without the quarter-to-quarter variation. Revenue this quarter was mainly from sales of projects in Hungary, Utah and Poland and from power generation any time. Gross profit of $6.8 million was up significantly from last quarter and up from the same period last year. Gross margin was almost 30% compared to 12% in Q4 and 6% in the same period last year. The increase was due to higher contribution from NTP sales. Moving down the P&L, non-GAAP operating expense up 17% sequentially, and up 4% year-over-year. G&A expense was up due to the incremental cost associated with the capital raise in Q1 and a non-GAAP operating expenses. Non-GAAP operating income was $4.6 million, compared to non-GAAP operating income of $0.2 million in 4Q last year and a non-GAAP operating loss of $0.7 million in the first quarter 2020. GAAP operating income was $4.1 million and GAAP operating margin was 18%. Non-operating expenses were up sequentially, but down year-over-year. We had a foreign exchange translation loss, which was caused by the differentiation of the Euros and Romania ron against U.S. dollar. That's led to exchange loss on the balance sheet. All this result in GAAP net income attributed to ReneSola Power of $0.8 million, earnings per ADS on a GAAP basis was $0.01. Now let's review the balance sheet shown on Slide 20. At the quarter end, we had cash and equivalents, including restricted cash of more than $300 million. It’s about $4.5 per ADS per share. In Q1, we used registered direct placement to raise capital that we will use to grow our product pipeline and for working capital. The deal has further strengthened our balance sheet, provide capital flexibility and enhance our ability to execute our long-term strategic growth plan. As Yumin mentioned, we significantly paid down our short-term borrowing in Q1. We reduced our borrowings to $800,000 in Q1, down $32 million in Q4. Please note that nearly all of that is project-based and non-recourse. Also, I would like to highlight that our debt to asset ratio is only 19%, a significant improvement in our capital structure. This also represented the lowest debt to asset ratio when compared to order solar industry affairs. Now let's cover 2021 guidance as shown on Slide 25. For full-year 2021, we continue to expect total revenue in the range of $90 million to $100 million and gross margin over 25%, and we are anticipating a profitable full-year 2021 with significant profit growth compared to 2020. For the second quarter, we are guiding revenue in the range of $19 million to $22 million and overall gross margin in the range of 36% to 39%. Our 2021 outlook has two key factors. First, the COVID-19 and global economic conditions remain highly uncertain. We continue to monitor how the health aspect of the pandemic are playing up as well as effect on the economy. We anticipated some slowdown in activity in some geographic regions in the first half of 2021. That being said, we expect to see global recovery in a number of key markets around the world in the second half of the year. In France, we believe it’s prudent we factored variability into our outlook. Secondly, we consider the normal fluctuations typical of the project development cycle. Overall, we focused on our solar markets, Europe, U.S. and China. We are very optimistic about our long-term profitable growth. With that, we will open up the call for Q&A. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Pavel Molchanov from Raymond James. Please ask your question.

Thank you for taking the question. Based on the guidance that you are giving for Q2, it looks like approximately 60% of your full-year revenue will be in the second half. And, of course, that percentage varies from year-to-year, but last year, it was the opposite. The first half was much more weighted. I'm curious what explains that change in the sequence?

In the first half, there is more NTP sales, and again, in the second half, we will have more COD sales. So I think that drive revenue mix.

And that also explains why the implied gross margin in the second half will be lower compared to the first half.

I will say that, in general, COD margin were lower than NTP margin. So - but again, at this moment, we are still trying our best to achieve high margins.

Okay. At the beginning of the year…

I'm sorry, go ahead.

No, please.

Adding a point on that as we mentioned, COVID-19 still play some effect in the development cycle or in the execution of the projects. That's why that the – we see the global recovery will happen mostly in the second half of this year as we see they are executing the projects.

Understood. At the beginning of the year, you talked about adding some electricity sale assets to your portfolio on a selective basis with a focus on China. Can you give an update on how that process is going?

Yes. Starting early this year, they restarted our project development in China with many considerations, and we are confident we will build at least 100-megawatt commercial rooftop projects in China. Number one, we carefully select the regions we have projects in China around the Yangtze Delta region, the strongest economic growth in the whole China. The second is those behind the meter commercial rooftops provide very attractive return to the company. And more importantly, that the solar experience, we own about 150 megawatts commercial rooftops in China, making significant, good experience in China operating those assets. We also are well connected to understand off-takers. We carefully select the best off-takers to do the PPAs with them to make sure we have confident cash flow or debt payment. So we expect more than 100-megawatt will be built in China, which will be added into our recall light IPP load.

Okay. Thank you for that. My last question, you very briefly address the input cost inflation at the beginning of the prepared remarks. I wanted to focus on not so much the modules, but the steel, the trackers, and other steel inputs. How are you managing the sudden price increases in the steel supply chain?

Okay. It actually has several different regions. Number one is, we are – our strategy is to sell more of our deals at NTP. So they push the procurement and EPC installation to the end buyer. But the cost increase will definitely impact the end buyer's financial model. So the - on one case that the – for example, in China and in Europe, back in Q1 before the price increases, we already made some nice move and build argument to EBITDA margins. That save us a quite significant amount of dollars for the projects in China and for the construction projects in Europe. Second is, our projects we are selling either at NTP or some execute transaction at COD are not looking at immediate construction. We are talking about starting either end of this year or next year, and everybody, including ourselves – I'm talking about everybody, meaning the buyers or the end owner of the projects, the OPD, the increase of the cost is a short-term issue. We see opening up and expansion of the suppliers. We believe this issue will be minimized. The cost will get back to normal. The overall price trend is still going down, not going up. That is why the conclusion of ours, we said it's a good news, but impact was minimum or no.

Understood. Appreciate the perspective. Thank you very much, guys.

Thank you.

Our next question comes from the line of Amit Dayal from HCW. Please ask your question.

Thank you. Good afternoon, everyone. Yumin, did you – with respect to the 100-megawatt deployment plans in China for your electricity sales. Did you say that you want to get this thing started in 2021 or completed in 2021? Could you clarify your comment please?

Yes. We actually have our first 20 megawatts under construction already. The good part - we are planning to complete this 100 megawatts are at least 100 megawatts by the end of the year, this year.

So this should potentially contribute cash flows et cetera in 2022?

Yes. Absolutely, and a little bit in 2021, too.

That's amazing. Thank you. With respect to your…

We will bring those small rooftops alive starting as early as end of next month and starting mostly from July.

Congratulations on that.

Thank you.

With respect to your cash balance, how fast can you put this cash to work? I mean, do you already have plans? Or users reading and watching to see how the markets sort of reemerges post-COVID? Can you give us any color on your thought process about how you want to use this cash? And then within that, where the stock is? Are there any possible buybacks at these loans?

Okay. Let me answer the first part and I’ll ask Ke to address the second part. We do have a plan to effectively utilize the proceeds we raised from the property market. We are adding – plan to add one more gigawatts within this year, and we are doing the light IPP in China. We are starting our strategy on solar-plus-storage, an independent storage. So all those things are consuming money. Another thing is we are actively looking at strategic M&A opportunities. Currently, we have several targets being reviewed by the team in the late stage. So we are confident that we'll use the cash we have in hand to grow the pipeline and provide the best return as we could to our investors. Ke, can you take the second part?

Sure. I mean, let me add. Again, as U.S. keep expanding the pipeline, it’s best to the utility scale. We also need more cash to like either currency deposit. And again, in Europe, we also need more cash for the good project, which for example, in Spain we need a great project, so we need to deposit cash to secure. And so all this, we are well disciplined to use this cash to expanding our projects, to compete in a better way because we have strong cash position. So the much of the cash we'll use it to expand our business. In terms of buybacks, again, the Board is compensated, so we are fabulous. Thank you.

Okay. And with respect to M&A targets you are considering. Are you going to stick to sort of type of transactions you have already undertaken in the past? Or are you going to maybe diversify away from it a little bit, any color on what type of M&A we maybe pursuing would be helpful. Thank you.

We are looking at mainly two or three different directions. Number one, definitely improve our possible values in the strategic market especially in the U.S. and Europe, okay. The second is we are also looking at our one of the most important strategies we initiated late last year, that is a storage sector. We are looking at not only the solar-plus-storage product pipeline, but also looking at the possible team we can acquire. And more importantly, in some new market, we plan not only driving some partnerships, but also to acquire – some more organic way to acquire some teams with the pipeline to help us to grow in the new market. The new power market, I mean is the couple of strategic countries are important market in Europe and several U.S. states.

Okay. Understood. That's all I have guys. Thank you so much.

Thank you.

Our next question comes from the line of Philip Shen from ROTH Capital Partners. Please ask your question.

Hi, everyone. Thank you for taking my questions. Yumin, earlier you were saying that the impact of the increase in the input costs is a minimum or none. And you had a great margin in Q1, so congrats on that. Just wanted to confirm that looking ahead assuming these inputs remain elevated through the end of the year, you continue to believe that the impact is minimal or none in Q2, Q3 and Q4. Can you give us some perspective on that? Thanks.

Yes. That's our – at least at this current moment, we absolutely believe that. The reasons are the – we did NTP sale and those NTP sale – NTP will start, our EPC installation will not start immediately, okay. Except some deals in the U.S. and some deals in the U.S. states will start similar to later within this year. But most of the deals we are selling will not start until next year. When we talk to the buyers at least their financial model sees minimum are no impact and everybody – OPD including ourselves at emission, this is a short-term thing, not a long-term. And we hope by the end of the year or Q1 next year, this cost increase will be minimized.

Great. Yes, it highlights, I think the strength of your business model now with the focus on NTP sales as opposed to COD. So that said, you talked about how the projects don't start until next year. Some of our recent checks suggest that some – we’re seeing some projects that were supposed to be built next year being delayed into 2023. So the impact actually – a lot of this pricing is certainly for the larger scale – utility-scale projects, I think they're contracting now for next year build. A lot of the kind of inputs have already been locked in for this year, so they can't push it off. So just curious if you see any risk of delays of either – well, what kind of delays do you think you see for next year? Have you had any of those kinds of conversations with your customers about 2022 projects getting pushed into 2023?

At this time as the – in our portfolio, we are monetizing this year. We seriously, we don't have those big utility-scale projects except excluding one of them. And when we talk to the end buyers, we are talking about the starting those utility-scale projects construction, utility from Q2 to Q3 next year, okay. At least the portfolio we are monetizing all we are selling, we do not see the need to delay that one to 2023. But let me go to the second half, if the cost increase continues, people's forecast is like longer than expected the cost increase. Then the legal letter we look, but at this time it's not really an issue for us.

Good. Okay. All right. For the Q2 period, can you name perhaps which projects you expect to sell? I think for example, you're looking to – and sorry if I missed it, but I think you guys were looking for some projects in Spain that were targeted for sale in Q2. Where those already sold? For example, we're half – more than half the way through Q2 and how many megawatts do you expect to sell in Q2? Thanks.

This is a difficult question, tough question. We are in the process of selling both U.S. and European projects, including the long delayed supposed to be closed last Q4 in Spain. And they do have the offer handy, but they are waiting for the final approval from the government and they may happen in Q2, but definitely with very high confidence will happen within Q3. The proximity talk about the Spain prosperous, but the – all other deals are as planned in the closing of the U.S. and Europe all as planned in Q2. We have several deals closing in Q2 and Q3.

Great. Okay. One last maybe housekeeping question on travel and your G&A. So obviously with travel restrictions from COVID, I am imagining that your G&A was lower recently. And so as the world opens up, do you expect your G&A to increase meaningfully? Or is it going to be a slow increase? And would you not expect an increase and will continue to work with Zoom and other virtual meeting platforms? Thanks.

Yes, we are disciplined about control of cost, so again, as I mentioned in the first quarter, our G&A cost will still remain between $2 million and $2.5 million. So yes, we are disciplined about that.

Okay. Fantastic. Thank you guys for the questions. I'll pass it on.

Thank you, Phil.

[Operator Instructions] Our next question comes from the line of Marisa Hernandez from Sidoti & Co. Please ask your question.

Thank you, and good afternoon. Just a quick housekeeping question. Can you give us some idea of what your capital expenditures would be in 2021? Thank you.

Sure. Marisa, thank you. Again, I think, the CapEx mainly for building off of the China 100 megawatts and also the project in Europe. So right now the whole year CapEx is still between $20 million and $25 million.

Thank you very much.

[Operator Instructions] We have a follow-up question from the line of Pavel Molchanov from Raymond James. Please ask your question.

Yes. Thank you. I wanted to follow-up on Europe. The countries in your current late-stage pipeline, Poland, Hungary, Spain, France, Germany, UK are I believe the same six countries that you had at the beginning of the year. Do you anticipate adding any new opportunities in Europe in terms of entering a new market either by yourself or through the joint ventures like Eiffel?

Good question. We are on the same page. We are preparing to go to two to three more countries as the opportunities in Europe is really – we have received lots of great quality grows in many countries in Europe. But as you know, we want to be very focused, so we do want to go to two or three more countries. We are actually developing the local partnerships, including the joint development partnership and including some potential acquisition of the local teams, as I mentioned earlier. So we are considering expanding our activities to two, three more countries in Europe.

Okay. Thank you very much.

Thank you.

[Operator Instructions] There's no more question at this time. I would now like to hand the conference back to Mr. Yumin Liu. Please continue.

Thank you, operator. To conclude, we are committed to grow profitability, managing our operations efficiently and strengthening our financial position. We are energized by the opportunities in front of us and looking forward to updating you on our progress again in a few months. Thank you all again for your participation. This concludes our call today. You may all disconnect.

This concludes today's conference call. Thank you for participating. You may now disconnect.