Canadian Solar, Inc. Q1 FY2025 earnings call

• Market challenges: Structural overcapacity in solar supply chain prolonged downturn, pressure on module pricing, tariffs and policies squeezing margins. - Solar future: Resounding yes to solar's bright future as global electricity demand grows, solar paired with storage can meet demand. - New products: Completed first deployment of Anti-Hail technology in Australia, introduced N-type High Power TOPCon Gen 2 modules. On storage, SolBank 3.0 Plus launched with long lifespan and high efficiency, EP Cube received design awards. - CSI Solar: Module shipment 6.9 gigawatts, revenue $[1.2] billion, gross margin 13.4%, operating income $2 million. e-STORAGE revenue from 849 MWh, softer Q1 but stronger Q2 expected. - Recurrent Energy: Generated $125 million in revenue, gross margin 18.6%, operating loss $12 million. Had projects in operation and under construction, secured $450 million multicurrency credit facility, project pipeline at 27 GW solar and [76] GWh storage.

Module Shipment reached 6.9 gigawatts, slightly above guidance. Revenue totaled $1.2 billion at the high end of the range, with gross margin of 11.7% modestly exceeded expectations. Storage deliveries aligned with guidance, totaling 849 megawatt hours. Revenue reached $1.2 billion, and gross margin declined by 640 basis points quarter-over-quarter to 13.4% for CSI Solar. e-STORAGE recognized revenue from 849 megawatt hours of shipped solutions in Q1, with softer performance due to contract timing but expecting stronger Q2.

• Second quarter 2025: CSI Solar module shipment range 7.5-8 gigawatts, storage delivery 2.4-2.6 gigawatt hours, total revenue range $1.9-$[2.1] billion, gross margin [between] 23%-25%. - Full year 20[25]: Module volume guidance 25-[30] gigawatts, energy storage shipments conditional 7-[9] gigawatt hours, full-year revenue $6.1-$7.1 billion. Reduced module volumes due to strategic reduction in less profitable markets, storage adjustments due to US volumes affected by trade negotiations.

• Structural overcapacity in solar supply chain prolongs market downturn, pressures module pricing. - Tariffs and shifting policies raise costs and squeeze margins. - Ongoing US-China tariff negotiations uncertainty impacts energy storage business. - Availability of easy-to-develop land with cheap interconnections becoming scarce.

Q: About FEOC provisions in the budget and impact on US capacity investment?

A: The draft was only released two days ago, it's the first draft, hard to comment now as it will likely change.

Q: On balance sheet leverage and target ratios?

A: Recurrent in transition to IPP, leverage may increase a bit; CSI Solar to maintain similar leverage ratio.

Q: Why revenue guide only down 10% despite lower module and storage volumes?

A: Maintaining profit first strategy, reducing volumes in less profitable markets, storage guidance considering trade negotiations fluidity.

Q: Details on tariff assumptions in storage guidance and sourcing flexibility?

A: Storage guidance 7-9 GWh covers uncertainties including tariff exemptions, sourcing flexibility to help in 2026, 2025 storage projects mostly from China.

Q: On deconsolidation of US project and margin contribution?

A: Deconsolidation is one-time event contributing ~5%-[6%] to Q2 gross margin from a storage project with fixed-rate agreement.

Q: A: