Canadian Solar Inc. (CSIQ) Q2 2026 Earnings Call Transcript

Thank you for standing by, and welcome to Canadian Solar's second quarter 2026 earnings conference call. My name is Melissa, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the call over to Wina Wang, Head of Investor Relations at Canadian Solar. Please go ahead.

Thank you, Operator, and welcome, everyone, to Canadian Solar's second quarter 2026 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 Colin Parkin, CEO, Dylan Marks, CEO of Canadian Solar's subsidiary Recurrent Energy, Symbol Jules, Senior VP and CFO, and Dr. Sean Hsu, Executive Chairman and CTO. All company executives will participate in the Q&A session after management's formal remarks. On this call, Colin will deliver key messages for the quarter. Dylan will share updates for Recurrent Energy. Symbol will go through the financial results, and Sean will discuss sustainability and technology highlights. Colin will conclude the 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 is since no obligation to update these projections in the future unless otherwise required by applicable law. A more detailed discussion of goods 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 sheet 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 provided in accordance with GAAP. And now I would like to turn the call over to Canadian Solar's CEO, Colin Parkins. Colin, please go ahead.

Thank you, Winna, and thank you all for joining our second quarter earnings call. Beginning on slide three, we recognized on 3.1 gigawatts of solar modules within guidance. We exceeded our storage guidance, shipping 3.7 gigawatt hours and recognizing revenue on 3.3 gigawatt hours within the quarter. Revenue totaled $1.2 billion at the high end of guidance. Gross margin was in a lot of guidance at 13.9%. Profitability was impacted by elevated freight costs from ongoing geopolitical uncertainties. We also faced near-term ramp-up costs for our solar cell manufacturing facility in Jeffersonville. These factors led to a net loss attributable to shareholders of $77 million or $1.40 per share. Turning now to slide four. Our manufacturing segment remains the key driver of our financial performance today. It is also where our strategic priorities lie. In our solar business, we continue to prioritize high-margin regions. We ship nearly half of our quarterly module volumes to our North America home base. In our energy storage business, we are scaling rapidly and executing well globally. In a single quarter, we delivered to utility-scale projects across North America, EMEA, Asia-Pacific, and Latin America. We outperformed guidance due to accelerated deliveries for two projects in the U.S. and Canada. Higher unit shipping costs and ramp-up expenses led to an operating loss of $49 million. dollars. As we finish ramping phase one of our solar cell facility and expand through phase two, these costs will normalize. We expect overall module margins to improve as a result. Now turning to slide five. A major highlight this quarter was the official opening of our state-of-the-art HGT solar cell facility. This marks a historic milestone. Canadian Solar is now the first commercially operational HGT manufacturer in the United States. We are also proud of the facility's meaningful impact and contribution to the local economy and community. We are currently ramping up Phase 1 capacity to 2.1 gigawatt peak. Phase 1 is set to enter full-scale production on October 1st. Before the end of the year, we will begin installing equipment for Phase 2, which will bring our Jeffersonville total nameplate cell capacity to 6.3 gigawatt peak in 2027. This facility will be the largest crystalline silicon cell manufacturing plant in North America. Paired with our 10 gigawatt peak module facility in Texas, CS PowerTech solidifies its place as one of North America's largest and premier integrated photovoltaic manufacturers. These expansions are backed up by strong customer demand for our high-performance U.S. solar products, which offer valuable domestic content benefits. Turning, please, to slide six. DS PowerTech has secured over 13 gigawatt peak in contracted backlog for our domestically manufactured HJT and TopCon n-type bifacial modules. Deliveries are scheduled through 2029. This backlog includes multiple long-term master service agreements with leading U.S. utilities, IPPs, developers, and EPCs. These commitments continue to grow daily and already represent north of $4.5 billion in value. On the policy front, President Trump released a new Section 232 announcement this month, which is focused on imported polysilicon and its derivative products. We view this new policy structure as supportive of our long-term investment in domestic manufacturing. Key details include minimum import pricing, tariff provisions, and potential manufacturing offsets for companies investing in domestic manufacturing capacity.

The Department of Commerce will work to approve U.S. investment plans.

We will continue to be active, constructive, ongoing dialogue with Department of Commerce and will continue to participate throughout the 120-day implementation period. Our current evaluation indicates that these measures will reinforce U.S. solar pricing and we are actively working with our customers to navigate this period of uncertainty. Overall, we view this policy direction as net positive for Canadian solar, and we welcome the administration's support for American industrial growth. Now turning to slide 7, for e-storage we ship 3.7 gigawatt hours of energy storage solutions this quarter and recognize revenue on 3.3 gigawatt hours after accounting for the more than 400 megawatt hours to internal projects under execution. At the end of this quarter, our contracted backlog stood at $3.5 billion. This includes long-term service agreements covering 34 gigawatt hours of contracted projects. We see demand from data centers transitioning from conversations to contracted opportunities. Earlier this year, eStorage secured a contract with a major U.S. utility for a 500-megawatt, 2.5-gigawatt-hour DC project designed to support data center, grid infrastructure, and resiliency. Energy-intensive data centers and their stakeholders face two primary hurdles, securing power and maintaining grid stability. Interconnection approvals and transmission builds require years to complete. Battery energy storage unlocks the higher throughput from existing infrastructure, responds dynamically to load swings, fortifies grid resilience, and protects mission-critical computing hardware from power disruptions. For on-site, behind-the-meter facilities, energy storage integrates seamlessly with other energy generation technology, including natural gas and renewable power generation. We are actively engaging with data center hyperscalers, developers, and utility customers to deliver solutions that help overcome these challenges. Our market value extends well beyond supplying battery containers. We produce our own battery cells, design the SolBank platform, integrate the power conversion and proprietary energy management controls, and deliver full EPC and commissioning services, and provide ongoing support through long-term service agreements. This end-to-end full-stack model offers customers a single, accountable partner while supplying us with real-world operating data to refine future solutions. Now, let me hand the call over to Dylan to review updates for Recurrent Energy, Canadian Solar's global project development business. Dylan, please go ahead.

Thank you, Colin. Starting on slide eight, we generated $117 million of revenue in the second quarter. Revenue declined sequentially, primarily because several project sales moved into the second half of the year. Electricity sales revenue rose quarter over quarter, supported by the commercial operation of a large solar asset in Spain. With muted project sales during the quarter and a $24 million impairment charge related to an upcoming project sale in Latin America, operating expenses rose quarter over quarter. As a result, we recorded an operating loss of $19 million. Despite the lowered financial performance, we continued to hit key operational milestones throughout the second quarter. Earlier in the quarter, we brought a 426 megawatt solar asset in Spain into commercial operation, which began contributing recurring energy. Our partnerships with leading global technology companies further validate our development platform. In Australia, we recently connected the 150 megawatt Car War project, which is backed by a long-term power purchase agreement with Microsoft. We also continue to secure competitive large-scale project financing. Recently we closed a $695 million construction tax equity package for our 330 megawatt cobalt solar facility in California. MUFG and NordLB provided the construction loans while Wells Fargo provided the tax equity. Turning to slide 9 for our portfolio pipeline update. As of June 30, 2026, we have secured grid interconnections for approximately 6 gigawatts of solar and 13 gigawatt hours of energy storage globally, excluding projects already in operation. Our total development pipeline stands at nearly 22 gigawatts of solar and 84 gigawatt hours of energy storage. Our strategy for this pipeline remains focused on high-quality, high-margin opportunities that drive real value. We are actively pruning lower-margin assets. For instance, we scaled back our EMEA pipeline following detailed evaluations of permitting, technical, and commercial viability. At the same time, we are moving decisively where we see attractive upside. Our team is actively positioning us to compete in Brazil's upcoming energy storage auction, which expanded our early-stage pipeline in Latin America. For the second half of the year, our priority remains the selective monetization of certain operating assets under construction and development assets. These transactions are intended to support our capital recycling strategy, improve financial flexibility, and address leverage levels over time, while preserving our ability to invest in high-return growth opportunities.

Now let me hand the call over to Shinbo, who will go through our financial results in more please go ahead thank you Dylan beginning on slide 10 in the second quarter we recognized revenue on 3.1 gigawatt of modules and 3.3 gigawatt hours of energy storage solutions both exponentially higher module performance was bolstered by strong U.S. volumes, while storage is guidance due to accelerated project deliveries in North America. Despite light contributions from recurrent due to deferred project sales, solid execution in the manufacturing segment lifted total revenue to $1.2 billion, dollars reaching the high end of our guidance gross margin was 13.9 percent in line with guidance the sequential and year-over-year margin jobs reflect two non-recurring items first the tariff refund benefits recognized last quarter and second the release of unrealized profit upon sales current leads of a U.S. project in the prior year period. Operating expenses rose 21% sequentially. This was driven by a combination of elevated trade rates and non-logistic run-up costs at our Jefferson Well solar cell plant. Net interest expense rose to $43 million from $36 million in the first quarter, primarily due to lower capitalized interest. We recorded a net foreign exchange loss of $9 million, primarily driven by strong appreciation in the Chinese Yuan. CSA Solar recorded a $41 million mark-to-market gain in investment income from its equity investment in a battery equipment company, helping buffer our bottom line. As a result, Canadian Solar recorded total net loss attributable to shareholders of $77 million, or $1.40 per year. Now let's turn to cash flow and the balance sheet on Flight 11. Net cash flow used in operating activities during the second quarter of 2026 was $181 million, driven primarily by change in working capital. Total assets grew to $16.1 billion. This increase primarily reflects ongoing consumption of U.S. solar and storage projects, along with inventory expansion to support our U.S. manufacturing strategy. Total debt increased to $7.1 billion, mainly from non-recourse construction financing for solar and storage projects under recurrent energy in the U.S. As we monetize operating under construction and development assets, we expect to deleverage the project's development business. At the same time, our manufacturing segment will take on incremental debt to fund strategic U.S. manufacturing investments, which we expect to expand profitability and cash flow in 2027 and beyond. Capital expenditures in the second quarter were $172 million, primarily directed toward our U.S. manufacturing initiatives. We anticipate full-year 2026 CAPEX to total around $1.3 billion. This implies higher capital outlays in the second half as we begin phase 2 equipment installation at Jeffersonville, double capacity at our module plant, and scale up our energy storage facility in Southeast Asia. It closed the quarter with a cash balance of $1.9 billion, providing us with solid liquidity to execute on our strategic priorities. Now let me turn the call to Sean, who will discuss our sustainability achievements and the technology roadmap. Sean, please go ahead.

Thank you, Jinbo. So, turning to slide 12, in June, we published our 2025 Corporate Sustainability Report. This highlights our commitment to driving the global clean energy transition through sustainable and responsible business practices. The report tracks our focus on value-driven growth. Notably, the science-based target initiative invalidated our net zero greenhouse gas target. We also advanced our resource efficiency, achieving significant energy and water savings alongside two zero carbon factory certifications. Furthermore, we reinforced our supply chain transparency and ethical labor standards. These efforts are backed by independent audits and certifications across our manufacturing footprint and key suppliers. Overall, this report demonstrates that environmental to stewardship, social responsibility, and strong governance are fundamental to how we build long-term stakeholder value. At the core of everything we do is technological innovation. Turning to slide 13, we continue to execute on a multi-generation technology roadmap across both solar PV and energy storage solutions starting with solar PV our near-term priority through 2028 yet the mass production and optimization of our next generation HGT our hydrojunction and top-con architectures across our coal utility, CNI, and residential market, we are scaling motor efficiency from 23.2% up to 24, while aggressively reducing sewer consumption from 6.5 milligram per watt down to 3 milligram per watt to drive down this key input cost. Looking slightly further ahead, we expect mass production of our premium 2BC architecture by 2028. Designed primarily for the premium residential market, 2BC aims to deliver efficiencies between 24.8% and 25.2% with ultra-low silver usage of just one to two milligrams per watt. Beyond terrestrial single-junction silicon, we approach physical limits at around 25 to 26% module efficiency. We are expanding into frontier applications and multi-junction technologies. We have already begun collaborating on space PV opportunities using our HDT cell technology. We planned the shipment in 2029 for extreme space environment where radiation tolerance and thermo-cycling resilience are critical. For long-term utility scale expansion, our ultimate efficiency frontier lies in tandem cells, targeted for commercial treatment in 2030 to break through the 30% module efficiency barrier. Given that Erosky reliability will require another five to ten years of validation before large-scale ground deployment, space applications may well serve as the initial commercial stepping stones to these next-generation tandem structures. Turning to our energy storage and power electronics roadmap on slide 14, we are building a foundation for sustainable high-density and long-duration storage assets. We are currently mass-producing Soapbank 3.0, which delivers 5 MWh in a standard 20-foot enclosure using 314 m-hour LFP cells. We will soon begin shipping the next iteration, Solbank 4.0, starting 2027. This solution increases energy density by 25%, delivering 6.25 mWh in the same 20-foot footprint, utilizing high-capacity 588 mAh LFP cells. To complement these larger battery systems, our solar electronics hardware is scaling in tandem. We are transitioning from our air-cooled mid-voltage SCET 1.0 to our liquid-cooled mid-voltage SCET 2.0, which integrates 32 of 450 kilowatt inverters to achieve 14.4 megawatts in a 40-foot layout. Further out on our 2030 roadmap, we're exploring solid-state transformers at 2.5 megawatts, 34.5 kilovolt AC to 800 volt DC solutions, achieving over 98.5% conversion efficiency that has the potential to replace traditional PCS unit and integrate directly into best platforms as cost and reliability material. To address long-duration storage and harsh environment requirements at a potentially lower levelized cost of storage or LCOS, we are actively validating our containerized sodium ion platform. This will eventually deliver an exceptional cycle time of over 15,000 cycles. Sodium ion technologies offers compelling structural advantages. Abandoned raw materials free from geopolitical restraints to prepare performance in extreme cold temperatures and simplified cooling requirements that could meaningfully reduce long-term operational expenditures. It also delivers important safety advantages such as significantly reduced thermal runaway risk. We are also developing a high-capacity energy storage product designed for deployment inside AIDC server room to deliver millisecond-scale energy management solutions. Ultimately, unifying these solar and storage developments advances our vision of Canadian solar as a total energy technologies provider. By pairing these technology roadmaps with robust end-to-end capabilities and full visibilities across our supply chain, we are uniquely positioned to deliver the mission-critical clean energy infrastructure of tomorrow to our global customers. We will unveil more cutting-edge energy technologies in the future, so stay tuned. Now, let me turn the call back to Colleen, who will conclude with our guidance and business outlook. Colleen, please go ahead.

Thank you, Sean. Turning now to slide 15. for the third quarter of 2026 we expect to recognize revenue from 3.5 to 3.8 gigawatts of solar modules we expect energy storage deliveries to range between 3.4 and 3.8 gigawatt hours driven by sequentially higher manufacturing volumes we project third quarter revenue to be between $1.3 and $1.5 billion, with gross margin expected to range between 13.5 and 15.5%. We anticipate U.S. solar and storage shipments to accelerate in the second half, with each remaining quarter delivering higher volumes than the last. At recurrent, we expect to finalize the project sales delayed from the second quarter. This will drive a sequentially stronger third quarter. For the full year of 2026, we reiterate our U.S. volume guidance of 6.5 to 7 gigawatts of module shipments and 4.5 to 5.5 gigawatt hours of energy storage shipments. With that, I would now like to open the floor for questions. Operator, please go ahead.

Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We do ask that you lead to keep to one question and one follow-up. Our first question comes from the line of Colin Rush with Oppenheimer & Company. Please proceed with your question.

Thanks so much, guys. You know, Sean, if you look at the roadmap that you just articulated from the technology perspective, it's pretty robust. There's a lot of activity. So I want to understand two dynamics. One, just trend lines on overall spending on the R&D line to bring all of this to fruition. And then secondarily, from a regionalization perspective, where is that work going to happen? And where is the IP going to sit as you bring, it looks like, five or six pretty significant technology evolutions to market?

Yeah, Colleen, thank you. So, because our revenue base is big, so although the R&D is spending significant, but usually, typically it's around 1% to 2% of the total revenue. So, we are controlling it well.

And from an IP perspective, is that going to sit in the U.S.? Is it going to sit outside the U.S.? Is that not a concern? Is it more around, you know, just know-how and understand how to manufacture these things where you guys feel like you have an advantage?

Yeah, Colleen, this is a good question. Yes, we develop more and more of the manufacturing and also process R&D capabilities in the U.S. We will see more and more IP with the, you know, in the U.S. Meanwhile, we also developed a lot of good technology in Canada, but I also see more and more IP in Canada, especially the IP related to the power electronics and either from inverter to the PCF or the energy storage system.

Excellent. And just the follow-up here is really around shipping expense and kind of practical ways that you guys can manage that or start passing that on in a more material way to customers here over the next six to 12 months?

Yeah, good morning, Colin. Thanks for the question. Colin here. Regarding the shipping expense, we do build that into our contracts and pass that along. But of course, the dynamic of the shipping cost, logistics costs start to change when you look at us continuing to scale in North America. Obviously, we don't have the as significant overseas freight. So we'll start to see that shipping cost start to decrease just as primarily due to the onshore in the U.S.

Okay. Thanks, guys.

Thank you. Thank you. Our next question comes from the line of Mahi Mandalay with Mazuho Security. Please proceed with your question.

Hey, thanks for taking the questions and for the color on the new bookings. And one question on that, you talked about the 13 gigawatts of bookings through 29. The pricing seems to be in mid 30 cents per watt. Could you clarify, like, if that already includes any impact of this new Section 232 on Paula Silicon, and if not, then what prices are you seeing, and is there any flexibility to go to the existing customers on higher prices if the spot prices move up on Section 232?

Yeah. Good morning, Mahid. Thanks for the question. Colin here, and we have Thomas on the line as well, but I'll start. You know, our contracts are structured with change in law and adjustment mechanisms with all this anticipated. So what we see is this is all very new. I think, as you know, this is only fresh in the last couple of weeks with the new Poly 232. But we already see the market adjusting. We think it will definitely drive for accelerated deliveries in the second half of this year in advance of the proclamation implementation, I think, on December 4th. So we're going to see a rush. And with that, it's driving increase in price and demand and correlating demand. So we are seeing that start to adjust. We are seeing the market start to adjust, but it is a relatively new change to the market. But I think overall, from Canadian Solar's standpoint, with the backlog that we mentioned, the 13 gigawatts backlog, it shows a strong demand for our U.S.-based products. and our customers are certainly willing to work with us as they have to adjust as well. So Thomas, would you add anything to that? Do you have anything to add on top of that?

So good morning. Colin is spot on.

The only comment I would make is that this backlog and the respective revenue value does not include a 232 adjustment yet, so this is going to increase and grow further. as we are adjusting contracts and agreements with customer. But it includes, of course, a certain portion of down payments, certain shipment costs. Some are further away, some are closer away. So you can take that all into account. But the 232 announcement will push the respective value upwards as we discuss and readjust and renegotiate with customer.

I hope this ends up. That's great. Thanks for the color. And maybe just like a different follow-up on the tariff or the duty exemption in lieu with domestic capex. Just want to understand, like, how much do you – could we expect on that for you guys, for capex? I think there's some language on that exemption is only applicable for new capex. So, I'm curious if the R&D capex would be – would be used for that or the capex?

Well, the Poly 232 does allow the U.S. manufacturing project to offset the tarotum duties. So, as Colin said, we will actively engage with the Department of Commerce. I think we're in a good standing, and we'll try to, like, go through this process. And, yes, we will apply for the tariff and MIP exemptions related to our U.S. manufacturing plan.

Thanks for the color. I'll jump back to the queue. Thank you, Mahit.

Thank you. Our next question comes from the line of Philip Shen with Roth Capital Partners. Please proceed with your question.

Hi, everyone. Thank you for taking my questions. As a follow-up to Maheep's second question on the tariff rebate program, Sean, you just mentioned that you have good standing with the Commerce Department. So I was wondering if you might be able to elaborate on that. And specifically, do you expect to qualify for the tariff rebate program? And if so, can you give us some color on why and how? Thanks.

Well, we do expect we qualify. We qualify for the tariff relief program because we are the one who invest and really invested into U.S. manufacturing through our solar module factory in Mesquite and also the solar cell factory in Jeffersonville plus the engine storage factory in Shelbyville. So, we are putting real dollars into onshore in the U.S. manufacturing. So we believe we are qualified. However, as I mentioned, we will go through the process. So I guess I shouldn't comment too much before we finish the dialogue and the process with the Department of Commerce.

Okay, thank you. And then earlier, Colin and Thomas talked about pricing already moving. and so I was wondering if you guys might be able to quantify the magnitude of the price increase that you've seen thus far and then where you expect things to change. So if your existing bookings are at X, do you think we see a $0.05 move in pricing to the upside or do you think it's $0.10 or maybe more? Thanks.

Philip, I think we're just like everybody else. We're we're monitoring the market and seeing what the opportunity looks like i think it might be a little premature for us to speculate how fast uh those changes and how how in the magnitude um so i think you know we're only a week or two into uh into this new uh new proclamation and we're still waiting for as a matter of fact uh expecting new guidance to come So that could also shape things as well. So I'd hesitate to give a specific amount, but I can tell you that we do feel it's going to be accretive to CS PowerTech overall.

Okay, thanks, Colin. One last follow-up. As it relates back to the tariff rebates program based on U.S. CapEx, what happens and what do you guys do if you cannot qualify for that tariff rebate program?

Well, that's a good question. I think the MIP requirements will help to strengthen the U.S. manufacturers' advantages. The overall price will go up. If the overall solar module price go up, it will help us, even in the case that we don't fully receive the rebate related to our CAPAC. So overall, with or without, we think that this decision will be, you know, a credit to CSI, to CS PowerTech, and any real, you know, meaningful manufacturers investing into the U.S.

Great. Appreciate the color. Thank you, Sean. And thanks, Colin, as well. Thank you, Philip. Appreciate the questions.

Thank you. Our next question comes from the line of Alan Lau with Jeffries. Please proceed with your question.

Thanks for taking my question. I would like to ask the management about the recent policy coming out from the White House last night on the bulk power system. So, So, we'd like to know, because Canadian solar actually has a battery cell plant in the U.S., so what's your view on complying to that U.S. manufacturing requirement, especially in relation to energy storage?

Alan, I would like to just hold off responding on that because it's something very new, and we haven't had a chance to fully study that. I will just generally say that in all respects, our ability to comply to U.S. requirements is strong generally because our supply chain has already evolved to supporting the domestic content requirements, and our U.S. manufacturing plans have been structured around that. I don't want to comment on such a recent policy change, but I would only say that at the moment, I expect we'll be able to address any changes.

Understood. So we got into another previous FTC investigation. I think there were clarifications, I think, in 20th of August on basically for inverters that were produced in the U.S. and is eligible for 45X would not be classified as foreignly produced. So, I recall the company previously was having third-party as a supplier for inverters, but also the company is also starting to do PCS as well. So, I wonder if management has any comment in regards to previous restrictions on this one.

Yeah, Alan, a good question. First of all, our inverters are not currently being moved into the U.S., so it's not an issue for us in terms of our current supply chain. But as you mentioned, we do procure significant amounts of third-party inverters, PCS, for example. And we are actively involved with our supply chain to ensure that they meet all the FCC requirements or have the path to have those FCC requirements in place. We don't see any issues with any of our business activities at this time related to the recent changes. I know there's just recent clarification provided with respect to the communication protocols, which we're looking at very carefully, but we don't see any impact to our business at the moment with respect to the new SEC requirements.

Yeah, I would like to add a little bit of color comment on top of what Colleen just said. We also noticed that in the new guidance, and FCC said anything qualified for the 45X, which means qualified for the local manufacturing and eligible for 45X, will be considered domestic. Therefore, will not require FCC approval. I think this is a very interesting policy clarification. As you mentioned, we do have our own pcs we have that technology centered in canada so we have started to actively look into the feasibility of manufacturing that pcs and inverter in u.s utilizing the advantage that Canadian Solver already has JS PowerTech, which is the 45x-qualified structure in the US. So yes, we are actively reviewing the visibility of that.

Thanks both. That's very clear. Because I recall the company actually got a very strong record in US manufacturing and has already secured 45 credits for other products like what you already so that might actually be a positive of the opportunity for the company to take share so that's why the pressure is coming from uh so uh switching gear to uh the uh technology path because i noticed that uh sean has spent quite a lot of time. I think that this is quite new, I think, in this quarterly results briefing. I would like to know, because Sean has mentioned about space PV, so I suspect if there has already been some form of discussion with major clients in the aerospace industry, or it's more a product development stage, or there's actually already some early-stage navigation already.

Yeah, space PV is a very interesting direction, although I don't expect it to contribute meaningfully this year or next year. But in the long run, space is what everybody is looking at, including Canadian solar and I myself. And you realize that Canadian solar is a strong, you know, participant in the so-called HAT or hydrojunction solar cell architecture. And this is what the industry considers very favorable for silicon-based space PV applications. And the research so far shows that the so-called P-type hydrojunction will have better tolerance to the high-energy particle radiation bombardment in the space. Therefore, P-type hydrojunction, especially the thin P-type hydrojunction, is considered to be a leading candidate for silicon-based solar cell application in the space. So, we do matter back to the P-type. As you know, Jefferson Solar Cell Factory adopted the hydrojunction, the HVT solar cell structure. And so far, we use N-type for the you know, for the terrestrial applications. However, it's very easy for us to convert that into PDIM. And we already use very thin wafers. And the wafers to be processed in our Jefferson Wheel factory average at 110 micron thickness, which is one of the thinnest wafers used for commercial production. Now, also on the R&D side, we have designed and processed even thinner, thinner to a 50-mile crown with thickness with P-type hydrogenated and very successful. So, we can supply that so we are at the leading front of space TV now we are talking to other space and satellite especially the satellite companies about this application and we are collaborating now I can't disclose the customer name But now, yes, we have close collaborations with space-related partners.

Understood. So it's also interesting that your view on the space TV is on THJT. Having mentioned about HJT, there are some market views that top horn might have some issues in relation to the Section 337 pattern investigation. Is it one of the reasons that you are selecting HGAT technology in the US because it is not the mainstream technology outside of the US? Or is it really other reasons like labor or shorter production process?

Yeah, we choose HGAT hydrogen chain for the US actually for several reasons. It's not one reason. So number one, yes, our strong R&D effort already into its HGT service. Now, as a matter of fact, we have studied the HGT structure as early as 2017 and 2018. And we have been doing finalized development for six, seven years already.

So we have very strong knowledge.

By the way, that also explains why our ramp-up of the Jeffersonville solar cell line was so far successful. And I would say pretty smooth. You know, any ramp up will have some issues, you know, that's the point of the hybrid ramp up, right? Which is to discover and resolve and solve an issue. But our ramp up in Jeffersonville was very successful, so that's a technical sign. And second, our HGT process is very neat, it's more equipment dependent. than human-dependent. It does require much less operators than TopCom, and we think this is a very unique advantage for the U.S. manufacturing. And IP is also an issue, no question about it. On one hand, we are pretty confident that our TopCom technology stand alone, on its own feet, and not have any conflict with other companies' TopCom IPs. However, less IP conflict is even better. So, the HGT IP is clean, much cleaner than TopCom. That's also one reason for a decision to select HGT for the U.S. cell manufacturing. So, there are multiple, there are quite a few factors. And all in all, we believe that HGT is a good technology. Also, as I mentioned, HGT is a leading candidate for the space application. We also consider this factor when we make this decision around two years ago.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Parkins for final comments.

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, everybody, and have a great day. Thank you.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.