Canadian Solar Reports Third Quarter 2007 Results
-- Q3 net revenues of $97.4 million, a 61% increase over Q2 net
revenues of $60.4 million
-- Q3 earnings per diluted share of $0.02 compared to Q2 loss per
diluted share of $0.11
-- Full year 2007 net revenue guidance increased to $285-$295 million
from previous guidance of $255-$265 million
-- Full year 2008 net revenue expected to be $650-$750 million and
shipments expected to be 200-220MW
JIANGSU, China, Nov. 14 /Xinhua-PRNewswire/ -- Canadian Solar Inc. ("the Company," "CSI," or "we") (Nasdaq: CSIQ) today reported its preliminary unaudited US GAAP financial information for the third quarter of 2007 ended September 30, 2007.
Net revenues for the quarter were $97.4 million, including $3.8 million of silicon material sales, compared to net revenues of $17.8 million for the third quarter of 2006 and $60.4 million for the second quarter of 2007. Net revenues for the second quarter of 2007 included $2.7 million of silicon material sales. Net income for the quarter was $0.5 million, or $0.02 per diluted share, compared to net income of $0.24 million, or $0.01 per diluted share, for the third quarter of 2006 and net loss of $2.9 million, or $0.11 per diluted share, for the second quarter of 2007. Excluding share-based compensation expenses of $2.4 million, non-GAAP net income for the quarter would have been $3.0 million, or $0.11 per diluted share.
Dr. Shawn Qu, Chairman and CEO of CSI, commented: "Q3 was another strong quarter for us as we achieved revenues above our guidance for the second quarter in a row. Our return to profitability was achieved through continued sales momentum, improved production yields, better inventory controls, improved cash management and stable pricing. As a result, we were able to increase our product shipments and improve our profit margins as forecast despite modest price increases in materials from some suppliers. Our second 25MW solar cell manufacturing line is now operating at full production capacity. In addition, we have completed the installation of our third and fourth lines, and expect to bring our total internal solar cell manufacturing capacity to 100MW starting next month. During the quarter, we also added new members to our Board of Directors and expanded our executive management team to help manage the next phase of our growth. Our strengthened supply situation and execution have led to increased confidence in our forecasts for revenue growth and margin improvement in Q4 and 2008."
Bing Zhu, CFO of CSI, noted: "As expected, our gross margins improved in Q3 due to the combination of continued sales growth and effective cost controls, as well as our increased in-house solar cell manufacturing capability. Our current progress in Q4 gives us confidence that we will be able to continue our pace of growth and profitability improvement in 2008."
Revenue by Geography (US $ thousands)
Q307 Q207 Q306
Region Revenue % Revenue % Revenue %
Asia 4,097 4.20% 2,959 4.90% 569 3.20%
Europe 93,036 95.48% 57,282 94.82% 16,613 93.33%
Americas -- -- 142 0.23% 575 3.23%
Other 304 0.32% 30 0.05% 43 0.24%
Total Net Revenue 97,437 100.00% 60,413 100.00% 17,800 100.00%
Note: Asian revenue included $3.8 million of silicon materials sales in
the third quarter of 2007 and $2.7 million of silicon materials sales in
the second quarter of 2007.
Recent Developments
The construction of our new Changshu solar module plant is currently on schedule. We expect the new plant, which will have 24,000 square meters of production and training space, to open in January 2008, bringing our total annual solar module production capacity to 400MW.
We have commenced work on two new projects:
-- Expansion of our solar cell manufacturing capacity from 100MW to 250 MW.
We expect to complete this project by the summer of 2008; and
-- Construction of a solar ingot and wafer plant in the City of Luoyang,
China. We expect to complete Phase One of this project by the summer
of 2008, which will give us an annual solar wafer capacity of 40-60MW.
Outlook
Dr. Qu continued: "We recently announced sales contracts in Spain, the U.S. and Germany, all of which are important solar industry growth markets. Customer demand remains strong and our operational structure is now much leaner. We are positioned for further growth as we demonstrate the successful leveraging of our operating model."
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 $285-$295 million from the previous guidance of $255-$265 million. The total annual shipments are expected to be about 80MW, including some OEM tolling business.
Net revenue for the fourth quarter of 2007 is expected to be $110-$120 million, with non-GAAP operating income, determined by excluding share based compensation expenses expected to be in the range from $8.0-$8.5 million. Shipments for the fourth quarter of 2007 are expected to be approximately 35 MW.
Based on current customer orders and market forecasts, we expect net revenue for 2008 to be $650-$750 million. The Company intends to continue its long-term supply chain strategy, which combines internal solar wafer and cell production and direct purchasing from a selected number of long-term strategic wafer and cell suppliers. The Company believes that it has contractually secured 90% of its silicon or cell requirements to support module production of 200-220MW in 2008. The Company continues to evaluate new technologies, including the use of metallurgical silicon (UMG) products, which, if successful, would have the potential to increase total shipments by 30-40MW in 2008.
Investor Conference Call / Webcast Details
A conference call has been scheduled for 10:00 p.m. on Wednesday, November 14, 2007 (in Jiangsu). This will be 9:00 a.m. on Wednesday, November 14, 2007 in New York. During the call, time will be set aside for analysts and interested investors to ask questions of senior executive officers of the Company.
The call may be accessed by dialing: +1-800-435-1398 (domestic) or +1-617- 614-4078 (international). The passcode to access the call is: 74227024. A replay of the call will be available starting one hour after the call and continuing until 12:00 a.m. on Thursday, November 22, 2007 (in Jiangsu) or 11:00a.m. on Wednesday, November 21, 2007 (in New York) at http://www.csisolar.com and by telephone at +1-888-286-8010 (domestic) or +1- 617-801-6888 (international). The passcode to access the replay is: 90058052.
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 customers 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, please visit http://www.csisolar.com .
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. 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.
Condensed Consolidated Statements of Operations
(In Thousands of U.S. Dollars, except share
and per share data and unless otherwise stated)
9 Months 9 Months
Q3 2007 Q3 2006 2007 2006
Net revenues:
Net revenues - product 97,437 17,799 175,339 43,773
Net revenues - others -- -- 68
Total net revenues 97,437 17,799 175,339 43,841
Cost of revenues:
Cost of revenues - product 91,088 12,977 166,172 31,533
Cost of revenues - others -- -- 68
Total cost of sales 91,088 12,977 166,172 31,601
Gross profit 6,349 4,822 9,167 12,240
Operating expenses:
Selling expenses 2,214 1,147 4,560 1676
General and administrative
expenses 4,527 2,733 11,378 4,483
Research and development
expenses 287 70 677 115
Total operating expenses 7,028 3,950 16,615 6,274
Income/(loss) from
operations (679) 872 (7,448) 5,966
Other income (expenses):
Interest expenses (601) (346) (943) (1,980)
Interest income 70 38 396 91
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 1,716 (12) 1,716 (13)
Income (loss) before taxes 506 552 (6,279) (4,123)
Income taxes 16 (313) 77 (202)
Net income (loss) 522 239 (6,202) (4,325)
Basic gain (loss) per share 0.02 0.01 (0.23) (0.25)
Basic weighted average
outstanding shares 27,290,298 20,970,000 27,279,021 17,275,330
Diluted gain (loss) per
share 0.02 0.01 (0.23) (0.25)
Diluted weighted average
outstanding shares 27,416,859 20,998,334 27,279,021 17,275,330
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)
(Unaudited)
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 those 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.
Q3 2007 Q3 2006
Gross Operating Net Gross Operating Net
Profit Income Income Profit Income Income
(Loss) (Loss) (Loss) (Loss)
US GAAP Profit
(Loss) 6,349 (679) 522 4,822 872 239
Share-based
compensation 36 2,428 2,428 73 2,904 2,904
Total Special Items 36 2,428 2,428 73 2,904 2,904
Non-US GAAP Profit
(Loss) 6,385 1,749 2,950 4,895 3,776 3,143
Non-US GAAP Gain
(Loss) per
Diluted Share 0.11 0.15
Adjusted Gross
Margin 6.55% 27.50%
Adjusted Operating
Margin 1.80% 21.21%
9 Months 2007 9 Months 2006
Gross Operating Net Gross Operating Net
Profit Income Income Profit Income Income
(Loss) (Loss) (Loss) (Loss)
US GAAP Profit
(Loss) 9,167 (7,448) (6,202) 12,240 5,966 (4,325)
Convertible Note
charge 8,893
Share-based
compensation 162 7,018 7,018 97 3,494 3,494
Total Special Items 162 7,018 7,018 97 3,494 12,387
Non-US GAAP Profit
(Loss) 9,329 (430) 816 12,337 9,460 8,062
Non-US GAAP Gain
(Loss) per
Diluted Share 0.03 0.47
Adjusted Gross
Margin 5.32% 28.14%
Adjusted Operating
Margin (0.25)% 21.58%
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 31
2007 2006
ASSETS
Current assets:
Cash and cash equivalents 27,402 40,911
Restricted cash 3,357 825
Accounts receivable, net 49,061 17,344
Inventories 65,918 39,700
Value added tax recoverable 7,926 2,281
Advances to suppliers 18,731 13,484
Prepaid and other current assets 2,473 2,398
Total current assets 174,868 116,943
Property, plant and equipment, net 31,688 7,910
Intangible assets 91 39
Prepaid lease payments 1,178 1,103
Deferred tax assets - non current 3,837 3,639
TOTAL ASSETS 211,662 129,634
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Short term borrowings 51,651 3,311
Accounts payable 14,919 6,874
Other payables 5,189 993
Advances from suppliers and customers 9,496 3,225
Income tax payable 509 112
Amounts due to related parties 202 149
Other current liabilities 1,330 1,191
Total current liabilities 83,296 15,855
Accrued warranty costs 2,552 875
Long term debt 10,003
TOTAL LIABILITIES 95,851 16,730
Stockholders' equity
Common shares 97,354 97,302
Additional paid in capital 24,352 17,334
Accumulated deficit (9,597) (2,783)
Accumulated other comprehensive income 3,702 1,051
TOTAL STOCKHOLDERS' EQUITY 115,811 112,904
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 211,662 129,634
For more information, please contact:
In Jiangsu, P.R. China
Bing Zhu, Chief Financial Officer
Canadian Solar Inc.
Tel: +86-512-6269-6755
Email: ir@csisolar.com
In the U.S.
David Pasquale
The Ruth Group
Tel: +1-646-536-7006
Email: dpasquale@theruthgroup.com
SOURCE Canadian Solar Inc.
-0- 11/14/2007
/CONTACT: In Jiangsu, P.R. China - Bing Zhu, Chief Financial Officer of
Canadian Solar Inc., +86-512-6269-6755, or ir@csisolar.com; or In the U.S. -
David Pasquale of The Ruth Group, +1-646-536-7006, or
dpasquale@theruthgroup.com, for Canadian Solar Inc. /
/Web Site: http://www.csisolar.com /
(CSIQ)
CO: Canadian Solar Inc.
ST: China
IN: CPR CSE OIL
SU: ASI CCA ERN
MM
-- CNW033 --
0465 11/14/2007 07:00 EST http://www.prnewswire.com