SOL
Nov. 14, 2024
Fellow Shareholders,
In Q3 2024, our company executed on its bottom-line focus, achieving solid profitability despite softer-than-anticipated revenue resulting from delays in closing scheduled project sales. With $12.9 million in revenue, we achieved a gross profit of approximately $5.6 million (yielding a solid gross margin of 43.8%), $2.1 million in operating profit and $4.8 million in net income1. Strong EBITDA of $8.5 million further reflects our commitment to sustainable profitability and core business resilience.
Net income¹ was supported by a foreign exchange gain exceeding $4.6 million as the Euro strengthened during the quarter, offsetting a similar f/x loss earlier in the year. With Europe generating a majority of our revenue in Q3, we benefited from a strong Euro.
Our focus on high-margin growth remains robust. The Independent Power Producer (IPP) segment generated $9.4 million, driven by seasonal strength in European assets. Our Development Service Agreement (DSA) model also expanded in key markets, adding $1.3 million from Italy, $1 million from France, and $0.9 million from our first Battery Energy Storage System (BESS) project portfolio in the U.S.
Revenue was lower than anticipated due to timing issue, particularly delays in government approvals for three projects in Europe. These remain in our pipeline and are expected to contribute to revenue once approvals are secured.
Business Line Overview
DSA
In Q3, we executed a 394 MW BESS DSA with PLT energia Srl and completed the sale of 57 MW solar projects to Trina through a mixed DSA/SPA structure. Our DSA approach is a game-changing, reliable, and scalable business model that enables us to monetize projects at early to mid-stages while securing high-quality contracted revenue. This strategic model delivers unique benefits, including positive cash flow and effective risk mitigation throughout the project lifecycle. Building on this momentum, we also signed our first DSA contract in the U.S. for a 72 MW BESS project portfolio in California.
As of September 30, we have secured DSA contracts with nine partners, including Glennmont Partners, Matrix Renewables, and PLT Energia Srl, covering 28 projects totaling over 2.1 GW (84% BESS and 16% PV), with expected contracted revenue exceeding $69 million to be monetized within the next 2-3 years. Additionally, over 2.0 GW of DSAs are under negotiation, estimated to bring $100 million in revenue. This robust DSA pipeline, encompassing both contracted projects and potential agreements and with nearly 90% based in Europe, underlines our strength in markets that favor renewable energy, driving our financial stability and growth.
In November, we announced a DSA with Arpinge for a 300 MW BESS portfolio in Southern Italy. This partnership, our fourth with an Italian ESG-focused leader, strengthens our position in Italy's BESS market, where we have approximately 2 GW in the permitting pipeline. The collaboration
1 Net income attributable to Emeren Group Ltd's common shareholders. 1
supports Italy's clean energy transition goals and aligns with our focus on high-value growth opportunities in battery storage.
Solar Power Project Development
In Q3, we successfully closed the sales of a solar project portfolio of 42 MWp in Spain to CVE España. Developed over the past few years, this portfolio is projected to generate approximately 92.8 GWh solar power annually, offsetting nearly 20,000 tons of CO₂ emissions each year. Additionally, we sold a 57 MWp solar project portfolio to Trina Solar, showcasing the strength of our European development efforts.
Due to project delays, the sales of a U.S. community solar project portfolio and some projects in Spain and Italy did not close by the end of Q3. For example, certain closings with CVE in Spain were delayed due to lengthy local administrative approvals. Some of these delayed project sales are expected to close in Q4.
IPP
Throughout the third quarter, our IPP assets demonstrated robust growth and profitability, contributing approximately 73.2% of our total revenue for the period. We continued to optimize operations across our solar farms, including Branston, reinforcing the IPP segment as a cornerstone of our business model that offers dependable, stable and predictable cash flow.
In September, we energized a 4.5 MW solar power plant at Luxshare iTech, a major facility of Luxshare Precision Industry Co., Ltd. (SHE: 002475) and a prominent Apple supplier active in Apple's Supplier Clean Energy Program. This collaboration reflects our shared commitment to environmental responsibility and Emeren's expanding renewable energy presence. In Q3 2024, we connected 7.2 MW of solar projects across China, while our 35 MWh battery storage portfolio was fully integrated into Huaneng Power International's Virtual Power Plant (VPP) platform.
In consideration of our strategy to grow IPP assets, we decided to retain a 52.4 MW project portfolio in Hungary, previously planned for sale, as an IPP asset. 30 MW of the portfolio is in operation and the remaining portfolio will be energized by the end of this year. This decision is supported by the project's strong returns, Hungary's favorable economic outlook projected to lead EU growth by 20252, and recent foreign investments bolstering local stability. Hungary's reinforced commitment to renewable energy, seen through ambitious solar capacity goals and a revised National Energy and Climate Plan3, further enhances the value of this asset as an IPP. This tactical shift, though impacting full year revenue, aligns with our long-term growth and value creation objectives as we continue to assess favorable market conditions. Furthermore, with supportive local policies in Hungary's energy storage market, we see expanding opportunities in the country, and battery storage facilities are now planned for several projects within this portfolio.
Outlook
As we approach the close of 2024 and look to 2025 and beyond, we are strengthening our presence in some of the world's fastest-growing solar and battery storage markets, which are supported by increasing demand for clean energy, favorable government policies, and advancing technologies. Our
primary objectives remain clear: advancing early-stage projects, expanding our DSA partnerships across Europe and the U.S., and refining our strategies to unlock the full potential of our development pipeline. While certain project sales in Europe may extend into 2025 due to delays in government approvals, our core business lines remain robust, and we are confident in our ability to deliver substantial growth in the fourth quarter, driven by a strong pipeline and favorable market conditions.
For Q4, we anticipate revenue between $40 and $45 million, with a projected gross margin of 20% to 25%. In line with the strategic move from sales to IPP for the 52.4 MW Hungarian projects and the revised timing of some project sales, we have adjusted our full-year revenue guidance to a range of $97 to $102 million, with an expected gross margin of approximately 30%. We expect to achieve EBITDA of $15 million to $20 million in 2024.
Our IPP and DSA segments are demonstrating solid progress. For 2024, we reiterate our expectation for IPP revenue to be between $24 million and $26 million with gross margin of around 50%. We expect our DSA to contribute more than $20 million in revenue during 2024. By maintaining a disciplined approach to cost efficiency and operational excellence, we remain focused on advancing our renewable energy initiatives and capturing new opportunities for sustainable value creation. In 2025, EBITDA contributions from IPP and DSA segments are expected to exceed $50 million.
Q3 2024 Financial Highlights:
$ in millions
Q3'24
Q2'24
Q/Q
Q3'23
Y/Y
Revenue
$12.9
$30.1
-57%
$13.9
-8%
Gross profit
5.6
9.4
-40%
5.7
-1%
Operating Income (loss)
2.1
3.0
-28%
(4.0)
+$6.1
EBITDA
8.5
3.6
+138%
(6.8)
+$15.4
Adjusted EBITDA
4.1
4.6
-12%
(1.5)
+$5.6
Net Income (loss) attributed to Emeren Group Ltd
$4.8
$0.4
+$4.5
($9.4)
+$14.2
Revenue by segment:
Segment
Q3'24
% of Total
($ in thousands)
Revenue
Revenue
Project development
1,533
12%
IPP
9,415
73%
EPC
337
3%
DSA
1,291
10%
Others
284
2%
Total
12,860
100%
Note: "Others" comprises revenue from ancillary revenues and expenses and other unallocated costs and expenses.
3
Revenue by region:
Region
Q3'24
% of Total
($ in thousands)
Revenue
Revenue
Europe
6,331
49%
China
5,306
41%
USA
1,223
10%
Total
12,860
100%
Advanced-Stage and Early-Stage Solar Development Project Pipeline
Project Pipeline by Region (as of September 30, 2024):
Region
Advanced
Early
Total
Stage
Stage
(MW)
Europe
1,548
3,909
5,457
U.S.
925
1,273
2,198
China
29
-
29
Total
2,502
5,182
7,684
Project Pipeline by Country (as of September 30, 2024):
Country
Advanced
Early
Total
Stage
Stage
(MW)
Poland
437
70
507
Hungary
21
-
21
U.K.
110
25
135
Spain
213
3,053
3,266
Germany
129
249
378
France
150
35
185
Italy
488
477
965
U.S.
925
1,273
2,198
China
29
-
29
Total
2,502
5,182
7,684
Advanced-Stage and Early-Stage Solar Storage Project Pipeline
Project Pipeline by Region (as of September 30, 2024):
Region
Advanced
Early
Total
Stage
Stage
(MW)
Europe
2,536
3,096
5,632
U.S.
375
1,787
2,162
China
44
-
44
Total
2,955
4,883
7,838
4
Project Pipeline by Country (as of September 30, 2024):
Country
Advanced
Early
Total
Stage
Stage
(MW)
Poland
623
280
903
U.K.
170
275
445
Spain
1
1,091
1,092
France
14
-
14
Italy
1,728
947
2,675
Germany
-
503
503
U.S.
375
1,787
2,162
China
44
-
44
Total
2,955
4,883
7,838
Notes: The average hours per MW vary across regions. For example, in the U.S. and Europe, it ranged from 4 - 8 hours per MW of storage, while in China, it was ~2 hours.
Growing IPP Asset Portfolio in Attractive PPA Regions
As of September 30, we owned and operated IPP assets comprising approximately 272 MW of solar PV projects and 35 MWh of storage.
Operating Assets
PV Capacity (MW)
Storage (MWh)
China DG
166
35
Europe
82
-
U.S.
24
-
Total
~272
35
Q3 2024 Financial Results:
All figures refer to the third quarter of 2024, unless stated otherwise.
Revenue
In Q3 2024, revenue totaled $12.9 million, coming in below expectations due to delayed project closings pending government approvals. Nevertheless, revenue was bolstered by strong performance in our high- margin IPP segment and expanding DSA activities across Europe and the U.S. With a robust pipeline, we are well-positioned for growth as these delayed projects are sold.
Gross Profit and Gross Margin
Gross profit was $5.6 million, compared to $9.4 million in Q2 2024 and $5.7 million in Q3 2023. Gross margin was 43.8%, compared to 31.2% in Q2 2024 and 40.8% in Q3 2023. The year-over-year increase was due to the favorable margin within the revenue from DSA and IPP projects.
Operating Expense
Operating expenses were $3.5 million, down from $6.4 million in Q2 2024 and $9.6 million in Q3 2023. The decrease was mainly due to lower G&A expenses thanks to our continued cost optimization program.
5
Net income attributable to Emeren Group Ltd's common shareholders
Net income attributable to Emeren Group Ltd's common shareholders was $4.8 million, a significant rebound from a net income of $0.4 million in Q2 2024, as well as a net loss of $9.4 million in Q3 2023.
Diluted net income attributable to Emeren Group Ltd's common shareholders per American Depositary Share ("ADS") was $0.09, compared to diluted net income of $0.01 in Q2 2024 and diluted net loss of $0.17 in Q3 2023.
Cash Flow
Cash used in operating activities was $5.6 million; cash used in investing activities was $4.2 million, and cash used in financing activities was $2.0 million.
Financial Position
Cash and cash equivalents at the end of Q3 2024 were $35.8 million compared to $50.8 million in Q2 2024.
Net asset value (NAV) is approximately $6.2 per ADS.
Our debt-to-asset ratio at the end of Q3 2024 was 10.18%, compared to 10.22% at the end of Q2 2024.
Conclusion
The solar industry is experiencing strong momentum due to the global commitment to renewable energy. This shift toward cleaner energy sources positions solar and battery storage as a key part of the future energy mix. The growing demand for solar power to support AI and blockchain operations is particularly exciting, as these technologies require substantial energy, and solar offers a scalable, cost- effective solution.
In conclusion, the future of solar energy is promising, and we are strategically positioned to capitalize on the accelerating adoption of solar technology worldwide. With our expertise, industry partnerships, and strong financial foundation, we are advancing towards our goal of becoming a leading global renewable energy company. We are enthusiastic about the future and proud to be driving the transition to a more sustainable world.
Sincerely,
Yumin Liu
Ke Chen
Chief Executive Officer
Chief Financial Officer
6
Third Quarter 2024 Earnings Results Conference Call
We will host a conference call today to discuss our third quarter 2024 business and financial results. The call is scheduled to begin at 4:30 p.m. U.S. Eastern Time on Thursday, November 14, 2024.
Please register in advance to join the conference call using the link provided below and dial in 10 minutes before the call is scheduled to begin. Conference call access information will be provided upon registration.
Participant Online Registration:
https://register.vevent.com/register/BI45573df6da5b45ddbf1d1490be2da2dc
Audio-only Webcast: https://edge.media-server.com/mmc/p/4s2et8tm
Additionally, an archived webcast of the conference call will be available on the Investor Relations section of Emeren Group Ltd's website at https://ir.emeren.com/.
Safe Harbor Statement
This press release contains statements that constitute ''forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Whenever you read a statement that is not simply a statement of historical fact (such as when the Company describes what it "believes," "expects" or "anticipates" will occur, what "will" or "could" happen, and other similar statements), you must remember that the Company's expectations may not be correct, even though it believes that they are reasonable. The Company does not guarantee that the forward-looking statements will happen as described or that they will happen at all. Further information regarding risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements is included in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's annual report on Form 10-K. The Company undertakes no obligation, beyond that required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, even though the Company's situation may change in the future.
For investor and media inquiries, please contact:
Emeren Group Ltd - Investor Relations +1 (925) 425-7335 ir@emeren.com
The Blueshirt Group
Gary Dvorchak
+1 (323) 240-5796 gary@blueshirtgroup.co
7
Appendix 1: Unaudited Consolidated Statement of Operations
Three Months Ended
Nine Months Ended
Sep 30, 2024
Jun 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
(in thousands, except per ADS data and ADS)
Net revenues
$
12,860
$
30,057
$
13,948
$
57,517
$
60,670
Cost of revenues
(7,229)
(20,675)
(8,263)
(38,182)
(40,730)
Gross profit
5,631
9,382
5,685
19,335
19,940
Operating expenses:
Sales and marketing
(8)
(57)
(74)
(124)
(293)
General and administrative
(3,959)
(5,354)
(6,964)
(13,935)
(16,689)
Other operating expenses
477
(1,012)
(1,281)
(1,392)
(3,549)
Impairment loss of assets
-
-
(1,325)
-
(1,325)
Total operating expenses
(3,490)
(6,423)
(9,644)
(15,451)
(21,856)
Income (loss) from operations
2,141
2,959
(3,959)
3,884
(1,916)
Other (expenses) income:
Interest (expenses) income, net
(431)
(33)
(79)
(328)
163
Investment gain/(loss)
(4)
-
57
(4)
239
Foreign exchange gain (loss)
4,615
(838)
(4,785)
525
42
Total other income (loss) , net
4,180
(871)
(4,807)
193
444
Income (loss) before income tax
6,321
2,088
(8,766)
4,077
(1,472)
Income tax expense
(647)
(1,342)
(251)
(3,145)
(478)
Net income (loss)
5,674
746
(9,017)
932
(1,950)
Less: Net income (loss) attributed to non-controlling interests
831
354
373
1,622
(714)
Net Income (loss) attributed to Emeren Group Ltd
4,843
392
(9,390)
(690)
(1,236)
Income (loss) attributed to Emeren Group Ltd per ADS
Basic
$
0.09
$
0.01
$
(0.17)
$
(0.01)
$
(0.02)
Diluted
$
0.09
$
0.01
$
(0.17)
$
(0.01)
$
(0.02)
Weighted average number of ADS used in computing income/(loss) per ADS*
Basic
51,254,956
51,283,524
56,287,193
52,023,918
56,958,511
Diluted
51,352,136
51,374,185
56,287,193
52,023,918
56,958,511
*Each American depositary shares (ADS) represents 10 common shares
8
Appendix 2: Unaudited Consolidated Balance Sheet
As of
Sep 30, 2024
Dec 31, 2023
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
35,755
$
70,174
Restricted cash
1
-
Accounts receivable trade, net
24,412
27,123
Accounts receivable unbilled, net
44,750
59,598
Advances to suppliers
1,269
4,283
Value added tax receivable
8,569
7,103
Project assets, current
77,220
39,914
Prepaid expenses and other current assets, net
19,836
18,255
Total current assets
211,812
226,450
Property, plant and equipment, net
168,397
163,114
Project assets, non-current
43,786
36,610
Operating lease, right-of-use assets
22,506
21,057
Finance lease, right-of-use assets
4,821
14,192
Other non-current assets
18,789
16,928
Total assets
$
470,111
$
478,351
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
12,982
$
16,203
Advances from customers
6,127
5,375
Amounts due to related parties
2,625
4,967
Long-term borrowings, current portion
927
1,385
Income tax payable
3,536
2,102
Salaries payable
1,044
718
Operating lease liabilities, current
592
363
Failed sales-leaseback and finance lease liabilities, current
4,934
4,559
Other current liabilities
16,076
21,320
Total current liabilities
48,843
56,992
Long-term borrowings
25,287
22,685
Operating lease liabilities, non-current
21,608
20,575
Failed sale-lease back and finance lease liabilities non-current
11,273
11,258
Deferred tax liabilities
3,690
3,532
Total liabilities
$
110,701
$
115,042
Commitments and contingencies
Shareholders' equity
Common shares
806,714
806,714
Additional paid-in capital
14,966
14,728
Treasury stock, at cost
(49,146)
(41,938)
Accumulated deficit
(441,253)
(440,563)
Accumulated other comprehensive loss
(11,710)
(13,629)
Emeren Group Ltd shareholders' equity
319,571
325,312
Noncontrolling interest
39,839
37,997
Total shareholders' equity
359,410
363,309
Total liabilities and shareholders' equity
$
470,111
$
478,351
9
Appendix 3: Unaudited Consolidated Statement of Cash Flow
Three Months Ended
Nine Months Ended
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
(in thousands)
Net cash used in operating activities
$
(5,582)
$
(4,643)
$
(14,582)
$
(30,724)
Net cash provided by (used in) investing activities
(4,193)
10,118
(10,646)
8,368
Net cash used in financing activities
(1,996)
(6,710)
(8,700)
(21,700)
Effect of exchange rate changes
(3,303)
(40)
(490)
(4,051)
Net decrease in cash and cash equivalents and restricted cash
(15,074)
(1,275)
(34,418)
(48,107)
Cash and cash equivalents and restricted cash, beginning of the period
50,830
60,456
70,174
107,288
Cash and cash equivalents and restricted cash, end of the period
$
35,756
$
59,181
$
35,756
$
59,181
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Disclaimer
Emeren Group Ltd. published this content on November 15, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on November 15, 2024 at 05:01:05.401.