omniture

Canadian Solar Reports First Quarter 2011 Financial Results

2011-05-12 01:27 2256

ONTARIO, Canada, May 12, 2011 /PRNewswire-Asia/ -- Canadian Solar Inc. (the "Company", "we" or "Canadian Solar") (NASDAQ: CSIQ), one of the world's largest solar companies, today announced financial results for the first quarter ended March 31, 2011.

First Quarter 2011 Highlights

  • Solar module shipments were 244 MW, up 31.9% from 185MW in the first quarter of 2010
  • Net revenue was $443.4 million, up 31.6% from $336.9 million in the first quarter of 2010
  • Gross profit was $65.3 million, up 55.8% from $41.9 million in the first quarter of 2010
  • Gross margin was 14.7%, compared to 12.4% in the first quarter of 2010
  • Operating profit was $34.0 million, up 60.5% from $21.2 million in the first quarter of 2010
  • Net income attributable to Canadian Solar Inc. was $5.9 million, up 292.5% from $1.5 million in the first quarter of 2010
  • Earnings per fully diluted share were $0.13, up from $0.03 in the first quarter of 2010

First Quarter 2011 Results

Net revenue for the first quarter of 2011 was $443.4 million, down 2.1% from $452.7 in the fourth quarter of 2010 and up 31.6% from $336.9 million in the first quarter of 2010.  Solar module shipments for the first quarter of 2011 totaled 244 MW, compared to shipments of 185 MW for the first quarter of 2010.  Sales to European markets in the first quarter of 2011 accounted for 75.7% of revenue, while sales to North America represented 12.2% and to Asia and others regions represented 12.2% of revenue, compared to 88.5%, 5.7% and 5.8%, respectively, in the first quarter of 2010.


 

 

Revenue by Geography

 

 

 

Q1 2011

 

Q4 2010

 

Q1 2010

 

 

US$M

 

%

 

US$M

 

%

 

US$M

 

%

 

 

Europe

 

335.4

 

75.6%

 

321.1

 

70.9%

 

298.2

 

88.5%

 

 

America

 

54.0

 

12.2%

 

46.8

 

10.3%

 

19.1

 

5.7%

 

 

Asia and others

 

54.0

 

12.2%

 

84.8

 

18.8%

 

19.6

 

5.8%

 

 

Total

 

443.4

 

100.0%

 

452.7

 

100.0%

 

336.9

 

100.0%

 

 

 

 

 

 

 

 

 

 

 
Gross profit for the first quarter of 2011 was $65.3 million, down 15.1% from $77.0 million in the fourth quarter of 2011 and up 55.8% from $41.9 million in the first quarter of 2010. Gross margin was 14.7% in the first quarter of 2011, compared to 17.0% in the fourth quarter of 2010 and to 12.4% in the first quarter of 2010. The sequential decline in gross margin was primarily due to lower average selling prices, relatively high raw material costs and costs associated with normal holiday-related factory shutdowns. The year-over-year increase in gross margin was primarily due to cost efficiencies from increased in-house cell production, partially offset by higher silicon costs.

Operating margin was 7.7% in the first quarter of 2011, compared to 9.3% in the fourth quarter of 2010 and 6.3% in the first quarter of 2010. The sequential decrease in operating margin was due to lower gross margin, and the year-over-year increase was due to lower non-silicon processing costs across the value chain as well as improved economies of scale.

Interest expense in the first quarter of 2011 was $9.9 million, compared to $6.5 million in the fourth quarter of 2010 and $3.9 million in the first quarter of 2010. The sequential and year-over-year increases were due to additional bank borrowings and an increase in interest rates. Interest Income was $1.5 million in the first quarter of 2011, compared to $1.4 million in the fourth quarter of 2010 and $1.4 million in the first quarter of 2010.

The Company recorded a loss from foreign exchange hedging activities of $17.2 million in the first quarter of 2011. The loss was due to actual settlements as well as mark to market of forward exchange contracts the Company entered into in the third quarter of 2010 to hedge then forecasted Euro denominated sales of fourth quarter 2010 and first quarter 2011 as well as contracts entered into at the beginning of 2011 to hedge the then forecasted Euro denominated sales of first and second quarters 2011. The range of contractual Euro/USD forward exchange rates for these contracts was $1.31 to $1.34 per Euro. Out of the $17.2 million loss, approximately $5.0 million was realized during the quarter, and $12.2 million was recognized but unrealized as a result of contracts with settlement dates in the second quarter 2011 being marked to market.

Foreign exchange loss in the first quarter of 2011 was $0.7 million compared to $1.2 million in the fourth quarter of 2010 and $16.4 million in the first quarter of 2010.

Income tax expense in the first quarter of 2011 was $1.7 million (representing a tax rate of 22.7%) compared to an expense of $10.3 million (representing a tax rate of 28.5%) in the fourth quarter of 2010 and an expense of $1.5 million (representing a tax rate of 51.3%) in the first quarter of 2010.

Net income attributable to Canadian Solar Inc. for the first quarter of 2011 was $5.9 million, or $0.13 per diluted share, compared to net income of $25.5 million, or $0.58 per diluted share, for the fourth quarter 2010, and net income of $1.5 million, or $0.03 per diluted share, for the first quarter of 2010.

As of March 31, 2011 the Company had $477.6 million in cash, cash equivalents and restricted cash, compared to $476.2 million as of December 31, 2010.

Accounts receivable balance at the end of the first quarter 2011 was $306.7 million, up from $169.7 million at the end of the fourth quarter of 2010 and $224.3 million at the end of the first quarter of 2010. The sequential increase in accounts receivable was primarily due to the fact that most shipments in the first quarter of 2011 were made in March.

Inventories at the end of the first quarter of 2011 were $305.5 million, compared to $272.1 million at the end of the fourth quarter 2010 and $173.3 million at the end of the first quarter of 2010. The sequential increase in inventory was primarily due to the increased work-in-progress for our EPC projects in Canada, which amounted to $26.0 million at the end of the quarter.

Accounts payable balance at the end of the first quarter 2011 was $143.7 million, up from $113.4 million in the fourth quarter of 2010 and $93.7 million in the first quarter of 2010. The sequential increase in accounts payable was in line with increased production.

Total bank borrowings were $827.6 million at the end of the first quarter of 2011, compared to $610.0 million at the end of the fourth quarter of 2010 and $403.1 million at the end of the first quarter of 2010. Accounts receivable turnover days increased from 34 days in the fourth quarter 2010 to 50 days in the first quarter 2011. The increase in bank borrowings during the first quarter 2011 was used to cover a temporary working capital shortage which primarily resulted from the increase in accounts receivable turnover days.

Total equity as of March 31, 2011 was $545.9 million, compared to $535.0 million at the end of the fourth quarter of 2010 and $469.2 million at the end of the first quarter of 2010.

Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, remarked: "First quarter 2011 results were in line with prior guidance. Based on sales volumes and customer feedback, Canadian Solar continues to build a successful downstream brand and gain market share in key solar industry markets worldwide. Of note, the Canadian market continues to be encouraging, with sales volumes expected to nearly double in 2011 compared to 2010. Also, indications are that the demand in Japan will return to more normal levels in the third quarter of 2011, once activity levels recover from the recent natural disaster. Finally, we continue to expand our brand and business in Germany and the U.S., among other markets."

Andrew Chen, Chief Financial Officer of Canadian Solar, commented: "First quarter gross margin of 14.7% was in line with prior guidance, with ASP declines in line with expectations and macro trends.  The benefits of our ongoing cost reduction program were offset by higher than forecasted wafer prices on the spot market, higher polysilicon prices and higher non-silicon materials costs, including silver paste. We continue to pursue cost efficiencies across our operations, with a focus on reducing wafer, cell and module manufacturing costs."

Business Outlook

The Company's business outlook is based on management's current views with respect to operating and market conditions, order book and customers' forecasts. Management's views and estimates are subject to change.

For the second quarter of 2011, shipments are expected to be in the range of approximately 245 MW to 255 MW, with gross margin expected to be between 13% and 15%. In addition, the Company expects to ship approximately 100 MW of modules under Delivery Duty Unpaid ("DDU") or Cash on Delivery ("COD") contract terms. Revenue recognition under DDU terms can only take place after delivery of goods to named destinations per sales contracts, resulting in increasing lead time for revenue recognition by 35 to 45 days. These shipments are currently expected to be recognized as sales in the third quarter 2011 according to the delivery schedules required by the Company's customers.

In addition, the Company expects that its three ground-mounted EPC projects in Ontario will reach certain degree of completion during the second quarter. The Company expects therefore to be able to partially recognize revenue from these projects starting in the second quarter under the percentage-of-completion method.

The Company's internal cell and module capacities, which are 220MW and 350MW, respectively, for the current quarter, are expected to be nearly fully utilized in the second quarter, reflecting strong endorsement of Canadian Solar products in the marketplace. The percentage of third-party cells compared to internally produced cells is expected to be higher in the second quarter than in the first quarter due to the full utilization of the Company's module capacity. However, the Company still expects that its blended gross margin in the second quarter will be similar to the first quarter based on its forecast of third party cell and wafer prices.

The Company remains on track to expand its annualized capacity for solar cells to 1.3GW, and annualized capacity for modules to 2 GW, both by mid-2011. The new module capacity includes 200MW in Guelph, Canada, to provide Ontario-content qualified solar modules to the Company's downstream solar projects and customers in Ontario.

For the full year 2011, the Company reiterates its previous guidance of shipments of approximately 1.2 GW to 1.3 GW.

Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, remarked: "From an operations standpoint, we are moving to more substantial cell and module vertical integration. Other than the capacity expansion mentioned above, we have nearly completed the planning of the next phase of our solar cell capacity expansion, for which we expect to add another 600 MW of high-efficiency cell capacity through a proposed joint venture. The new solar cell plant is expected to adopt our proprietary Alps technology using metal-wrap-through (MWT) design.  With this expansion, we expect to bring our internal cell capacity to 1.9 GW by early 2012. The joint venture is planned to allow us to achieve significant vertical integration from cell to module. We are also working on partnering with a leading wafer supplier in order to add another 600MW of wafer capacity dedicated to Canadian Solar, thereby securing up to 2 GW of high quality and low cost wafers for 2012. These planned strategic alliances are expected to enable us to expand significantly while minimizing the impact on our cash flows. We expect to complete these agreements shortly to prepare ourselves for further growth in the second half of 2011 and in 2012."

Dr. Shawn Qu continued: "We have seen significant declines in raw materials costs so far in Q2, including lower costs for polysilicon, wafer and cells, which we expect to help lessen the impact of expected declines in module ASP. We are also pursuing further internal cost reduction measures. On the module side, we expect to benefit from price declines in glass and other materials. We expect these actions to contribute to our efforts to maintain a reasonable margin structure in 2011. We expect our strong global sales and service network, together with our leading brand name and strong net cash position, to help us navigate through policy and incentive changes. We are confident that we can expand our market share in 2011 through further cost reductions, technology innovations and new product introductions. We also expect to benefit from our early mover advantage in the total solutions EPC business."

Recent Developments

On April 21, 2011, the Company announced a 97 MW supply agreement with GP Joule. Under the agreement, Canadian Solar will supply its high performance solar modules to GP Joule, with all deliveries to occur before December 31, 2011. GP Joule operates four offices in the North and South Germany and has joint ventures in North America and France. In the PV sector, GP Joule focuses principally on implementing ground mounted large solar power plants.

On April 20, 2011, the Company announced a 100 MW solar module supply agreement with Fire Energy Group. Under the terms of the supply agreement, module deliveries will occur throughout 2011, with prices adjusted quarterly. Fire Energy Group is a leading system integrator that provides project management and distribution services in Spain, Germany, Italy, France, the U.S., the Czech Republic, Morocco and China.

On April 19, 2011, the Company announced that it has supplied 8 MW of solar modules to a solar power plant constructed by EOSOL Energies and the Caisse des depots et consignations in Villeneuve de Marsan, Aquitaine, France. The ground-mounted solar plant at Villeneuve de Marsan has an installed capacity of more than 8 MW, representing the consumption of 2,500 households and preventing the emission of 9,180 tons of carbon dioxide (CO2) per annum.

On March 29, 2011, the Company announced it has been certified under industry standards ISO 14001 and REACH (registration, evaluation, authorization and restriction of chemicals). The basis for complying with the international ISO standard is the introduction of an environmental management system to administer and monitor the corporate environmental objectives. The Company's CS5 and CS6 series modules meet the requirements of REACH as these modules are free from so-called "substances of very high concern" and are environmentally-friendly.

On March 16, 2011, the Company announced a third SkyPower engineering, procurement and construction (EPC) agreement to build a 10.5 MW solar park in Thunder Bay, Ontario. SkyPower is Canada's largest owner and developer of large-scale solar projects and was recently awarded 148.3 MW through thirteen power purchase agreements by the Ontario Power Authority under the Province of Ontario, Canada's Feed-in Tariff Program.

Conference Call Details

The Company will host a conference call on Wednesday, May 11, 2011 at 7:00 p.m. U.S. Eastern Time (7:00 a.m., May 12, 2011 in Hong Kong) to discuss its financial results and business outlook. To participate on the live conference call please dial +1-617-786-2964 or +1-800-901-5217. The passcode for the call is 14231903.

A replay of the call will be available on Wednesday, May 11, 2011 at 9:00 p.m. U.S. Eastern Time through May 18, 2011 at 10:00 p.m. U.S. Eastern Time (10:00 a.m., May 19, 2011 in Hong Kong). To access the replay please dial +1-617-801-6888 and use passcode 63469827.

A live webcast of the call can be accessed in the investor relations section of Canadian Solar's website at www.canadiansolar.com, and will be available for replay shortly after the call.

About Canadian Solar Inc. (NASDAQ: CSIQ)

Canadian Solar Inc. is one of the world's largest solar companies. As a leading vertically integrated provider of ingot, wafer, solar cell, solar module and other solar applications, Canadian Solar designs, manufactures and delivers solar products and solar system solutions for on-grid and off-grid use to customers worldwide. With operations in North America, Europe and Asia, Canadian Solar provides premium quality, cost-effective and environmentally-friendly solar solutions to support global, sustainable development. For more information, visit www.canadiansolar.com.

Safe Harbor/Forward-Looking Statements:

Certain statements in this press release including statements regarding our expected future shipment volumes, gross and net margins, manufacturing capacities and cell conversion efficiencies, are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include the risks regarding the previously disclosed SEC and internal investigations as well as general business and economic conditions and the state of the solar industry; governmental support for the deployment of solar power; future available supplies of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand from major markets such as Germany; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling prices; delays in new product introduction; continued success in technological innovations and delivery of products with the features customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company's SEC filings, including its annual report on Form 20-F originally filed on August 19, 2011. Although the Company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.

FINANCIAL TABLES FOLLOW

Canadian Solar Inc.

Unaudited Condensed Consolidated Statement of Operations

(In Thousands of US Dollars, except share and per share data)


 

 

 

 

Three Months Ended

 

 

 

 

3/31/2011

 

12/31/2010

 

3/31/2010

 

 

 

 

 

 

 

 

Net revenues

 

 

443,404

 

452,719

 

336,931

 

 

Cost of revenues

 

 

378,084

 

375,743

 

295,018

 

 

Gross profit

 

 

65,320

 

76,976

 

41,913

 

 

Selling expenses

 

 

12,608

 

14,161

 

10,698

 

 

General and administrative expenses

 

 

16,623

 

18,655

 

8,174

 

 

Research and development expenses

 

 

2,048

 

2,064

 

1,834

 

 

Total operating expenses

 

 

31,279

 

34,880

 

20,706

 

 

Income from operations

 

 

34,041

 

42,096

 

21,207

 

 

Interest expenses

 

 

(9,891)

 

(6,476)

 

(3,862)

 

 

Interest income

 

 

1,455

 

1,397

 

1,395

 

 

Investment (loss) income

 

 

2

 

(2,912)

 

-

 

 

Gain (Loss) on change in fair value of derivatives

 

 

(17,207)

 

3,158

 

536

 

 

Exchange loss

 

 

(722)

 

(1,192)

 

(16,438)

 

 

Income  before taxes

 

 

7,678

 

36,071

 

2,838

 

 

Income tax expenses

 

 

1,743

 

10,286

 

1,454

 

 

Net income

 

 

5,935

 

25,785

 

1,384

 

 

Less: net income (loss) attributable to non-controlling interest

 

 

58

 

249

 

(113)

 

 

Net income attributable to Canadian Solar Inc.

 

 

5,877

 

25,536

 

1,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings  per share

 

 

$0.14

 

$0.60

 

$0.04

 

 

Basic weighted average outstanding shares

 

 

42,907,945

 

42,889,124

 

42,755,446

 

 

Diluted earnings  per share

 

 

$0.13

 

$0.58

 

$0.03

 

 

Diluted weighted average outstanding shares

 

 

43,627,487

 

43,714,853

 

43,974,827

 

 

 

 

 

 

 

 

 



Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheet

(In Thousands of US Dollars)


 

 

 

 

3/31/2011

 

 

12/31/2010

 

 

 Assets

 

 

Unaudited

 

 

Unaudited

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

 

245,963

 

 

288,652

 

 

Restricted cash

 

 

231,668

 

 

187,595

 

 

Accounts receivable, net of allowance for doubtful accounts

 

 

306,736

 

 

169,657

 

 

Amount due from related parties

 

 

607

 

 

1,356

 

 

Inventories

 

 

305,466

 

 

272,097

 

 

Value added tax recoverable

 

 

61,787

 

 

42,297

 

 

Advances to suppliers

 

 

47,954

 

 

27,321

 

 

Foreign currency derivative assets

 

 

1,751

 

 

2,183

 

 

Prepaid and other current assets

 

 

40,313

 

 

43,508

 

 

Current assets - subtotal

 

 

1,242,245

 

 

1,034,666

 

 

Property, plant and equipment, net

 

 

397,330

 

 

330,460

 

 

Intangible assets

 

 

3,892

 

 

2,695

 

 

Long term prepayments

 

 

14,118

 

 

13,946

 

 

Prepaid land use rights

 

 

13,442

 

 

13,378

 

 

Investments

 

 

8,737

 

 

5,671

 

 

Deferred tax assets - non current

 

 

18,590

 

 

16,725

 

 

Other non current assets

 

 

15,830

 

 

5,826

 

 

Total assets

 

 

1,714,184

 

 

1,423,367

 

 

Liabilities and  equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short term borrowings

 

 

747,513

 

 

540,520

 

 

Accounts payable

 

 

143,708

 

 

113,404

 

 

Notes payable

 

 

23,190

 

 

9,969

 

 

Other payables

 

 

55,245

 

 

47,876

 

 

Advances from customers

 

 

11,775

 

 

8,971

 

 

Amounts due to related parties

 

 

2,827

 

 

2,445

 

 

Foreign currency derivative liabilities

 

 

14,245

 

 

2,452

 

 

Provision for firm purchase commitment

 

 

22,553

 

 

15,889

 

 

Other current liabilities

 

 

18,655

 

 

33,807

 

 

Current liabilities - subtotal

 

 

1,039,711

 

 

775,333

 

 

Accrued warranty costs

 

 

35,516

 

 

31,225

 

 

Liability for uncertain tax positions

 

 

12,073

 

 

11,460

 

 

Convertible notes

 

 

917

 

 

906

 

 

Long term borrowings

 

 

80,075

 

 

69,458

 

 

Total liablities

 

 

1,168,292

 

 

888,382

 

 

Common shares

 

 

502,096

 

 

501,146

 

 

Additional paid in capital

 

 

(56,703)

 

 

(57,392)

 

 

Retained earnings

 

 

67,988

 

 

62,111

 

 

Accumulated other comprehensive income

 

 

31,785

 

 

28,462

 

 

Total CSI stockholders' equity

 

 

545,166

 

 

534,327

 

 

Non-controlling interest

 

 

726

 

 

658

 

 

Total  equity

 

 

545,892

 

 

534,985

 

 

Total liabilities and  equity

 

 

1,714,184

 

 

1,423,367

 

 

 
Source: Canadian Solar Inc.
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