Q1 2019 ReneSola Ltd Earnings Call
Jun 27, 2019 PM UTC
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SOL - ReneSola Ltd
Q1 2019 ReneSola Ltd Earnings Call
Jun 27, 2019 / 12:30PM GMT
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Corporate Participants
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* Doran Hole
ReneSola Ltd - CEO of North America & VP of Strategy
* Ella Li
ReneSola Ltd - IR
* Xiaoliang Liang
ReneSola Ltd - CFO
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Conference Call Participants
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* Philip Shen
Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst
* Gary Thomas Dvorchak
The Blueshirt Group, LLC - MD of Asia
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Presentation
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Operator [1]
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Hello, ladies and gentlemen, thank you for standing by for ReneSola's Limited First Quarter of 2019 Earnings Conference Call. (Operator Instructions) Please note that we are recording today's conference call, Thursday, 27th of June 2019.
I will now turn over the call to Mr. Gary Dvorchak, Managing Director of The Blueshirt Group Asia. Please go ahead, Mr. Dvorchak.
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Gary Thomas Dvorchak, The Blueshirt Group, LLC - MD of Asia [2]
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Thank you, Annie, and hello, everyone. Thank you for joining us on this conference call to discuss ReneSola's first quarter 2019 results. We distributed the press release and shareholder letter earlier today and it's available on the company's website and from newswire services.
Furthermore, the call includes a short presentation deck, which you can also download from our website at renesolapower.com.
On the call with me today are Mr. Xiaoliang Liang, Chief Financial Officer; Ms. Shelley Xu, Vice President of Asia; Ms. Jessie Zhang, Director of Financial Reporting.
Our Chairman Mr. Li had important engagement and he could not be on the call tonight. As such, Ms. Ella Li, our Manager of Investor Relations, will read the prepared remarks covering ReneSola's operating highlights and then Mr. Liang will review our first quarter 2019 financial results.
Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 as shown on Slide 2.
Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. For information regarding these and other risks and uncertainties is included in the company's annual report on Form 20-F and other documents filed with the U.S. SEC. ReneSola does not assume any obligation to update any forward-looking information.
Please note that, unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars.
With that, let me now turn the call over to our Manager of Investor Relations, Ella Li. Ella, please go ahead.
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Ella Li, ReneSola Ltd - IR [3]
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Thank you, Gary. And thank you, everyone, for joining our call today. We appreciate you interest in ReneSola.
To get started, we will provide a summary of our first quarter financial performance and review our operating highlights.
The call will then go to our CFO Xiangliang Liang, who will cover financial results in some detail and will update 2019 guidance. We will then open the call to questions.
We are off to a solid start in 2019. Revenue of USD 13.1 million, grew 134%, sequentially, and was above the high end of our guidance range.
We made good operating progress in Q1. We successfully connected 3.7 megawatts of field projects in Canada and sold 21 megawatts of project rights in the U.S. and 2.5 megawatts of project rights in France. Furthermore, our global pipeline remains still, late-stage is now 753 megawatts, where total is a robust 1.4 gigawatts. We are in a good financial position with a healthy balance sheet that can fund growth.
Mr. Liang will go over the details of our financial results later in the call.
First off, because it is in the news, let me comment on the latest subsidy policy for solar projects in China, which impacts our China DG business.
As many of you know, China's National Energy Administration or NEA recently released a statement regarding the government subsidies for solar projects. Under the new policy, in 2019, China will allocate CNY 3 billion or USD 435 million of subsidies for new solar projects. Of that total, CNY 750 million or USD 109 million will be awarded to household projects with a combined capacity of 3.5 gigawatts. The balance will be directed to solar power stations. To participate in the new subsidy program, project developers and operators are required to submit applications for subsidies to the NEA by July 1, 2019. The applications must specify the expected generating capacity and annual operating hours for their projects. We have already submitted applications for subsidies to the NEA ahead of the deadline.
We view the latest subsidy announcement for solar projects by the NEA as a positive development, both for the industry and for ReneSola. We are optimistic about the current environment and remain focused on rapidly developing new DG projects in China. While we are focused on the development business, we are also actively pursuing other segments of the business to reduce our risk and better utilize our capital, in particular the development business recycles capital quickly where operating assets generate a stable high-margin recurring revenue.
With that, let's now turn our attention to operating highlights. Our development pipeline remains strong at 1.4 gigawatts, of which 753 megawatts is late-stage. This late-stage pipeline is geographically diversified and spreads across the U.S., Canada, Poland, France, Hungary, Spain, India, South Korea, Vietnam and China. Approximately 50 megawatts of the late-stage is under construction, while 3.7 megawatts was connected in Q1. The connected projects were all field projects in Canada. We also sold to Nautilus solar 21 megawatts of project rights in the U.S. State of Minnesota. Also, we sold 2.5 megawatts of project rights in France to Tenesol, a French developer.
In addition to our development pipeline, we currently own and operate a 228 megawatts portfolio of solar projects that generates high-margin recovering revenue. The portfolio consists of 208 megawatts of rooftop in China, 15 megawatts of ground mount in Romania and 4 megawatts of rooftop in the U.K. Looking ahead, we have approximately 11 megawatts of rooftop projects under construction in China. Slide 3 covers our project business in more detail.
Now let me review the geographies in more detail. First, China, as shown on Slide 6, we now operate approximately 208 megawatts of rooftop solar concentrated in a multitude of Eastern provinces with favorable development environment. The C&I electricity price in both provinces are relatively high and electricity off-takers are generally creditworthy enterprises. Self-consumption DG projects in those provinces are attractive investment in an effort to evolve and a change for ReneSola into an active LED solar project developer. We expect to monetize our China DG asset eventually. What does the monetization do for us? The simple answer is that the work process strengthen our balance sheet. We do see leverage and improved cash flow, that is a key focus area for us.
Next, let's talk about the U.S. The U.S. remains a large and important market for us. As highlighted on Slide 7, our late-stage projects, they are total 327.4 megawatts, of which approximately 107.8 megawatts are community solar in Minnesota and in New York. Additionally, we are pursuing small utility scale projects with a mix of corporate, municipal and utility off-takers in other states, including Utah, Texas, Florida, Arizona and California. Of the late-stage projects, 24.1 megawatts are under construction and expected to grid connect in the second and third quarters of 2019.
Our U.S. business continues to gain traction. As I mentioned earlier, we sold Nautilus Solar 21.1 megawatts community solar portfolio in Minnesota that was developed by our team. As many of you know, Nautilus is a leading U.S. company, engaged in solar projects acquisition, development and asset management. This sale to them represents the third acquisition of community solar asset from us. Similar to the 2017 and 2018 deals we had with them, this community solar portfolio was also qualified under Xcel Energy's community solar program in Minnesota.
Furthermore, as highlighted in our recent press release, we signed a development service agreement with X-Elio North America, a subsidiary of X-Elio, a Madrid Spain-based company that specialized in the development, construction, operation and maintenance of solar plants. Under the agreement, our North American development team will originate and develop large utility scale solar projects for X-Elio. The parties are in the process of conducting joint due diligence on initial portfolio of projects in California, Oregon and Arizona with a total installed capacity of over 500 megawatts. Many of these projects will include battery storage systems.
ReneSola will assist X-Elio in obtaining site control, permitting, interconnection and off-taker agreements. We will also support other projects through the financing and construction phases.
We are very excited to engage with X-Elio and leverage our development platform and capacity to support their needs. We have a talented team and a solid track record of developing solar projects globally. So we are in an excellent position to help them expand their presence in the U.S.
In Canada, shown on Slide 8, we connected 3.7 megawatts of FiT3 projects in Q1. We now have 3.3 megawatts of late-stage projects, all of which are under construction and it should connect to the grid in the second and third quarters of 2019. All these projects are eligible for the FiT3 scheme.
We show Poland on Slide 9, where we have a total of 37 megawatts in various stages. Our main assets there is a portfolio of 55 installation of 1 megawatt each. 44 of those are completed, operating and up for sale. The other 11 are under construction. In addition to the 55 installations, late last year, we won the auctions for another 26 megawatts of projects development rights, which are for sale. All of the projects will sell power our Poland's Contract for Difference or CFD regime different and are eligible for a 15-year guaranteed tariff. The 26 we won are eligible for a 15-year guaranteed tariff of PLN 354.8 to 358.8 per megawatt hour. That -- this is close to the highest auction price of PLN 364.9 per megawatt hour. Poland is also a key market for us and we are one of the largest project developers in the country. As such, the auction went in late last year is a positive development. As it once again demonstrates our ability to deliver reliable cost competitive distributed power to serve growing energy demand in the region.
Slide 10 shows Hungary, where we continue to invest in small-scale DG projects. Our late-stage pipeline has more than 67 micro projects, each with a size of 100 megawatts, bringing total capacity to approximately 33.6 megawatts. We expect the construction of all of this micro projects to start in the second and third quarter of 2019. In Q1, we entered into a bridge finance agreement with Eiffel Energy Transition Fund for our solar projects in Hungary and Poland. As discussed in our last call, Eiffel Energy Transition Fund is a specialized investment vehicle of EUR 350 million, strictly reserved for institutional investors. The fund meets the financial needs of energy transition period for custom-owned renewable energy production and energy efficiency solutions. Under the terms of the agreement, Eiffel Energy Transition Fund will finance our 41.3 megawatt projects in Hungary and 55 megawatts project in Poland in the amount of EUR 13.4 million. We are excited to partner with Eiffel. This facility demonstrates the confidence that the capital market put in our ability to successfully develop projects in this region. We continue to expect both Hungary and Poland to be growth markets for us in the years ahead.
Moving on to India on Slide 11. Our project pipeline currently stands at 50 megawatts. Most projects, they are ground mounted open access projects. Similar to U.S. community solar, Indian projects can sell electricity to different commercial and industrial off-takers under long-term PPAs. Our strategy in India is a pure project developer model. We want to develop projects to the shovel-ready stage and then sell the project rights to investors. This model enables us to leverage our expertise in project development and our global network of solar project investors.
Now turning to Slide 12, where we cover other regions. In France, we formed a strategic partnership with Green City Energy last year to jointly develop 4 solar parks in the south with a total installed capacity of 69 megawatts. The 4 parks will generate approximately 105 million kilowatt hours of electricity per year. We expect COD for the parks in 2020 and 2021. Beyond the regions I just discussed, we are actively pursuing opportunities in other international markets including Spain, South Korea and Vietnam. In Spain, we have a late-stage pipeline of 12 megawatts of private PPA projects. And in South Korea, we secured 9 megawatts ground-mounted project. In Vietnam, we obtained the land rights for a 200 megawatts of ground-mounted project. In sum, we have a globally diversified project portfolio spanning multiple space in both rooftop and ground mount. Because of this, we are very optimistic about the opportunities ahead of us.
Before I turn the call over to Mr. Liang, I would like to take a minute to emphasize the strength of our strategy. We are pursuing a global active LED project development model with a focus on distributed generation and community solar. Revenue comes from the sale of shovel-ready project rights and the build and transfer projects after grid commencing. We typically achieve high gross margins from monetizing project rights. Downstream projects represent large opportunities globally for us, and we look forward to capturing those opportunities. Our talented team, diversified geographic coverage and the record of accomplishment puts us in an excellent position to grow profitability.
With that, let me now turn the call over to Mr. Liang for comments on our financial performance.
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Xiaoliang Liang, ReneSola Ltd - CFO [4]
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Thank you, Ella. And thank you, everyone, for joining us on the call today. I will review our financial performance for the first quarter of 2019 and then discuss our outlook.
Please turn to Slide 14. Q1 revenue was USD 13.1 million compared to USD 5.6 million last quarter and USD 44.8 million in the same period last year. Q1 revenue was ahead of our guidance range of USD 8 million to USD 10 million.
Here is our revenue breakdown by segment in Q1. Project development was USD 8.4 million, as we recognized the revenue primarily from the sales of project rights of 21.1 megawatts in the U.S. IPP or electricity sales were USD 4.6 million, mainly from the 31.2 million kilowatt hours of electricity generated by our operating DG projects in China.
Q1 gross profit was USD 0.4 million compared to a gross margin -- gross profit of USD 2.9 million last quarter and USD 8.4 million in the same quarter last year. Gross margin of 2.8% was in line with our expectations of 0% to 5% and was down from 51% last quarter. The sequential decline in gross margin was attributable to revenue mix coupled with unfavorable margins from project sales in the U.S.
First quarter operating loss was USD 2.1 million compared to operating loss of USD 1.9 million in Q4 of 2018. Operating margin was negative 16% compared to a negative 34% in Q4. First quarter operating expenses were USD 2.5 million, down from USD 4.8 million last quarter and essentially flat when compared to the same period last year. Q1 sales and marketing expenses was USD 23,000 down from USD 0.5 million in Q4 of 2018 and down from USD 0.1 million in Q1 2018. Notice that the year-over-year decrease in sales and marketing expenses outpaced the year-over-year decline in revenue.
General and administrative expenses were USD 2.3 million, down from USD 2.5 million last quarter and down slightly from USD 2.4 million in the same period last year. The decrease in both sales and marketing and general and administrative expenses describes our strong focus on disciplined expense control.
Below the line, first quarter nonoperating expenses totaled USD 3.4 million, up from USD 2.6 million last quarter. Q1 nonexpense -- nonoperating expenses include interest expense of USD 2.3 million and foreign exchange loss of USD 1.2 million. The ForEx loss was mainly due to depreciation of the Romania leu against the euro. Q1 net loss was USD 5.6 million or USD 0.01 per share compared to net loss of USD 4.3 million or USD 0.01 per share in Q4 of 2018. Q1 EBITDA was negative USD 1 million, which was flat when compared to last quarter.
Now the balance sheet, shown on Slide 15. We have cash and equivalents of USD 7 million as of March 31, 2019, a small increase of about USD 0.2 million during the quarter. Long-term borrowings were approximately USD 11 million as of March 31, 2019, down from USD 41.4 million in Q4. The decline was the result of the reclassification of the USD 28.8 million Romania construction loan from long-term borrowings to short-term borrowings because it is still in March 2020. We have long-term liabilities related to sale leasebacks and the lease liabilities of approximately USD 78.1 million, an increase of USD 0.2 million during the quarter. This relates mainly to rooftop projects in China.
Finally, let's turn our attention to guidance, shown on Slide 18. For 2019, the company continue to expect revenue to be in the range of USD 150 million to USD 170 million and overall gross margin in the range of 20% to 25%. The company intends to monetize approximately 270 megawatts of projects in international markets. We anticipate meaningful revenue growth in the second half relative to the first half of 2019, as we expect significant revenue contribution from project sales in the second half of the year. For the second quarter of 2019, we expect the revenue in the range of USD 10 million to USD 12 million and gross margin in the range of 55% to 65%.
With that, we would now like to open up the call for any questions that you may have for us. Operator, please go ahead.
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Questions and Answers
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Operator [1]
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(Operator Instructions) Our first question comes from the line of Philip Shen of Roth Capital Partners.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [2]
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The first one I'd like to ask is about the margins on the U.S. projects. Can you help us understand why the margins on this projects in Q1 fell short of expectations? Or why they were so low?
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Ella Li, ReneSola Ltd - IR [3]
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Thank you for your question. I'll answer the question. The lower margin in U.S. project is because of deferral revenue -- deferral in revenue until the COD, which, I mean, we will...
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [4]
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Okay. So can you share actually what the margins were for the U.S. projects?
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Ella Li, ReneSola Ltd - IR [5]
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For the U.S. projects? It's negative 16% now, but if we recognized revenue until COD, the gross margin will be near 0.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [6]
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Okay. So just to be clear, did you sell it -- sell the project closer to NTP as opposed to COD?
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Ella Li, ReneSola Ltd - IR [7]
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We sell it at NTP, but we will have payment into COD.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [8]
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Okay. And then when you look at the overall U.S. pipeline, late-stage, what kind of margin profile do you expect for that pipeline?
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Ella Li, ReneSola Ltd - IR [9]
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In 2019? Okay. Doran, would you please answer this question?
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [10]
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Yes, Phil. It's Doran.
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Ella Li, ReneSola Ltd - IR [11]
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Would you please answer?
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [12]
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Yes. Sure. And Phil, just very quickly I'm going to slightly elaborate on the margins from the projects sold. Just understand that there are purchase price adjustments attributable to certain elements of that transaction having to do with interconnection costs and -- final interconnection costs and final subscriptions for the Minnesota community solar, which we are expecting to result in a slightly different margins, which are all adjusted and paid at COD. So it is a little bit hard to forecast exactly what that number is going to look like.
With respect to the remainder of the portfolio...
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [13]
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Sorry, Doran. Just as a follow-up there, does that mean you expect at some point to get a benefit from those adjustments at COD? Or does the -- neither of the projects realize that?
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [14]
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We realize that and those are a mixture of benefits and determents still. As you can expect that when the final interconnection costs are made -- determination are made post COD that there is an adjustment in that interconnection cost. Risk and benefit is something that ReneSola maintains as part of the sale. So those could be two-way adjustments. I mean we are expecting on balance what we've seen so far that those adjustments will be in our favor. However, there is no certainty on some of the other adjustments that may appear and those are unknowns as you would expect from when the utility does its final reconciliation of interconnection costs, right?
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [15]
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Fair enough.
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [16]
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So with respect to the remainder of the pipeline in the United States, I would say that the gross margins there will vary. I would say that the range is likely -- I believe we'll have some projects where that might be as low as, say, 10%, but then certainly, they could go as high as, in some cases, 40%. That again with projects in the varying stages is a little bit difficult to forecast these numbers and that's why the range is so wide, but we do expect those margins to be much better.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [17]
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Okay. Let's shift over to China for a moment. I think the China DG asset declined in Q1 to about 208 megawatts from 212. So did you sell 4 megawatts in Q1? I think you guys only talked about selling U.S. project rights and the project sale in France. But was 4 megawatts also sold in China?
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Ella Li, ReneSola Ltd - IR [18]
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Yes. We sold our project in China, total 4 megawatts.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [19]
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Great. What was the margin profile on the China project?
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Ella Li, ReneSola Ltd - IR [20]
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It's almost near 0.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [21]
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Okay. And then I also noticed that you guys had, I think, in the China pipeline as much as 350 megawatts of grid parity projects that was listed in Q4, but now they are not listed in the pipeline today. What happened to the 350 megawatts of grid parity projects in Northern China?
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Unidentified Company Representative, [22]
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(foreign language)
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Ella Li, ReneSola Ltd - IR [23]
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[Interpreted] Philip, we canceled some ground mounted grid parity projects.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [24]
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You canceled that. Is that right?
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Ella Li, ReneSola Ltd - IR [25]
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Yes.
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Unidentified Company Representative, [26]
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(foreign language)
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Ella Li, ReneSola Ltd - IR [27]
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[Interpreted] And we are -- currently, we are focused on some DG projects and as many about net-meter projects as it has high gross margin.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [28]
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How high?
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Ella Li, ReneSola Ltd - IR [29]
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It's around 55% to 60%.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [30]
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I'm sorry, I didn't hear the gross margin. Can you say it again?
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Ella Li, ReneSola Ltd - IR [31]
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Yes, Phil. It's around 55% to 60%.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [32]
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Okay. Fine. So let's move on to the guidance for the full year. Can you update us now on how many megawatts you plan to monetize in 2019 in each region? And then give us a sense for how many megawatts per quarter you plan to monetize?
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Unidentified Company Representative, [33]
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(foreign language)
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Ella Li, ReneSola Ltd - IR [34]
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[Interpreted] Philip, for the whole year 2019, we are planning to monetize 270 megawatts and that it's mainly concentrated in the second half of the year. For Q3, we are planning to monetize around 115 megawatts and the remaining will be Q4.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [35]
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Okay. Great. And I think, on the last call, you talked about, of the 270 megawatts, 170 megawatts will be sold at NTP and then 100 megawatts will be sold at COD. Is that -- what do you expect now? Is that mix of NTP and COD still the same?
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Ella Li, ReneSola Ltd - IR [36]
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Around 90 megawatts will be at COD and around 170 megawatts at NTP.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [37]
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You said 90 megawatts at COD, is that right?
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Ella Li, ReneSola Ltd - IR [38]
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Yes.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [39]
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So it's roughly the same?
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Ella Li, ReneSola Ltd - IR [40]
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Yes.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [41]
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Great. And when you think about the -- in this quarter, the margin profile of the projects you sold was either 0 or negative. When you think about the 150 megawatts you expect to sell in Q3, what is that margin profile look like? Perhaps you can talk about the regions that those projects are in?
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Ella Li, ReneSola Ltd - IR [42]
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I can say our recent gross margin is around 16%. Gross profit -- the early gross profit for Q3 is about 16%.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [43]
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1-6, right?
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Ella Li, ReneSola Ltd - IR [44]
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Yes.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [45]
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Great. And what regions are the -- what's the mix of geographies for the 150 megawatts?
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Ella Li, ReneSola Ltd - IR [46]
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Philip, mix, it varies in Canada, Hungary and Poland.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [47]
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Okay. Great. And then can you give me the same for Q4. What's the regional or geographic mix? And then what the margin profile looks like?
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Ella Li, ReneSola Ltd - IR [48]
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For Q4, the gross profit is around 22% and it will be in Hungary, U.S. and South Korea.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [49]
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Okay. Great. In terms of your project or your partnership with X-Elio, you talked about 500 megawatts developing and originating for them. Can you -- is there a sense of timing that you can share with us? I'm imagining it may not be for over a year, but can you talk to us about when that 500 megawatts could actually -- you could start to realize some sales there?
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [50]
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I'll jump in here, Phil. So the way that, that deal is set up, in fact, is, we have a relatively detailed schedule of milestones, development milestones, with portions of the agreed upon developer fee assigned to those milestones. And so we will start to see small amounts of this as even site control comes through on some of these projects. As the release says, we're in diligence on the first handful projects. Those are primarily out West. Each of those projects are relatively large in size. So certainly, getting those through the NTP will be a process that takes between 18 and 24 months. However, during that period of time, we do expect to see some of this income come in as we reach some of these milestones, milestones related to site control, permitting, interconnection agreements, et cetera.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [51]
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Great. When you think about the overall...
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [52]
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And I do expect to -- go ahead, sorry.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [53]
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No, please. Please, finish.
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [54]
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I was going to say I do expect some element of that to be flowing in during 2019, but given that we are in diligence initially and it's a new relationship, that's not something that we are including in our forecasts here.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [55]
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Got it. I think you just answered my question there. So great. Well, congrats on the X-Elio partnership. And one last question and this might be to Doran as well as others. But from a technology standpoint, bifacial has started to gain more prominence, especially with exemption of the Section 201 in the U.S. To what degree are you guys considering -- for your late-stage projects, what percentage of them are being -- are factoring in the use of bifacial?
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Doran Hole, ReneSola Ltd - CEO of North America & VP of Strategy [56]
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In the U.S., it's still relatively small percentage, Phil. I think you guys did a nice job outlining some of the engineering challenges associated with that. You know that switch is not something you can just simply do on the fly. However, I would say that the number is certainly greater than 0. We are looking closely bifacial for a number of projects, but I would say, it's sort of less than 25% of our pipeline that's being considered as well as some of the large projects that we are looking with X-Elio. That's sort of the best answer I can give at this point.
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Philip Shen, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [57]
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Okay. Great. And I'd love to get Mr. Li's opinion on bifacial as well. Are you guys using bifacial globally? Or -- and also what -- how does he -- what's his opinion on bifacial?
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Ella Li, ReneSola Ltd - IR [58]
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Philip, (inaudible) depends on the market situation. And currently, it's not as free (inaudible) that widely. And we think currently we might not use this, but we might consider it later.
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Operator [59]
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(Operator Instructions) No more questions as of this time. I'd now like to hand the conference back to Ms. Ella Li. Please go ahead.
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Ella Li, ReneSola Ltd - IR [60]
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Thank you, operator. We are pleased with our Q1 results that reflect our continued execution of our project development strategy. We remain committed to prudently managing our operations and strengthening our financial position. We are optimistic about our opportunities and look forward to discussing continually improvement in a few months.
Thank you all again for your participation. This concludes our call today. You may all disconnect it.
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