ONTARIO, Canada,May 10, 2012 /PRNewswire-Asia-FirstCall/ –Canadian Solar Inc. (the “Company” or “Canadian Solar”) (NASDAQ: CSIQ), one of the world’s largest solar companies, today announced its financial results for the quarter endedMarch 31, 2012.
First Quarter 2012 Highlights
- Solar module shipments were 343 MW, compared to 436 MW in the fourth quarter 2011.
- Net revenue was$325.8 million, compared to$474.1 millionin the fourth quarter 2011.
- Gross margin was 7.7%, compared to 8.7% in the fourth quarter 2011.
- Diluted loss per share was$0.49, compared to$1.39in the fourth quarter 2011.
- Cash, cash equivalents and restricted cash balances at the end of the quarter was$625.2 million, compared to$522.3 millionat the end of the fourth quarter 2011.
First Quarter 2012 Results
Net revenue for the first quarter of 2012 was$325.8 million, down 31.3% from$474.1 millionin the fourth quarter of 2011 and down 26.5% from$443.4 millionin the first quarter of 2011. Total solar module shipments for the first quarter of 2012 were 343 MW, compared to 436 MW for the fourth quarter 2012 and 244 MW for the first quarter of 2011. Total solar module shipments for the first quarter of 2012 included 7.4 MW used in the Company’s total solutions business.
By geography, in the first quarter of 2012, sales to European markets represented 42.6% of net revenue, sales toNorth Americarepresented 45.1% of net revenue, and sales toAsiaand all other markets represented 12.3% of net revenue, compared to 46.5%, 26.9% and 26.6%, respectively, in the fourth quarter of 2011 and 75.6%, 12.2% and 12.2%, respectively, in the first quarter of 2011.
| Revenue by Geography | ||||||||||
| Q1 2012 | Q4 2011 | Q1 2011 | FY 2011 | FY 2010 | ||||||
| US$M | % | US$M | % | US$M | % | US$M | % | US$M | % | |
| Europe | 138.8 | 42.6 | 220.5 | 46.5 | 335.4 | 75.6 | 1,232.2 | 65.0 | 1,193.4 | 79.8 |
| America | 146.9 | 45.1 | 127.3 | 26.9 | 54.0 | 12.2 | 334.9 | 17.6 | 115.7 | 7.7 |
| Asia and others | 40.1 | 12.3 | 126.3 | 26.6 | 54.0 | 12.2 | 330.8 | 17.4 | 186.4 | 12.5 |
| Total | 325.8 | 100.0 | 474.1 | 100.0 | 443.4 | 100.0 | 1,898.9 | 100.0 | 1,495.5 | 100.0 |
Gross profit in the first quarter of 2012 was$25.1 million, compared to$41.4 millionin the fourth quarter of 2011 and$65.3 millionin the first quarter of 2011. The sequential and year-over-year decline in gross profit was primarily due to the continued decline in average selling prices over the past several quarters, partially offset by lower manufacturing costs. In addition, the cost of goods sold in the fourth quarter of 2011 included a one-time reversal of previously recorded non-cash losses on firm purchase commitment of$14.0 millionresulting from the termination of a long-term supply contract. Gross margin was 7.7% in the first quarter of 2012, compared to 8.7% in the fourth quarter of 2011 and 14.7% in the first quarter of 2011.
Total operating expenses were$38.5 millionin the first quarter of 2012, compared to$62.9 millionin the fourth quarter of 2011 and$31.3 millionin the first quarter of 2011. The operating expenses in the fourth quarter of 2011 included a provision of$17.4 millionagainst a pre-payment made for a long-term supply agreement, and reflected higher costs associated with supporting the Company’s higher shipment levels.
Selling expenses were$20.3 millionin the first quarter of 2012, down 3.7% from$21.1 millionin the fourth quarter of 2011 and up 61.1% from$12.6 millionin the first quarter of 2011. The sequential decline in selling expenses was due to lower volume partially offset by higher shipping costs. The year-over-year increase in selling expenses was due to increases in freight and other export-related expenses, as well as higher shipment volumes and higher marketing expenses.
General and administrative expenses were$15.2 millionin the first quarter of 2012, compared to$36.8 millionin the fourth quarter of 2011 and$16.6 millionin the first quarter of 2011. In addition to the one-time charge taken in the fourth quarter of 2011 in connection with the termination of a long-term supply agreement, the sequential and year-over-year declines in general and administrative expenses were primarily due to lower legal fees.
Research and development expenses were$3.0 millionin the first quarter of 2012, compared to$5.0 millionin the fourth quarter of 2011 and$2.0 millionin the first quarter of 2011. The sequential decline in research and development expenses reflects a lower level of material consumption in the quarter. The year-over-year increase in research and development expenses was due to the Company’s increased investment in advanced solar technologies targeted at increasing cell efficiency and reducing manufacturing cost.
Operating margin was negative 4.1% in the first quarter of 2012, compared to negative 4.5% in the fourth quarter of 2011 and positive 7.7% in the first quarter of 2011. The sequential improvement in operating margin was due to lower operating expenses. The year-over-year decrease in operating margin was due to lower gross profit and higher operating expenses.
Interest expense in the first quarter of 2012 was$13.1 million, compared to$11.7 millionin the fourth quarter of 2011 and$9.9 millionin the first quarter of 2011. The sequential and year-over-year increase in interest expense was primarily due to higher borrowing costs and higher bank borrowings during the first quarter of 2012. Interest income in the first quarter of 2012 was$2.7 million, compared to$1.8 millionin the fourth quarter of 2011 and$1.5 millionin the first quarter of 2011. The sequential and year-over-year increase in interest income was due to higher restricted cash balances.
The Company recorded a loss on change in fair value of derivatives of$0.2 millionin the first quarter of 2012, compared to a gain of$2.4 millionin the fourth quarter of 2011 and a loss of$17.2 millionin the first quarter of 2011. Foreign exchange gain in the first quarter of 2012 was$0.3 million, compared to a foreign exchange loss of$14.1 millionin the fourth quarter of 2011 and foreign exchange loss of$0.7 millionin the first quarter of 2011.
Income tax benefit in the first quarter of 2012 was$2.5 million, compared to income tax expense of$16.3 millionin the fourth quarter of 2011 and$1.7 millionin the first quarter of 2011.
Net loss attributable toCanadian Solarin the first quarter of 2012 was$21.3 million, or$0.49per diluted share, compared to net loss of$59.9 million, or$1.39per diluted share, in the fourth quarter 2011, and net income of$5.9 million, or$0.13per diluted share, in the first quarter of 2011.
Financial Condition
As ofMarch 31, 2012, the Company had$625.2 millionof cash, cash equivalents and restricted cash, compared to$522.3 millionas ofDecember 31, 2011. The Company generated approximately$12.1 millionfrom operations in the first quarter of 2012.
Accounts receivable balance, net of allowance for doubtful accounts, at the end of the first quarter of 2012 was$250.6 millioncompared to$292.2 millionat the end of the fourth quarter of 2011. Accounts receivable turnover days increased to 78 days in the first quarter of 2012 from 50 days in the fourth quarter of 2011.
Inventories at the end of the first quarter of 2012 were$389.9 million, compared to$296.6 millionat the end of the fourth quarter of 2011. Inventory turnover days were 110 days in the first quarter of 2012 compared to 80 days in the fourth quarter of 2011.
Accounts and notes payable at the end of the first quarter of 2012 were$390.5 million, compared to$306.0 millionat the end of the fourth quarter of 2011. Accounts payable turnover days in the first quarter of 2012 were 104 days compared to 74 days in the fourth quarter of 2011.
Short-term borrowings at the end of the first quarter of 2012 totaled$861.9 million, compared to$743.7 millionat the end of the fourth quarter of 2011. The Company continues to maintain good relationships with several local and regional PRC banks for nearly all of its short-term borrowing needs. As ofMarch 31, 2012, the Company has approximately$764 millionin unused bank lines. The Company’s bank lines contain no specific extension terms but, historically, the Company has been able to obtain new short-term loans on terms similar to those of the maturing short-term loans shortly before they mature. Long-term debt at the end of the first quarter 2012 was$88.3 million, compared to$88.2 millionat the end of the fourth quarter of 2011. As ofMarch 31, 2012the Company had$455.5 millionin total stockholders’ equity, compared to$467.0 millionas ofDecember 31, 2011.
Dr.Shawn Qu, Chairman and Chief Executive Officer ofCanadian Solar, remarked: “We are pleased with our results for this seasonally slow quarter, as we met our shipment guidance and our gross margin guidance. We also made good progress on the execution of our strategy to reduce manufacturing cost, differentiate our product offering and expand our total solutions business. Following on from the announcement of a planned sale of nine solar power plants toTransCanada Corporationin the fourth quarter of 2011 for approximatelyC$470 million, we announced an even larger transaction withSkyPower Limited. Under this transaction,Canadian Solarwill acquire sixteen projects at late development stage inOntario, Canadaand establish an international joint venture withSkyPower Limited. We expect these projects will generate revenue forCanadian Solarin excess ofC$800 milliononce the solar power plants are built and sold. We are excited about this area of our business because it increases our visibility, leverages our expertise and global brand, and protects our margins. We see similar opportunities for our solutions business in many other countries, includingIndia,Japan, the U.S. andChina. With our existing pipeline and potential new opportunities, we target to generate over 25% of 2012 revenue and over 40% of 2013 revenue from our total solutions business.”
Michael G. Potter, Senior Vice President and Chief Financial Officer ofCanadian Solar, commented: “Our results reflect the continued successful execution of our near-term and long-term business strategy. This is evidenced by the improvement of our gross margin after factoring out one-time items, the geographic diversification of our revenue mix and our ability to generate positive operating cash flow in a seasonally slow quarter. We are very pleased with the continued progress of our total solutions business and expect it will enhance our financial results as we move through 2012 and beyond. We continue to evaluate costs across our global organization.Canadian Solarhas always strived to maintain a lean organization and to minimize unnecessary costs. We want to insure that we are deploying our resources in the right markets and against the right opportunities. Given the current operating environment, it is clear that strict financial discipline is essential to success and we believe diligence in financial matters will separate the winners from the rest.Canadian Solarplans to be a winner as we build on our current market leading position and strong momentum in our total solutions business.”
Business Outlook
The Company’s business outlook is based on management’s current views with respect to operating and market conditions, its current order book, and the challenging global financing environment, which continues to result in customer demand uncertainty. Management’s views and estimates are subject to change without notice.
For the second quarter of 2012, shipments are expected to be in the range of approximately 430 MW to 450 MW, with gross margin expected to be between 8% and 10%. The Company reiterates its annual guidance to ship approximately 1,800 MW to 2,000 MW of solar products in 2012.
Dr.Shawn Qu, Chairman and Chief Executive Officer ofCanadian Solar, remarked: “Canadian Solarcontinues to hit its stride as others fall by the wayside. We are highly confident in the prospects for our business and in our ability to drive further manufacturing efficiencies. We expect that our calculated efforts to invest in the areas of business and in the geographies where we see the greatest potential will help us to deliver improved results in the quarters ahead. We are benefiting from customers’ ongoing global shift to quality and to tier-one solar companies with global delivery and service capabilities. Our strong track record of performance combined with our unwavering commitment to providing our customers with innovative, high performance, fairly priced solar solutions differentiatesCanadian Solarand we believe is helping us to gain market share in key solar markets worldwide. We have a stable balance sheet and excellent support from major financial institutions worldwide, which will allow us to continue to capture both major project opportunities and smaller scale customer wins.”
Recent Developments
OnMay 3, 2012,Canadian SolarandBank ofChina, one of the world’s largest banks, announced that they had signed a financing agreement to provide aC$120 Millionconstruction loan facility for solar power plants inOntario, Canada. The loan facility will be used to support the construction of solar power projects, which are owned byCanadian Solarand are expected to be built during 2012, 2013 and into 2014.
OnMay 3, 2012,Canadian Solarannounced a further strategic expansion intoSouth-East Europeby supplying 3.3 MW of solar modules for a PV project inBulgaria.
OnApril 23, 2012,Canadian Solarannounced that it had passed the OHSAS 18001 international standards for occupational health and safety after auditing by TUV Rheinland.
OnApril 17, 2012,Canadian SolarandSkyPower Limitedannounced they had entered into a landmark purchase and international joint venture agreement, which creates a powerful team comprising of one of the world’s largest solar companies andCanada’s largest owner and developer of solar projects to build and deploy solar energy solutions inOntario, and to jointly develop solar projects internationally in select emerging markets.
OnMarch 14, 2012,Canadian Solarannounced that it has been working with leading solar project developer,Lightsource Renewable Energy Limited, on the completion of four solar power plants throughoutEngland. The new ground-mounted PV plants were built inCornwall(Bodmin),Lincolnshire(Spalding) andSomerset(Taunton), with a combined capacity of 6.4 MW.
Conference Call Details
The Company will hold a conference call onThursday, May 10, 2012at8:00 a.m.U.S. Eastern Time (8:00 p.m.,May 10, 2012inHong Kong) to discuss the Company’s financial results for the first quarter endedMarch 31, 2012and provide an update to its business strategy and outlook.
The dial-in phone number for the live audio call is +1-617-801-9713 or +1-800-299-6183, with passcode 89332039. A live webcast of the conference call will also be available on Canadian Solar’s website at www.canadiansolar.com.
A replay of the call will be available approximately two hours after the conclusion of the live call through 10:00 a.m.on May 17, 2012, U.S. Eastern Time (10:00 p.m., May 17, 2012in Hong Kong) by telephone at +1-617-801-6888, with passcode 43375393. A webcast replay will also be available at www.canadiansolar.com.
About Canadian Solar Inc. (NASDAQ: CSIQ)
Canadian Solar Inc.(NASDAQ: CSIQ) is one of the world’s largest solar companies. As a leading vertically integrated provider of ingots, wafers, solar cells, solar modules and other solar applications, Canadian Solardesigns, 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, Australiaand Asia, Canadian Solarprovides premium quality, cost-effective and environmentally-friendly solar solutions to support global, sustainable development. For more information, please visit www.canadiansolar.com.
Safe Harbor/Forward-Looking Statements:
Certain statements in this press release including statements regarding our expected future shipment volumes, gross margins, supply cost, manufacturing capacities, revenue from the projects acquired fromSkyPower Ltd., percent of our 2012 and 2013 revenues from our total solutions business, future market share, business prospects, future quarterly results and capture of both major project opportunities and smaller scale customer wins, 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 disclosedSECinvestigation 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 asGermany; 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; delays in utility-scale project approval process; delays in utility-scale project construction; 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’sSECfilings, including its annual report on Form 20-F filed onApril 27, 2012. 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, andCanadian Solarundertakes 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 And Unless Otherwise Stated) | |||
| Three Months Ended | |||
| Item | Mar 31, 2012 | Dec 31, 2011 | Mar 31, 2011 |
| Net revenues | 325,804 | 474,060 | 443,404 |
| Cost of revenues | 300,749 | 432,675 | 378,084 |
| Gross profit | 25,055 | 41,385 | 65,320 |
| Selling expenses | 20,311 | 21,094 | 12,608 |
| General and administrative expenses | 15,171 | 36,794 | 16,623 |
| Research and development expenses | 3,031 | 5,012 | 2,048 |
| Total operating expenses | 38,513 | 62,900 | 31,279 |
| Income (loss) from operations | (13,458) | (21,515) | 34,041 |
| Interest expenses | (13,119) | (11,737) | (9,891) |
| Interest income | 2,730 | 1,763 | 1,455 |
| Gain (loss) on change in foreign currency derivatives | (229) | 2,407 | (17,207) |
| Foreign exchange gain (loss) | 276 | (14,097) | (722) |
| Investment income (loss) | (44) | (134) | 2 |
| Income (loss) before incomes taxes | (23,844) | (43,313) | 7,678 |
| Income tax benefit (expenses) | 2,450 | (16,269) | (1,743) |
| Net income (loss) | (21,394) | (59,582) | 5,935 |
| Less: Net income (loss) attributable to non–controlling interest | (52) | 306 | 58 |
| Net income (loss) attributable to Canadian Solar Inc. | (21,342) | (59,888) | 5,877 |
| Earnings (loss) per share-basic | (0.49) | (1.39) | 0.14 |
| Shares used in computation-basic | 43,155,767 | 43,155,767 | 42,907,945 |
| Earnings (loss) per share-diluted | (0.49) | (1.39) | 0.13 |
| Diluted used in computation-diluted | 43,155,767 | 43,155,767 | 43,627,487 |
| Canadian Solar Inc. | |||
| Unaudited Condensed Consolidated Statement of Comprehensive Income | |||
| (In Thousands of US Dollars) | |||
| Three Months Ended | |||
| Mar 31, 2012 | Dec 31, 2011 | Mar 31, 2011 | |
| Net income (loss) | (21,394) | (59,582) | 5,935 |
| Other comprehensive income, net of tax: | |||
| Foreign currency translation adjustments | 4,847 | 7,689 | 3,323 |
| Comprehensive income (loss) | (16,547) | (51,893) | 9,258 |
| Less: comprehensive income (loss) attributable to non-controlling interest | 104 | 382 | 68 |
| Comprehensive income( loss) attributable to Canadian Solar Inc. | (16,651) | (52,275) | 9,190 |
| Canadian Solar Inc. | ||||
| Unaudited Condensed Consolidated Balance Sheet | ||||
| (In Thousands of US Dollars) | ||||
| March 31, 2012 | December 31, 2011 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 393,319 | 343,995 | ||
| Restricted cash | 231,839 | 178,270 | ||
| Accounts receivable trade, net | 250,605 | 292,176 | ||
| Accounts receivable, unbilled | 49,324 | 88,504 | ||
| Amount due from related parties | 5,847 | 19,836 | ||
| Inventories | 389,894 | 296,568 | ||
| Value added tax recoverable | 23,786 | 16,974 | ||
| Advances to suppliers, net | 11,513 | 11,309 | ||
| Foreign currency derivative assets | 648 | 2,727 | ||
| Prepaid expenses and other current assets | 49,857 | 45,219 | ||
| Total current assets | 1,406,632 | 1,295,578 | ||
| Property, plant and equipment, net | 507,006 | 510,069 | ||
| Deferred tax assets | 26,915 | 23,227 | ||
| Advances to suppliers, net | 477 | 258 | ||
| Prepaid land use right | 13,746 | 13,805 | ||
| Investments in affiliates | 10,287 | 11,008 | ||
| Intangible assets, net | 8,426 | 8,516 | ||
| Goodwill | 2,631 | 2,265 | ||
| Other non-current assets | 15,006 | 15,083 | ||
| TOTAL ASSETS | 1,991,126 | 1,879,809 | ||
| Current liabilities: | ||||
| Short-term borrowings | 861,880 | 743,687 | ||
| Accounts and notes payable | 390,482 | 305,998 | ||
| Amounts due to related parties | 1,313 | 3,008 | ||
| Other payables | 67,612 | 84,676 | ||
| Advances from customers | 9,453 | 65,216 | ||
| Other current liabilities | 24,411 | 33,862 | ||
| Total current liabilities | 1,355,151 | 1,236,447 | ||
| Accrued warranty costs | 49,852 | 47,021 | ||
| Convertible notes | 962 | 950 | ||
| Long-term borrowings | 88,342 | 88,249 | ||
| Liability for uncertain tax positions | 12,622 | 12,301 | ||
| Loss contingency accruals | 28,684 | 27,863 | ||
| Total liabilities | 1,535,613 | 1,412,831 | ||
| Common shares | 502,403 | 502,403 | ||
| Additional paid-in capital | (52,509) | (53,331) | ||
| Accumulated deficit | (50,035) | (28,693) | ||
| Accumulated other comprehensive income | 50,402 | 45,555 | ||
| Total Canadian Solar Inc. shareholders’ equity | 450,261 | 465,934 | ||
| Non-controlling interest | 5,252 | 1,044 | ||
| Total equity | 455,513 | 466,978 | ||
| TOTAL LIABILITIES AND EQUITY | 1,991,126 | 1,879,809 | ||
SOURCECanadian Solar Inc.
Investor Relations Contacts: Ed Job, CFA, Director, Investor Relations, Canadian Solar Inc., ir@canadiansolar.com; David Pasquale, Global IR Partners, +1-914-337-8801, csiq@globalirpartners.com
