Emeren Group Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 13, 2025

There are 6 speakers on the call.

Operator

I will turn the call over to Gary Dvorchak, Managing Director of The Blue Shirt Group. Please go ahead, Mr.

Operator

Dvorchak.

Speaker 1

Thank you, operator, and hello, everyone. Thank you for joining us today to discuss the fourth quarter and full year '20 '20 '4 results. We released our shareholder letter after the market closed today, and it's available on our website at ir.emiran.com. We also provided a supplemental presentation that's posted on our IR website that we will reference during our prepared remarks. On the call with me today are Mr.

Speaker 1

Yumen Liu, Chief Executive Officer Mr. Ke Chen, Chief Financial Officer and Mr. Enrico Bocchi, Executive Vice President of Europe. Yumen and Ke will provide an overview of our business performance and financial results, followed by a Q and A session, during which Enrico will also be available to answer questions. Before we continue, please turn to Slide two.

Speaker 1

Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward looking. These forward looking statements represent Emoryn Group's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under Risk Factors and elsewhere in Emoryn Group's filings with the SEC. Please do not place undue reliance on these forward looking statements, which reflect Emory Group's opinions only as of the date of this call.

Speaker 1

Emory Group is not obliged to update you on any revisions to these forward looking statements. In addition, please note that all financial numbers discussed on this call are unaudited. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U. S. Dollars.

Speaker 1

With that, let me now turn the call over to Mr. Yumin Ryu. Yumin, go ahead.

Speaker 2

Thank you, Gary, and thank you, everyone, for joining today. Let me start with a brief overview of our Q4 and full year results before discussing our business outlook and key financial catalysts. After that, Phil will take you through a detailed breakdown of our financial performance and 2025 guidance. 2024 was a year of resilience and disciplined execution and strategic growth for Ameren. Despite currency headwinds and project sale delays, we successfully monetized renewable energy assets, expanded our energy storage footprint and generated positive free cash flow in Q4.

Speaker 2

Our IPP and DSA segments provided high margins and stable cash flows, while strategic project monetization strengthened our financial position. For the full year, we generated $92,100,000 in revenue and $24,100,000 in gross profit with a 26% gross margin. We reported an operating loss of $500,000 while non cash and unrealized foreign exchange loss resulted in a $12,500,000 net loss attributed to Ameren Group. However, operating cash flow improved significantly towards breakeven, reaching negative $4,200,000 compared to negative $23,400,000 a year ago. And adjusted EBITDA rose to $6,900,000 demonstrating disciplined financial execution.

Speaker 2

Turning to Q4 specifically, we maintained strong financial discipline and cash flow generation, delivering $34,600,000 in revenue and $4,800,000 in gross profit with a solid 14% gross margin, while foreign exchange losses due to U. S. Dollar strengthens impact in net income, our operating loss improved by 35% year over year in Q4, reflecting strong cost control. We also generated over $5,000,000 in free cash flow in Q4, reinforcing our strong liquidity position. Our capital light model and early stage monetization strategy continue to support financial strength.

Speaker 2

We ended the year with $50,000,000 cash, up 40% sequentially, positioning us well for growth in 2025. With a strong pipeline, expanding energy storage initiatives and disciplined execution, we are positioned to scale profitably and drive long term shareholder value. Turning to our key milestones in Q4. We successfully closed several strategic transactions, further solidifying our leadership in renewable energy monetization and energy storage across Europe, The U. S.

Speaker 2

And China. In Europe, we successfully completed the COD sale of our 17 megawatt solar product portfolio in Poland with 15 megawatt under our PPA, reinforcing our strong foothold in the region. We also expanded our energy storage footprint in Italy, executing a four sixty two megawatt DSA for battery energy storage system with Appinja, further strengthening our leadership in the growing energy storage market. Additionally, we finalized the sale of 65 megawatt of solar projects in Germany to China through a mixed DSASPA structure, underscoring the strength of our development partnerships. In The United States, we made further progress in distributed generation by closing the COD sale of our 2.8 megawatt community solar project to Autos Power, demonstrating our ability to capture opportunities in The U.

Speaker 2

S. Community solar market. Meanwhile, in China, we advanced our energy storage strategy with the successful commissioning of 18 megawatt hour of best projects, which are now fully integrated into Allium Power International's virtual power plant platform. This integration enhances great stability and further strengthens our presence in China's evolving energy storage sector. These achievements highlight our ability to execute across multiple regions, efficiently monetize projects and expand our renewable energy portfolio, while reinforcing contracted cash flow generation.

Speaker 2

Now turning to our core business segments. Our high margin DSA model remains a key driver of stable revenue and early stage project monetization. In 2024, we recognized $19,000,000 in DSA revenue, primarily from Italy and Germany. As of year end, we had DSA contracts with nine partners covering 40 projects totaling over 2.8 gigawatts with approximately $84,000,000 in contracted revenue expected to be realized over the next two to three years as well as more than $100,000,000 in uncontracted revenue currently under negotiation. Meanwhile, our IPP segment played a crucial role in supporting stable cash flow, contributing 31% of the total revenue and 64 of the total gross profit.

Speaker 2

In Q4, we optimized our portfolio across Europe and China, while further advancing energy storage integration to enhance long term profitability. Complementing these efforts, our solar development business continue to generate strong monetization opportunities. In 2024, we successfully monetized about 200 megawatt of solar PV projects across Germany, France, Spain, Holland, China and The U. S, alongside 1.3 gigawatt of BaaS projects. These achievements reinforce the strength of our capital light development model and our ability to efficiently recycle capital for future growth.

Speaker 2

Looking ahead, we remain very confident in our ability to execute our growth strategy and drive profitability in 2025. While project sales, timing, delays impacted Q4 revenue recognition, these projects remain on track to close in the first half of twenty twenty five, reinforcing near term revenue visibility. Key drivers for our 2025 financial outlook include our strong contracted revenue base provide a solid foundation for future growth. We have $84,000,000 in contracted DSA revenue with an additional $100,000,000 under negotiation, strengthening long term cash flow visibility and revenue stability. Overall, with 75% of our DSA pipeline concentrated in Europe, we are positioned to capitalize on demand growth across key markets.

Speaker 2

Building on this momentum, our high margin DSA and IPP businesses continue to generate strong gross margin and predictable cash flows, supporting sustainable and profitable expenses. Additionally, our robust monetization pipeline positions us well to capitalize on growing market demand. With approximately 4.3 gigawatts at one stage storage pipeline and 2.4 gigawatts of solar PV projects, we have a clean path clear path for long term growth in key regions. Further strengthening our outlook, the opening of China merchant power market in 2025 presents a significant opportunity. Our best assets are strategically positioned to capture new revenue streams through energy arbitrage, reinforcing our leadership in energy storage and grid services.

Speaker 2

With that, let me turn the call over to our CFO, Ke Chen, to provide a more detailed breakdown of our financial performance and 2025 guidance. Ke?

Speaker 3

Thank you, Yiming, and thanks everyone again for joining us on the call today. In Q4, we delivered $34,600,000 in revenue, down 23% year over year, primarily due to project delays pending government approvals. However, it surged 169% quarter by quarter, driven by successful project monetization, while timing delays in The U. S. And Europe impact Q4 revenue recognition.

Speaker 3

This project remain on track to close in the first half of twenty twenty five, providing strong near term visibility. Gross profit was $4,800,000 compared to $5,600,000 in Q3 twenty twenty four and $5,100,000 in Q4 twenty twenty three. Gross margin was 13.9%, down from 43.8% in Q3 twenty twenty four, but up from 11.3% in Q4 twenty twenty three. The year over year improvement reflects the continued strength of our high margin IPP and the DSA business. Operating expenses were $9,200,000 up from $3,500,000 in Q3 twenty twenty four, but down from $11,800,000 in Q4 twenty twenty three.

Speaker 3

The annual decline was primarily due to reduced write offs and the absence of asset impairment losses. Net loss attributable to Amerigroup Ltd. Common shareholder was $11,800,000 compared to net income of $4,800,000 in Q3 twenty twenty four and a net loss of $2,000,000 in Q4 twenty twenty three. The increase in net loss was primarily due to long operational foreign exchange losses. Diluted net loss attributed to Amerigroup Ltd.

Speaker 3

Common shareholder per ADS was CAD0.23 compared to diluted net income of CAD0.09 in Q3 twenty twenty four and diluted net loss of CAD0.04 in Q4 twenty twenty three. From a cash flow perspective, we generated RMB10.4 million in operating cash flow and over RMB5 million in free cash flow, further enhancing our financial flexibility. Cash used in investing activity was RMB5 million dollars and the cash provided by financing activity was $2,800,000 We ended Q4 twenty twenty four with $50,000,000 in cash and cash equivalents, up 40% sequentially from $35,800,000 in Q3 twenty twenty four, reinforcing our strong liquidity position. Our debt to asset ratio at the end of Q4 twenty twenty four was around 11.2% compared to 10.2% at end of Q3 twenty twenty four. The majority of our debt was non recourse project financing.

Speaker 3

In 2024, Europe contributed over 70% of our total revenue and China contributed 19%. Both generate positive operating cash flow. We are seeing a strong execution and steady growth in both regions. Turning to our 2025 outlook. We expect full year revenue to be in the range of $80,000,000 to $100,000,000 with a gross margin of 30% to 33%.

Speaker 3

IPP revenue is anticipated to between $28,000,000 and $30,000,000 with around 50% gross margin. DSA is expect to contribute 35,000,000 to $45,000,000 in revenue. IPP and DSA contributed will be expect to contribute over 70% of total revenue in 2025. Additionally, we anticipate achieving positive operating cash flow in 2025. For the first half of twenty twenty five, we anticipate revenue in the range of $30,000,000 to $35,000,000 dollars with a gross margin of approximately 30% to 33%.

Speaker 3

With that, let's open up the call for any questions. Operator, please go ahead.

Operator

Thank you. First question comes from Philip Shen of Roche Capital Partners. Your line is now open.

Speaker 4

Hey, everyone. Thanks for taking my questions. Wanted to talk about the 25 guide. Specifically, can you share what the mix is between DSA revenue and IPP revenue and if there's any other revenue in the third bucket? Thanks.

Speaker 3

We just talked about this IPP revenue will be between $28,000,000 to $30,000,000 in $2,025,000,000 dollars and we did mention gross margin will be around 50%. DSA revenue will roughly between $35,000,000 to $45,000,000 So added up IPP and DSA contributed almost will contribute almost 70% of our revenue.

Speaker 4

Great. Sorry I missed that. And you talked about how there's another incremental $100,000,000 of DSA revenue that you're negotiating now. Do you have a sense for what the geographic mix of that DSA revenue is? Is it also European concentrated?

Speaker 4

And then does it have similar do you expect high margins for that incremental $100,000,000 And then when do you think you could start to close the bulk or majority of that $100,000,000 Is that in the coming months or do you think it might take most of $2,025,000,000 dollars to secure the $100,000,000 Thanks.

Speaker 2

We target to close all of them within this year. And the couple of them or several of them are in the final stage to be closed within next two to three months and more is coming. As you see that we do have a very welcomed product pipeline on both solar and storage. We have built up the strong track record on the DSA petition. And that is why that we are super confident on our 2025 guidance.

Speaker 2

Two reasons. One is, as Curtis mentioned, that the 70% of the revenue and margin will be coming from the contracted IPP and DSAs. And another confidence is coming from the to be billed DSA positions and at least five to six contracts are being finalized and to be inked in the next two to three months and more are coming.

Speaker 3

Yes, Phil, in terms of breakdown, I think Europe will be around 70% and U. S. Will be 30%.

Speaker 4

Great. Okay. And then can you talk about the types of counterparties for the $100,000,000 that you're negotiating? Are there any repeat customers or partners? Are they mostly new customers and counterparties?

Speaker 4

Thank you.

Speaker 2

I think it's about half our existing customers repeated and another half are the new customers.

Speaker 4

Okay. That's good. And then for 2025, sorry if I missed this, but did you guys share what your cash generation or free cash flow outlook might be? If you haven't, perhaps you can give us some guidance?

Speaker 3

Yes. We're certainly talking about we expect positive operating cash flow in 2025. So we ended in 2024, '50 million dollars. So we truly believe we should have a higher cash at end of twenty twenty five.

Speaker 4

Okay, great. Thanks for taking all my questions. I'll pass it on.

Speaker 2

Thank you, Phil. Thanks.

Operator

Thank you. We have a follow-up question from Philip Shen. Your line is now open. Philip, did you have a follow-up question?

Speaker 4

Yes. Can you guys hear me? Yes. Great. Okay.

Speaker 4

So let's talk about the delays. You've consistently had pretty a number of delays that unfortunately result in expectations or results that are weaker than expectations. So do you think the delays in Europe and The U. S. For government approvals and so forth, you think we've seen the worst of it?

Speaker 4

Or do you think it could get worse from here? And if it's if we've seen the worst of it, how much could it improve? Do you expect to see improvements in 2025 or do we have to wait for 2026? Thanks.

Speaker 2

This is a very good and interesting question. What we see here is that the for example, in Spain, we could not close the deals as of the government approval. Those two major transactions we could not close, none of them. And one of them we already awaited for eighteen months and we have still have not got it. But there is a deadline, the government published guidelines for twelve months and additional three months, additional three months and deadline is coming.

Speaker 2

And we see that is pending in less than three months. So that is one thing. I see that the European governments are moving faster as for example, Spain, they have to have the strong supporting policies to support renewable energy including storage. That's one example. Only uncertainty we could not foresee is in The U.

Speaker 2

S. But the good part is our DSA structure. Also, let me comment another one on European DSA structure. We normally split the DSA payments into three to four milestones or sometimes even five milestones. As we go through all the milestones in 2025, I mean this year, we do see the impact from the government approvals on the TSA milestones is very minimum.

Speaker 2

That's why we have the certainty or high confidence we will deliver in 2025. Interconnection approval delays in The U. S. Is expected, but the most PSAs we are signing in The U. S, we are expecting only milestone one payments in 2025.

Speaker 2

Some expect milestone two, which is related to interconnection approval and we are guiding them and actually want to be signed within this month, next two weeks. So we see in the future maybe the government in The U. S. Slows down the process of approvals that may impact our 02/1928 TSA milestone payments, but we don't see near term impacts even in The U. S.

Speaker 4

Okay. Thanks.

Speaker 2

I just

Speaker 3

want to add, in U. S, we also have this community solar segment, which we believe we are moving along despite of the federal uncertainty. So community solar still get approved as normal. So we think those projects we are on our pipeline, we will see that execution in 2025.

Speaker 4

Okay. So remind us for your U. S. Projects, what percentage is community solar and then what percentage might be larger scale in the 100 to 200 plus megawatt level?

Speaker 2

From megawatt size, as the three scale size is a lot bigger and the community solar size is a lot smaller. So it's hard to really make the monetary adjustment or predict the financial results from the megawatt numbers. As especially the margin on development fee for big deals will be normally a single digit and community solar is several times or many times of that margin. So on the megawatt side, I will say the total duty scale and compared to community solar, I will say eightytwenty.

Speaker 4

So 80% community solar.

Speaker 2

80% utility and 20% community solar.

Speaker 4

Sorry. Okay, got it. So the inverse, 20% community solar. So what about for the utility scale solar that's not community solar, do you have any AI or data center type customers, hyperscaler type customers that you are currently working with or that you plan to work with in future DSAs for example?

Speaker 2

We do have some assets in those hot data center spots and we are building our internal expertise on data center power suppliesdata center power management. And on that part, we try to combine our where our developer hat, which is we talk about we are literally a developer and start from a LAN developer. And then we are also a developer supplying power to our customers. These two together, literally we are a natural fit to support the data center demand. So in the house, we are building that expertise.

Speaker 2

Especially, we are doing the analysis in detail to understand the data center demand and AI demand from the power supply point of view.

Speaker 4

Great. Thank you. So

Speaker 2

that is also another point. We have several projects in those hotspots. That is also why some customers, they are looking at them and try to sign the DSA with us.

Speaker 4

What percentage of The U. S. Market is working with DSA frameworks? Do you think it's still very small?

Speaker 2

It will not be small anymore. I will say that it quickly can go as big as one third to 50% of our entire portfolio.

Speaker 4

Brett, I mean, it's big for you, but I mean for the overall market. Is it becoming more common for the rest of the market or is it more yes, go ahead.

Speaker 2

I personally don't think so. The reason is as a listing company, we have to provide numbers to the investors on quarterly basis. So naturally, it's not really advantageous for us to wait for several years to really finally monetize. That is why in the last eighteen months, we strategized the whole operation of the company and put up the DSA strategy across the board. And we are signing many DSA's as we mentioned in this script in the Europe and we will be signing more.

Speaker 2

But as now, we see that the people are actively signing. But when the new market is coming, we see within next twelve months, the market will be in favor of the renewable energy and battery storage. I think we don't need to sign TSAs anymore.

Speaker 4

Okay, got it.

Speaker 2

That applies to many other developers too.

Speaker 4

Interesting. Thank you. Maybe one more and I'll pass it on. As it relates to power prices, what is the base case? Maybe talk about the top three countries in Europe.

Speaker 4

What's the base case you have for those end markets? We hosted a webinar with WoodMac recently and the outlook for retail power prices in Europe in general was maybe a little bit of an increase in '25, but then maybe it's flat or down even for '26 and '27. And so do you expect power prices to remain kind of at current levels or do you see upside or what's your base case as you develop these projects and sell against them? Thanks.

Speaker 2

We have IPP operation or the COD solar assets in two countries now in Hungary and Poland. And we also definitely have in China. China is stable, the power price stable. And Europe, we see the price remains to be very nice compared to before COVID or before the war. Okay.

Speaker 2

But we do have noticed that in some countries like Spain, the price is going down in the last twelve to eighteen months and goes down from as high as $0.08 to $0.09 or $0.08 to $0.09 per kilowatt hour to all the way to below $0.03 and even corporate PPAs only give you about $0.035 to $0.04 But in general, European market is a lot nicer than The U. S. Market. The beauty of U. S.

Speaker 2

Is we still enjoy the tax equity of the 30% or 40% and that helps. While EOS tariff as you know better maybe than I do that we are looking at the $4 or $5 even higher $0.04 or $0.05 or even higher.

Speaker 3

Phil, I just want to add, our brownstone project in UK is under strong PPA still, is much higher than the current virgin price in UK. So that's the advantage we have with this strong PPA with our brownstone projects.

Speaker 4

Okay. Thank you for taking all my questions.

Speaker 2

Thank you, Phil.

Operator

Thank you. Just one moment for our next question please. Our next question comes from Samir Joshi from H. C. Wainwright.

Operator

Your line is now open.

Speaker 5

Great. Thanks. Hey, Yoonmin. Thanks for taking my questions. So the range for range of top line expectation for this year, The DSA seems to be like a wide range of $10,000,000 from $35,000,000 to $45,000,000 What are the like what will it make how will it be at the lower end versus the higher end?

Speaker 5

Are there projects or big projects that you expect to materialize and timing is the issue? Or are there some other things at play?

Speaker 3

I think the range is because accounting will have to really some of the project, like we said, is DSASPA. So we have to trade this differently, it's SPA and DSA. So that's why there is big range. I believe that's a major reason. So it's mainly accounting category.

Speaker 5

Okay, understood. And then the push out of the projects from this year into fourth quarter into next year or rather fourth quarter into the first half, do we know what the size of those projects was? Like if those had materialized, what would the revenue have been for the fourth quarter?

Speaker 3

I think it's around $10,000,000 in terms of revenue.

Speaker 5

Okay. Pretty big chunk. Okay. And then also like the outlook for gross margins, I think you mentioned the overall gross margins, the IPP gross margins, but I don't think guidance for DSE gross margins was provided. Is there a reason for that?

Speaker 5

And does it depend on project to project? Or how should we look at that DSA segment gross margin?

Speaker 2

In general, as I also mentioned, you may understand our PSA milestone payment structure. In normal case that the milestone early milestone have lower margin and later milestone will be having a higher margin. For example, we normally try to book oral cost in the first two milestones. So the margin in the earlier payment or early years of the DSA will be lower. And that put our 2020 buy margin for the TSA for the new ones newer ones lower.

Speaker 2

Got it. You see my point? Yes, I understand. We mentioned we have $84,000,000 remaining PSA contracted revenue. We already recognized 2019.

Speaker 2

And 2019, we recognized in 2024 has lower margin compared to the $35,000,000 to forty five million dollars we are building in 2025. I would say that the at least half of the $35,000,000 to $45,000,000 margin expected in 2025 will generate higher margin and other half as they are newer or they are milestone one payment, that will be a lower margin.

Speaker 5

Yes, yes. That was a good explanation. Thanks for that. And one last one, I know Phil also asked about this, the $100,000,000 that you are additionally negotiating. Is there possibility of upside from those projects?

Speaker 5

Like if you sign those in the next few months, is there any possibility that your revenues for 2025 will be able to recognize some of those revenues or is it too early?

Speaker 2

We learned the lessons in the last couple of years. We try to understand the market and also precisely make the predictions or guidance for our numbers. The DSA on the revenue and the pricing of the DSA, we are going to close, let's say, within Q2 this year, next three months. The price there, the revenue expectation is there for the milestone one payment and those are covers about five to six DSAs to be signed. But the potential upside may come in the DSAs we are negotiating to be closed in Q3 or late Q2 or June, July, August timeframe, right?

Speaker 2

We do see possibility that the that provide us upside as more DSAs will be coming as the $100,000,000 expectation. If we successfully signed all $100,000,000 the milestone one payment will absolutely help the 2025 revenue.

Speaker 5

Understood. That's good.

Speaker 2

We only in the guidance, we only consider part of it, which literally speaking, the ones to be closed within next two months.

Speaker 5

Got it. Understood. And then just actually this probably will be the last one. Is there a mix of BESS versus only PV that is that you are looking at maybe different in different geographies? Or how do you see the project mix in your pipeline?

Speaker 2

It's a whole mixture. As you see that we presented early that we started our storage business or initiative over two point five years ago. And the point is almost every single country we have storage assets. And PV either big or small, normally big ones in The U. S.

Speaker 2

And in Europe, we try to sign DSAs. And smaller ones, we try to do it all the way to NTP and sell that at with totally risk free format and make higher margin.

Speaker 3

So, yes, I think you will definitely see more storage from U. S, because we launched the first storage last year and you will see more in U. S. Definitely, again, we have a strong pipeline both from solar and storage and then you will see more from different country from Europe. We talk about Italy a lot, but you see we announced Germany, France, so you will definitely see more from different country and also again it's a good mix of solar and storage.

Speaker 3

Got

Speaker 5

it. Thanks a lot for taking my questions.

Speaker 2

Thank you.

Operator

Thank you for all the questions. This concludes the Q and A session. I will now hand back to our CEO, Yu Min.

Speaker 2

Thank you, operator. The global transition to renewable energy continues to accelerate, creating strong tailwinds for solar and energy storage. With disciplined execution, a solid contracted revenue base and a growing presence in high margin segments, we are well positioned for sustained growth. As we enter 2025, we remain focused on executing our strategy across DSA, IPP and energy storage reinforcing our leadership in the sector Backed by a strong financial foundation and a commitment to innovation, we are confident in our ability to seize new opportunities, drive long term value creation and deliver meaningful returns for our shareholders. Thank you, operator.

Operator

Thank you. This concludes today's conference call. Thank you for

Remove Ads
Powered by Quartr
Earnings Conference Call
Emeren Group Q4 2024
00:00 / 00:00
Remove Ads