CSIQ
$20.31
Canadian Solar
$.06
.30%
Earnings Details
3rd Quarter September 2019
Tuesday, November 12, 2019 4:00:00 PM
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Summary

Canadian Solar Misses

Canadian Solar (CSIQ) reported 3rd Quarter September 2019 earnings of $0.66 per share on revenue of $759.9 million. The consensus earnings estimate was $0.88 per share on revenue of $797.9 million. The Earnings Whisper number was $0.82 per share. Revenue fell 1.1% compared to the same quarter a year ago.

The company said it expects fourth quarter revenue of $850.0 million to $880.0 million. The current consensus revenue estimate is $1.32 billion for the quarter ending December 31, 2019.

Canadian Solar Inc is a solar power company. The Company designs, develops, and manufactures solar wafers, cells and solar power products.

Results
Reported Earnings
$0.66
Earnings Whisper
$0.82
Consensus Estimate
$0.88
Reported Revenue
$759.9 Mil
Revenue Estimate
$797.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Canadian Solar Reports Third Quarter 2019 Results

GUELPH, Ontario, Nov. 12, 2019 /PRNewswire/ -- Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ: CSIQ), one of the world's largest solar power companies, today announced financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

  • Total solar module shipments were 2,387 MW, compared to 2,143 MW in the second quarter of 2019 and third quarter 2019 guidance of 2.2 GW to 2.3 GW.
  • Net revenue was $759.9 million, compared to $1.0 billion in the second quarter of 2019 and third quarter 2019 guidance of $780 million to $810 million.
  • Gross margin was 26.2%, compared to 17.6% in the second quarter of 2019 and third quarter 2019 guidance of 24% to 26%. Gross margin was 23.0% excluding a $24.3 million countervailing duty ("CVD") true-up benefit.
  • Net income attributable to Canadian Solar on a GAAP basis was $58.3 million, or $0.96 per diluted share, compared to $62.7 million, or $1.04 per diluted share, in the second quarter of 2019.
  • Net income attributable to Canadian Solar on a non-GAAP basis was $40.1 million, or $0.66 per diluted share. This excludes a $24.3 million CVD true-up benefit, net of income tax effect. For a reconciliation of results under generally accepted accounting principles in the United States ("GAAP") to non-GAAP results, see the accompanying table "About Non-GAAP Financial Measures".
  • Net cash provided by operating activities was approximately $22.4 million, compared to $225.8 million in the second quarter of 2019.
  • As of September 30, 2019, the Company's portfolio of utility-scale solar power plants in operation was 795.8 MWp with an estimated total resale value of approximately $900 million.

Third Quarter 2019 Results

Net revenue in the third quarter of 2019 was $759.9 million, compared to $1.0 billion in the second quarter of 2019, and $768.0 million in the third quarter of 2018. The sequential decline primarily reflects the lower revenue from the sale of solar power plants.

Total solar module shipments in the third quarter of 2019 were 2,387 MW, compared to 2,143 MW in the second quarter of 2019 and third quarter 2019 guidance of 2.2 GW to 2.3 GW. Total solar module shipments in the third quarter of 2019 included 61 MW shipped to the Company's utility-scale solar power projects. Solar module shipments recognized in revenue in the third quarter of 2019 totaled 2,156 MW, compared to 2,376 MW in the second quarter of 2019 and 1,521 MW in the third quarter of 2018.

Gross profit in the third quarter of 2019 was $198.9 million, compared to $182.6 million in the second quarter of 2019 and $200.4 million in the third quarter of 2018. The benefit for the anti-dumping ("AD") and CVD true-up was $24.3 million in the third quarter of 2019, $21.6 million in the second quarter of 2019, and $8.3 million, in the third quarter of 2018.Gross margin in the third quarter of 2019 was 26.2%, compared to 17.6% in the second quarter of 2019 and 26.1% in the third quarter of 2018. Non-GAAP gross margin, which excludes the impact of the quarterly AD/CVD true-up, was 23.0% in the third quarter of 2019, compared to 15.5% in the second quarter of 2019 and 25.0% in the third quarter of 2018.

The Company's Module and System Solutions ("MSS") business comprises primarily the design, development, manufacture and sale of solar modules, other solar power products and solar system kits. The MSS business also provides engineering, procurement and construction ("EPC") and operating and maintenance ("O&M") services. The Company's Energy business comprises primarily the development and sale of solar projects, operating solar power projects and the sale of electricity. Module sales from the MSS business to the Energy business are on terms and conditions similar to sales to third parties.

The Company develops solar power projects worldwide. Where applicable, the Company may apply for and/or be entitled to receive a feed-in tariff ("FIT") for its projects. Alternatively, the Company may participate in public or private energy auctions and bidding, which result in long-term power purchase agreements ("PPAs"). The Company may also sell all or a portion of the electricity generated from its solar power projects on the merchant power market. Due to the relatively long lead times (usually two to four years) required to develop solar power projects and bring them to a commercial operation date ("COD"), the actual gross margin of a project may deviate from the expected gross margin. The deviation may be caused by, among other things, changes in political and economic conditions in host countries, project specific conditions, fluctuations in the price of solar modules and other components, changes in the cost of EPC services and the capital return requirements of solar asset buyers. In recent years, the Company has sold some solar power projects before COD. We typically refer to these sales as "notice to proceed" or NTP sales. In NTP sales, the revenue is lower while the gross margin percentage is higher than in COD sales, even if the absolute margin is the same. Results from the Energy business may be lumpy from quarter to quarter, depending on whether projects are sold at NTP or COD, project sale transaction dates and the profit level of each project.

The following tables provide selected financial data for the Company's MSS and Energy businesses:




Three Months Ended September 30, 2019
(In Thousands of U.S. Dollars)




MSS


Energy


Elimination


Total


Net revenue 



674,921


97,550


(12,589)


759,882


Cost of revenue



493,505


77,589


(10,126)


560,968


Gross profit



181,416


19,961


(2,463)


198,914


Gross Margin



26.9%


20.5%



26.2%


Income (loss) from operations



86,686


(4,116)


(2,463)


80,107















 




Nine Months Ended September 30, 2019
(In Thousands of U.S. Dollars)




MSS


Energy


Elimination


Total


Net revenue 



1,816,938


504,075


(40,137)


2,280,876


Cost of revenue



1,382,545


453,292


(43,956)


1,791,881


Gross profit



434,393


50,783


3,819


488,995


Gross Margin



23.9%


10.1%



21.4%


Income (loss) from operations



165,864


(22,229)


3,819


147,454















 



Three Months Ended September 30, 2019



Nine Months Ended September 30, 2019




(In Thousands of U.S. Dollars)


MSS:







Solar modules and other solar power products



539,038


1,435,262


Solar system kits



28,100


85,020


EPC services



69,429


193,533


O&M services



5,535


13,442


Others (materials and components)



20,230


49,544


Subtotal



662,332


1,776,801


Energy:







Solar power projects



83,973


474,506


Electricity



1,090


4,066


Others (EPC and development services)



12,487


25,503


Subtotal



97,550


504,075


Total net revenue



759,882


2,280,876











Total operating expenses in the third quarter of 2019 were $118.8 million, compared to $121.9 million in the second quarter of 2019 and $104.5 million in the third quarter of 2018.

Selling expenses in the third quarter of 2019 were $46.9 million, compared to $45.4 million in the second quarter of 2019 and $38.4 million in the third quarter of 2018. The sequential increase was primarily due to an increase in shipping and handling costs, partially offset by lower project transaction fees.

General and administrative expenses in the third quarter of 2019 were $61.5 million, compared to $65.7 million in the second quarter of 2019 and $58.9 million in the third quarter of 2018. The sequential decrease was mainly due to a $7.3 million decrease in impairment in the third quarter of 2019, compared to the second quarter of 2019 and $1.6 million decrease in labor cost, partially offset by a $6.0 million customer settlement.

Research and development expenses in the third quarter of 2019 were $11.6 million, compared to $12.1 million in the second quarter of 2019 and $10.1 million in the third quarter of 2018.

Other operating income in the third quarter of 2019 was $1.2 million, compared to $1.3 million in the second quarter of 2019 and $2.9 million in the third quarter of 2018.

Income from operations in the third quarter of 2019 was $80.1 million, compared to $60.7 million in the second quarter of 2019, and $95.9 million in the third quarter of 2018. Operating margin was 10.5% in the third quarter of 2019, compared to 5.9% in the second quarter of 2019 and 12.5% in the third quarter of 2018.

Non-cash depreciation and amortization charges in the third quarter of 2019 were $37.0 million, compared to $39.7 million in the second quarter of 2019 and $32.5 million in the third quarter of 2018. Non-cash equity compensation expense in the third quarter of 2019 was $2.8 million, compared to $3.5 million in the second quarter of 2019 and $2.5 million in the third quarter of 2018.

Interest expense in the third quarter of 2019 was $19.2 million, compared to $20.7 million in the second quarter of 2019 and $26.8 million in the third quarter of 2018.

Interest income in the third quarter of 2019 was $2.6 million, compared to $4.5 million in the second quarter of 2019 and $2.6 million in the third quarter of 2018. 

The Company recorded a loss on the change in fair value of derivatives in the third quarter of 2019 of $2.2 million, compared to $12.5 million in the second quarter of 2019 and $8.9 million in the third quarter of 2018. Foreign exchange gain in the third quarter of 2019 was $2.8 million, compared to $16.4 million in the second quarter of 2019, and $10.1 million in the third quarter of 2018.

Income tax expense in the third quarter of 2019 was $10.4 million, compared to $14.0 million in the second quarter of 2019 and $13.4 million in the third quarter of 2018.

Net income attributable to Canadian Solar in the third quarter of 2019 was $58.3 million or $0.96 per diluted share, compared to net income of $62.7 million or $1.04 per diluted share in the second quarter of 2019 and net income of $66.5 million or $1.09 per diluted share in the third quarter of 2018.

Financial Condition

The Company had $1,048.9 million of cash, cash equivalents and restricted cash as of September 30, 2019, compared to $981.0 million as of June 30, 2019.

Accounts receivable, net of allowance for doubtful accounts, at the end of the third quarter of 2019 were $449.3 million, compared to $454.6 million at the end of the second quarter of 2019. Accounts receivable turnover in the third quarter of 2019 was 64 days, compared to 41 days in the second quarter of 2019.

Inventories at the end of the third quarter of 2019 were $413.0 million, compared to $337.8 million at the end of the second quarter of 2019. Inventory turnover in the third quarter of 2019 was 63 days, compared to 40 days in the second quarter of 2019.

Accounts and notes payable at the end of the third quarter of 2019 were $1,006.0 million, compared to $926.2 million at the end of the second quarter of 2019.

Short-term borrowings and the current portion of long-term borrowings on project assets at the end of the third quarter of 2019 were $1.3 billion, compared to $1.3 billion at the end of the second quarter of 2019. Long-term borrowings at the end of the third quarter of 2019 were $525.9 million, compared to $462.9 million at the end of the second quarter of 2019.

Total borrowings directly related to the Company's utility-scale solar power projects were $670.8 million at the end of the third quarter of 2019, compared to $640.5 million at the end of the second quarter of 2019. Total debt at the end of the third quarter of 2019 was $1.97 billion, compared to $1.86 billion at the end of the second quarter of 2019.

Dr. Shawn Qu, Chairman and Chief Executive Officer, commented: "Q3 was another strong, highly profitable quarter for Canadian Solar. Our results reflect robust global demand for our solar power products, the benefit of stable pricing trends and continued execution by our team. Strategic decisions we made in R&D and manufacturing efforts have positioned Canadian Solar at the forefront of solar cell and module manufacturing technology. For example, we recently set another world record of 22.8% conversion efficiency for P-type large area multi-crystalline silicon solar cells. We remain committed to developing and commercializing the solar technologies and system innovations that drive efficiency levels higher and total cost of ownership lower. This approach brings additional value to our customers and helps ensure the Company's long-term success. We have significant room for growth ahead of us and remain positive in our outlook given further improvements in our backlog and visibility."

Yan Zhuang, Acting Chief Executive Officer, commented: "Our solar module shipments and gross margin expansion underscore the solid execution of our strategies in both our MSS and Energy businesses. Higher module shipments were led by the success of Canadian Solar's premium brand and the strength of the global sales channels we have built over many years. Our solid track record has also allowed us to grow our presence across the solar supply chain. During the third quarter, we signed an O&M agreement for third party projects totaling 300 MWp; and completed the sale of the 266 MWp Rambler project in the U.S. and the sale of an 80% interest in the 171.5 MWp Lavras project in Brazil. In addition, we won a total of 424 MWp of projects with attractive PPAs, energized a 100 MWp project in Argentina and secured additional project development financing at favorable rates. Globally, as of September 30, 2019, we had a 3.4 GWp pipeline of late-stage, utility-scale solar power projects. In addition, our 796 MWp portfolio of solar power plants under operation has an estimated resale value of approximately $900 million."

Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer, added: "We achieved GAAP net income of $58 million, or $0.96 per diluted share, for the third quarter even with lower than expected revenue which was primarily due to the delayed closing of solar power plant sales in Japan. This reflects an underlying improvement in our operating and financial performance as well as benefit from the CVD true-up adjustment of $24 million. Our focus on operating efficiency improvements helped us further reduce our blended module manufacturing costs. In October, we completed the sale of an 80% interest in 353 MWp of projects in Brazil, in addition to the 80% interest in the 171.5 MWp Lavras project which we sold in August. We will continue to monetize the remainder of our 3.4 GWp late-stage utility-scale solar project pipeline through 2020 and to maintain a balance between driving profitable growth and strengthening the Company's balance sheet."

Utility-Scale Solar Project Pipeline

The Company divides its utility-scale solar project pipeline into two categories: an early-to-mid-stage pipeline and a late-stage pipeline. The late-stage pipeline includes primarily those projects that have FITs or PPAs and are expected to be built within the next four years. The Company cautions that some late-stage projects may not reach completion due to such factors as failure to secure permits and grid connection, and changes of political and economic conditions in host countries, among others.

Late-Stage Utility-Scale Solar Project Pipeline

As of September 30, 2019, the Company's late-stage, utility-scale solar project pipeline, including those in construction, totaled approximately 3.4 GWp, with 1,285 MWp in the U.S., 832 MWp in Brazil, 370 MWp in Mexico, 343.5 MWp in Japan, 145 MWp in China and an additional 422.1 MWp in Australia, Canada, Israel, Taiwan, the Philippines, Malaysia, Italy and South Korea.

In the United States, as of September 30, 2019, the Company's late-stage, utility-scale solar project pipeline totaled 1,285 MWp* as detailed in the table below. 

Project

MWp

Storage (MWh)

Location

Status

Expected COD

Gaskell West 2

147

N/A

California

Development

2022

Pflugerville

185

N/A

Texas

Development

2021

Texas Project

280

N/A

Texas

Development

2021

Maplewood

310

N/A

Texas

Development

2021

Maplewood 2

40

N/A

Texas

Development

2021

Slate

235

180

California

Development

2021

Stanford Solar Generating Station #2

 

88

 

N/A

 

California

 

Development

 

2021

Total

1,285





*This table does not include the 100 MWac Sunflower project located in Mississippi. In November 2018, the Company entered into a build-to-transfer agreement with Entergy Mississippi for the Sunflower project. As part of the agreement, Entergy Mississippi will serve as both project owner and electricity off-taker once the project is constructed and transferred to them. This build-to-transfer agreement is pending approval by the Mississippi Public Service Commission.

In Japan, as of September 30, 2019, the Company's late-stage, utility-scale solar project pipeline for which interconnection agreements and FITs have been secured totaled approximately 343.5 MWp, including 104.3 MWp under construction and 239.2 MWp under development.

The table below sets forth the expected COD schedule of the Company's late-stage utility-scale solar power projects in Japan, as of September 30, 2019:

Expected COD Schedule (MWp) 


2019


2020


2021 and Thereafter



 Total


62.5


72.5


208.5



343.5

In Brazil, as of September 30, 2019, the Company had an 832 MWp late-stage, utility-scale solar project pipeline as detailed in the table below.

Project

MWp

Location

Status

Expected COD

Francisco Sa

125.7*

Minas Gerais

Development

2021

Jaiba

112.4*

Minas Gerais

Development

2021

Jaiba Expansao

51.2

Minas Gerais

Development

2021

Lavras

34.3*

Ceara

Development

2021

Salgueiro

114.7*

Pernambuco

Development

2020

Ciranda

190.5

Pernambuco

Development

2022

Lavras Expansion

76.2

Ceara

Development

2022

Jaiba Expansao II

127

Minas Gerais

Development

2023

Total

832




*In April 2019, the Company signed an agreement to sell its 80% interest in the 482.6 MWp (has now expanded to 524.3 MWp) of solar power projects to Nebras Power Investment Management B.V., a Dutch affiliate of Nebras Q.P.S.C. Canadian Solar completed the sale of the 80% interest in the 171.5 MWp Lavras project in August 2019 and the sale of the 80% interest in the Francisco Sa, Jaiba and Salgueiro projects in October 2019.

In Mexico, as of September 30, 2019, the Company had a 370 MWp late-stage, utility-scale solar project pipeline as detailed in the table below.

Project

MWp

Location

Status

Expected COD

Horus

119

Aguascalientes

Under construction

2020

EL Mayo

126

Sonora

Development

2021

Tastiota

125

Sonora

Development

2021

Total

370




In China, as of September 30, 2019, the Company's late-stage, utility-scale solar project pipeline was 145 MWp.

Solar Power Plants in Operation

In addition to its late-stage, utility-scale solar project pipeline, as of September 30, 2019, the Company had a portfolio of utility-scale, solar power plants in operation totaling 795.8 MWp. The Company records these power plants on the balance sheet as "project assets (build to sell)", "assets held-for-sale" and "solar power systems, net (build to own)". The proceeds of project sales recorded as "project assets (build to sell)" on the balance sheet will be recorded as revenue in the income statement once revenue recognition criteria are met. The gain or loss 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 utility-scale, solar power plants in operation, as of September 30, 2019 (MWp):

U.S.

Japan

China

India

Argentina

Others

Total

205.9

89.6

350.3

35.0

100.1

14.9

795.8

Manufacturing Capacity

The table below sets forth the Company's manufacturing capacity expansion plan from December 31, 2019 to December 31, 2020.

Manufacturing Capacity (MW)


30-Sept-2019

Actual

31-Dec-2019

Planned

30-Jun-2020

Planned

31-Dec-2020

Planned

Ingot

1,850

1,850

1,850

2,350

Wafer

5,000

5,000

5,000

5,000

Cell

8,700

9,600

9,600

9,600

Module

11,150

13,040

13,420

15,170

The Company's manufacturing capacity expansion plan is subject to change based on market conditions.

Business Outlook

The Company's business outlook is based on management's current views and estimates given existing market conditions, the Company's order book and production capacity, the timing of project sales, and the global economic environment. This outlook is subject to uncertainty with respect to, among other things, final customer demand and solar project construction and sale schedules. Management's views and estimates are subject to change without notice.

For the fourth quarter of 2019, the Company expects total solar module shipments to be in the range of 2.3 GW to 2.4 GW, including approximately 190 MW of shipments to the Company's utility-scale solar power projects that may not be recognized as revenue in the fourth quarter of 2019. Total revenue for the fourth quarter is expected to be in the range of $850 million to $880 million. Gross margin for the fourth quarter is expected to be between 19% and 21%.

For the full year 2019, the Company now expects total module shipments to the range of approximately 8.4 GW to 8.5 GW. Total revenue for the year is expected to be in the range of $3.13 billion to $3.16 billion.

Yan Zhuang, Acting Chief Executive Officer of Canadian Solar, commented: "While our near-term revenue is expected to be impacted by the potential shift of certain project sales into 1Q 2020 from 4Q 2019 due to revised sales schedules, we expect sequential growth in solar module shipments based on our backlog and demand forecasts. The broader global market remains healthy as we benefit from robust demand in traditional geographies and the development of new markets where our brand, track record and local presence give us a distinct competitive advantage. We expect to gain additional momentum in 2020 as we monetize our late-stage, utility-scale solar project pipeline as well as solar power plants in operation. We also continue to explore opportunities to create additional synergies across the upstream and downstream businesses by leveraging our global purchasing power and providing total solutions to our customers, thereby building value for our Company's shareholders."

Recent Developments

On November 11, 2019, Canadian Solar announced that it had been awarded two solar PV projects totaling 190.5 MWp in the 7th Brazilian Federal Auction held in October 2019.

On October 22, 2019, Canadian Solar announced that it had been awarded a 30 MWp project in Japan's 4th solar energy auction. Once constructed, the project will enter into a 20-year power purchase agreement with Chugoku Power Electric Company at a rate of ¥13.47 ($0.12) per kWh.

On October 10, 2019, Canadian Solar announced that it had been awarded three solar PV projects totaling 393.7 MWp in two recent Private Corporate Auctions held in Brazil during the third quarter of 2019.

On September 17, 2019, Canadian Solar announced that its technology team set a world record of 22.80% conversion efficiency for P-type large area multi-crystalline silicon solar cells.

On September 12, 2019, Canadian Solar announced that its wholly-owned subsidiary, Recurrent Energy, LLC, sold the 200 MWac/266 MWp Rambler solar project to Duke Energy Renewables, a subsidiary of Duke Energy.

On August 28, 2019, Canadian Solar announced that it secured 487.0 million Brazilian reals (US$120 million) in non-recourse project financing from Banco do Nordeste do Brasil S.A. (BNB) for its Francisco Sa and Jaiba solar power projects.

On August 21, 2019, Canadian Solar announced that it signed O&M agreements with Gannawarra Solar Farm Pty Ltd, Hayman Solar Farm Pty Ltd and Daydream Solar Farm Pty Ltd for three solar PV plants totaling 300 MWp in Australia.  

On August 5, 2019, Canadian Solar announced that it energized its 100.1 MWp Cafayate solar power project in Argentina on July 19, 2019, the largest operational solar power plant in the country.

Conference Call Information

The Company will hold a conference call at 5:00 p.m. U.S. Eastern Standard Time on November 12, 2019 (6:00 a.m., November 13, 2019 in Hong Kong) to discuss the Company's third quarter 2019 results and business outlook. The dial-in phone number for the live audio call is +1 866-519-4004 (toll-free from the U.S.), +852-3018-6771 (local dial-in from HK) or +1 845-675-0437 (from international locations). The passcode for the call is 3366785.  A live webcast of the conference call will also be available on the Investor Relations section of Canadian Solar's website at www.canadiansolar.com.

A replay of the call will be available two hours after the conclusion of the call until 8:00 a.m. U.S. Eastern Standard Time on Wednesday, November 20, 2019 (9:00 p.m., November 20, 2019 in Hong Kong) and can be accessed by dialing +1-855-452-5696 (toll-free from the U.S.), +852-3051-2780 (local dial-in from HK) or +1-646-254-3697 (from international locations), with passcode 3366785.  A webcast replay will also be available on the investor relations section of Canadian Solar's at www.canadiansolar.com.

About Canadian Solar Inc.

Canadian Solar was founded in 2001 in Canada and is one of the world's largest and foremost solar power companies. It is a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions and has a geographically diversified pipeline of utility-scale solar power projects in various stages of development. Over the past 18 years, Canadian Solar has successfully delivered over 38 GW of premium-quality, solar photovoltaic modules to customers in over 150 countries. Canadian Solar is one of the most bankable companies in the solar industry, having been publicly listed on NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn or visit www.canadiansolar.com.

Safe Harbor/Forward-Looking Statements

Certain statements in this press release regarding the Company's expected future shipment volumes, gross margins 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 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 Japan, the U.S., India and China; 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; delays in the completion of project sales; 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 filed on April 25, 2019. 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. Investors 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 U.S. Dollars, Except Share and Per Share Data and Unless Otherwise Stated)


Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,


September 30,


September 30,



2019


2019


2018


2019


2018












Net revenues

$ 759,882


$ 1,036,275


$ 767,970


$ 2,280,876


$ 2,843,471

Cost of revenues

560,968


853,633


567,579


1,791,881


2,339,698













Gross profit

198,914


182,642


200,391


488,995


503,773












Operating expenses:











Selling expenses

46,935


45,361


38,423


130,227


121,030


General and administrative expenses

61,491


65,735


58,862


178,650


164,067


Research and development expenses

11,567


12,133


10,143


36,865


28,776


Other operating income

(1,186)


(1,329)


(2,941)


(4,201)


(38,192)

Total operating expenses

118,807


121,900


104,487


341,541


275,681












Income from operations

80,107


60,742


95,904


147,454


228,092

Other income (expenses):











Interest expense

(19,240)


(20,654)


(26,839)


(61,591)


(83,028)


Interest income

2,579


4,452


2,567


9,060


9,026


Loss on change in fair value of derivatives

(2,176)


(12,489)


(8,881)


(15,924)


(11,974)


Foreign exchange gain (loss)

2,825


16,415


10,112


6,653


(799)


Investment income (loss)

(738)


2,002


6,528


1,809


5,944

Other expenses, net

(16,750)


(10,274)


(16,513)


(59,993)


(80,831)












Income before income taxes and equity in earnings of unconsolidated investees

63,357


50,468


79,391


87,461


147,261

Income tax expense

(10,434)


(13,951)


(13,423)


(16,858)


(25,280)

Equity in earnings of unconsolidated investees

2,303


23,740


2,504


28,025


6,353

Net income

55,226


60,257


68,472


98,628


128,334












Less: Net income (loss) attributable to non-controlling interests

(3,105)


(2,425)


1,932


(5,221)


2,846












Net income attributable to Canadian Solar Inc.

$  58,331


$  62,682


$   66,540


$  103,849


$  125,488












Earnings per share - basic

$   0.97


$   1.05


$   1.14


$   1.74


$   2.13

Shares used in computation - basic

59,900,740


59,547,209


58,526,275


59,562,101


58,826,117

Earnings per share - diluted

$   0.96


$   1.04


$   1.09


$   1.71


$   2.08

Shares used in computation - diluted

60,846,753


60,260,410


61,937,187


61,040,675


62,103,349













 

Canadian Solar Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income

(In Thousands of U.S. Dollars)


 Three Months Ended


 Nine Months Ended



 September 30, 


 June 30,


 September 30, 


September 30, 


September 30, 



2019


2019


2018


2019


2018


Net Income

55,226


60,257


68,472


98,628


128,334


Other comprehensive income (net of tax of nil):











Foreign currency translation adjustment

(13,419)


(11,170)


26,709


(8,604)


(12,179)


Gain (loss) on changes in fair value of derivatives

(1,314)


(3,310)


2,464


(6,994)


9,510


Comprehensive income

40,493


45,777


97,645


83,030


125,665


Less: comprehensive income (loss) attributable to non-controlling interests

(3,529)


(1,028)


4,844


(8,884)


7,052


Comprehensive income attributable to Canadian Solar Inc.

44,022


46,805


92,801


91,914


118,613


 

 

Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets

(In Thousands of U.S. Dollars)


September 30,


December 31,


2019


2018

ASSETS




Current assets:





Cash and cash equivalents

$      526,175


$     444,298


Restricted cash

515,260


480,976


Accounts receivable trade, net

449,347


498,231


Accounts receivable, unbilled

38,996


38


Amounts due from related parties

44,307


16,740


Inventories

413,036


262,022


Value added tax recoverable

100,088


107,222


Advances to suppliers

80,875


37,011


Derivative assets

5,131


4,761


Project assets

910,101


933,563


Prepaid expenses and other current assets

261,458


289,459

Total current assets

3,344,774


3,074,321

Restricted cash 

7,417


15,716

Property, plant and equipment, net

995,932


884,986

Solar power systems, net

53,460


54,898

Deferred tax assets, net

184,680


121,087

Advances to suppliers

64,901


48,908

Prepaid land use right

62,839


65,718

Investments in affiliates

149,813


126,095

Intangible assets, net

24,019


14,903

Goodwill

-


1,005

Derivatives assets

-


3,216

Project assets

237,585


352,200

Right-of-use assets*

37,141


-

Other non-current assets

145,079


129,605

TOTAL ASSETS

$    5,307,640


$       4,892,658


Current liabilities:






Short-term borrowings


$    1,055,762


$    1,027,927


Long-term borrowings on project assets - current


261,868


265,770


Accounts payable


529,416


379,462


Notes payable


476,611


369,722


Amounts due to related parties


13,949


16,847


Other payables


453,118


408,013


Convertible notes


-


127,428


Advance from customers


65,210


39,024


Derivative liabilities


13,539


13,698


Lease Liabilities*


17,352


-


Tax equity liabilities


53,175


158,496


Other current liabilities


139,791


141,970

Total current liabilities


3,079,791


2,948,357

Accrued warranty costs


52,992


50,605

Long-term borrowings


525,935


393,614

Amounts due to related parties


338


568

Derivatives liabilities 


3,008


-

Liability for uncertain tax positions


26,486


20,128

Deferred tax liabilities


66,028


35,698

Loss contingency accruals


27,646


24,608

Lease Liabilities*


21,066


-

Financing liabilities


75,528


77,835

Other non-current liabilities


63,371


68,400

Total LIABILITIES


3,942,189


3,619,813

Equity:






Common shares


703,806


702,931


Additional paid-in capital


19,378


10,675


Retained earnings


725,864


622,016


Accumulated other comprehensive loss


(122,084)


(110,149)

Total Canadian Solar Inc. shareholders' equity


1,326,964


1,225,473

Non-controlling interests in subsidiaries


38,487


47,372

TOTAL EQUITY


1,365,451


1,272,845

TOTAL LIABILITIES AND EQUITY


$     5,307,640


$        4,892,658

Note: * The Company adopted ASU 2016-02 – Leases (Topic ASC842) in the first quarter of 2019 using the optional transition method and elected certain practical expedients, which were permitted under the guidance ASU 2018-11, Leases (Topic 842) – Targeted Improvements. The transition guidance allowed the Company not to reassess prior conclusions related to contracts containing leases or lease classification. The adoption primarily affected the condensed consolidated balance sheet through the recognition of right-of-use assets and lease liabilities as of January 1, 2019. The adoption did not have a significant impact on the results of operations or cash flows.

About Non-GAAP Financial Measures

To supplement its financial disclosures presented in accordance with GAAP, the Company uses non-GAAP measures which are adjusted from the most comparable GAAP measures for certain items as described below. The Company presents non-GAAP net income and diluted earnings per share so that readers can better understand the underlying operating performance of the business before the impact of AD/CVD true-up provisions. The non-GAAP numbers are not measures of financial performance under U.S. GAAP, and should not be considered in isolation or as an alternative to other measures determined in accordance with GAAP. These non-GAAP measures may differ from non-GAAP measures used by other companies, and therefore their comparability may be limited.

Statement of Operations Data:










(In Thousands of U.S. Dollars, Except Share and Per Share Data)

































Three Months Ended


Nine Months Ended



September 30,

2019


June 30,

2019


September 30,

2018


September 30,

2019


September 30,

2018












GAAP net income attributable to Canadian Solar Inc.

58,331


62,682


66,540


103,849


125,488

Non-GAAP income adjustment items:











AD/CVD provision true-up

(24,291)


(21,617)


(8,271)


(45,908)


(34,074)


Tax impact

6,029


5,365


2,053


11,394


8,457

Non-GAAP net income attributable to Canadian Solar Inc.

40,069


46,430


60,322


69,335


99,871












GAAP income per share - diluted

$   0.96


$   1.04


$   1.09


$  1.71


$  2.08

Non-GAAP income per share - diluted

$   0.66


$   0.77


$   0.99


$  1.14


$  1.66

Shares used in computation - diluted

60,846,753


60,260,410


61,937,187


61,040,675


62,103,349

 

Cision View original content:http://www.prnewswire.com/news-releases/canadian-solar-reports-third-quarter-2019-results-300956729.html

SOURCE Canadian Solar Inc.