Ladies and gentlemen, thank you for standing by. Welcome to the Canadian Solar's Third Quarter 2015 Earnings Conference Call. My name is Tatiana and I'll 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 would now like to turn this call over to Ed Job, Canadian Solar’s IR, Director. Please proceed.

Thank you, Tatiana, and welcome, everyone to Canadian Solar's third quarter 2015 earnings conference call. Joining us on the call today are Dr. Shawn Qu, our Chairman and Chief Executive Officer; Mr. Michael G. Potter, Senior Vice President and Chief Financial Officer; and Mr. Ed Job, Director of Investor Relations. Before we begin, may I remind our listeners that in today's call management's prepared remarks will contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions? Therefore, the company claims the protection of 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 and, we refer you to a more detailed discussion of the risks and uncertainties in the company's annual report on Form 20-F filed with the Securities and Exchange Commission. In addition, any projections as to the company’s future performance represent management's estimates as of today, November 11, 2015. Canadian Solar assumes no obligation to update these projections in the future, unless otherwise required by applicable law. At this time, I would like to turn the call over to Dr. Shawn Qu. Shawn please go ahead, sir.

Thank you, Ed, and thank you all for joining us on the call today. We are pleased with our results for the third quarter which reflect our leadership position in both the module and solar energy business. We continue to execute well on our near-term project and module sales opportunities, while also making progress on important, long-term, strategic initiatives, including the expansion of our manufacturing capacity as well as the confidential filing of our Yield Co. registration statement with the SEC. In Q3, our revenue and gross margin again exceeded our guidance, reflecting strong demand for our solar products across several markets, as well as the partial sale of our Tranquility solar power plant in United States to Southern. Our module sales were again met by strong demand in US, Japan, China and India, with each of these markets contributing at least [150] [ph] MW of shipments. Shipments to the US however, exceeded 400 MW in the quarter, while in Japan shipment exceeded [190] [ph] MW. Our energy business also delivered solid results. In Canada, we’ve reached substantial completion on the 141 MW Samsung phase 2 project, which is the largest solar power plant in operation in the country. In addition, we started commercial operation of our BeamLight solar power plant which we currently plan to own and operate. In the US, all our southern project acquired from Recurrent are now in construction. We have closed tax equity, construction and term financing on three. We expect to close financing on the remaining four projects in the weeks ahead. In Japan, we energized four solar power plants totaling 8.6 MW, bringing total solar power plants in operations under the Japanese FIT program to 15 MW. This follows the five solar power plants we connected to the grid in Q2. In Brazil,…

Thank you Shawn. Net revenue for the third quarter of 2015 was $849.8 million, up 33.5% sequentially and down 7.1% compared to the year-ago period. Q3 revenue came in well above our guidance range of $570 million to $620 million as a result of better than expected pricing environment as well as the partial sale of the Tranquility project. Gross profit in Q3 was $126.8 million compared to $96.5 million in Q2. Gross margin in Q3 was 14.9% compared to 15.2% in Q2. This was above our Q3 guidance of 12% to 14%. The sequential decrease in gross margin is in part due to the strong shipment volume to the US market that is weighed down by countervailing and antidumping duties, as well as lower than average gross margin contribution from the partial sale of the Tranquility project in the USA. Total operating expenses were $95.9 million in the third quarter of 2015, up 49.8% from the $64.1 million in the second quarter of 2015. The increase in operating expenses was primarily driven by the $20.8 million provision to settle the 2012 LDK arbitration case as well as $12 million in general and administrative expenses contributed by recurrent energy including a $5.6 million expense associated with closing tax equity financing for its solar project. Income from operations was $30.9 million in Q3 compared with $32.5 million in Q2. Operating margin was 3.6% in Q3 compared to 5.1% in Q2. Net foreign exchange gain in Q3 was $4.8 million compared to net foreign exchange loss of $2.8 million in Q2. Income tax benefit in Q3 of 2015 was $3.9 million compared to income tax expense of $2.7 million in Q2. Net income attributable to Canadian solar shareholders for Q3 2015 was $30.4 million or $0.53 per diluted share, compared to net…

[Operator Instructions] and your first question comes from the line of Colin Rusch with Oppenheimer. Please proceed.

Can you talk a little about the debt markets, the non-recourse project debt, and where are you seeing that pricing out and how that’s contributed to the CAFD number that you guys just detailed for potentially YieldCo?

The non-recourse construction in term debt pricing receiving is low compared to what we’ve others are receiving in the markets these days. We don’t disclose the exact percentages, but is well below 5% and the term debt is quite attractive. So we’re not having any trouble closing the financings that have been planned and the banking group we’ve been working with has been quite good and not been really distracted by the noise around the solar market. The project themselves are still quite valuable and sought after and have good value when it comes to financing.

Your next question comes from the line of Sven Eenmaa with Stifel. Please proceed.

I first wanted to clarify, in terms of your guidance for the next quarter you mentioned that you are intending to sell a couple of projects I guess from Recurrent pipeline. Are you going to also monetize some of the Canadian projects which are reaching completion of construction in the quarter or how should we think about the project megawatt sold in that quarter?

This is Shawn Qu. We didn’t say that we would sell the Recurrent project. We sold the controlling shares of one project or maybe selling controlling shares of some other project to tax equity investors, but it is not really for selling a project, but it is just a way to structure the tax equity investment in US, just one of the methods to structure the tax equity. And in Canada we always have the contract to sell most of our project. We only have two projects which we haven’t had a sales contract, and these two projects we plan to build and hold for the moment. And in addition as you may notice, in the end of Q3, we also closed [acquisition] [ph] project of some Canadian project from KKR, which actually makes our Canadian operating project volume even bigger.

And to be specific, we have three projects in Canada that we plan on selling and recognizing the sale in Q4. There will be a couple of projects that we’ll do a partial sale as part of our financing in the portfolio in the US.

Your next question comes from the line of Philip Shen with Roth Capital Partners. Please proceed.

During your investor day in May, you laid out some pretty clear expansion plans for selling module capacity, and today six months later you are increasing your targets meaningfully. Can you talk about or provide some color as to what you’re seeing that supports such strong demand outlook, in particular which markets are you seeing the strength in, especially the markets that may not be obvious to us in the investment community.

Well this year we are delivering somewhere around 4.2 MW to 4.3 MW, which is already above our total capacity. So we have to rely on some OEM module capacity already. And on the solar cell side, we have been very conservative in the past. So our internal solar cell capacity has fallen below 50% of internal supply, which becomes too low. When we look at our Q1, Q2 results, we realize that this structure doesn’t allow us to always reach the 15% to 20% gross margin. We have a very strong end customer market. Our product is well received around the world. So we don’t have to spend that much effort to increase or to sustain our module sales. But we need some internal wafer and cell capacity in order to boost our margin, and we think that’s the easiest way and safest way to increase our margin, because we don’t run any market risk as you know. And the current play is based on our estimate for 2016. We think we will continue the volume growth in 2016. So even with this module capacity increase, we may still have to use some outside module OEMs in the busy months next year. And on the cells and wafer side, as you can see, even after we reach 3.4 GW, our cell capacity is just over 50% of our module capacity. So we still buy a lot of significant solar cell from our side. And 1 GW of module of wafer capacity is really nothing. And in terms of market, the four largest markets we already mentioned in the press release which are the US, Japan, India and China and those are the four leading markets. And other than that, we sell to many other small markets. But these four markets are really the four pillars of the house.

Thanks Shawn. We’ve heard wafer capacity might be tight, what are you seeing as wafer is increased for you and what are your thoughts on wafer in general and what do you see going ahead.

As a matter of fact the wafer price increased a little bit from Q2 to Q3; however the wafer price in Q2 is really low. So a little bit of increase of wafer price doesn’t surprise us too much. We have reduced our cell and module processing cost. So the wafer price increase doesn’t really hurt our total cost. But on the other hand, we do see external solar cell price increase, and the shortage on cell supply is a little bit more severe than on wafer. We’ll get by okay, and however we do see a need to increase our solar cell supply.

One more if I may, I know you haven’t provided an outlook or guidance for Q1. But can you talk about what you see ahead perhaps bookings and so on.

Yeah, I think Q1 will continue to be a healthy quarter, that’s why I said in my comments that we think the visibility there I believe for the next couple of quarters.

Your next question comes from the line of Jeff Osborne with Cowen & Company. Please proceed.

I just had two questions; one is on the external capacity that you’re adding in Southeast Asia Shawn, how big can that site eventually be? Is that going to be a gig watt fab overtime and you’re just doing this is in phases or what’s the thought process there?

Yeah, we are the phase 2 in the gig watt side. There are additional land we can acquire, but we want to do a 400 MW to start with.

Got it. And then just for Mike the last question from me is, just on the project that you’ve been selling, can you just talk about how long it’s been taking to market those and sell them. You’ve obviously talked about the terms being very strong, but just putting in perspective given there’s a big ramp put for current projects in 2Q and 3Q next year, just I’m trying to get a sense of what kind of at the last minute you could decide on the YieldCo is versus hitting those on the market and selling them in 2016.

So the projects that we’re getting and the pricing indications from a part of these partial sales projects as part of the financing and tax equity strategy. So you extrapolate the purchase price for the partial that is just over 50% sales, and you can see what the pricing is like. I think that the other projects in that portfolio are quite good projects. We’ve had a reasonable amount of interest from some people we sold projects to in the past. So I don’t think if we are running a real sales process particularly very close to COD or at COD, it would longer than three months or so to actually sell the projects.

Your next question comes from the line of Jed Dorsheimer with Canaccord. Please proceed.

First question that I have is, is you’re selling off the Recurrent project, how should we think of OpEx, and could you provide any additional color on split between the module fab versus with specifics to OpEx and then on the project side.

We’re not selling off the Recurrent project, we’re doing partial sales of the Recurrent project, similar to the one we did to Southern Co in Q3. So it’s not like there’s a wholesale selling of the Recurrent project. I think the question is more when all the projects enter construction and no longer in development, what do you do with the staff and the development group. And I would say that we see a fairly strong pipeline in the next few years and we certainly need the very good, well trained and well executing staff that came along with the acquisition, and we think we’re going to have a good future in both the US and other markets. The module business has higher G&A and sales expense, and obviously almost all the R&D expense goes to that as well. But it’s also got probably the most global footprint and the largest amount of transaction volume to go with it. Cost per person is much higher in the energy business. You need a different set of professionals to do the financing and the development there. So I think overtime, the project business expenses will grow a little bit from where they are and the operating expenses for the module business will continue to shrink as a percent of revenue even if they grow a little bit on the absolute dollars.

That’s helpful. Thank you. And then with respect to - you outlined the CapEx budget for ’15 and ’16 with respect to the capacity expansion. Did you also provide total CapEx or will that be similar to total CapEx?

We haven’t provided total CapEx in that number, because we didn’t include the projects that we’re building and holding in that number. But I think the cost per MW to build in the different market is fairly straight forward, and we have the tables in our earnings results so that you calculate that. If you need more information we could follow up, but it’s basically just building up the projects in our portfolio that we’re holding. Any projects that we finance selling which typically projects that are not in the OECD countries that would be likely to go in to YieldCo, we’re building to sell. Those stay as an inventory type asset and don’t go in to [success] and don’t count as CapEx.

[Operator Instructions] Your next question comes from the line of Sheng Zhong with Morgan Stanley. Please proceed.

I have two questions; one is, you expand your capacity largely in some emerging market in Asia, I just wanted to know, is this because your strategy changed to look at more emerging market or this market just serves as your product base.

Not really. Actually more than half of the expansion are still in China. The wafer expansion is in China, on the solar cell side we are the from this point end to next year we are being around 1.4 GW and 1.5 GW in China, so we are almost doubling the sales capacity in China, and we are only adding 400 MW in Southeastern Asia. On the module side, we are adding some module factory in Southeast Asia, and we are adding module capacity in China as well. And I guess to further answer your question, Asia is a strong region for growth. Look at Southeastern Asia, both Thailand, India, Philippines, Indonesia are very interesting, and these are already a high growth market or potentially high growth market. And the manufacturing costs in these countries are very similar to China, and also these places are already used for the International conglomerate for global manufacturing. So we also use these sites as a site to supply to our global customers. To do this, we also diversify some of the political and trade conflict risk.

And the section one, you mentioned about sales supply shortage overall globally. So it is meaning means the multi-crystalline in shortage or there are some shortages in mono, because I think current mono price is down much more than the multis price. So do you see any potential that mono can have faster growth in coming future?

Sheng you have a very smart observation. Indeed we have seen the cost of modern wafers drop these days, which is in contrast to the multi-crystalline wafers which had a little bit increase in the past few months. We think this may be temporary, because it’s quite easy to add multi-casting capacity to, and fundamentally the cost of multi is lower than the cost of mono. However, the lower mono wafer cost plus the higher power output of the mono cells and modules does make the mono more attractive these days. So as a result, we are increasing our mono production. As you know in the past, most of our production was on multi-crystalline, but we are going to increase our mono portion just because we can deliver a higher luggage to our customers, while cost wise the current process cost or wafer cost makes the cost per watt for the mono quite attractive.

Can you share with us maybe some roughly percentage of your mono’s shipment currently and expectation of total shipment.

At this moment, the majority is still multi, and I would say maybe 10% is in mono, 90% is in multi at this moment. But if the cost and benefit jointly continue, we will increase the mono. You might see a shift maybe 20% or over 20% mono next year if this cost and benefit trend continue, because for us, converting the line from multi to mono is very simple. We have a little bit of equipment and its very quick and very simple and we have stable, we have some workshops stably producing mono. So we have the technology, we have the experience.

[Operator Instructions] Your next question comes from the line of Colin Rusch with Oppenheimer. Please proceed.

As you look in to the emerging markets, you mentioned Thailand and obviously you’re mentioning in the press release fairly attractive pricing in Brazil. Can you talk a little bit about what the demand profile looks like outside of those four countries that you talked as the pillars of your business and the growth trajectory on those markets?

Well Europe is still an interesting market. We don’t [invest] in it a lot, but it still accounts for 5%-6% of our Q3 shipments. So it’s still an interesting market. And we have projectivity, a very strong projectivity in UK still in this quarter and next quarter. And some of the Middle East countries are interesting, for example, Turkey. There will be some very interesting projects over there. And we are looking at some project opportunities in Africa as well. And turning in to South Americas, Brazil will start [inaudible] their first batch and second batch of their project and very soon we expect to see 4GW-5GW in the next four-five years I believe, just in Brazil itself, based on the bidding volume. In Chile, solar has been, is already part of the LCOE [product] is already lower than that for the conventional power in some part of Chile. So that market is interesting. And Caribbean countries there are always demand here and there from Caribbean countries. Early this year we delivered 140 MW to Honduras, which is out of the blue, and I expect this kind of out of the blue opportunities to happen as well. And you asked, next year US will be very strong, and I believe even after next year 2017, I think the basic demand on volume is there. So I think US market will be reasonably okay or a strong player, tier one players in 2017. And then move to Canada, and just submitted the bid Ontario’s 140 MW of solar procurement and we are waiting for the results. And next year there should be another run-off bid on Ontario. So that’s where I am counting the fingers. And if I forget anything, if you have any particular touch of interest let me know, just ask me.

And just one final question around tax rate, Michael, how should we be thinking about the ongoing tax rate for the balance of this year and in to next year.

Our tax rate will be about 26% overall, but our taxes were a little bit high for the first part of the year. So there was a correction to get to the proper effective tax rate in Q3. Q4 we have three projects selling in Canada for example, and that’s a higher tax rate country for us.

[Operator Instructions] Your final question comes from the line of Carter Driscoll with FBR. Please proceed.

As regards to your resale value of your pipeline, did that take in to effect a full sale or some of the partial sales that you’ve done, and may be you could share with us some of the factors that got you the valuation or any particular regional differences that you see trending upward or downward that led you to that figure.

The resale value would be if we sold entire project, not if we did a partial sale. And it’s just a valuation metric to help people see what the value of these projects would be if we went out and sold them. And what we do is we take a look at recent sales in the market where offers were received and we multiply it by the amount of megawatts we have and we keep track of that internally. So I don’t have any special, we don’t special extra prices for our projects compared to other good projects in the market. We track all the markets where we have projects and see what the selling prices are, and that’s where they come up from.

So it’s a pretty straight forward clean number.

I mean it’s an estimate. Some of these projects will be finished in the next couple of years. So you’re extrapolating a little bit to what you think the price would be then. But as an estimate I think it’s a reasonable estimate, and we’ve been fairly close in the past. We tend to under-call those chapter numbers a little bit, because we tend to build it on the conservative side.

And then just a quick comment tariff policy, obviously been a lot of changes, at least regulatory wise from clean energy perspective in the US over the past couple of years. Do you see any potential changes to the US tariff policy and does that have any effect on your target of the US, and then also maybe just a quick comment on the ITC and your potential impact you see on your decision to perceive with the YieldCo. In past discussions you guys have talked that you just see adjustment on the PPA and you wouldn’t have big deals, any change in your view point from that perspective.

I think the tariff question, we remain hopeful that the governments were to reach some sort of a settlement and that the tariff will go away eventually. It’s a fairly complex question between not only two countries but two groups of manufacturers, module makers and polysilicon makers. So we remain hopeful, but there has not been a solution reached on that yet. And that’s in the US market. In terms of the ITC, a lot of projects have been pulled forward in to 2015 and ’16. So demand for utility scale projects is expected by all outside forecasting groups to drop in 2017 for the US. The question is, are projects viable at a 10% ITC, the answer is yes. But you need to continue to work on the balance of system and EPC cost and make sure you can deliver projects that are costed properly for lower ITC environment. And obviously if the ITC is at that level PPA rates have to be reflective to make an attractive investment. With the requirements under the Clean Air Act and various state initiatives we do believe there’d be continued demand in the US after the ITC.

And what do you think that magical all-in number is for utility scale and at 10% ITC to be viable.

Somewhere around $1 a Watt, I mean plus or minus a few percent over above or below that. It kind of depends on the state and what incentives are there.

Thank you for all of your questions. We will now turn back to the company CEO for closing comments.

Thank you operator, and thank you everyone for joining the call today. And thank you for your continuous support. If you have any further follow-up questions after today’s call, please contact us. Have a great day.