Canadian Solar Reports Third Quarter 2018 Results
Third Quarter 2018 Highlights
- Net revenue was
$768.0 million , compared to$650.6 million in the second quarter of 2018, and third quarter 2018 guidance in the range of$790 million to $840 million . - Gross margin was 26.1%, compared to 24.5% in the second quarter of 2018, and third quarter guidance of 20.0% to 23.0%.
- Net income attributable to
Canadian Solar was$66.5 million , or$1.09 per diluted share, compared to$15.6 million , or$0.26 per diluted share, in the second quarter of 2018. - During the quarter, the Company completed the sale of solar power plants totaling 103 MWp, including 64 MWp in
Japan . - Net cash provided by operating activities was approximately
$148 million , compared to net cash used in operating activities of$174 million in the second quarter of 2018. - The Company's portfolio of utility-scale solar power plants in operation was approximately 1.1 GWp with an estimated total resale value of approximately
$1.23 billion , as ofOctober 31, 2018 . Only the value of class B shares, which the Company holds in its tax equity solar power plants in the U.S., is included in this resale value.
Third Quarter 2018 Results
Net revenue in the third quarter of 2018 was
Total solar module shipments in the third quarter of 2018 were 1,590 MW, compared to 1,700 MW in the second quarter of 2018, and third quarter of 2018 guidance in the range of 1,500 MW to 1,600 MW. Total solar module shipments in the third quarter of 2018 included 180 MW shipped to the Company's projects. Solar module shipments recognized in revenue in the third quarter of 2018 totaled 1,521 MW, compared to 1,454 MW in the second quarter of 2018 and 1,782 MW in the third quarter of 2017.
Gross profit in the third quarter of 2018 was
The Company has been operating in two principal businesses since 2016: the MSS business and the Energy business. The MSS business comprises primarily the designing, development, manufacturing and sale of solar modules, other solar power products, solar system kits and the provision of EPC and Operating and Maintenance (O&M) services. The Energy business comprises primarily the development and sale of solar projects, operating solar power projects and the sale of electricity. The module sales from the Company's MSS business to its Energy business are on terms and conditions similar to sales to third parties.
The Company develops solar power projects, then applies for feed-in tariff (FIT), negotiates energy off-take agreements or bids these projects in energy auctions. As we usually bid in energy auctions 2 to 4 years before solar power projects reach commercial operation, the actual gross margin varies, due to the country, project specific risk, the expected length of capital investment, price movements of solar modules and other components, engineering, procurement and construction (EPC), the capital return requirements of solar asset buyers and fluctuations of local currencies, among other factors. In recent years, the Company sold some solar projects before commercial operation date (COD). We typically refer to these as NTP sales. Revenue will be lower, while gross margin percentage will be higher in NTP sales compared to COD sales, even if the absolute margin is the same. Results from the Company's Energy business may be lumpy quarter to quarter, depending on the NTP or COD dates, sales transaction dates, and the profit level of each project.
The following table summarizes the Company's revenues and gross profit generated from each business:
Three Months Ended September 30, 2018 |
||||||||||||
MSS |
Energy |
Elimination |
Total |
|||||||||
Net revenues |
585,867 |
255,646 |
(73,543) |
767,970 |
||||||||
Cost of revenues |
455,415 |
183,598 |
(71,434) |
567,579 |
||||||||
Gross profit |
130,452 |
72,048 |
(2,109) |
200,391 |
Nine Months Ended September 30, 2018 |
|||||||||||
MSS |
Energy |
Elimination |
Total |
||||||||
Net revenues |
1,784,174 |
1,239,378 |
(180,081) |
2,843,471 |
|||||||
Cost of revenues |
1,450,902 |
1,058,856 |
(170,060) |
2,339,698 |
|||||||
Gross profit |
333,272 |
180,522 |
(10,021) |
503,773 |
The following table summarizes the Company's revenues generated from each product or service:
Three Months |
Nine Months |
||||||
(in Thousands of US Dollars) |
|||||||
Module and System Solutions: |
|||||||
Solar modules and other solar power products |
440,262 |
1,432,162 |
|||||
Solar system kits |
21,910 |
68,833 |
|||||
EPC and development services |
32,124 |
41,269 |
|||||
O&M services |
2,380 |
7,470 |
|||||
Other |
15,648 |
54,359 |
|||||
Energy: |
|||||||
Solar power projects |
250,981 |
1,216,422 |
|||||
Electricity |
2,013 |
7,128 |
|||||
Other |
2,652 |
15,828 |
|||||
Total net revenues |
767,970 |
2,843,471 |
Total operating expenses in the third quarter of 2018 were
Other operating income in the third quarter of 2018 was
Income from operations in the third quarter of 2018 was
Non-cash depreciation and amortization charges in the third quarter of 2018 were approximately
Interest expense in the third quarter of 2018 was
Interest income in the third quarter of 2018 was
The Company recorded a loss on the change in fair value of derivatives in the third quarter of 2018 of
Income tax expense in the third quarter of 2018 was
Net income attributable to
Financial Condition
The Company had a cash, cash equivalents and restricted cash balance of
Accounts receivable, net of allowance for doubtful accounts, at the end of the third quarter of 2018 were
Inventories at the end of the third quarter of 2018 were
Accounts and notes payable at the end of the third quarter of 2018 were
Short-term borrowings at the end of the third quarter of 2018 were
Senior convertible notes totaled
Total borrowings directly related to the Company's utility-scale solar power projects were
Dr.
Dr.
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 primarily includes projects that have energy off-take agreements and are expected to be built within the next two to four years. The Company cautions that some late-stage projects may not reach completion due to risks such as failure to secure permits and grid connection, among others.
Late-Stage, Utility-Scale Solar Project Pipeline
As of
In
The Company's late-stage, utility-scale solar project pipeline in the U.S. as of
Project |
MWp |
Storage (MWh) |
Location |
Status |
Expected COD |
Mustang Two |
210 |
N/A |
California |
Development |
2020 |
Gaskell West 2 |
147 |
N/A |
California |
Development |
2020 |
Pflugerville |
185 |
N/A |
Texas |
Development |
2020 |
Texas Project |
280 |
N/A |
Texas |
Development |
2020 |
Slate |
200 |
180 |
California |
Development |
2021 |
Total |
1,022 |
In
In
The table below sets forth the expected COD of the Company's late-stage, utility-scale solar power projects in
Expected COD Schedule (MWp) |
||||||||
2H2018 |
2019 |
2020 |
2021 and |
Total |
||||
13.2 |
70.3 |
60.6 |
165.9 |
310.0 |
The Company plans to sell most of its late-stage projects in
In
Project |
MWp |
Location |
Status |
Expected COD |
Francisco Sa |
122.2 |
Minas Gerais |
Development |
2021 |
Jaiba |
97.3 |
Minas Gerais |
Development |
2021 |
Lavras |
144.7 |
Ceara |
Development |
2021 |
Salgueiro |
112 |
Pernambuco |
Development |
2020 |
Total |
476.2 |
In
Project |
MWp |
Location |
Status |
Expected COD |
EL Mayo |
124 |
Sonora |
Development |
2020 |
Horus |
119 |
Aguascalientes |
Development |
2020 |
Tastiota |
125 |
Sonora |
Development |
2020 |
Aguascalientes |
67.7 |
Aguascalientes |
Construction |
2019 |
Total |
435.7 |
In
Solar Power Plants in Operation
In addition to its late-stage, utility-scale solar project pipeline, as of
The sale of projects 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
U.S. |
Japan |
Brazil |
China |
India |
Others |
Total |
340.1 |
92.9 |
79.8 |
462.6 |
126.1 |
46.7 |
1,148.2 |
Manufacturing Capacity
The table below sets forth the Company's capacity expansion plan from
Manufacturing Capacity Roadmap (MW) |
|||
31-Dec-18 |
30-Jun-19 |
31-Dec-19 |
|
Ingot |
1,650 |
1,650 |
1,650 |
Wafer |
5,000 |
5,000 |
5,000 |
Cell |
6,250 |
6,300 |
7,100 |
Module |
8,700 |
9,360 |
9,640 |
The Company's manufacturing capacity expansion plans for 2019 are under review and subject to change based on market conditions.
Business Outlook
The Company's business outlook is based on management's current views and estimates with respect to operating and market conditions, its current order book and the global financing environment. It is subject to uncertainty relating to solar module average selling prices, 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 2018, the Company expects total solar module shipments to be in the range of 1.67 GW to 1.72 GW, including approximately 170 MW of shipments to the Company's utility-scale, solar power projects that may not be recognized as revenue in fourth quarter 2018. Total revenue for the fourth quarter of 2018 is expected to be in the range of
Dr.
Recent Developments
On
On October 25, 2018,
On
On
On
On
On
On
On
Conference Call Information
The Company will hold a conference call on
A replay of the call will be available 2 hours after the conclusion of the call until
About Canadian Solar Inc.
Founded in 2001 in
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
FINANCIAL TABLES FOLLOW
Canadian Solar Inc. |
||||||||||
Unaudited Condensed Consolidated Statement of Operations |
||||||||||
(In Thousands of US Dollars, Except Share And Per Share Data And Unless Otherwise Stated) |
||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||
September |
June 30 |
September |
September |
September |
||||||
2018 |
2018 |
2017 |
2018 |
2017 |
||||||
Net revenues |
$ 767,970 |
$ 650,590 |
$ 912,223 |
$ 2,843,471 |
$ 2,281,630 |
|||||
Cost of revenues |
567,579 |
491,155 |
752,422 |
2,339,698 |
1,862,584 |
|||||
Gross profit |
200,391 |
159,435 |
159,801 |
503,773 |
419,046 |
|||||
Operating expenses: |
||||||||||
Selling expenses |
38,423 |
40,275 |
42,831 |
121,030 |
116,096 |
|||||
General and administrative |
58,862 |
56,433 |
53,328 |
164,067 |
161,347 |
|||||
Research and development |
10,143 |
9,134 |
7,271 |
28,776 |
20,214 |
|||||
Other operating income |
(2,941) |
(345) |
(1,399) |
(38,192) |
(17,798) |
|||||
Total operating expenses |
104,487 |
105,497 |
102,031 |
275,681 |
279,859 |
|||||
Income from operations |
95,904 |
53,938 |
57,770 |
228,092 |
139,187 |
|||||
Other income (expenses): |
||||||||||
Interest expense |
(26,839) |
(26,596) |
(33,656) |
(83,028) |
(84,484) |
|||||
Interest income |
2,567 |
2,883 |
3,382 |
9,026 |
7,297 |
|||||
Gain (loss) on change in fair |
(8,881) |
(7,567) |
1,764 |
(11,974) |
(7,836) |
|||||
Foreign exchange gain (loss) |
10,112 |
(2,454) |
(16,474) |
(799) |
(13,908) |
|||||
Investment income (loss) |
6,528 |
(584) |
- |
5,944 |
- |
|||||
Other expenses, net |
(16,513) |
(34,318) |
(44,984) |
(80,831) |
(98,931) |
|||||
Income before income taxes |
79,391 |
19,620 |
12,786 |
147,261 |
40,256 |
|||||
Income tax expense |
(13,423) |
(7,766) |
(6,165) |
(25,280) |
(12,015) |
|||||
Equity in earnings of |
2,504 |
4,119 |
6,971 |
6,353 |
11,961 |
|||||
Net income |
68,472 |
15,973 |
13,592 |
128,334 |
40,202 |
|||||
Less: Net income attributable |
1,932 |
404 |
299 |
2,846 |
2,033 |
|||||
Net income attributable to |
$ 66,540 |
$ 15,569 |
$ 13,293 |
$ 125,488 |
$ 38,169 |
|||||
Earnings per share - basic |
$ 1.14 |
$ 0.26 |
$ 0.23 |
$ 2.13 |
$ 0.66 |
|||||
Shares used in computation - |
58,526,275 |
58,826,343 |
58,392,071 |
58,826,117 |
58,059,372 |
|||||
Earnings per share - diluted |
$ 1.09 |
$ 0.26 |
$ 0.22 |
$ 2.08 |
$ 0.65 |
|||||
Shares used in computation - |
61,937,187 |
59,215,958 |
59,283,636 |
62,103,349 |
58,608,831 |
Canadian Solar Inc. |
|||||||||
Unaudited Condensed Consolidated Statement of Comprehensive Income |
|||||||||
(In Thousands of US Dollars) |
|||||||||
Three Months Ended |
Nine Months Ended |
||||||||
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|||||
2018 |
2018 |
2017 |
2018 |
2017 |
|||||
Net Income |
68,472 |
15,973 |
13,592 |
128,334 |
40,202 |
||||
Other comprehensive income (net |
|||||||||
Foreign currency translation adjustment |
26,709 |
(62,068) |
23,148 |
(12,179) |
35,910 |
||||
Gain (loss) on changes in fair value |
2,464 |
1,918 |
(456) |
9,510 |
(2,386) |
||||
Comprehensive income (loss) |
97,645 |
(44,177) |
36,284 |
125,665 |
73,726 |
||||
Less: comprehensive income (loss) |
4,844 |
(1,292) |
97 |
7,052 |
812 |
||||
Comprehensive income (loss) |
92,801 |
(42,885) |
36,187 |
118,613 |
72,914 |
Canadian Solar Inc. |
||||||
Unaudited Condensed Consolidated Balance Sheet |
||||||
(In Thousands of US Dollars) |
||||||
September 30, |
December 31, |
|||||
2018 |
2017 |
|||||
ASSETS |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ 519,604 |
$ 561,679 |
||||
Restricted cash - current |
459,746 |
617,761 |
||||
Accounts receivable trade, net |
322,867 |
358,091 |
||||
Contract assets |
39 |
1,253 |
||||
Amounts due from related parties |
17,290 |
26,102 |
||||
Inventories |
322,011 |
346,092 |
||||
Value added tax recoverable |
111,101 |
94,503 |
||||
Advances to suppliers - current |
74,355 |
61,399 |
||||
Derivative assets - current |
5,834 |
16,200 |
||||
Project assets - current |
1,187,118 |
1,523,342 |
||||
Assets held-for-sale |
- |
182,797 |
||||
Prepaid expenses and other current assets |
316,542 |
296,084 |
||||
Total current assets |
3,336,507 |
4,085,303 |
||||
Restricted cash - non-current |
15,674 |
10,695 |
||||
Property, plant and equipment, net |
863,359 |
747,235 |
||||
Solar power systems, net |
55,804 |
63,964 |
||||
Deferred tax assets, net |
119,085 |
131,796 |
||||
Advances to suppliers - non-current |
59,286 |
38,325 |
||||
Prepaid land use right |
65,826 |
78,649 |
||||
Investments in affiliates |
403,141 |
414,215 |
||||
Intangible assets, net |
12,320 |
10,986 |
||||
Goodwill |
4,061 |
6,248 |
||||
Derivatives assets - non-current |
14,967 |
10,911 |
||||
Project assets - non-current |
117,470 |
148,170 |
||||
Other non-current assets |
136,370 |
143,130 |
||||
TOTAL ASSETS |
$ 5,203,870 |
$ 5,889,627 |
||||
Current liabilities: |
||||||
Short-term borrowings |
$ 1,877,952 |
$ 1,957,755 |
||||
Accounts and notes payable |
856,733 |
975,595 |
||||
Amounts due to related parties |
36,389 |
6,023 |
||||
Other payables |
321,939 |
315,321 |
||||
Convertible notes |
127,188 |
- |
||||
Advances from customers |
64,301 |
51,739 |
||||
Derivative liabilities - current |
17,716 |
6,121 |
||||
Liabilities held-for-sale |
- |
185,872 |
||||
Financing liabilities - current |
164,491 |
407,683 |
||||
Other current liabilities |
178,713 |
201,903 |
||||
Total current liabilities |
3,645,422 |
4,108,012 |
||||
Accrued warranty costs |
53,541 |
55,659 |
||||
Convertible notes |
- |
126,476 |
||||
Long-term borrowings |
120,158 |
404,341 |
||||
Amounts due to related parties |
638 |
- |
||||
Derivatives liabilities - non-current |
- |
359 |
||||
Liability for uncertain tax positions |
8,721 |
9,264 |
||||
Deferred tax liabilities - non-current |
5,634 |
5,562 |
||||
Loss contingency accruals |
25,047 |
25,682 |
||||
Financing liabilities - non-current |
71,840 |
12,243 |
||||
Other non-current liabilities |
71,097 |
82,254 |
||||
Total LIABILITIES |
4,002,098 |
4,829,852 |
||||
Equity: |
||||||
Common shares |
702,877 |
702,162 |
||||
Additional paid-in capital |
8,305 |
417 |
||||
Retained earnings* |
510,432 |
383,681 |
||||
Accumulated other comprehensive loss |
(60,909) |
(54,034) |
||||
Total Canadian Solar Inc. shareholders' equity |
1,160,705 |
1,032,226 |
||||
Non-controlling interests in subsidiaries |
41,067 |
27,549 |
||||
TOTAL EQUITY |
1,201,772 |
1,059,775 |
||||
TOTAL LIABILITIES AND EQUITY |
$ 5,203,870 |
$ 5,889,627 |
||||
Note: * The Company, starting from January 1, 2018, adopted Accounting Standards Update 2014-09, Revenue |
View original content:http://www.prnewswire.com/news-releases/canadian-solar-reports-third-quarter-2018-results-300751102.html
SOURCE
Mary Ma Manager, Investor Relations, Canadian Solar Inc., investor@canadiansolar.com; OR David Pasquale Global IR Partners, Tel: +1-914-337-8801, csiq@globalirpartners.com