Emeren : Q3 2024 Letter to Shareholder

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

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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

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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.