Emeren Group Ltd Q4 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Hey, guys. Thanks for taking my question. I wanted to talk about the 2024 guidance . You guys missed last year, and you're making adjustments to hit your goals for this year. One of them is this development service agreements. Can you give us a little more color on how that works? I know you're trying to collect revenue and payment earlier, but what leverage do you have to allow that to happen? And can you just describe the structure versus what you guys had been doing before? So just give us a little color on what you're doing differently. Thanks.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Okay. So that --

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Right. So you mean for you to get these benefits, that means your customer needs to get something as well. So I think I just heard you say that you charge them at a discount relative to what they would get at NTP. And so they don't have to pay as much by paying you guys earlier. Can you talk about what that discount is? Is it 5%, 15%, or greater? Thanks.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Okay. So do you expect to make other DSA announcements in the coming quarters?

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : And what's the magnitude -- sorry, what's the magnitude of the typical DSA partnership that you can imagine? I mean, are we talking about 100 megawatts? Are we talking about 500 megawatts or gigawatt level? Thanks.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Right. So this should smooth out your revenue and cash generation over time, so that's good. Shifting gears to a new topic. First, in the US, recently approved an order 2023, which could have meaningful positive impacts to the US pipeline, not just for you, but for your US pipelines in general by waiting out a lot of projects that do not yet have site control in addition to penalizing develop -- actually penalizing the RTOs if they don't complete studies on time, and forcing the RTOs to group studies together. I was wondering if you can comment on how you expect fourth quarter 2023 to impact your US pipeline? Could you lose some of your pipeline because you don't have site control? Or do you have site control on all your pipeline assets? And do you expect this to actually speed things up for you? Thanks.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : That's great. Okay. Last one --

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Very good to hear. Last question, and then I'll pass it on. AI and data centers are driving a lot of demand. You highlighted that in your prepared remarks. Can you share what percentage of your US pipeline is going to serve, and maybe in the form of PPA, you have relationship with an AI or data center end market or customer? Thanks.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Okay. Thank you both. I'll pass it on.

Question: Philip Shen - ROTH Capital Partners LLC - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 28, 2024 / 9:00PM, SOL.N - Q4 2023 Emeren Group Ltd Earnings Call

Question: Donovan Schafer - Northland Capital Markets - Analyst : Hey, guys. Thanks for taking the questions. So first I want to ask for the revenue range that you gave for the first half of 2024. If we just -- I want to talk just strictly about the non-IPP revenue, because we can kind of estimate IPP revenue, maybe back that out or something. So let me talk about the first half of 2024 revenue, and again the non-IPP part of that. How much of that is expected to come from the delayed projects that were supposed to happen, be monetized in the second half of this year?

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. All right. That's helpful. And then another question is, are you guys still planning on filing a 10-K for 2023?

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. And what's the timing on that? Is there a deadline at the end of this month, or given you're small cap and you're converting from being a foreign filer to 10-K, do you have until either this month or is it till the end of April?

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. Wait. Yeah, which one is it? Sorry, the end of April or the end of March, the deadline?

Question: Donovan Schafer - Northland Capital Markets - Analyst : Okay. Okay. That's helpful. And then I wanted to ask about the $4.1 million revenue adjustment and the earnout adjustment on the 75-megawatt of Poland projects. I believe those projects are usually lower than like the rule of thumb of like a $1 megawatt. It's probably more like $0.60, or maybe even -- maybe $0.60, $0.70, $0.80 a watt, but if we assume $1 a watt, then a $4.1 million amount that becomes 5 percentage points through a reduction in margin by straight up 5 percentage points. And if it's $0.60 a watt, that becomes like a 9 percentage point reduction in gross margins. I'm curious if you guys can talk maybe about what is that caused that change? Like if I'm thinking about the right way, why that revenue -- just why you didn't get that revenue? And if there are other projects you still would have taken on, or if this makes them the economics of where you would not necessarily have wanted to do these projects, otherwise?

Question: Donovan Schafer - Northland Capital Markets - Analyst : I think I understand, yeah. Yeah, okay, all right. Listen. Thank you, guys. I think I'll link the rest of my questions offline.

Question: Amit Dayal - H.C. Wainwright & Co - Analyst : Thank you. Good afternoon, everyone. So Yumin, with respect to some of the regulatory uncertainties you highlighted in your press release you may have faced in 2023 in the US and Europe, can you give any examples of what some of these challenges were? And with respect to your outlook in 2024, have these issues resolved? How are you dealing with some of these challenges that may have been in place in 2023 from a project execution perspective?

Question: Amit Dayal - H.C. Wainwright & Co - Analyst : Got it. Thank you. Last question from me. With the balance sheet we have right now, $113 million in debt and $70 million in cash, what level of revenues on an annual basis with this type of balance sheet can you -- what level of revenues can be generated with this balance sheet if you execute exceptionally well? I know your guidance is for $150 million to $160 million. But in a scenario where everything goes well for you, how much revenues can the company potentially generate with this balance sheet?

Question: Amit Dayal - H.C. Wainwright & Co - Analyst : So is this DSA Emeren creation, or is this something that is happening across the industry now (multiple speakers)?

Question: Amit Dayal - H.C. Wainwright & Co - Analyst : Okay, understood. That's all I have, guys. I'll take my other questions offline. Thank you so much.