News Releases

Canadian Solar Reports Second Quarter 2007 Results

     -- Q2 net revenues of $60.4 million, a three-fold increase from $17.5
        million in Q1
     -- Q2 loss of $0.11 per share compared to a loss of $0.14 per share in Q1
     -- Full year 2007 net revenue guidance increased to $255-$265 million
        from $220-$230 million

JIANGSU, China, Aug. 14 /Xinhua-PRNewswire/ -- Canadian Solar Inc. ("the Company," "CSI," or "we") (Nasdaq: CSIQ) today reported its preliminary unaudited US GAAP financial information for the second quarter of 2007 ended June 30, 2007.

Net revenues for the quarter were $60.4 million, including $2.7 million silicon material sales, compared to net revenues of $17.3 million for the second quarter of 2006 and $17.5 million for the first quarter of 2007. Net revenues for the first quarter of 2007 included $2.8 million in silicon material sales. Net loss for the quarter was $2.9 million, or $0.11 per share, compared to net income of $2.5 million, or $0.16 per diluted share, for the second quarter of 2006 and net loss of $3.9 million, or $0.14 per share, for the first quarter of 2007. Excluding share-based compensation expenses of $2.4 million, the net loss for the quarter would have been $0.5 million, or $0.02 per share.

Dr. Shawn Qu, Chairman and CEO of CSI, commented: "Our Q2 revenues were at the high end of our guidance range. We continue to benefit from our strong international sales and marketing network and our focus on tier one distributors and project-based companies. During the quarter, we saw sustained demand for our products in Germany and Spain. We expect to complete our Phase One in-house solar cell production facility in the middle of October, which would bring our total cell capacity to 100MW per year. We have recently ramped up our module production capacity to 180MW per year. These successful steps in our expansion strategy will help to solidify our position as a major player in the industry and enable us to meet increased customer demand."

Bing Zhu, CFO of CSI, noted: "Our gross margins improved slightly in Q2 due to our increasing in-house solar cell manufacturing capability. We would have been profitable on a cash operating basis during the quarter without the following two factors: first, we cleared out 1.63MW of high-priced solar cells inventory purchased in 2006 and secondly, we incurred slightly higher yield loss, as we almost quadrupled our production within one quarter. Entering the third quarter, we are experiencing stable module pricing and expect this to continue during the second half of 2007. We have also experienced modest materials price increases from certain suppliers. We are working on improving our cost structure and operating efficiencies to offset these increases and expect our operating margins to improve significantly in Q4 as we speed up our in-house solar cell manufacturing production."

Recent Developments

We recently started to ramp up production at our second 25MW solar cell production line, following installation and acceptance tests in June and July. We expect to install our third and fourth 25MW cell production lines in September and October 2007, ahead of our original schedule. By doing so, we expect to increase our in-house solar cell manufacturing capacity to 100 MW by the middle of Q4.

We also recently entered into agreements for syndicated loans of US$50 million with Industrial and Commercial Bank of China and China Communications Bank. Both banks announced their intention to continue to support our newly revised three-year growth plan. Together with other existing banking arrangements, CSI has approximately US$90 million in available credit lines.

    Revenue by Geography (US$ thousands)
                             Q207             Q107            Q206
    Region              Revenue    %     Revenue    %    Revenue    %
    Asia                 2,959   4.9 %    3,308  18.9 %      96   0.6 %
                        57,282  94.8 %   12,139  69.4 %  16,602  96.3 %
    North America
                           142   0.2 %      225   1.3 %     528   3.1 %
    South America
                            --    --      1,817  10.4 %      --    --
                            30   0.1 %       --   0.0 %      24   0.0 %
    Total Net
    Revenue             60,413 100.0 %   17,489 100.0 %  17,250 100.0 %

    Note: Asian revenue included $2.7 million silicon materials sales in Q207
          and $2.8 million silicon materials sales in Q107.


Based on current market conditions, our order backlog and our production capacity, we are increasing our prior guidance of net revenues for the full year 2007 to $255-$265 million from $220-$230 million. Shipments for the year are expected to be 70-75MW, compared to our original estimate of 64MW. Based on indications from our key customers, the Company estimates that the demand for CSI module products in 2008 is now over 200MW.

Net revenues for the third quarter of 2007 are expected to be $80-$85 million, with cash operating income, determined on a non-GAAP basis by excluding share based compensation, in the range of $1.6-$2.0 million. Shipments for the third quarter of 2007 are expected to be 20-23 MW. In the third quarter, our current customer backlog orders are enabling us to better utilize our existing inventory of all cell grades, which will help us increase our product efficiency and improve our profit margins on the module sales.

Investor Conference Call / Webcast Details

A conference call has been scheduled for 9:00 p.m. on Tuesday, August 14, 2007 (in Jiangsu). This will be 9:00 a.m. on Tuesday, August 14, 2007 in New York. During the call, time will be set aside for analysts and interested investors to ask questions of executive officers.

The call may be accessed by dialing +1-866-202-0886 (domestic) or +1-617- 213-8841 (international). The passcode to access the call is 62629322. A replay of the call will be available starting one hour after the call and continuing until 11:00p.m. on Tuesday, August 21, 2007 (in Jiangsu) or 11:00a.m. on Tuesday, August 21, 2007 (in New York) at and by telephone at +1-888-286-8010 (domestic) or +1-617-801-6888 (international). The passcode to access the replay is 54310460.

About Canadian Solar Inc. (Nasdaq: CSIQ)

Founded in 2001, Canadian Solar Inc. (CSI) is a vertically integrated manufacturer of solar cell, solar module and custom-designed solar application products serving worldwide customers. CSI is incorporated in Canada and conducts all of its manufacturing operations in China. Backed by years of experience and knowledge in the solar power market and the silicon industry, CSI has become a major global provider of solar power products for a wide range of applications. For more information, please visit .

Safe Harbor/Forward-Looking Statements

Certain statements in this press release including statements regarding expected future financial and industry growth 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 shortage or availability of the supply 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, including customers of our silicon materials sales; 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 price; delays in new product introduction; continued success in technological innovations and delivery of products with the features customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company's SEC filings, including its annual report on Form 20-F originally filed on May 29, 2007 and its registration statement on Form F-1 originally filed on October 23, 2006, as amended. 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 CSI undertakes no duty to update such information, except as required under applicable law.

                             Canadian Solar Inc.
               Condensed Consolidated Statements of Operations
      (In Thousands of U.S. Dollars, except share and per share data and
                           unless otherwise stated)

                                 Q2 2007     Q2 2006     H1 2007     H1 2006
    Net Revenues:

    Net Revenues - product        60,413      17,240      77,902      25,973

    Net Revenues - others             --          10          --          68

    Total Net revenues            60,413      17,250      77,902      26,041

    Cost of Revenues:
    Cost of Revenues -
     product                      57,940      12,294      75,084      18,555
    Cost of Revenues -
     others                           --          10          --          68

    Total Cost of Sales           57,940      12,304      75,084      18,623

    Gross profit                   2,473       4,946       2,818       7,418
    Operating expenses

    Selling expenses               1,294         404       2,347         529
    General and
     administrative expenses       3,765       1,354       6,851       1,750
    Research and
     development expenses            204          17         390          44

    Total operating expenses       5,263       1,775       9,588       2,323
    Income/(Loss) from
     operations:                  (2,790)      3,171      (6,770)      5,095
    Other income (expenses):

    Interest expenses               (275)       (881)       (342)     (1,635)

    Interest income                   41          34         326          53
    Loss on change in fair
     value of derivatives             --          --          --      (6,997)
    Loss on change in fair
     value of instruments
     related to convertible
     notes                            --          --          --      (1,190)

    Others - net                      --          (7)         --          (1)
    Income (loss) before
     taxes                        (3,024)      2,317      (6,786)     (4,675)

    Income taxes                     153         183          61         111

    Net Income (loss)             (2,871)      2,500      (6,725)     (4,564)

    Basic (loss)/gain per
     share                         (0.11)       0.16       (0.25)      (0.30)
    Basic weighted averaging
     outstanding shares       27,276,699  15,427,995  27,273,350  15,427,995

                             Canadian Solar Inc.
     Reconciliation of US GAAP Gross Profit, Operating Income (Loss) and
                             Net Income (Loss) to
       Non-US GAAP Gross Profit, Operating Income (Loss) and Net Income
                    Use of Non-GAAP Financial Information

To supplement its condensed consolidated financial statements presented in

accordance with GAAP, CSI uses the following measures as defined as non-GAAP

financial measures by the SEC: adjusted gross profit, adjusted operating

income (loss) and adjusted net income (loss), each excluding share-based compensation and other one-time non-cash charges, expenses or gains, which we

refer to as special items. CSI believes that non-GAAP adjusted gross profit,

adjusted operating income (loss) and adjusted net income (loss) measures indicate the company's baseline performance before subtracting other charges. In addition, these non-GAAP measures are among the primary indicators used by the management as a basis for its planning and forecasting of future periods.

The presentation of these non-GAAP measures is not intended to be considered

in isolation or as a substitute for the financial information prepared and

                      presented in accordance with GAAP.

                       Q2 2007                     Q2 2006
                       Gross   Operating  Net      Gross  Operating   Net
                       Profit  Income     Income   Profit Income      Income
                               (Loss)     (Loss)          (Loss)      (Loss)

    Profit/(Loss)      2,473   (2,790)    (2,871)  4,946  3,171       2,500
      Note charge                                                       303
      charge              57    2,365      2,365      24    590         590

    Total special
     items                57    2,365      2,365      24    590         893
    Non-US GAAP
     Profit/(Loss)     2,530     (425)      (506)  4,970  3,761       3,393
    Adjusted Gross
     Margin                                 4.19 %                    28.67 %
     Expense - % of
     Revenue                                4.89 %                     7.01 %
     Operating Margin                      (0.70)%                    21.80 %

                              H1 2007                     H1 2006
                      Gross   Operating  Net      Gross   Operating  Net
                      Profit  Income     Income   Profit  Income     Income
                              (Loss)     (Loss)           (Loss)     (Loss)

    Profit/(Loss)      2,818    (6,770)  (6,725)   7,418     5,095   (4,564)
      Note charge                                                     8,893
      charge             126     4,589    4,589      24        590      590

    Total special
     items               126     4,589    4,589      24        590    9,483
    Non-US GAAP
     Profit/(Loss)     2,944    (2,181)  (2,136)  7,442      5,685    4,919
    Adjusted Gross
     Margin                                3.78 %                     28.58 %
     Expense - % of
     Revenue                               6.58 %                      6.75 %
     Operating Margin                     (2.80)%                     21.83 %

    Non-US GAAP adjusted condensed consolidated statements of operations
    are intended to present the Company's operating results, excluding
    special items.

                             Canadian Solar Inc.
               Unaudited Condensed Consolidated Balance Sheets
                        (In Thousands of U.S. Dollars)

                                                      June 30     December 31
                                                        2007           2006
    Current Assets:

    Cash and cash equivalents                          22,869         40,911

    Restricted cash                                     1,577            825

    Accounts receivable, net                           39,249         17,344

    Inventories                                        59,775         39,700

    Value added tax recoverable                         6,696          2,281

    Advances to suppliers                              13,244         13,484
    Prepaid and other current
     assets                                             1,251          2,398

    Total current assets                              144,661        116,943
    Property, plant and equipment,
     net                                               21,656          7,910

    Intangible assets                                      54             39

    Prepaid lease payments                              1,168          1,103
    Deferred tax assets - non
     current                                            3,508          3,639

    TOTAL ASSETS                                      171,047        129,634

    Current liabilities:

    Short term borrowings                              37,679          3,311

    Accounts payable                                    6,033          6,874

    Other payables                                      4,332            993
    Advances from suppliers and
     customers                                          7,785          3,225

    Income tax payable                                    492            112

    Amounts due to related parties                        188            149

    Other current liabilities                           1,025          1,191

    Total current liabilities                          57,534         15,855

    Accrued warranty costs                              1,597            875

    TOTAL LIABILITIES                                  59,131         16,730

    Stockholders' equity

    Common shares                                      97,354         97,302

    Additional paid in capital                         21,923         17,334

    Accumulated deficit                               (10,119)        (2,783)
    Accumulated other
     comprehensive income                               2,758          1,051

    Total stockholders' equity                        111,916        112,904

     EQUITY                                           171,047        129,634

    For more information, please contact:

    In Jiangsu, P.R. China:
     Bing Zhu, Chief Financial Officer
     Canadian Solar Inc.
     Phone: +86-512-6269-6755

    In the U.S.:
     David Pasquale
     The Ruth Group
     Phone: +1-646-536-7006
SOURCE  Canadian Solar Inc.
    -0-                             08/14/2007
    /CONTACT: In Jiangsu, P.R. China, contact Bing Zhu, Chief Financial
Officer of Canadian Solar Inc. at +86-512-6269-6755, or; in
the U.S., contact David Pasquale of The Ruth Group at +1-646-536-7006, or /
    /Web site: /

CO:  Canadian Solar Inc.
ST:  China

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