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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.

Shawn Qu: Thanks, Isabel, and thank you to everyone for joining our Q3 call today. Please turn to slide three. We achieved solid Q3 results despite the continued challenging environment. During the quarter, we delivered 8.3 gigawatt in solar module shipments. We generated $1.85 billion in net revenue, a 16.7% gross margin, and total net income attributable to Canadian Solar shareholders of $22 million, or $0.32 per diluted share. Let me share a few key takeaways. Please turn to slide four. First, even with the challenging operating environment, the industry is healthy. To give you some color, I have worked in the solar industry for well over 20 years, but only just witnessed total cumulative solar installed capacity finally reach 1 terawatt worldwide in 2022.

As we look ahead, strong global demand is on track to drive that number up to 1 terawatt in annual installations. I strongly believe this can happen before the end of the decade or 2030. That is an incredible amount of growth ahead of us. Adding to this, the battery energy storage system market, our best market, is also growing rapidly. I believe that best market is also on pace to reach the terawatt generation over the coming decade as it hits its first terawatt hours of cumulative deployments. Of course, short-term market cyclical fluctuations are inevitable with demand and supply constantly rebalancing. However, even with the current high cost of capital, solar and energy storage project returns are more economically attractive today than ever before.

This is due to the lower equipment costs and higher electricity prices. The push towards de-carbonization and net zero emissions is stronger than ever before and the challenges of energy security remain. I strongly believe that the solutions we provide the market are truly the most competitive, impactful, and scalable in a fight against climate change. So, long-term, we believe the market fundamentals remain very strong. Turning to slide five, technology remains a key driver of growth and progress in the industry. Over the past 20 years, conversion efficiencies improved from less than 15% to well over 25% now. N-type is the next big technology driver and we have already ramped capacity. N-type TOPCon cell capacity now accounts for half of our total cell capacity and is expected to reach 60% by the end of this year.

This gives us a major competitive advantage over other companies that have far greater exposure to older legacy technologies. Please turn to slide six. The third point I would like to make is on the continued strategic long-term investments we are making in key premium markets, including the US, where we are making major inroads. We recently announced a new 5 gigawatt solar cell investment in Jeffersonville, Indiana. Jeffersonville is on the northern side of the Ohio river, on the border between Indiana and Kentucky. We chose this location after extensive analysis and evaluation of 85 different sites across the US. It is going to be one of our largest single investment, which will enable us to not only better serve US customers with the most advanced technology, but also fulfill the local-content rules of the Inflation Reduction Act, or IRA.

We are excited, because our new 5 gigawatt cell facility will complement the new 5 gigawatt solar module facility in Mesquite, Texas, which we announced earlier this year. The Mesquite facility is on track to start producing modules in a few weeks before the end of the year. In fact, I was there last week and was pleased to see the team fine-tuning and working on the final preparations for mass production. I'm very proud of everyone involved in executing these two important manufacturing plants. We also thank the officials in Indiana and Texas and the local officials in Jeffersonville and Mesquite for their unwavering, critical support. We look forward to continuing work with them as we grow in these communities, create important new jobs, and expand our global platform.

In addition, we also recently announced a 5 gigawatt solar wafer facility in Thailand, which will complement our investments in the US and allow us to responsibly meet the new requirements related to latest and adjusted AD/CVD ruling by the US Department of Commerce. Concurrently, we are adjusting the procurement of our module bill of materials in accordance with the newest regulations. Overall, we are strongly positioning ourselves to deliver long-term profitable growth for our shareholders. Please turn to slide seven. Lastly, we continue to lead in our ESG efforts. Recently, our ESG working group held global internal ESG town halls to socialize our initial tests and seek greater participation from our employees across all our regions. In this process, we continue to gather ideas and feedback from our great talent tool.

Over the next year, we plan to focus on setting our SBTi, our science-based initiative climate targets. We will also be expanding Recurrent Energy's ESG practices across OS development and construction activities. This includes standardizing ESG procedures to the strictest levels of biodiversity, archaeological surveying, community engagement and environmental justice policies, enhanced health and safety, and so on. Historically, we have mostly focused on the manufacturing side of the business, which naturally has the greatest environmental impact. But we are making sure that our efforts cover every inch of our company. We are committed to continual improvement. Reflecting on our leadership efforts in ESG, we recently received the Global Sustainability Reporting of the Year Award by Environmental Finance.

Congratulations to the global teams for their hard work. Canadian Solar will continue to work on our ESG disclosures, enhance strategy and execution and seek improvement every year. With that, let me turn the call over to Yan, who will provide more details on our CSI Solar business. Yan, please go ahead.

Yan Zhuang: Thanks, Shawn. Please turn to slide eight. In Q3, as Shawn noted earlier, the CSI Solar division delivered 8.3 gigawatts in solar module shipments and $1.8 billion in net revenues. Gross margin was 16.6%, 230 basis points higher than last quarter, driven by lower manufacturing costs and a higher level of vertical integration. This was partially offset by lower solar modules price. It also included a $35 million inventory write-down, which was specifically for modules in warehouses intended for certain distributed generation markets. Without the write-down, CSI Solar's gross margin would have been 18.5%. Let me now give you an update on the key drivers and market dynamics we're seeing. Please turn to slide nine. First, in Q3, we added 13 gigawatts of TOPCon cell capacity.

We expect to add another 11 gigawatts by the end of 2023. As we explained previously, this expansion will meaningfully help us improve our vertical integration and enhance our structural margins. As Shawn mentioned earlier, we are big believers in N-type technology and its ability to drive change in our industry. We also believe that TOPCon is the most competitive N-type technology for the next few years. In fact, TOPCon technology has pleasantly surprised us since we have been adding more lines over the past few months. For example, the conversion efficiency of our mass-produced TOPCon cells has now reached an average of 25.65%, which is nearly 3.5 percentage points higher than that of PERC. We're confident we'll exceed the 26% threshold next year.

However, that is still well below the theoretical limit for TOPCon, which is currently 28.7%, and this number will likely increase over time as well. Second, let's look at our capacity by region. I want to highlight the implications of our capacity investments. We believe we will meaningfully increase our US market share with our capacity expansion in the US and Thailand, where we're investing across the supply chain from modules to cells to wafer. Over the past few years, we have been shipping on average around 3.5 gigawatts to the US, as we did not make any major investments due to the uncertain policy environment. The circumstances have obviously changed over the past 12 months and next year, we intend to deliver significant growth in the US market, supported by a combination of our new local capacity in the US, as well as in Thailand.

We have also set up our own internal capacity for certain view of materials in Vietnam and by March of next year, we expect to meet the new requirements on the four out of six rule in the newest Department of Commerce ruling on AD/CVD circumvention for 100% of our solar module production in Thailand. Let me also make a few comments about our shipments to the US as certain false information about Canadian Solar was recently brought to our attention. In the first three quarters of 2023, we imported approximately 3 gigawatts of solar modules manufactured in Thailand into the US. Over the past few weeks, a sampling of containers has been detained for inspection under the UFLPA. This is a small fraction of the total, only amounting to approximately 150 megawatts as of last Friday.

More importantly, we believe the detained merchandise is outside the scope of the UFLPA and we are fully cooperating with CBP to provide detailed information to that effect, as we have strictly traceability procedures in place. Moreover, Canadian Solar follows comprehensive ESG protocols and do not tolerate forced labor or any other form of modern slavery. In 2022, we conducted 122 supplier ESG audits. We believe this is one of the most rigorous ESG auditing programs in our industry. Lastly, turn to slide 10. I would like to highlight our continued progress in e-STORAGE, our utility scale storage business. Since June 30 of this year, our team has signed approximately $520 million in new contracts, and our total contracted backlog has increased to $2.6 billion.

Of these, around half are expected to be delivered next year, which is equivalent to approximately 6 gigawatt hours to 6.5 gigawatt hours of projects. As we speak, our teams are busy with customers closing more transactions, which we expect to announce over the next few weeks. I'm proud that we have built a very strong global team that is able to execute and deliver on some of the most differentiated storage technical solutions in the market. Their ability to solve complex problems for our customers has allowed us to sign contracts with multiple repeat customers. The profitability of e-STORAGE has also been improving as most of our contracts have fixed prices, whereas our costs have been declining alongside the decline in lithium carbonate prices.

Hence, we expect e-STORAGE to be a much bigger contributor to CSI Solar revenues and, notably, profits in 2024. Now, let me hand over to Ismael to provide an overview of Recurrent Energy, Canadian Solar's global project development business. Ismael, please go ahead.

Ismael Guerrero: Thank you, Yan. Please turn to slide 11. In Q3, we delivered $64 million in revenue with a 27.7% gross margin. Q3 was expected to be a sequentially lower but still profitable quarter for Recurrent Energy from a gross margin standpoint, as we only monetized an 18 megawatt project in Japan and a few smaller projects in Taiwan. However, as I have started emphasizing recently, we are now shifting more of our resources towards executing projects as we intend to grow our base of operating assets that generate recurrent earnings. In Q3, nearly 300 megawatts of projects in the US closed financing, including both tax equity and project finance, and are now under construction. We expect to hold these projects longer term.

We also expect to close financing on a third one soon, with construction then starting. Hence, we plan to have close to 500 megawatts under construction in the US by the end of 2023. In Europe, we have approximately 150 megawatts under construction with financing and lucrative PPAs in place. Over the course of the next year, we expect to COD around 500 megawatts projects and a start construction of approximately 1.7 gigawatts of solar and 800 megawatt hours of storage projects, which we intend to hold long-term. All of this means we are executing on our strategy. We are transitioning from mostly being a pure developer to a developer plus asset owner and operator. Over time, this will allow us to deliver more stable, forecastable growth, as over 70% of the revenues of the assets we intend to retain control of are fully contracted and diversified in low-risk addresses only.

We've also significantly expanded our operations and maintenance, or O&M capabilities. In Q3, we acquired a market-leading O&M team in the UK, significantly expanding our O&M contracted capacity from 6 gigawatts at the end of last quarter to 8 gigawatts at the end of Q3. This brought us to top three in the world by global O&M market share. Being one of the largest and most geographically diversified O&M operators and power services providers for both solar and storage assets enables us to better understand and optimize the performance of these assets in different locations around the world. Please turn to slide 12. As of September 30th, our total development pipeline grew to 26 gigawatts of solar and 55 gigawatt hours for battery storage projects.

While we are focusing our resources on executing late-stage projects, we are also proactively developing new origination opportunities. The persistently high interest rate environment has made generating high returns more challenging. However, the decrease in system cost has also helped offset these effects, including the significant decline in solar module and lithium prices, as well as the lower cost of steel that has reduced the cost of trackers and other pieces of equipment. Technology improvements such as TOPCon have also improved our project economics through higher efficiency and lower degradation and the interest from offtakers for renewable assets remain as strong as ever, helping us sign lucrative PPAs. Securing interconnections and interconnection delays continue to be the main constraints for our business today, but having approximately 13 gigawatts of solar and 12 gigawatt hours of storage interconnections secured give us very good long-term growth visibility.

One of the key advantages of being a global project developer is our ability to apply lessons learned and best practices from one region to others. For example, we are one of the market leaders in energy storage development in the US, where we developed and completed 3 gigawatt hours of projects. We are now applying that valuable experience as we pursue significant storage opportunities across Europe, Japan, and areas in Latin America. In these markets, we are the only player with a significant track record in storage development. This lends us significant credibility and competitive BEPS to take advantage of the earliest and most profitable opportunities that will create long-term value. Similarly, being one of the few developers that can provide PPAs in different parts of the world give us a significant advantage with global offtakers who are seeking a streamlined process when signing renewable projects in different countries.

We have been very successful in signing contracts in different jurisdictions with the same global customers, thanks to this advantage. Now, let me hand over to Huifeng, who will go through our financial results in more detail. Huifeng, please go ahead.

Huifeng Chang: Thank you, Ismael. Please turn to slide 13. In Q3, we delivered $1.85 billion in net revenues, down 22% sequentially and 4% year-over-year. The sequential decrease was driven by lower project sales in Q3 relative to Q2, and a decline in module average selling price. Gross margin was 16.7%, a sequential decrease from 18.6% in the prior quarter. This was mainly driven by a lower contribution from the Recurrent Energy segment, which monetized a large high-margin project in the second quarter of 2023. On the CSI Solar side, margins improved due to a faster decline in costs relative to ASPs. In addition, CSI Solar incurred a $35 million inventory write-down specifically for modules in warehouses intended for certain distributed generation markets.

Without the write-down, the Q3 total gross margin would have been 18.6%. Selling and distribution expenses were up 14% sequentially, driven by higher unit logistics costs. General and administrative expenses declined 18% sequentially, as share-based compensation expense related to the CSI Solar IPO from Q2 did not reoccur in Q3. This was partially offset by other factors, including a TOPCon ramp-up cost. Research and development costs increased 25% sequentially due to higher spending in TOPCon and the storage R&D. Overall operating expenses increased by 4%. Net interest expense in the quarter was $11 million, down from $21 million in the prior quarter. This was mainly driven by the higher interest income from higher cash balance during the quarter from the proceeds of the CSI Solar IPO, which have not been spent yet.

The net foreign exchange and the derivative loss in Q3 was $17 million, compared to a net gain of $34 million in the second quarter of 2023, mainly driven by a weaker euro relative to the US dollar and hedging losses on RMB. Total income was $62 million, with net income attributable to Canadian Solar shareholders at $22 million, or diluted EPS of $0.32. Now getting to the cash flow and the balance sheet, please turn to slide 14. In Q3, we generated approximately $158 million in operating cash and invested $305 million in CapEx. Our full year 2023 CapEx budget is reduced slightly to approximately $1.3 billion. This means that Q4 will have a significant increase in CapEx. While we firm up next year's CapEx plans, we expect the next year's number to be slightly higher, but not too off from this year's CapEx level.

So, we ended the third quarter with a healthy total cash balance of $3 billion. Our leverage, as measured in net debt to EBITDA, excluding restricted cash, was at 1.6 times, slightly higher than last quarter. Our financing programs now include two green bonds, one issued in Europe and other in Japan, the latter which we closed around a month ago. So, now, let me turn the call back to Shawn, who will conclude with our guidance and the business outlook. Shawn, please go ahead.

Shawn Qu: Thanks, Huifeng. Let's turn to slide 15. For the fourth quarter of 2023, we expect solar module shipment by CSI Solar to be in a range of 7.6 gigawatts to 8.1 gigawatts, including approximately 85 megawatts to Recurrent Energy project. Total e-STORAGE utility scale battery storage shipment by CSI Solar are expected to be in a range of 1.4 gigawatt hours to 1.5 gigawatt hours, of which approximately 720 megawatt hours are expected to be recognized as revenue in early 2024. From a financial point of view, we expect total revenue to be in a range of $1.6 billion to $1.8 billion, and gross margin is expected to be between 14% to 16% in the fourth quarter. For the full year 2024, we expect total solar module shipments to grow to the range of 42 gigawatts to 47 gigawatts.

We expect total battery energy storage shipment to grow to the range of 6 gigawatt hours to 6.5 gigawatt hours. These numbers include approximately 2 gigawatts of solar and 2.5 gigawatt hours of storage internal shipment to Recurrent Energy projects, respectively. While competition is always tough in this industry and probably more so today than in the time past, overall, Canadian Solar is well positioned to execute through the near-term challenges and drive long-term growth. The strong position we hold across our key markets, segments and business units gives us a major competitive advantage. This includes the e-STORAGE, which is one of our fastest growing businesses with improving profitability. We expect to further strengthen our leadership position as we expect to more than triple shipment of our utility-scale energy storage solution in 2024, gaining additional market share in the global energy storage market.

With that, I would now like to open the floor for questions. Operator?

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