Canadian Solar Reports Second Quarter 2017 Financial Results

Veröffentlicht auf 17.08.2017
CSI Solar 
Canadian Solar Inc. announced its financial results for the quarter ended June 30, 2017.

Second Quarter 2017 Highlights

- Total solar module shipments were 1,745MW, compared to 1,480MW in the first quarter of 2017, and second quarter guidance in the range of 1,530MW to 1,580MW.

- Net revenue was $692.4 million, compared to $677.0 million in the first quarter of 2017, and second quarter guidance in the range of $615.0 million to $635.0 million.

- Net revenue from the total solutions business as a percentage of total net revenue was 6.5% compared to 18.8% in the first quarter of 2017.

- Gross margin was 24.2%, including the benefits of two AD/CVD reversals of $42.6 million and $15.0 million based on the final rates of Solar 1 AR3 and Solar 2 AR1, respectively. Gross margin was 15.9%, excluding these reversal benefit, compared to 13.5% in the first quarter of 2017, and second quarter guidance of 13.0% to 15.0%.

- Net income attributable to Canadian Solar was $38.2 million, or $0.63 per diluted share, compared to a net loss of $13.3 million, or $0.23 per diluted share, in the first quarter of 2017.

- Non-GAAP net loss attributable to Canadian Solar, which excludes the AD/CVD reversal benefit and an insurance compensation gain, net of income tax effect, was $9.1 million, or $0.15 per diluted share, compared to a non-GAAP adjusted net loss attributable to Canadian Solar in the first quarter of 2017 of $6.0 million, or $0.10 per diluted share, which excludes a provision for LDK of $8.6 million, net of income tax effect. (For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures.")

- Cash, cash equivalents and restricted cash balance as of June 30, 2017 was $961.6 million, compared to $961.4 million as of March 31, 2017.

- Net cash used in operating activities was approximately $83.4 million, compared to net cash used in operating activities of $55.8 million in the first quarter of 2017.

- The Company's portfolio of solar power plants in commercial operation was 1,260.2MWp as of June 30, 2017, with an estimated total resale value of approximately $1.8 billion. Only the class B share value of the 
- Company's tax equity deal projects in the U.S. was included in this resale value.

- In July 2017, the Company completed the sale of the 281MWp Great Valley Solar project, previously called Tranquillity 8, to Sempra Renewables LLC, a unit of Sempra Energy.

- The Company completed the sale of an 80% interest in each of 191.5MWp Pirapora I, 115MWp Pirapora II and 92.5MWp Pirapora III to EDF. EN do Brasil.

Second Quarter 2017 Results

Net revenue in the second quarter of 2017 was $692.4 million, up 2.3% from $677.0 million in the first quarter of 2017 and down 14.1% from $805.9 million in the second quarter of 2016. Solar module shipments recognized in revenue totaled 1,638MW, compared to 1,489MW recognized in revenue in the first quarter of 2017 and 1,290MW recognized in revenue in the second quarter of 2016. Solar module shipments recognized in revenue in the second quarter of 2017 included 29.2MW used in the Company's total solutions business, compared to 176.3MW in the first quarter of 2017 and 18.7MW in the second quarter of 2016.

The following table is a summary of net revenue by geographic region based on the location of customers' headquarters (in millions of US$, except percentages).


Gross profit in the second quarter of 2017 was $167.8 million, compared to $91.4 million in the first quarter of 2017 and $138.5 million in the second quarter of 2016. Gross margin in the second quarter of 2017 was 24.2%, compared to 13.5% in the first quarter of 2017, and compared to 17.2% in the second quarter of 2016. Gross profit in the second quarter of 2017 includes the benefits of a $42.6 million and a $15.0 million AD/CVD reversals based on the final rates of Solar 1 AR3 and Solar 2 AR1, respectively. Excluding this benefit, gross margin was 15.9% in the second quarter of 2017.

Total operating expenses were $84.1 million in the second quarter of 2017, down 10.3% from $93.7 million in the first quarter of 2017 and down 15.0% from $98.9 million in the second quarter of 2016.

Selling expenses were $39.3 million in the second quarter of 2017, up 15.9% from $33.9 million in the first quarter of 2017 and up 16.1% from $33.9 million in the second quarter of 2016. The sequential increase of $5.4 million was primarily due to higher shipping and handling cost, resulting from higher module shipment volume, increased professional service fees, and increased external sales commission.

General and administrative expenses were $53.0 million in the second quarter of 2017, down 3.8% from $55.1million in the first quarter of 2017 and up slightly from $52.9 million in the second quarter of 2016. Excluding the $8.6 million provision for the LDK legal case in the first quarter of 2017, the sequential increase was primarily due to an increase in various professional service fees, an increase in sales tax associated with prior years' sales and an increased property insurance premium.

Research and development expenses were $7.3 million in the second quarter of 2017, compared to $5.6 million in the first quarter of 2017 and $5.1 million in the second quarter of 2016. The sequential and year-over-year increases reflect the Company's continued commitment to investing in and commercializing solar energy technologies that differentiate the Company and strengthen its competitive position through higher efficiency, and more sought after energy solutions.

Other operating income was $15.5 million in the second quarter of 2017, compared to other operating income of $0.9 million in the first quarter of 2017 and other operating loss of $7.1 million in the second quarter of 2016, Other operating income in the second quarter of 2017 included insurance compensation of $15.2 million for the loss of profit related to the June 2016 tornado damage to the Company's Funing cell factory.

Income from operations was $83.7 million in the second quarter of 2017, compared to a loss from operations of $2.3 million in the first quarter of 2017, and income from operations of $39.6 million in the second quarter of 2016. Operating margin was 12.1% in the second quarter of 2017, compared to negative 0.3% in the first quarter of 2017 and 4.9% in the second quarter of 2016.

Non-cash depreciation and amortization charges were approximately $21.2 million in the second quarter of 2017, compared to $17.1 million in the first quarter of 2017, and $25.5 million in the second quarter of 2016. Non-cash equity compensation expense was $4.2 million in the second quarter of 2017, compared to $0.9 million in the first quarter of 2017 and $1.9 million in the second quarter of 2016.

Interest expense was $26.7 million in the second quarter of 2017, compared to $24.1 million in the first quarter of 2017 and $11.9 million in the second quarter of 2016.

Interest income was $1.4 million in the second quarter of 2017, compared to $2.5 million in the first quarter of 2017 and $2.4 million in the second quarter of 2016.

The Company recorded a loss on change in fair value of derivatives, predominantly from foreign exchange hedging positions of forwards, of $1.8 million in the second quarter of 2017, compared to a loss of $7.8 million in the first quarter of 2017 and a loss of $1.6 million in the second quarter of 2016. Foreign exchange loss in the second quarter of 2017 was $11.6 million compared to a foreign exchange gain of $14.2 million in the first quarter of 2017 and a foreign exchange gain of $24.9 million in the second quarter of 2016.

Income tax expense was $9.0 million in the second quarter of 2017, compared to income tax benefit of $3.1 million in the first quarter of 2017 and income tax expense of $16.3 million in the second quarter of 2016.

Net income attributable to Canadian Solar was $38.2 million, or $0.63 per diluted share, in the second quarter of 2017, compared to net loss attributable to Canadian Solar of $13.3 million, or $0.23 per diluted share, in the first quarter of 2017 and net income attributable to Canadian Solar of $40.4 million, or $0.68 per diluted share, in the second quarter of 2016. Non-GAAP net loss attributable to Canadian Solar, which is adjusted to exclude the AD/CVD reversal and an insurance compensation gain, net of income tax effect, was $9.1 million, or $0.15 per diluted share, in the second quarter of 2017, compared to a non-GAAP net loss attributable to Canadian Solar of $6.0 million, or $0.10 per diluted share, in the first quarter of 2017, which is adjusted to exclude the LDK legal case provision of $8.6 million, net of income tax effect. For a reconciliation of measures presented in accordance with generally accepted accounting principles in the United States ("GAAP") to the non-GAAP measures, a table is available at the end of this press release.

Financial Condition

The Company had $961.6 million of cash, cash equivalents and restricted cash as of June 30, 2017, compared to $961.4 million as of March 31, 2017.

Accounts receivable, net of allowance for doubtful accounts, as of June 30, 2017 were $367.6 million, compared to $368.6 million as of March 31, 2017. Accounts receivable turnover was 56 days in the second quarter of 2017, compared to 59 days in the first quarter of 2017.

Inventories as of June 30, 2017 were $283.2 million, compared to $274.5 million as of March 31, 2017. Inventory turnover was 52 days in the second quarter of 2017, compared to 48 days in the first quarter of 2017.

Accounts and notes payable as of June 30, 2017 were $899.5 million, compared to $847.2 million as of March 31, 2017.

Excluding the borrowings included in 'Liabilities held-for-sale', short-term borrowings as of June 30, 2017 were $2.04 billion, compared to $1.71 billion as of March 31, 2017. Long-term borrowings as of June 30, 2017 were $273.0 million, compared to $462.1 million as of March 31, 2017.

The Company had approximately $1.18 billion in non-recourse bank borrowings as of June 30, 2017. Senior convertible notes totaled $126.0 million as of June 30, 2017, compared to $125.8 million as of March 31, 2017. Total borrowings directly related to utility-scale solar power projects, which included approximately $1.10 billion of non-recourse borrowings, were $1.30 billion as of June 30, 2017, compared to $1.20 billion as of March 31, 2017.

In the second quarter of 2017, the Company invested RMB 220.6 million ($32.6 million) into Suzhou Gaochuangte New Energy Co., Ltd., a solar EPC company in China, increasing Canadian Solar's holdings from 40% to 80%. A preliminary allocation of the share purchase price to assets acquired and liabilities assumed has been made based on available information and management's best estimates. The final allocation of the purchase price may differ from this preliminary allocation.

Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, remarked, "Q2 was a solid quarter, with solar module shipments, revenue and gross margin all coming in above guidance. We continue to make progress with respect to the monetization of our operating solar power plants in the U.S., Japan, Brazil, China and the U.K. We have entered into exclusive discussions with the winner of the binding bids submitted for 703MWp of our U.S. solar power plant assets and expect to finalize the sale over the coming months. Separately, in July, we completed the sale of an additional 281MWp solar power projects, which are still in construction in the U.S. In Japan, we are on track to launch a JREIT listing in the near future, with an initial portfolio of 65MWp of solar power plants."

Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer of Canadian Solar, added: "We are pleased with our second quarter results. The higher module shipments were driven by strong demand for solar modules in China, India, Japan and the U.S., with the gross margin improvement due to higher than expected average selling price and better cost controls. Results in the quarter benefitted from an AD/CVD reversal, and the finalization of an insurance claim related to the tornado damage of our Funing cell factory. The insurance payment included compensation of $15.2 million for the loss of profit from the business interruption, which is recorded as 'Other operation incomes'. We remain confident we will finalize several project monetization events, including our JREIT in Japan, and the sales of solar power project assets in the U.S., Japan, China and the U.K. Our focus is on delivering a healthy return to our shareholders, maximizing operating cash flow and deleveraging our balance sheet in order to fund the next phase of the Company's growth."

Utility-Scale Solar Project Pipeline

The Company divides its utility-scale solar project pipeline into two parts: an early-to-mid-stage pipeline and a late-stage pipeline. The late-stage pipeline primarily includes projects that have energy off-take agreements and are expected to be built within the next two to four years. The Company used to include certain Japanese projects under bidding process as late-stage. In the future, the Company will describe these projects as mid-stage. The Company has also moved certain Chinese projects from the category of late-stage to mid-stage. The Company continues to advance these mid-stage projects as usual, and will add them back to the list of late-stage once the PPA or FIT is received.

Late-Stage Utility-Scale Solar Project Pipeline

As of July 31, 2017, the Company's late-stage solar project pipeline, including those in construction, totaled approximately 1,391MWp, which included 362MWp in Japan, 120MWp in the U.S., 210MWp in China, 399MWp in Brazil, 108MWp in India, 118MWp in Australia, 68MWp in Mexico and 6MWp in Africa. The Company cautions that some late-stage projects may not reach completion due to risks as failure to secure permits and grid connection, among others.

In the United States, as previously announced, the Company completed the sale of the 281MWp Great Valley Solar project, previously called Tranquillity 8, to Sempra Renewables LLC, a unit of Sempra Energy. The Great Valley Project currently is under construction and Sempra Renewables will assume construction of the project and operate the facility.

The table below sets forth the Company's late-stage utility-scale solar project pipeline in the U.S. as of July 31, 2017:



In Japan, as of July 31, 2017, the Company's pipeline of utility-scale solar power projects totaled approximately 572MWp, as an additional 51MWp reached COD in the second quarter of this year. 362MWp of these projects are described as late-stage for which interconnection agreements and FIT are secured. 159MWp of the late-stage projects are under construction and 203MWp are under development. Canadian Solar has additional 210MWp of utility-scale solar projects in the bidding process, which will be added to the list of late-stage projects once FIT is awarded. The table below sets forth the expected commercial operation schedule of the Company's late-stage utility-scale solar power projects in Japan as of July 31, 2017:


In Brazil, the Company has a total of 399MWp of late-stage projects. The table below sets forth the Company's late-stage utility-scale solar project pipeline in Brazil as of July 31, 2017:


The Company completed the sale of an 80% interest in each of 191.5MWp Pirapora I, 115MWp Pirapora II and 92.5MWp Pirapora III to EDF. The Company supplies modules for all the Pirapora projects. The Company expects to bring Pirapora I to COD in Q3 of 2017.

In India, as of July 31, 2017, the Company's late-stage utility-scale power project pipeline stood at 108MWp. The 108MWp SECI Maharashtra project is currently under development and is expected to reach commercial operation by the end of 2017. The 18MWp Kamareddy project and the 18MWp Ramnapet project were connected to the grid in July 2017.

In China, the Company connected a total of 58.2MWp of solar power projects to the grid in the second quarter of this year. As of July 31, 2017, the late-stage utility-scale power pipeline was at 210MWp and the mid-stage pipeline was 131.8MWp in China.

Solar Power Plants in Operation

In addition to its late-stage utility-­scale solar project pipeline, the Company has a portfolio of solar power plants in operation, totaling 1,260.2MWp as of June 30, 2017, which are recorded on its balance sheet as project assets ($1,308.5 million), assets held-for-sale ($203.5 million) and solar power systems, net ($65.8 million). Revenue from the sale of electricity generated by the plants recorded as "assets held-for-sale" and "solar power systems, net" in the second quarter of 2017 totaled $9.8 million, compared to $5.2 million in the first quarter of 2017.

The sale of projects recorded as 'project assets' (build­ to ­sell) on the balance sheet will be recorded as revenue once revenue recognition criteria are met, and the gain from the sale of projects recorded as 'assets held-for-sale' and 'solar power systems, net' (build ­to ­own) on the balance sheet will be recorded within 'other operating income (expenses)' in the income statement.

The table below sets forth the Company's total portfolio of solar power plants in operation as of June 30, 2017:


Manufacturing Capacity

The Company plans to expand its ingot, wafer, cell and module capacities to 1.1GW, 4.0GW, 4.70GW and 7.19GW, respectively, by December 31, 2017. The table below sets forth the Company's capacity expansion plan from December 31, 2016 to December 31, 2017


The Company continues to ramp up its new multi-crystalline silicon ingot casting workshop in Baotou, China, with 50 new casting furnaces with a 700MW annual capacity, operated in G6 mode, producing 36 bricks per ingot. The Company has now successfully relocated its older casting ingot furnaces, previously in Luoyang, China, to Baotou in order to benefit from lower electricity cost. The Company expects to complete the ramp up at Baotou in the third quarter of 2017 and reach 1,100MW of annual internal ingot casting capacity. The Company plans to migrate the 50 new casting furnaces to G7 mode, producing 49 bricks per ingot, by the middle of 2018, thereby raising its ingot capacity to 1,500MW and further reducing costs. The new Baotou ingot factory will also help the Company to reduce the amount it pays to purchase external ingots and thus reduce its all-in module manufacturing costs.

The Company's wafer manufacturing capacity recently reached 2.0GW and will reach 3.0GW in the third quarter of 2017 and 4.0GW by December 31, 2017, all of which will use diamond wire-saw technology. Diamond wire-saw technology is compatible with the Company's proprietary and highly efficient Onyx black silicon multi-crystalline solar cell technology, significantly reducing silicon usage and manufacturing cost.

The Company's solar cell manufacturing capacity as of June 30, 2017 was 4.49GW. The annual capacity at the Company's Funing cell factory has reached 1,440MW, with an additional 850MW cell capacity at the Company's South East Asia facility. The Company plans to debottleneck the production in its Funing and South East Asia plants later this year, allowing the Company's cell manufacturing capacity to reach 4.70GW by December 31, 2017.

The Company expects that its total worldwide module manufacturing capacity will exceed 7.19GW by December 31, 2017.

Business Outlook

The Company's business outlook is based on management's current views and estimates with respect to operating and market conditions, its current order book and the global financing environment. It is also subject to uncertainties relating to customer final demand and solar project construction schedules. Management's views and estimates are subject to change without notice.

For the third quarter of 2017, the Company expects total solar module shipments to be in the range of approximately 1.65GW to 1.70GW, including approximately 86MW of shipments to the Company's utility-scale solar power projects that may not be recognized as revenue in the third quarter of 2017. Total revenue for the third quarter of 2017, which includes revenue from both of our solar module sales and from our energy business, is expected to be in the range of $805 million to $825 million. Gross margin for the third quarter of 2017 is expected to be between 15% and 17%.

The Company reiterates its expectation that total module shipments in 2017 will be in the range of 6.0GW to 6.5GW. The module shipments recognized in revenue and total annual revenue will depend on market conditions, including ASP trends. The Company continues to expect it will connect approximately 1GW to 1.2GW of new solar projects globally in 2017, based on the commercial operation date (COD). These projects are located in the U.S., Japan, China, the UK, India, Brazil and Africa. The revenue from the Company's energy business will mainly come from the monetization of the Company's high quality solar power plant assets in the U.S., Japan, China, UK, India and Brazil. Management expects that the increase in vertical integration along the manufacturing cycle will help the Company maintain or improve its gross margin.


ENF Profile von in diesem Artikel genannten Unternehmen

CSI Solar (Solarwerkstoffe): https://de.enfsolar.com/csi-solar
CSI Solar (Solarmodule): https://de.enfsolar.com/csi-solar
CSI Solar (Komponenten): https://de.enfsolar.com/csi-solar
CSI Solar (Solarteure): https://de.enfsolar.com/csi-solar
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