Canadian Solar Reports 1Q10 Unaudited Financial Results and FY09 Audited Financial Results
ONTARIO, Canada, Aug. 19 /PRNewswire-Asia-FirstCall/ --
The Company previously released its 4Q09 unaudited financial results in its press release dated March 3, 2010 and subsequently disclosed in its press release dated June 1, 2010 that it may revise such numbers. This release supersedes the March 3, 2010 release. The 4Q09 results disclosed herein are referred to as "revised" results.
1Q10 Highlights
-- Net revenues of $336.9 million for 1Q10, compared to revised net
revenues of $254.2 million for 4Q09.
-- Shipments of 185.0 MW for 1Q10, compared to revised shipments of 141.2
MW for 4Q09.
-- Gross margin of 12.4% for 1Q10 compared to revised gross margin of 9.5%
for 4Q09.
-- Net income of $0.04 per diluted share for 1Q10, compared to revised net
loss of $0.38 per diluted share for 4Q09.
Canadian Solar Inc. (the "Company", "we" or "Canadian Solar") (Nasdaq: CSIQ), one of the world's largest solar companies, today announced its audited financial results for 2009, its unaudited financial results for the first quarter ended March 31, 2010 and its outlook for the second quarter and full year 2010.
Net revenues for the first quarter of 2010 were $336.9 million, compared to net revenues of $254 million for the fourth quarter of 2009 and net revenues of $49.5 million for the first quarter of 2009.
Net income for the first quarter of 2010 was $1.5 million, or $0.04 per diluted share, compared to a net loss of $15.6 million, or $0.38 per diluted share, for the fourth quarter of 2009 and a net loss of $4.8 million, or $0.13 per diluted share, for the first quarter of 2009.
Shipments for the first quarter of 2010 were 185.0 MW, compared to shipments of 141.2 MW for the fourth quarter of 2009 and shipments of 18.0 MW for the first quarter of 2009. The Company's sales came from the key solar industry markets worldwide, with Europe continuing to be the Company's largest contributing geographic market.
1Q10 unaudited financial results and 2009 audited financial results include the following major changes, provisions and allowances compared with the results announced on March 3, 2010:
1. Provision for loss on firm purchase commitment under a wafer supply
agreement: In 4Q09, we recorded a contingent liability for a loss of
$13.8 million on firm purchase commitment under our wafer supply
agreement with Deutsche Solar AG for 2009 and 2010. We are in
discussions with Deutsche Solar to amend the terms of this contract.
For 1Q10, we accrued a further contingent liability for a loss of $2.0
million on this purchase commitment. These loss provisions were
recorded as a component of cost of revenues.
2. Allowance for advances to suppliers under long-term wafer supply
agreements: We have given notice to terminate our two long-term wafer
supply agreements with LDK Solar Co. Ltd. and in July 2010 we initiated
arbitration proceedings to recover the outstanding $8.8 million advance
payments we made to LDK under these contracts. In 4Q09, we made a
provision against the outstanding balance and recorded it as a
component of 4Q09 operating expenses.
3. Increase in allowance for doubtful accounts: We recorded an allowance
for doubtful accounts of $18.0 million as of December 31, 2009 mainly
due to subsequent events involving two customers after the Company's
4Q09 press announcement on March 3, 2010. However, we also recorded a
receivable from a credit insurance company amounting to $7.1 million as
of December 31, 2009 and a corresponding reduction in bad debt expense
in 4Q09. The net increase in bad debt expense after the Company's 4Q09
pre-announcement on March 3, 2010 is $7.9 million.
4. Changes in 4Q09 revenue, gross profit and operating income: For certain
customers from whom collection of payment could not be reasonably
assured as of December 31, 2009, we will only recognize revenue on the
date that such collection can be assured. As a result, we expect that
$21.0 million of products shipped in 4Q09 will be recognized in future
quarters when cash is collected.
5. Sales Return Reserve: In 4Q09, we began accruing a sales return reserve
against our revenues. For 4Q09, we accrued 3.3% of revenues, or $8.5
million, and for 1Q10 we accrued 3.3% of revenues, or $10.7 million, in
sales return reserves.
6. Tax Provisions: In 4Q09, we had a tax benefit of $5.7 million, mainly
due to the above items.
7. In summary, including the above our 4Q09 net revenues were reduced by
$32.8 million and our 4Q09 net income by $30.4 million.
8. Foreign Exchange Loss (Gain): In 1Q10, we incurred a foreign exchange
loss (net of hedging effects) of $15.9 million, less than our original
guidance of $18 million to $20 million.
Revenue by Geography
Revenue by Geography
Region 1Q 2010 1Q 2009 4Q 2009(revised)
US$M % US$M % US$M %
Europe 298.2 88.5% 36.0 72.7% 233.3 91.8%
America 19.1 5.7% 2.7 5.5% 5.3 2.1%
Asia and others 19.6 5.8% 10.8 21.8% 15.6 6.1%
Total 336.9 100.0% 49.5 100.0% 254.2 100.0%
Region FY 2009(revised) FY 2008
US$M % US$M %
Europe 523.0 82.9% 631.1 89.5%
America 37.0 5.9% 32.3 4.6%
Asia and others 71.0 11.3% 42.0 5.9%
Total 631.0 100.0% 705.0 100.0%
Recent Developments
-- Audit Committee Investigation: The Company's audit committee has
conducted an investigation into certain transactions identified in the
subpoena issued to the Company by the Securities and Exchange
Commission (the "SEC"). The audit committee has concluded that the
transactions identified in the SEC subpoena were properly accounted for
in the Company's annual report on Form 20-F for the year ended December
31, 2009 filed with the SEC. Absent new information coming to light,
the audit committee investigation has been concluded.
-- Ontario Module Plant: The Company has selected the site for our 200 MW
module plant in Guelph, Ontario. Production is expected to begin at
this site early next year.
-- Resignations: The Company announces the resignations of Mike Miskovsky,
V.P., U.S. Sales and Greg Ashley, Acting President for our U.S.
subsidiary. The Company sincerely appreciates their contributions and
wishes them success in their future careers.
Business Outlook
The outlook below is based on the Company's current views with respect to operating and market conditions, and its current order book and customer' forecasts, which are subject to change. The risks to our outlook also include changes in foreign exchange, product and materials pricing and the project financing environment.
-- 2Q10 Guidance: For 2Q10, we expect shipments of approximately 173 MW to
177 MW, with margins of approximately 13.5% to 14.5%. Although we
hedged approximately 90% of our 2Q10 cash flow, we expect a foreign
exchange loss for the quarter (net of hedging effects) in the range of
approximately $10 million to $12 million.
-- 2H10 Guidance: We believe that margins may improve in the second half
of 2010 due to our increased vertical integration and improvements in
our processing costs, provided that there is no further depreciation in
the Euro or further increases in raw materials prices.
-- Full-year Guidance: For the full year 2010, we are reiterating our
shipments guidance of approximately 700 MW to 800 MW.
-- Increased internal cell production to reduce costs and increase
visibility: We are ramping up our new cell lines to reach our 3Q10
target of 720 MW of cell production capacity. In 4Q10, we plan to
increase our internal cell capacity from 720 MW to 800 MW through
process improvements. In 2011, we expect to further increase our cell
production capacity by 500 MW, of which 200 MW will be enhanced
selective emitter capacity and 300 MW will be high conversion
efficiency multicrystalline cell lines. This will bring our total cell
production capacity to 1.3 GW. We expect the higher efficiency cells to
result in lower processing costs and greater customer interest. We
expect the addition of cell production capacity to have a significant
beneficial impact on our gross margins.
-- Wafer Capacity: We believe we have resolved the issues with respect to
our ingot and wafer operation. In recent months, we have been
approaching industry leading processing costs and yields. As a result,
we plan to expand our ingot capacity from 300 MW and our wafering
capacity from 150 MW to approximately 350 MW each in 2011.
Dr. Shawn Qu, Chairman and CEO of Canadian Solar, remarked: "Demand remains very strong in key solar markets worldwide and we continue to gain share or take a leadership position in many new, developing markets. Given current events, we are taking the opportunity to further strengthen our internal controls and procedures to better match our current global market position and to support the ongoing growth we expect from large, well-established customers as well as newer industry participants. Our management also remains focused on our internal cell and wafer expansion. This expansion is consistent with our broader efforts to focus on higher margin products, while also striving to reduce our processing costs. Overall, we are very optimistic looking forward and expect continued growth in revenues, and improvement in gross margins and profitability."
Investor Conference Call / Webcast Details
The Company will hold a conference call to discuss its financial results for the first quarter of 2010, audited financial results for 2009 and business outlook. The conference call will be held Thursday, August 19, 2010 at 5:00 p.m. U.S. Eastern Time (5:00 a.m. August 20, 2010 in Hong Kong). The dial-in phone number is +1-617-213-8842, with passcode 56014742. A live webcast of the conference call will also be available on Canadian Solar's website at http://www.canadiansolar.com .
A replay of the call will be available approximately one hour after the conclusion of the live call through 7:00 p.m. on August 26, 2010, U.S. Eastern Time (7:00 a.m., August 27, 2010 in Hong Kong) by telephone at +1-617-801-6888. To access the replay, use passcode 29237944. A webcast replay will also be available at http://www.canadiansolar.com .
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 http://www.canadiansolar.com .
Safe Harbor/Forward-Looking Statements:
Certain statements in this press release including statements regarding our expected revenue recognition, 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 filed on August 19, 2010. 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.
Canadian Solar Inc.
Unaudited Condensed Consolidated Statements of Operations
(In Thousands of U.S. Dollars, Except Share And Per Share Data And Unless
Otherwise Stated)
Item 2010 Q1 2009 Q1 2009 Q4
(revised)
Net revenues 336,931 49,465 254,194
Cost of revenues 295,018 53,360 230,008
Gross profit (loss) 41,913 (3,895) 24,186
Selling expenses 10,698 1,881 10,415
General and administrative expenses 8,174 4,518 28,069
Research and development expenses 1,834 470 1,217
Total operating expenses 20,706 6,869 39,701
Income (loss) from operations 21,207 (10,764) (15,515)
Interest expenses (3,862) (2,254) (2,794)
Interest income 1,395 563 916
Gain on debt extinguishment -- -- --
Debt conversion expenses -- -- --
Investment income -- -- 1,788
Gain on change in fair value of
derivatives 536 11,366 935
Exchange (loss) gain (16,438) (2,875) (5,146)
Income (loss) before taxes 2,838 (3,964) (19,816)
Income tax expenses (benefit) 1,454 820 (4,388)
Net income (loss) 1,384 (4,784) (15,428)
Less: Net income (loss) attributable
to Non-controlling interest (113) -- 157
Net income (loss) attributable to CSI 1,497 (4,784) (15,585)
Basic earnings (loss) per share $0.04 $(0.13) $(0.38)
Basic weighted average outstanding
shares 42,755,446 35,765,185 41,349,901
Diluted earnings (loss) per share $0.03 $(0.13) $(0.38)
Diluted weighted average outstanding
shares 43,974,827 35,765,185 41,349,901
Item 2009 1~12 2008 1~12
(revised)
Net revenues 630,961 705,006
Cost of revenues 552,856 633,998
Gross profit (loss) 78,105 71,008
Selling expenses 22,089 10,608
General and administrative expenses 46,324 34,510
Research and development expenses 3,180 1,825
Total operating expenses 71,593 46,943
Income (loss) from operations 6,512 24,065
Interest expenses (9,459) (12,201)
Interest income 5,084 3,531
Gain on debt extinguishment -- 2,429
Debt conversion expenses -- (10,170)
Investment income 1,788 0
Gain on change in fair value of
derivatives 9,870 14,455
Exchange (loss) gain 7,681 (19,989)
Income (loss) before taxes 21,476 2,120
Income tax expenses (benefit) (1,302) 9,654
Net income (loss) 22,778 (7,534)
Less: Net income (loss) attributable
to Non-controlling interest 132 --
Net income (loss) attributable to CSI 22,646 (7,534)
Basic earnings (loss) per share $0.61 $(0.24)
Basic weighted average outstanding
shares 37,102,723 31,566,503
Diluted earnings (loss) per share $0.60 $(0.24)
Diluted weighted average outstanding
shares 37,743,464 31,566,503
Canadian Solar Inc.
Unaudited Condensed Consolidated Balance Sheets
(In Thousands of U.S. Dollars)
March 31, December 31,
Item 2010 2009(revised)
Assets
Current assets
Cash and cash equivalents 174,481 160,111
Restricted cash 259,077 179,390
Accounts receivable, net of allowance
for doubtful accounts 224,313 151,549
Inventories 173,299 164,313
Value added tax recoverable 30,091 39,495
Advances to suppliers 11,242 17,264
Foreign currency derivative assets 236 0
Prepaid and other current assets 39,667 41,865
Current assets - subtotal 912,406 753,987
Property, plant and equipment, net 223,003 217,136
Intangible assets 1,840 1,824
Advances to suppliers 35,555 35,210
Prepaid land use right 13,184 12,535
Investments 7,102 7,101
Deferred tax assets - non current 11,398 10,910
Total assets 1,204,488 1,038,703
Liabilities and equity
Current liabilities
Short term borrowings 375,268 251,702
Accounts payable 93,696 92,271
Notes payable 137,988 105,218
Other payables 30,846 34,724
Advances from customers 7,695 3,644
Amounts due to related parties 261 261
Foreign currency derivative
liabilities 223 523
Provision for firm purchase
commitment 15,763 13,823
Other current liabilities 13,491 12,775
Current liabilities - subtotal 675,231 514,941
Accrued warranty costs 20,263 16,900
Liability for uncertain tax positions 11,116 10,705
Convertible notes 876 866
Long term borrowings 27,833 29,290
Total liabilities 735,319 572,702
Common shares 500,774 500,322
Additional paid in capital (59,963) (61,269)
Retained earnings 13,039 11,542
Accumulated other comprehensive
income 15,156 15,121
Total Canadian Solar Inc.
stockholders' equity 469,006 465,716
Non-controlling interest 163 285
Total equity 469,169 466,001
Total liabilities and equity 1,204,488 1,038,703
SOURCE Canadian Solar Inc.
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