News Releases

Canadian Solar Reports Third Quarter 2006 Results


Company to Hold Conference Call Today at 9 a.m. New York Time

  • Third quarter 2006 net revenues increased to $17.8 million, compared to $4.5 million for the third quarter of 2005
  • Third quarter 2006 non-GAAP diluted earnings per share of $0.15, compared to $0.08 for the third quarter of 2005
  • CSI expects fourth quarter 2006 net revenues to be in the range of $24.5 million to $26 million, including approximately $8.1 million of silicon materials sales, compared to net revenues of $6.81 million for the fourth quarter 2005

JIANGSU, CHINA--(MARKET WIRE)--Dec 11, 2006 -- Canadian Solar Inc. ("the Company", or "CSI") (NASDAQ: CSIQ) today reported unaudited financial results for the three and nine months ended September 30, 2006.

Net revenues for the third quarter of 2006 was $17.8 million, compared to $4.5 million for the third quarter of 2005. Net income was $0.2 million, or $0.01 per diluted share, compared to a net income of $1.2 million, or $0.08 per diluted share for the third quarter of 2005. Excluding share-based compensation of $2.9 million or $0.14 per diluted share, net income for the third quarter of 2006 was $0.15 per diluted share.

Shawn Qu, Chairman and CEO of CSI, commented: "We had another good quarter, led by the continued growth in sales to our existing customers, particularly in Germany and Spain. Our diversified supply chain approach, long-term supply agreements and silicon reclamation program helped us to offset relatively high material costs. Separately, we raised approximately $83.2 million from our initial public offering, providing us with capital to continue implementing our growth strategy, which includes bringing four solar cell production lines online in 2007."

Bing Zhu, Chief Financial Officer of CSI, said: "On a non-GAAP basis (excluding non-cash charges relating to share-based compensation and the convertible note), we achieved year-over-year net revenues and net income growth in the third quarter."

As of September 30, 2006, the Company had cash and cash equivalents of $12.2 million. This amount does not include the approximately $83 million net proceeds from the Company's initial public offering that will be recorded in the fourth quarter of 2006.


Based on current market conditions and customer forecasts, the Company expects its net revenues for the fourth quarter of 2006 to be approximately $24.5 million to $26 million, including approximately $8.1 million of silicon materials sales, compared to net revenues of $6.81 million for the fourth quarter of 2005 and $17.8 million for the third quarter of 2006. The fourth quarter will include charges of approximately $2.69 million or $0.11 per diluted share relating to share-based compensation.

With respect to the fourth quarter of 2006, Mr. Qu commented: "I just returned this past Saturday from another visit to our key German market. Unlike earlier visits, I observed some weakness in this important market, which I believe is attributable, in part, to inventory clearance efforts by smaller solar module makers, many of whom are, I believe leaving the market. Although industry consolidation will benefit the overall market and CSI in the mid- to long-term, in the short term, the current inventory clearance efforts by these smaller solar module makers have caused some of CSI's German distributors to delay or reduce their end-of-year product stocking plans, thereby impacting CSI's near-term operating results. We believe, following our IPO, CSI is well-capitalized and our financial strength will allow us to weather near-term market volatility."

Looking forward, Mr. Qu stated: "CSI is addressing the situation by taking the following measures:

  • we are working closely with our long-term distributors in their business planning, and increasing our support for their marketing and branding programs;
  • we are accelerating our marketing efforts outside of Germany, particularly in Spain, the U.S. and Korea; and
  • we are renegotiating our existing feedstock supply agreements and entering into new, more favorable, long-term supply agreements by leveraging our purchase volumes and financial strength with our loyal suppliers. The new supply contracts have allowed us to sell a limited amount of our existing solar silicon materials and will permit us to further reduce costs."

Investor Conference Call / Webcast Details

A conference call has been scheduled for 10:00 p.m. on Monday, December 11, 2006 (in Jiangsu). This will be 9:00 a.m. on Monday, December 11, 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 +1-201-689-8471. A replay of the call will be available starting two hours after the live call through to 1:00 p.m. on Thursday, December 21, 2006 (in Jiangsu) or midnight on Wednesday, December 20, 2006 (in New York) at and by telephone at +1-201-612-7415. The account number to access the replay is 3055 and the conference ID number is 223686.

About Canadian Solar Inc.

Founded in 2001, Canadian Solar Inc. (CSI) is a standard solar module and specialty solar module and product company, serving customers located in various markets worldwide. 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 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 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 and in the attachments is as of December 11, 2006, and CSI 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)

                                 Three Months             Nine Months
                              Ended September 30      Ended September 30,
                               2006        2005        2006        2005

Products                    $   17,799  $    4,530  $   43,773  $   11,084
Others                               -           -          68         428
                            ----------  ----------  ----------  ----------
Total net revenues          $   17,799  $    4,530  $   43,841  $   11,512
Total cost of revenues          12,977       2,784      31,601       6,704
                            ----------  ----------  ----------  ----------
Gross profit                     4,822       1,746      12,240       4,808

Operating expenses:
  Selling expenses               1,147          33       1,676         100
  General and
   administrative expenses       2,733         465       4,483       1,226
  Research and development
   expenses                         70           2         115          10
                            ----------  ----------  ----------  ----------
Total operating expenses         3,950         500       6,274       1,336
                            ----------  ----------  ----------  ----------
Operating income (loss)            872       1,246       5,966       3,472

Interest Expenses                 (346)          -      (1,980)          -
Interest income                     38           4          91           8
Loss on change in fair
 value of derivatives                -           -      (6,997)          -
Loss on financial
 instruments related to
 convertible notes                   -           -      (1,190)          -
Other income (expenses),
 net                               (12)         (7)        (13)        (21)
                            ----------  ----------  ----------  ----------

Income (loss) before income
 taxes                             552       1,243      (4,123)      3,459
Income tax expense                (313)         (6)       (202)       (342)

                            ----------  ----------  ----------  ----------
Net income (loss)           $      239  $    1,237  $   (4,325) $    3,116
                            ==========  ==========  ==========  ==========

Basic earnings per share    $     0.01  $     0.08  ($    0.25) $     0.20

Diluted earnings per share  $     0.01  $     0.08  ($    0.25) $     0.20

Basic weighted average
 outstanding shares         20,970,000  15,427,995  17,275,330  15,427,995
Diluted weighted average
 outstanding shares         20,998,344  15,427,995  17,275,330  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 (Loss)
                      (In thousands of US Dollars)

Use of Non-US GAAP Financial Information

To supplement its condensed consolidated financial statements presented on
a US GAAP basis, Canadian Solar uses non-US GAAP measures of gross profit,
operating income (loss) and net income (loss), that are US GAAP gross
profit, operating income (loss) and net income (loss) adjusted to exclude
certain costs, expenses or gains, referred to as special items. Non-US
GAAP adjusted gross profit, operating income (loss) and net income (loss)
measure give an indication of the company's baseline performance before
other charges that are considered by management to be outside of its core
operating results. In addition, the company's non-US GAAP adjusted measure
of gross profit, operating income (loss) and net income (loss) are among
the primary indicators management uses as a basis for its planning and
forecasting of future periods.  The presentation of this additional
information should not be considered in isolation or as a substitute for
gross profit, operating income (loss) and net income (loss) prepared in
accordance with generally accepted accounting principles in the United
States of America.

                       Three Months Ended          Three Months Ended
                       September 30, 2006          September 30, 2005

                            Operating   Net             Operating   Net
                     Gross   Income   Income     Gross   Income   Income
                    Profit   (Loss)   (Loss)    Profit   (Loss)   (Loss)
                    -------  -------  -------   -------  -------  -------
US GAAP Amounts     $ 4,822  $   872  $   239   $ 1,746  $ 1,246  $ 1,237

Special items
  Share based
   charges               73    2,904    2,904         -        -        -

Total special items      73    2,904    2,904         -        -        -

Non-US GAAP Profit  $ 4,895  $ 3,776  $ 3,143   $ 1,746  $ 1,246  $ 1,237

Adjusted Gross
 Margin                                  27.5%                       38.5%
Adjusted Operating
 Expense - % of
 Revenue                                  6.3%                       11.0%
Adjusted Operating
 Margin                                  21.2%                       27.5%

                       Nine Months Ended           Nine Months Ended
                       September 30, 2006          September 30, 2005

                            Operating   Net             Operating   Net
                     Gross   Income   Income     Gross   Income   Income
                    Profit   (Loss)   (Loss)    Profit   (Loss)   (Loss)
                    -------  -------  -------   -------  -------  -------
US GAAP Amounts     $12,240  $ 5,966 ($ 4,325)  $ 4,808  $ 3,472  $ 3,116

Special items
  Share based
   charges               97    3,494    3,494         -        -        -
                    -------  -------  -------   -------  -------  -------
  Non-cash charges
   relating to
   notes                  -        -    8,893         -        -        -

Total special items      97    3,494   12,387         -        -        -
                    -------  -------  -------   -------  -------  -------

Non-US GAAP Profit  $12,337  $ 9,460  $ 8,062   $ 4,808  $ 3,472  $ 3,116

Adjusted Gross
 Margin                                  28.1%                       41.8%
Adjusted Operating
 Expense - % of
 Revenue                                  6.5%                       11.6%
Adjusted Operating
 Margin                                  21.6%                       30.2%
                    -------  -------  -------   -------  -------  -------

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)

                                                September 30,  December 30,
                                                    2006          2005

Current assets:
Cash and cash equivalents                              12,239         6,280
Restricted cash                                           771           112
Accounts receivable                                     8,440         2,067
Inventories                                            30,005        12,163

Advances to suppliers                                   4,212         4,739
Other current assets                                    2,553         1,072

Total current assets                                   58,220        26,433
Property, plant and equipment, net                      3,486           932
Intangible assets, net                                    526             -
Deferred offering cost                                  3,780             -
Deferred tax assets (non-current)                         256            65
TOTAL ASSETS                                           66,268        27,430
Current liabilities:
Short-term borrowing                                   23,190         1,300
Accounts payable                                        2,445         4,306

Advances from suppliers and customers                   6,414         2,823

Income tax payable                                        575           914

Amounts due to related parties                            103           431

Embedded derivatives related to convertible notes           -         3,679
Other current liabilities                               4,687         1,914
Total current liabilities                              37,414        15,367
Accrued warranty costs                                    769           341
Convertible notes                                           -         3,387
Financial instruments related to convertible notes          -         1,107
Other non-current liabilities                             982           261

TOTAL LIABILITIES                                      39,165        20,463

Paid-in capital                                        10,373           211
Additional paid-in capital                             13,910             -
Retained earnings                                       2,322         6,647
Foreign currency translation reserve                      498           109
Total stockholder's equity                             27,103         6,967
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY             66,268        27,430

In Calgary, Alberta
Bob Patterson
VP, Corporate Development
Canadian Solar Inc.
Email Contact  
In the U.S.
David Pasquale
The Ruth Group
Email Contact