Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Second Quarter 2024 Earnings Conference Call. My name is Rob and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Wina Huang, Head of Investor Relations at Canadian Solar. Please go ahead.

Thank you, operator, and welcome, everyone, to Canadian Solar's second quarter 2024 conference call. Please note that today's conference call is accompanied with slides, which are available on Canadian Solar's Investor Relations website within the Events and Presentation section. Joining us today are Dr. Shawn Qu, Chairman and CEO; Yan Zhuang, President of Canadian Solar subsidiary CSI Solar; Ismael Guerrero, Corporate VP and President of Canadian Solar subsidiary Recurrent Energy; and Xinbo Zhu, Senior VP and CFO. 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 review business highlights for CSI Solar and Recurrent Energy, respectively, and Xinbo will go through the financial results. Shawn will conclude his prepared remarks with the business outlook, after which we will have time for questions. Before we begin, I would like to remind listeners that management's prepared remarks today, as well as their answers to questions, will contain certain forward-looking statements that are subject to risks and uncertainties. The company claims protection under 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 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 requirements 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 non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to enable 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 Chairman and CEO, Dr. Shawn Qu. Shawn, please go ahead.

Thank you, Wina, and thank you all for joining our second quarter call today. Please turn to slide three. In the second quarter, we delivered strong results. We shipped 8.2 gigawatts of solar modules, surpassing our previous guidance of 7.5 gigawatts to 8 gigawatts. While increasing volume, we maintained competitive average selling prices, resulting in revenue of $1.6 billion and a gross margin of 17.2%, both in line with our previous guidance. Over the past few months, we have observed signs of market rationalization. Record low prices are driving out uncompetitive players. Meanwhile, our industry peers announced significant first-half losses. In comparison, we have performed well, striking a delicate balance between volume and profitability. I'm proud of what we have accomplished in one of the most challenging industry cycles I have experienced in my career. The underlying fundamentals of solar remain robust. As I have mentioned before, AI-driven data center expansion, electric vehicles, cryptocurrency, and other emerging technologies will generate substantial demand for clean energy. Solar and energy storage will also continue to be a major trend. We must not forget that the distance to meeting our global climate goals remains large. However, the challenges ahead should not be underestimated. It will take time to rebalance supply and demand in solar, given that today's industry competitors have more scale and resilience than ever before. How will we navigate a potentially extended downturn? Please turn to slide four. Canadian Solar is a diversified business with complementary divisions that enable us to not only weather but also succeed in this challenging industry landscape. Today, our module business has reached an optimal scale, large enough to maintain a highly competitive cost structure, yet lean enough to adapt swiftly to changes in industry dynamics. Our approach to capacity investment has always been carefully balancing vertical integration, the right technology mix, and magnitude. At the same time, we are positioning ourselves for sustainable growth through our rapidly expanding energy storage segment, a business for which we began laying the foundation 10 years ago. We are on track to grow by more than 500% this year, and we are doing so at industry-leading margins. Wood Mackenzie has forecasted an accumulated energy storage base of 1 terawatt hour by 2027. We have the expertise to grow alongside this market. Complementing our global manufacturing expertise in both solar and energy storage are our outstanding business teams. These local experts have enabled us to develop both global operations and a truly global brand. Finally, our project development platform, Recurrent Energy, is poised to deliver additional long-term value as it transitions to be a global developer, owner, and operator of solar and storage assets. A key element of our growth strategy is to do so sustainably and ethically. Please turn to slide five. In May, we proudly published our latest Corporate Sustainability Report, which features expanded disclosures and enhanced transparency. Highlighting a few achievements, in 2023, Canadian Solar achieved reductions in greenhouse gas emissions by 37%, energy consumption also by 37%, water usage by 72%, and waste intensity by 54%, compared to the level in 2017. Additionally, we remain on track to meet our target of powering all global operations with 100% renewable energy by 2030. As we have consistently emphasized, ethical labor practices are of utmost importance to us, both within our operations and throughout our supply chain. As a participant in the United Nations Global Compact, we adhere to the UNGC's 10 principles of human rights, labor practices, environmental protection, and business ethics to ensure the integrity of our operations and supply chain. We also engage with responsible business alliances to conduct validated assessment programs and audits at our facilities and those of our suppliers. The RBA VAP audit is an industry-leading standard for onsite manufacturing evaluations assessing labor practices, health and safety, environmental impact, ethics, and management systems. Finally, we remain committed to promoting diversity, equity, and inclusion at Canadian Solar, fostering a productive workforce that benefits from diverse perspectives in decision-making processes. Our newly included gender pay analysis revealed that women at Canadian Solar earned 95% of what men earned in 2023, with the remaining 5% gap deemed equitable. In conclusion, I'm pleased with our achievements in the second quarter and the first half of this year. We have demonstrated the resilience of our business in challenging circumstances and remain vigilant in our work moving forward. I will now turn the call over to Yan, who will provide more details on our CSI Solar business. Yan, please go ahead.

Thank you, Shawn. Please turn to slide six. In the second quarter of 2024, we shipped 8.2 gigawatts of modules, marking a 30% quarter-over-quarter growth. We generated revenue of $1.7 billion and achieved a gross margin of 16.7%. Despite the industry facing record losses, CSI Solar delivered an operating income of $93 million. Our revenue and profitability were bolstered by strong performance in North America, which accounted for approximately 30% of our shipments. In most other regions, average selling prices remain challenging. We managed our orders stringently. This coupled with a reduction in cost supported our financial performance. To walk through key drivers of our Module business, please turn to slide seven. Alongside the rapid decline in polysilicon prices, the entire supply chain is under pressure, leading to continued cost reductions. While this trend may initially seem concerning, it highlights the advantages of our partial vertical integration. We can flexibly source upstream materials at prices that enhance our competitive cost structure. In line with our flexible strategic manufacturing approach, we're moderating our capacity expansion plans to capitalize on current market conditions. Specifically, we intend to delay upstream investments until a more opportune window, reducing our planned capital expenditures this year. Thanks to our ongoing technological advancements, N-type TOPCon costs are now nearly aligned with those of PERC. Today, TOPCon technology is an industry standard, offering a lower levelized cost of energy compared to mass-produced non-crystalline technologies. This means our customers benefit from using less land, installing fewer trackers, reducing end-of-life disposal costs, and more. As I mentioned, our U.S. business remains strong, with higher volumes delivered at competitive prices in the second quarter compared to the first. We currently have contracts signed and under active negotiations through to 2030. In the U.S., bankability is even more critical than in other markets, and customers prefer to buy from a select group of Tier 1 suppliers where trust and proven track record are paramount. As in the past, during periods of uncertainty, we continue to actively service the U.S. market. In addition, we are investing over $1 billion in the U.S. to ramp up two state-of-the-art and highly competitive manufacturing facilities. One facility is already producing solar modules in Mesquite, Texas, while the other will manufacture solar cells in Jeffersonville, Indiana. Together, these facilities will create more than 2,500 American manufacturing jobs. As a domestic manufacturer, we believe that regulatory certainty and clarity are essential for maintaining a long-term resilient solar industry in the United States. Now turning to our e-STORAGE business, please go to slide eight. In the second quarter, we continued to achieve record shipments, delivering approximately 1.5 gigawatt hours globally. Our backlog continues to grow and now stands at $2.6 billion. Our key markets include the United States, where we have a longstanding track record across all our businesses, as well as the United Kingdom, Australia, Canada, and other countries we're entering as we expand the business. One deal in our backlog that I would like to highlight is our contract with Nova Scotia Power to develop flagship energy storage projects across three locations in Nova Scotia: Bridgewater, Waverley, and White Rock. These projects, totaling more than 700 megawatt-hours, will play a crucial role in enhancing grid reliability and stability. As Canadians, we take pride in making a significant environmental impact at home, contributing to both provincial and federal targets of achieving 80% renewable energy by 2030. The growth potential for e-STORAGE is immense. As of June 30, 2024, our total project turnkey pipeline for e-STORAGE stands at approximately 66 gigawatt hours. This pipeline includes both contracted and in-construction projects, as well as projects in various stages of negotiation. Moving forward, we expect to continue growing volume at healthy margins. With the support of our energy storage segment and the continued strategic management of our Module business, we anticipate the second half of the year to be stronger than the first. Now, I will hand it over to Ismael to provide an overview of Recurrent Energy, Canadian Solar's global project development business. Ismael, please go ahead.

Thank you, Yan. Please turn to slide nine. Second quarter results were relatively modest, with no major project sales. We generated $50 million in revenue, with a gross margin of 47.4%. During our transition to a model focused on accumulating operating assets, project sales will be lighter. In the second half, due to policy changes in Europe, our projects will experience delays of one to two quarters in Spain and longer in Italy, depending on the region. While in the U.K., we obtain approval on several projects. We also anticipate potential interconnection delays in certain parts of the U.S. These risks we will continue to manage through our hybrid developer, owner, and operator business model with a global presence. Since the announcement of BlackRock's $500 million investment in January, we have made significant progress securing the requisite regulatory approvals and meeting internal operating milestones. We are pleased to have announced the initial closing representing $300 million of the planned capital infusion. A key aspect of the growth expected from this transaction is our ability to secure the financing needed to support the construction and monetization of our high-value pipeline projects. Over the past few months, we have continued to obtain competitive financing at both the operational and construction levels. In May, we secured a landmark multi-currency revolving credit facility valued at up to EUR1.3 billion involving 10 banks to support the construction of renewable energy projects across several European countries. In June, we obtained $513 million in project financing for our 1.2 gigawatt-hour storage project in Maricopa County, Arizona. Papago Storage is the largest energy storage project in Arizona and holds a 20-year tolling agreement with Arizona Public Service Company. The battery energy storage system used for this historic project is sourced from Canadian Solar's e-STORAGE division. Also in June, we closed a $103 million tax credit facilitation agreement with Bank of America for our 160-megawatt North Fork Solar project, which is already in operation. This transaction marks our first production tax credit deal and exemplifies our ability to execute globally to optimize our funding access. Please turn to slide 10. We continue to lay the groundwork for long-term shareholder value. We have expanded our total development pipeline to 27 gigawatts of solar and 63 gigawatt hours of battery energy storage. Our pipeline is valuable not only for its scale and geographical diversity but also because of the interconnections we can secure and the competitive PPAs we negotiate with top-tier counterparties. For example, we recently signed a 10-year PPA with GKN Automotive, a global leader in drive systems. This agreement will facilitate the annual production of approximately 200 gigawatt hours of renewable electricity and marks GKN Automotive's first renewable energy PPA in Europe. Across the world in Japan, we entered into a 20-year PPA with Toyota Tsusho Corporation to secure 100% of the solar power along with the non-fossil certificates generated by three of our solar projects. This accomplishment marked our first private PPA with Toyota Tsusho, a key member of the Toyota Group. Recurrent Energy currently owns 1.6 gigawatts of projects in operation and 1.7 gigawatts under construction along with 1 gigawatt-hour of best projects in operation and 3.8 gigawatt-hours under construction. The vast majority of these projects are fully funded and secured with PPA contracts, positioning us to begin generating substantial revenues from 2025 onwards. Additionally, we have around 10 gigawatts of PV and 16 gigawatts hours of BESS with granted interconnections which are expected to be ready in the near term, driving significant growth. Our O&M business continues to grow steadily with 11 gigawatts of contracted projects, making it one of the largest operational fleets globally. This steady growth is supported by our own project portfolio, which provides clear visibility into future expansion. Now, let me hand it over to Xinbo, who will go through our financial results in more detail. Xinbo, please go ahead.

Thank you, Ismael. Please turn to slide 11. In the second quarter, we achieved revenue of $1.6 billion and a gross margin of 17.2%, both of which were in line with our guidance. The sequential increase in revenue was primarily due to a higher volume of solar module shipments, partially offset by a decline in module average selling price. Gross margin decreased 180 basis points quarter-over-quarter, mainly due to lower module prices. Total operating expenses in the second quarter increased to $434 million, primarily driven by higher shipping and handling expenses. Freight costs are likely to remain elevated in the second half of the year, given the ongoing issues and the industry's efforts to clear shipment backlogs from Asia to the United States and Europe. Net interest returned to a normalized level in the second quarter following the absence of an interest benefit derived from the interest income generated by anti-dumping and countervailing duty deposit refunds in the first quarter of 2024. Net foreign exchange and derivative gains in the second quarter of 2024 amounted to $13 million, mainly driven by the weakening of the Chinese Yuan and the Japanese Yen against the U.S. dollar. Total net income was $27 million, while net income attributable to Canadian Solar was $4 million, or $0.02 per diluted share. Basic and diluted earnings per share included the Recurrent Energy redeemable preferred share dividends payable in kind associated with BlackRock's investment, resulting in an EPS effect of $0.03 deducted on the diluted basis. I want to address the impact of the current energy business model transformation on Canadian Solar's P&L in the near to mid-term. As Recurrent transitions to a partial IPP model and accumulates more assets, two key effects will emerge. First, recurring will sell fewer projects, leading to a lower contribution to Canadian Solar's P&L. Second, as more projects are retained on the balance sheet, a greater portion of revenue and gross profit created by CSI Solar will be eliminated at the consolidated growth level. The unrealized CSI Solar revenue and gross profit on equipment sales to recurrent for those projects will be recognized gradually over the life of the project assets. Due to these effects, during the transition period, Canadian Solar's P&L will be systematically and consistently lower than that of CSI Solar. While recurrent assets will deliver value longer-term. Now let's discuss cash flow and the balance sheet. Please turn to slide 12. Net cash flow used in operating activities in the second quarter of 2024 was $429 million. The operating cash outflow was primarily driven by increased project assets due for sale and increased accounts receivables, mainly associated with higher module sales during the second quarter. Regarding that, going forward, CSI Solar and Recurrent Energy's leverage profiles will align with their respective strategic goals. This quarter, CSI Solar reduced its debt, optimizing its financial leverage to better navigate the industry cycle. Meanwhile, Recurrent Energy will continue to increase leverage in the near-term to support this transition to a partial IPP model. In summary, total financing at the half-year mark stood at $4.2 billion with a decrease at CSI Solar and a net increase at Recurrent Energy. In the second quarter, we spent approximately $390 million in manufacturing capital expenditures. As Yan mentioned earlier, in light of market conditions, we are dialing back our upstream capacity plans. We have revised our full-year 2024 capital expenditure expectations downward to approximately $1.2 billion. We ended the period with a cash position of $2.2 billion, reflecting CSI Solar planned repayments, Recurrent Energy growth, and changes in working capital. Lastly, I would like to speak to the private convertible bond announced on Monday. Please turn to slide 15. The rationale for this transaction is both financial and strategic. From a financial perspective, the notes provide us a versatile financing solution, offering a flexible drawdown schedule and reasonable funding costs. From a strategic standpoint, we are pleased to welcome PAG as a new potential equity partner. Please turn to slide 14 for additional comments. With more than $55 billion in assets under management, PAG is among a select group of global investment managers with specialized capital pools across multiple asset classes dedicated to investing in renewable energy. PAG is an experienced investor in the solar sector. After acquiring the first solar Japan platform in 2022, it expanded its portfolio to over 600 megawatts across Japan. PAG is also the largest owner of distributed solar projects in Hong Kong. PAG is well-positioned to partner with Canadian Solar to strengthen the company's market-leading position across the solar value chain. In key operating markets, we anticipate that PAG will collaborate with Canadian Solar to explore and realize strategic synergies. Now let me turn the call back to Shawn, who will conclude with our guidance and business outlook. Shawn, please go ahead.

Thank you, Xinbo. Please turn to slide 15. For the third quarter of 2024, we expect solar module shipments by CSI Solar to be in a range of 9 gigawatts to 9.5 gigawatts, including approximately 100 megawatts of solar module shipments to our own project. Total battery energy storage shipments are expected to be between 1.4 gigawatts to 1.7 gigawatt hours, including about 1.2 gigawatt hours for our own project. This significant volume to our own project is primarily for Papago Storage, a landmark project in Arizona developed by Recurrent Energy. Total revenue is expected to be in a range of $1.6 billion to $1.8 billion. Gross margin is expected to be between 14% to 16%. At this midpoint of the year, we observed a second half characterized by certain uncertainties, given the potential extended period required for the supply-demand balance to normalize, module margins will continue to face pressure. However, this is counterbalanced by the strength of our e-STORAGE business. e-STORAGE is expected to deliver record revenue and profitability in the fourth quarter, even after accounting for the elimination of shipments to our own project. As such, we are revising our total solar module shipment guidance to be in a range of 32 gigawatts to 36 gigawatts, including 1 gigawatt to our own project. CSI Solar's battery storage shipments are expected to be between 6.5 gigawatt to 7 gigawatts hours, including approximately 2.5 gigawatt hours to our own projects. We expect full-year revenue to be in a range of $6.5 billion to $7.5 billion. These revised forecasts reflect our continued commitment to our strategy of prioritizing profitability and driving sustainable growth. With that, I would like to open the floor for questions. Operator?

Thank you. We will now begin the question-and-answer session. Our first question comes from Colin Rusch with Oppenheimer. Please go ahead with your questions.

Thanks so much, guys. With new AD/CVD charters, can you talk a little bit about how you're expecting the sales and distribution costs to trend to the balance of the year? And just as a percentage of revenue would be so powerful?

Yes, Colin, I don't know which AD/CVD you referred to. If you're referencing the new AD/CVD petition for four Southeast Asian countries, then we have to wait for the preliminary ruling expected in October and then November. So it's difficult for me to speculate on the impact of that AD/CVD case at this moment.

Maybe we can discuss it later, but the question is really about how you are accounting for that in the meantime as you bring products into the country. Let me take that one offline. The second question then is really around go ahead.

At the moment, we are collaborating with our customers on the conditioning price mechanism to ensure that both parties are protected under different tariff levels. This process is ongoing as usual for us.

Okay, thanks guys. And then, you know, you guys have had a history of being flexible with the market in terms of building out capacity and managing margins around where best returns are? And you've still got a very strong distribution business in a number of countries. Can you talk a little bit about the dynamics for that distribution business as you've seen some of the kind of disruption that's happened in that distribution channel here in the last couple of years? And how you see that opportunity evolving for your distribution business? Is that something you can grow into or are you still managing a lot of relationships and kind of working somewhere at some point?

Yes, so the distribution business has always been our strong channel, and they continue to be strong. Actually, we anticipate this year that more than half of the volume will go to the DG market. That includes residential rooftop and the CNI rooftop market. In particular, I would say, we're even under the current situation with the very low price in the market price of modules, we're doing well in the U.S., for example, on the distribution channel, and we're doing well in Japan. We have even started our bundling business, bundling modules, residential storage, and inverters in the channel to enhance our margins. So long-term wise, we will expand that bundling business in different markets and it has proven to be a very profitable way of conducting sales by providing solutions.

Okay, thanks guys.

Hey guys, thanks for taking my questions. First one is on the 2024 guide. Can you share some additional color on what drove the latest 2024 shipment reduction? Was the main impact driven by the Southeast Asia AD/CVD tariff process? I know the tariffs have not come out yet, but there is uncertainty. And so just with the petition filed, did that slow business and the willingness of customers to receive modules? And if it wasn't that then was the driver more the global slowdown that we're seeing? Thanks.

Yes, Philip, this is Shawn. The new guidance is not because of the new AD/CVD case for our Southeast countries. It's rather for other markets. For U.S.-funded shipments, we are more or less on target with our previous target. There's not much impact. As you know, the preliminary decision for the new AD/CVD is only expected in October and November, so it's rather late. Therefore, you won't see much impact on the total annual shipment. The impact is really from the other market. Now, as we mentioned every time in the earnings call, we want to strike a balance between shipment volume and profit. In other words, we don't want to lose money just to sustain or to achieve shipment numbers. So we look at the current situation. As you know, our shipment has been going up every quarter. In the first quarter, we delivered 6.3 gigawatts, in the second quarter 8.2 gigawatts, and in the third quarter, we just guided 9 gigawatts to 9.5 gigawatts. So actually, we have stabilized our sales channels. We are getting back with more and more orders. We'll still be able to protect our profitability. But still, we are already at the second half of August. In order to strike a balance between the volume and profitability, we have taken actions. So we look at how much we can reasonably ship while still maintaining profitability. Then we decided on the new guidance, the new shipment range as a reasonable estimate and update.

Great. Okay, thank you, Shawn. Can you share any color on a potential recurrent IPO timeline? Additionally, are you thinking about spinning off the e-STORAGE business as well? And then finally, related to e-STORAGE, do you plan on building a battery cell pack line in the U.S.? And how much solar cell capacity? Well, you guys talked about how much you have in the U.S. now. How much more could it be? How much more could you grow it? Sorry for so many questions in a row, but thank you.

Well, Philip, thanks for highlighting so much of the strengths of Canadian Solar. You see our strength in recurrent. You also see our strengths and differentiation in the storage. So thank you very much for seeing our strengths and seeing our differentiators. Now, we haven't talked about how to speculate this. However, we are moving to a partial IPP model, as I, myself, Ismael, and Xinbo mentioned. Going through this model, you can reasonably speculate that at some point, we will look for a way to capitalize on what we accumulate and what we build. However, we just started this process. So I would say it takes a couple of years to build a good IPP. So this is the indication of any capitalization plan for recurrent. Now, e-STORAGE, we don't have a plan to spin off. e-STORAGE is an important and dynamic component of CSI Solar. It fits well within the CSI Solar family. So we don't have a plan there. Now, what's your next number three and number four question?

Yes, so the next one is, do you plan on building battery cell and pack in the U.S.? And then as it relates to U.S. solar cell and module capacity. Just remind everybody what the capacity is today and what your plans are for expansion. And I think that's it. Thanks.

Well, we plan. In other words, we have been studying the battery cell pack and the best production in the U.S. No question about that. However, we haven't made an announcement of any factories there. So I would not make an announcement today. Now for solar cell and solar module, the module capacity must be 5 gigawatts. The cell capacity in Jeffersonville, Indiana is also 5 gigawatts.

Great. Okay. Thanks. I'll pass it on.

Thanks for taking my questions. So the guidance for the second half, it sounds like you expect margins to be under pressure because of the challenging market conditions and oversupply across the solar value chain? I guess when do you think things get back into balance? You have kind of an internal view there. And then at a high level, do you expect this challenging market conditions and margin weakness to extend into 2025?

Yes, I would like to clarify that we see the margin for solar module business under pressure. However, we see sustainable and healthy margins for our energy storage business. Overall, we still have confidence for the second half of the year. Now, I will let Yan make further comments, especially for the question of how long the pressure on the module business may continue.

So first of all, as Shawn has already mentioned, we're going to have a strong Q4, a very strong Q4 on the storage side. So we believe the pressure will continue throughout this year for sure, and it may carry into next year. So I'm not a magician, and I cannot tell you when it's going to recover. But we are already seeing it's actually reaching the bottom. So people are very careful with inventory control and we're seeing capacity actually starting to flush out slowly. But it's going to accelerate, we believe, when we move into next year. For us, we're going to continue to have a very healthy business on our storage moving into next year, significantly higher volume with a healthy margin. We believe next year's module situation will further be stabilized. I don't think it's going to worsen from this year. So, overall speaking, we're still confident about our business next year.

Let me add additional colors. Yes, the weaker gross margin in Q3 is kind of fluctuation mostly because of the gross margin recognition in Q3, you know, e-STORAGE is kind of system cell. The revenue and profit recognition may fluctuate because of cut-offs. So we expect lower gross margins to be recognized in Q3. As both Yan and Shawn mentioned, we confirm that even after elimination, we are going to deliver a stronger second half of the year for e-STORAGE. So it implies a very robust Q4 for e-STORAGE.

Okay, got it. So maybe just to be clear on that point for, as I know you haven't provided guidance for gross margin in Q4, but given the commentary around e-STORAGE being strong in Q4, the margins there are higher. Should we assume then that the gross margin increases potentially from Q3, the midpoint is 15% from Q3 to Q4?

Reasonable.

Well, we're not providing Q4 gross margin yet, as you just mentioned. It will take quite some computation to determine the gross margin range. So usually, we reserve it before the next earnings call.

So we already stated that we're going to have a stronger second half than the first half.

Okay, no, that makes sense. Okay, thank you guys.

Alright, thanks for taking the question. Could you give some insight into U.S. module pricing more recently? We know that it's far higher than module pricing globally, but we've also seen an increase in module imports this year, quite a sharp increase. So could you talk about how that impacts your domestic U.S. module pricing compared to your imported volumes? Have you seen a big change or differential in the pricing of those two markets that would be helpful?

Well, we have a very healthy margin in the U.S. on the module side and we're actually growing our volume in the U.S., shipment to the U.S. I think we see some price fluctuation. However, the AD/CVD petition is making the price situation more complex. In general, we're seeing prices trending up. With the impact of the AD/CVD, we are still confident from the deals we're signing up. We're actually quite confident that our margin in the U.S. will continue to be healthy in Q3. Even in Q4, we have strong high confidence.

Got it. That's helpful. Thank you. And just a question on the third quarter of guidance, could you give some color on what's driving that step up sequentially in the module shipment to that 9 gigawatt to 9.5 gigawatt range? Are there any specific regions that you're shipping to that are driving that? Just trying to understand that step up, especially in light of managing volumes against pricing?

Well, we have a volume increase in the U.S. in Q3 and also in Europe slightly. Other than that, it's actually small changes, small increases. So in the end, it's from 8.2 up to we give a range of 9 to 9.5. It's like about a 1 gigawatt hour.

Thank you. At this time, we've reached the end of our question-and-answer session. I'll hand the floor back to management for closing remarks.

Thank you for joining us today and for your continued support. If you have any questions or would like to set up a call, please contact our Investor Relations team. Take care and have a great day.

This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.