Canadian Solar Inc (CSIQ) 2021 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Third Quarter 2021 Earnings Conference Call. My name is Rochelle, and I will be your operator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Isabel Zhang, IR Director at Canadian Solar. Please go ahead.

Thank you, operator, and welcome, everyone, to Canadian Solar's Third Quarter 2021 Conference Call. Please note that we have provided slides to accompany today's conference call, which are available on Canadian Solar's Investor Relations website within the Events & Presentations section.

Joining us today are Dr. Shawn Qu, Chairman and CEO; Yan Zhuang, President of Canadian Solar's majority-owned subsidiary, CSI Solar; Dr. Huifeng Chang, Senior VP and CFO; and Ismael Guerrero, Corporate VP and President of Canadian Solar's wholly subsidiary, Global Energy. All company executives will participate in the Q&A session after management's formal remarks.

On this call, Shawn will go over some key messages for the quarter. Yan and Ismael will respectively review the highlights of the CSI Solar and Global Energy businesses, followed by Huifeng, who will go through the financial results. Shawn will conclude the prepared remarks with the business outlook, after which we will have time for questions.

Before we begin, may I remind listeners that management's prepared remarks today as well as their answers to questions will contain forward-looking statements that are subject to risks and uncertainties. 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. Any projections of the company's future performance represent management's estimates as of today. Canadian Solar assumes no obligation to update these projections in the future, unless otherwise required by applicable law. A more detailed discussion of the risks and uncertainties can be found in the company's annual report on Form 20-F filed with the Securities and Exchange Commission.

Management's prepared remarks will be presented within the requirement of SEC Regulation G regarding generally accepted accounting principles or GAAP. Some financial information presented during the call will be provided on both a GAAP and a non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends.

Management uses non-GAAP measures to better assess operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP. And now I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Shawn Qu. Shawn, please go ahead.

Thank you, Isabel. Good morning, and good evening, everyone. During the third quarter of 2021, we delivered 3.9 gigawatts of module shipment and sold our largest battery storage project today, which is the 1.4 gigawatt hour Crimson project located in Riverside County, California, one of the largest battery storage project in the world.

We accomplished 34% year-over-year revenue growth with gross margin well ahead of guidance and our strongest net profit performance since the start of COVID. Overall, we are pleased with our ability to navigate an extremely challenging market while continuing to focus on long-term investments and R&D innovation.

You will hear Yan, Ismael and Huifeng walk through a more detailed review of our performance in a few minutes. But first, I would like to highlight 3 key messages on the Global Energy outlook, our strategic priorities and CSI Solar carve-out IPO.

Please turn to Slide 3. First, after many years, we are starting to see real action across the world to appropriately price the cost of carbon and curtail investment in fossil fuel. For example, the European Union's emission trading system, one of the most mature market in the world, saw carbon prices exceed EUR 60 per ton for the first time in its history.

Now it remains at nearly 6x of its 2010 to 2018 average. We, in response were witnessing more actions that call for greater clean energy deployment. It is no coincidence that we are experiencing a number of energy crisis across the world most notably in Europe, China and part of U.S.

These events reflect a broader trend of declining investment in traditional energy, insufficient investment growth in clean energy and continued growth in economic development, I see 3 moving parts in this equation. However, we don't want to increase the supply of fossil fuel-based energy. We also don't want to lower our living standards.

Therefore, the only solution is to accelerate the adoption of reliable, low-cost and clean renewable energy, including solar and battery storage.

Please turn to Slide 4. So the long-term growth outlook for solar and battery storage is stronger than ever. Solar PV's cumulative installations will cross 1 terawatt next year and is set to reach 3.2 terawatts by 2030. Battery energy storage cumulative installations will cross 100 gigawatt hours next year and is set to reach 1 terawatt hours by 2030.

At the same time, clean energy PPAs are also going up reversing a long-term trend of aggressive PPA bidding. The market is certainly adjusting and in a good way. Meanwhile, we are encouraged by the upbeat narrative and government policies in supporting the clean energy transition. China has announced a series of decarbonization policies for the 14th 5-year plan, demonstrating the country's commitment to fight climate change.

We expect more policies to come. We're also hopeful that President Biden's Build Back Better plan will pass Congress and set America of the right path towards decarbonization. These are responsible government policy that will support long-term sustainable development.

Turning to Slide 5. All of these mega trend actions serve as tailwinds for our business for years to come. Our preparations to capture these opportunities started many years ago. Today, our global pipeline of solar and battery storage assets increased the visibility of our future growth.

We are also expanding and deepening our sales channels, focusing on providing total clean energy system solutions. At the same time, we are making tactical manufacturing capacity expansion business, limiting investment in certain stage of supply chain to navigate through the short-term supply chain volatility and we are investing significantly in technologies and R&D to maintain our leadership position in clean energy.

And finally, I would like to update you on the CSI Solar carve-out IPO in China. Please turn to Slide 6. We are on the third round of Q&A feedback with Shanghai Stock Exchange and continue to make progress. We continue to communicate proactively and transparently with officials at the Shanghai Stock Exchange.

At this point, we think it is more realistic to target completion early next year rather than this year, subject to customary market and regulatory risk. With that, let me turn over the call to Ismael for an overview of our Global Energy business. Ismael, please go ahead.

Thanks, Shawn. Please turn to Slide 7. I'm proud to report that in Q3, Global Energy closed 350 megawatts or 1.4 gigawatt hours in battery storage project sales. We delivered a total of $140 million in revenue and nearly 44% gross margin. Most of the profit this quarter was driven by our landmark Crimson stand-alone battery storage project in California, demonstrating the value creation potential of battery storage projects. Note that we completed the sale preconstruction and therefore, our gross profit is a better metric of our performance than the revenue.

As we continue to hold 20% ownership in this project, it will allow us to capture its long-term value creation. Hence, battery storage team is also providing the fully integrated battery storage system, EPC and long-term maintenance service.

Construction started several weeks ago. and we expect the project to reach commercial operation by the summer of 2022 with a significantly shorter lead time than most solar projects. We are very proud of our teams for having developed one of the largest stand-alone battery storage projects in the world, and for contributing to California's grid reliability and safety while supporting its decarbonization goals.

Besides Crimson, we now have a total of 2.9 gigawatt hours of battery storage projects under construction and almost 500 megawatts hour in backlog. We are also expanding our storage project pipeline in Latin America and other parts of the world. For example, we won Colombia's very first utility-scale battery storage project of 45 megawatts and 45 megawatts hour.

Colombia has the third largest population in Latin America after Brazil and Mexico with very strong renewable energy growth fundamentals. Following our first storage project win, we recently won another project in Colombia, a 52-megawatt solar plant in a nearby location. Elsewhere, we are also developing new battery storage projects in Chile.

Recently, we have been winning in public auctions while also exploring opportunities to create value by developing merchant battery storage projects. These projects represent our entry into new Latin American markets and our ability to diversify our pipeline globally, positioning Global Energy for long-term growth.

Slide 8, please. Nearer term, we are doing all we can to reduce the impact of equipment cost inflation. For instance, in some markets, we have signed PPAs indexed to inflation significantly hedging our position. In other markets, with the negotiating significantly higher PPAs for new projects and off-takers have been willing to accept higher prices. We are also proactively delaying equipment orders for projects where we can.

Overall, the impact in 2021 is limited, but we think there will be some impact in 2022. Turning to Slide 9. That said, we still anticipate a strong 2022. We continue to grow our global pipeline of projects which now stands at 24 gigawatts for solar projects, including China energy and 21 gigawatt hours of battery storage project.

Meanwhile, we continue to execute on our long-term strategy to expand the base of recurring cash flows. While our Brazilian infrastructure fund is slightly delayed due to the cost inflation impact, we are making significant progress on our Italian investment vehicle.

The first batch of projects will be 164 megawatts and we'll be hitting the virtual road with investors in the next few months. Our operations and maintenance teams are also winning new project contracts with our global O&M portfolio now at 5 gigawatts of solar, of which half is already operational and 860-megawatt hours of storage projects across 9 countries.

Now let me pass it on to Yan, who will talk about Canadian Solar's CSI Solar business. Yan, please go ahead.

Thank you, Ismael. Please turn to Slide 10. In Q3, we delivered 3.9 gigawatts of shipments and $1.1 billion revenue. Gross margin improved sequentially by 200 basis points to 15.1% driven by continued price increases and partially offset by higher costs. The margin was also helped by an antidumping and countervailing duty reversal benefit as the solar tariff for the last revision was reduced to 0 in the remand decision.

Please turn to Slide 11. The operational environment remains very challenging, driven by 3 key factors. First, the global logistics bottleneck is continuing to increase our transportation costs while delaying shipping schedules. We have signed several long-term contracts with shipping companies to mitigate the impact. But with average shipping costs at 5x the historical average, the impact remains significant.

Second, material costs are moving up again across the board, polysilicon glass, EVA encapsulant, steel, aluminum, et cetera and not just for solar, but for battery materials as well with lithium carbonate prices at 4x where they were at the beginning of the year. We're mitigating the cost increase with continued ASP increases with solar module prices up by nearly 25% year-over-year.

And third, power curtailment has not only affected our capacity utilization rates at certain factories, but also significantly affected the utilization of energy-intensive upstream manufacturing capacity, leading to the resumption of input price increases since September.

So the operating environment is not great and the power shortages in China are affecting the execution of our margin improvement plan. However, we continue to take proactive measures to improve the situation. For example, we have walked away from low-priced volume in order to protect margins and have been raising prices more aggressively on new contracts.

Our market positioning and brand is now more important than ever as we further expand and deepen our sales channel partnerships as a clean energy brand providing total system solutions while also optimizing our capacity expansion and utilization to ensure we are operating in line with market realities.

As Shawn mentioned, we're limiting investment in certain stages of the supply chain to avoid falling into the overcapacity track. For example, we see significant overcapacity in cell manufacturing, and thus, we do not have immediate plans to expand cell capacity. Nevertheless, we do expect to continue expanding our module capacity to benefit from cell overcapacity. And we continue to develop our sales channels, particularly in the distributed generation segments.

Importantly, turn to the next slide, please. We're investing in the next-generation solar technologies such as n-type heterojunction or TOPCon programs. As you know, we already invested in an HJT pilot plant earlier this year, and we'll be delivering HJT modules in the coming weeks. The champion cell during mass production not R&D testing has generated close to 25% efficiency, while average efficiency is reaching 24.5%. We're also currently deploying a 200-megawatt TOPCon pilot line, utilizing existing Mono-PERC capacity.

Please turn to Slide 13. In terms of battery storage, we're well on track to complete 860-megawatt hours of storage shipments this year for the Mustang and Slate projects. In fact, Mustang's 300-megawatt hours project is commissioning as we speak. The Slate project will be completed before the end of the year. Our combined contracted and forecast pipeline continues to increase. Although some of the earlier stage pipeline has dropped somewhat due to the current supply challenges.

That being said, we're making significant progress on our in-house R&D and product development for stationary battery storage product and hope to give you more updates very soon. Now let me turn over to Huifeng, who will go through the financial results in greater detail. Huifeng, please go ahead.

Thank you, Yan. Please turn to Slide 14. In Q3, we delivered $1.23 billion in revenue. Gross margin was 18.6%, well ahead of our guidance of 14% to 16%. Q3 benefited significantly from the Crimson battery storage project sale as well as higher module pricing. As Yan mentioned, we also had a $12 million benefit from the AD/CVD reversal true-up. But without true-up benefit, the gross margin would still stand at 17.6%, well ahead of the guidance.

Selling and distribution expenses increased by 21% quarter-over-quarter, mainly due to higher transportation costs, which accounted for three- quarters of the sequential increase. To give you a sense of the magnitude, 2 years ago, transportation costs accounted for approximately 50% of selling and distribution expenses. Today, it accounts for 80%. The total amount is more than 3x from 2 years ago.

General and administrative expenses also increased by 21%, mainly due to the project loss contingency. Our underlying OpEx cost increase is very low, adjusted for transportation costs. In this tough operating environment, we continue to manage costs very carefully while maintaining our investment on future technology and cost-saving operational efficiencies.

Other operating income increased during this quarter due to a combination of factors, including the sale of 75 megawatts of solar power systems in China. Total operating expenses were up 11% and accounted for 14% of revenues. This was above our targeted long-term OpEx level. The net foreign exchange loss in the third quarter was $14 million -- higher than usual. The FX loss was mainly due to the strength of the U.S. dollar relative to a basket of currencies, including the Brazilian real and euro. The losses were partially offset by our hedging programs.

Income tax benefit was $3 million, resulting from the utilization of net operating losses. Net income attributable to Canadian Solar shareholders was $35 million or $0.52 per diluted share. Our basic and diluted EPS stands at $0.56 and $0.52, respectively. We increased our issued share base by 1.1 million and 2.6 million shares during Q3 and year-to-date with our ATM, at-the-market equity offering program.

In addition, our diluted EPS is adjusted for 6.3 million shares to account for the additional shares had our convertible bond been fully converted into equity. Slide 15, please. Now turning to cash flow and the balance sheet. Our working capital days increased moderately as turnover days were affected by longer logistics cycles.

We now expect the full year 2021 CapEx to be around $500 million below our previous guidance as we adjust capacity expansion and the utilization plans in light of latest market conditions. Of that amount, we deployed approximately $420 million year-to-date including $60 million in the third quarter. We ended the period with a healthy cash balance at $1.4 billion, giving us significant financial flexibility.

Total debt increased modestly to $2.3 billion from $2.2 billion, mainly driven by an increase in non-recourse borrowings, while net debt to EBITDA excluding restricted cash remained stable at 3.7x. Now let me pass back to Shawn, who will conclude with our guidance and the business outlook. Shawn?

Thanks, Huifeng. Let's turn to Page 16. For the fourth quarter of 2021, we expect total module shipments to be in the range of 3.7 to 3.9 gigawatts, including approximately 250 megawatts of module shipments to our own projects. Total revenue is expected to be in the range of $1.5 billion to $1.6 billion.

The updated shipment and revenue guidance reflects a deliberate decision to protect module ASP and profitability in the fourth quarter. Q4 gross margin is expected to be between 14% to 16%. Please note that this does not include any benefit from the potential refunds of previously incurred Section 201 tariffs on modules shipped to the U.S.

As a reminder, the U.S. Court of International Trade recently ruled to reinstate the exclusion of bifacial solar module from Section 201 tariff. The CIT also reduced the Section 201 tariff rate from 18% to 15%. We are still evaluating the magnitude of the potential benefit. Therefore, it is not included in today's guidance.

For the full year of 2021, battery storage shipments accounted for CSI Solar are expected to be in the range of 840 to 860-megawatt hour. Project sales in Global Energy are expected to be in the range of 1.5 to 2.1 gigawatt reflecting the timing of certain project sales which are already in the advanced negotiations, but that may occur in December or Q1 next year.

We are also introducing guidance for the next year. For the full year of 2022, we expect module shipments to be in the range of 20 to 22 gigawatts, reflecting approximately 45% growth from 2021. We expect battery storage shipments to be in the range of 1.4 to 1.5 gigawatt hours, reflecting 70% year-over-year growth. And the total project sales will be in the range of 2.4 to 2.9 gigawatts, reflecting 50% year-over-year growth.

Revenue for the full year 2022 is expected to be in the range of $6.5 billion to $7 billion, up 30% year-over-year. To sum up, we believe the challenges facing the industry are temporary and the long-term fundamentals remain positive. Canadian Solar is positioned to benefit from both market and company-specific catalysts in each of our business segments.

With that, I would like to open the call to your questions. Operator?

(Operator Instructions) The first question comes from the line of Philip Shen from ROTH Capital Partners.

The first one is on the 2022 guidance. Thank you for sharing that outlook so early. Specifically, I was interested in understanding how you expect margins to trend by quarter? I know you haven't given it officially. But given your outlook for how input costs could trend and your ability to increase both pricing on the module side with ASPs as well as PPAs on the project side, how do you think we could see margins trend by quarter as we go through '22?

Philip, this is Shawn speaking. We believe now those are all forecasts that the feedstock pricing has been quite volatile this year. Now for 2022, we believe that the overall trend for the key material, especially for the silicon should be down rather than up. That's because the capacity of polysilicon is getting higher every quarter and it should be up a lot over the past of the next 4 to 5 quarters.

And also considering the recently announced the U.S. CIT decision, which will help the customers in U.S. and also help us because of the exclusion of the bifacial modules from the Section 201, but also to reduce -- the reduction of the Section 201 for other modules.

Considering all these factors, I would think that the module -- the overall margin for us should get better next year, which means if we forecast 14% to 16% margin for the fourth quarter, we are forecasting the module -- the Canadian Solar's margin be stabilized and going up slightly over the 4 quarters next year. Now that will be my expectation, Philip.

Great. You mentioned the Section 201 bifacial exemption being reinstated. And so you talked about how you could see a refund. And I know you said you're assessing the magnitude. But given that the -- all the bifacial product that's coming in as of earlier this week is now without the I guess, 18% tariff. You have some benefit there.

And then there could be benefits for recent imports as well. So I was wondering if you might be able to give us a sense of what the size of that could be? And then also for Q3, I think the gross margin had a positive impact from the AD/CVD from a prior period being refunded or at least being reduced, I think, to 0%. So can you quantify what the impact was for Q3? And then also what you expect for Q4 as I guess you might continue to get that refund?

Yes. The AD/CVD benefit in Q3, it is $12 million. Now moving forward, as you said, without 18% duty, it will help -- the exception of 18% duty for the bifacial will help the U.S. customer, also help us. And moving forward, I think we will see more of this benefit next year rather than in Q4 because as you know, the shipping and logistics time is pretty long these days. So the stuff we are shipping today will probably only be able to clear our customer in Q1.

Great. One last one for me. How do you guys expect OpEx to trend in Q4 maybe by line item? And then in Q3, I think you also had this $23 million operating income benefit. What was the driver of that?

This is Huifeng. Let me answer this question. Yes, the OpEx was up about 11% quarter-over-quarter, mainly due to the higher transportation costs, as I explained on the call earlier. And going into Q4, I think all these cost factors will be pretty much similar to Q3. So -- that is the overall picture. But I think a lot of them will be compensated with the higher ASP.

Our next question comes from Colin Rusch from Oppenheimer.

Can we get an update on how your PPA pricing is holding for the projects that you've already fully developed and signed deals with relative to clearing price in the market for sales of projects? Just trying to get a sense of how those spreads are changing and your ability to digest some of the higher costs that are coming through the supply chain?

Ismael will handle this question.

Thank you, Shawn. Colin, thanks for the question. We don't have this year many projects PPA signed that are not indexed to inflation, like most of the PPAs we signed this year are in Brazil, and there all our PPAs are indexed to inflation. So there is no change in the market there. And in the rest of the countries, all the PPAs that we have signed have all the orders placed before. So we don't see a big impact for us on any change in the market conditions this year.

What we are seeing in the market truly depends from market to market, but what we are seeing for instance in Europe is a significant increase on the market PPAs and what we have been doing is all the contracts we have under negotiations have been basically renegotiated and we didn't sign some PPAs that were basically very close to be finalized and pricing has been renegotiated. Has this reply your question or?

Yes. I have some more nuance to it. I guess the second question embedded in there is clearing price for projects. Are you seeing things clear 5% unlevered returns? Is it getting down below 5%? Or is it closer to 6%? What's the sense of pricing on the number of buyers are right now?

It really depends on market to market and on the PPA contracts that you have signed, as you know. But look in general, I would say 6% is a reasonable assumption. And it's what people is basically looking for in most of the countries.

Okay. Great. And then just changing gears on the power dynamics in China. Shawn, as you look at the activity around that, are you seeing signs of real activity that can help boost power production? Are you seeing the government get involved? Can you just give us an update on what's happening on the ground to mitigate that and what you're watching for to just get a bit more hopeful on our capacity coming back online?

This is Yan. First of all, I think given the macro level, the high level of carbon-neutral effort, I think controlling on the carbon emission from the carbon-based energy consumption will continue. However, in the past few months, the very harsh restriction on power control was kind of temporary.

We are already observing a relaxation on that. So that's why we see some improvement on the supply chain already. But I'm not saying that will completely disappear, it will continue, but it will be in a more rational manner into next year.

(Operator Instructions) Your next question comes from Brian Lee from Goldman Sachs.

Maybe just first one is a follow-up to Phil's question. That $23 million operating sort of income benefit you saw on the OpEx line away from -- what is that? And does that repeat?

Sorry, Brian. Can you highlight exactly where the number is?

Brian, this is Shawn. That operating benefit is from selling of some of the solar power plant assets in China. And we will not repeat, it's a onetime item.

Yes, that's a 75-megawatt solar power plant we sold in Western China.

Okay. Why does that show up as a contra expense, I guess, as opposed to just -- why is it not booked as traditional revenue and margin?

Yes. Because that asset book is recorded as a project to hold, if it's project to hold, then if we decide to offload the project, it is recorded as an operating benefit or other income rather than into the revenue line.

Got it. Okay. Understood. Makes sense. And then maybe 2 more quick ones for me. I don't know if you mentioned this. I appreciate the early '22 guidance and all the different capacity forecast here. What are you thinking about the CapEx budget for 2022?

That's so far away. I haven't -- we haven't finished that yet.

Do you think it will be in excess of the $500 million for this year given your capacity is growing more on a year-on-year basis?

While at this moment, we believe it's more or less the same as 2021. However, as I said, we're still quite a few months into 2022. So or finalize it in a months to come.

Okay. Understood. Makes sense. And then last one for me, and I'll pass it on. If I look at your slide deck, the guidance slide, Slide 16, again, I appreciate all the detail here. You got modules up 45% in '22, battery storage, 70%; project sales up 50%, but then revenue is up 30% million in the guidance.

So just trying to understand what sort of ASP assumptions are you making? Why in an environment right now where panel pricing is up 25%, like you said, Shawn. Are you assuming ASP degradation into 2022?

Or are the batteries or project sales coming in at lower prices? Just wondering why that volume growth, which is pretty robust across all 3 product types for you isn't kind of translating into a similar level of revenue growth?

This is Yan. Actually, we're still feeling certain uncertainties for next year, first of all. We still believe there are multiple number for driving courses for next year. So as you see, the inflation may not end yet. And we'll still see -- we're still observing the output, the real output for silicon next year is going to be taking time from first half into second half.

So the real capacity is going to be released -- will be out in the second half. So we're still seeing a rather tight balance between supply and demand, I'm talking about silicon module shipment for next year.

So although we are also observing the adjustment from downstream, I'm talking about the PPA of taking prices and the expectation of returns are also becoming more tolerating. So all things together, we're seeing next year is a very rational balancing.

That's why we're providing a very rational forecast. In terms of ASP, I would say it's rather stable. It may go down, but it's not going to be a dramatic drop. So in particular, in the first half, we are seeing a quite tight balance.

Brian, this is Huifeng. Let me also add on the EG side, even though the gigawatt, we projected for next year 2022, higher -- significantly higher than 2021. But because of the nature of the business, higher gigawatt doesn't mean -- necessarily mean higher revenue. So there is a -- this factor in the total equation. That's why you see a much higher volume but not necessarily much higher revenue.

(Operator Instructions) We will take our final question from J.B. Lowe of Citi.

My question is on -- essentially on polysilicon and whether you guys have -- well, first, I wanted to ask about what impact you guys are seeing, if any, from the WRO and especially by the Customers Bureau here in the States over the summer and how that's been affecting your polysilicon buying patterns, if at all?

And whether or not you guys are looking for I guess, alternative polysilicon to buy outside of China and how that would kind of work with your cost base?

This is Shawn speaking. We are buying polysilicon both inside China and outside China. We have stable long-term suppliers -- both inside China and outside China. And indeed, we are buying significant outside of China.

Moving forward, I think we continue to buy polysilicon both inside China and outside China. And of course, in all of our purchasing activities, we have a strict policy to prevent any forced labor or any actions violating the commonly accepted labor practice.

Okay. Great. Other question was just on -- have you -- did you guys see any COVID-related slowdowns in your Southeast Asia manufacturing facilities? And have those -- and if so, have those been abated in any sense?

We see COVID related, yes, we do see some COVID-related slowdown in the manufacturing in Southeastern Asia. But we also see some slowdown seems to be due to other reasons, for example, WRO and it looks like it's affecting especially the production at some of other solar companies.

Yes. I think the impact from other factors are bigger than the impact of COVID.

There are no further questions from the line at this time. I would now like to hand the call back to Canadian Solar's Chairman and CEO, Dr. Shawn Qu for closing comments.

Thank you, and thanks, everyone, for joining us today and for everyone's continued support. And if you have any question or would like to set up a call. You know that you can contact our Investor Relations team at any time. I hope you have a wonderful Thanksgiving holidays next week with your family and have a nice day.

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