Canadian Solar Reports Fourth Quarter and Full Year 2019 Results
Fourth Quarter 2019 Highlights
- Total module shipments were 2.5 GW, compared to 2.4 GW in the third quarter of 2019 and fourth quarter 2019 guidance of 2.3 GW to 2.4 GW.
- Net revenue was
$920 million , compared to$760 million in the third quarter of 2019 and fourth quarter 2019 guidance of$850 million to$880 million . - Gross profit was
$230 million . Gross margin was 25.0%, compared to 26.2% in the third quarter of 2019 and fourth quarter 2019 guidance of 19% to 21%. Gross margin was 24.3% excluding the benefit of aU.S. anti-dumping ("AD") and countervailing duty ("CVD") true-up of$6.4 million . - Net income attributable to
Canadian Solar was$67.7 million , or$1.12 per diluted share, compared to$58.3 million , or$0.96 per diluted share, in the third quarter of 2019. - Net cash provided by operating activities was approximately
$247 million , compared to$22 million in the third quarter of 2019. - As of
January 31, 2020 , the Company's portfolio of utility-scale solar power plants in operation was 880.2 MWp with an estimated total resale value of approximately$1 billion . - The Company's board of directors authorized a
$150 million share repurchase program for a six month-period beginningDecember 9, 2019 .
Full Year 2019 Results
- Total module shipments were 8.6 GW, compared to 6.6 GW in 2018 and guidance of 8.4 GW to 8.5 GW.
- Net revenue was
$3.20 billion , compared to$3.74 billion in 2018 and guidance of$3.13 billion to$3.16 billion . - Net income attributable to
Canadian Solar was$171.6 million , or$2.83 per diluted share, compared to$237.1 million , or$3.88 per diluted share in 2018. - Net cash provided by operating activities was approximately
$600 million , compared to$216 million in 2018.
Fourth Quarter 2019 Results
Net revenue in the fourth quarter of 2019 was
Total module shipments in the fourth quarter of 2019 were 2,474 MW, compared to 2,387 MW in the third quarter of 2019 and fourth quarter 2019 guidance of 2,300 MW to 2,400 MW. This included 295 MW for the Company's utility-scale solar power projects.
Gross profit in the fourth quarter of 2019 was
Income from operations in the fourth quarter of 2019 was $111 million, compared to $80 million in the third quarter of 2019, and
Non-cash depreciation and amortization charges in the fourth quarter of 2019 were $45 million, compared to
The Company uses derivative instruments to hedge its foreign exchange positions. In the fourth quarter of 2019, the Company recorded a
Net income attributable to
Dr.
Dr.
Energy Business Segment
Operating Results
Energy Business Segment Financial Results – (In Thousands of |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
|
|
|
|
|
|||
Net revenues |
215,370 |
97,550 |
336,214 |
719,445 |
1,575,594 |
||
Cost of revenues |
182,424 |
77,589 |
243,923 |
635,716 |
1,302,779 |
||
Gross profit |
32,946 |
19,961 |
92,291 |
83,729 |
272,815 |
||
Operating expenses |
17,747 |
24,077 |
30,087 |
90,760 |
61,276 |
||
Income (loss) from |
15,199 |
(4,116) |
62,204 |
(7,031) |
211,539 |
||
Gross margin |
15.3% |
20.5% |
27.5% |
11.6% |
17.3% |
||
Operating margin |
7.1% |
-4.2% |
18.5% |
-1.0% |
13.4% |
||
Project Backlog and Pipeline
The Company's project backlog (formerly called its late-stage, utility-scale, solar project pipeline) totaled 3.7 GW, as of
The Company's project pipeline (formerly called its early-to-mid-stage, utility-scale, solar project pipeline) totaled 11.7 GW as of
Project Backlog and Pipeline by Region* (as of |
||||
Region |
Backlog |
Pipeline |
Total |
|
|
1,597 |
5,232 |
6,829 |
|
|
1,087 |
3,246 |
4,333 |
|
EMEA |
206 |
2,113 |
2,319 |
|
|
806 |
676 |
1,482 |
|
|
45 |
410 |
455 |
|
Total |
3,741 |
11,677 |
15,418 |
Note: Backlog and pipeline table represents the gross MWp size of the projects, including minority interest.
More recently, in 2018, the Energy team at Recurrent, the Company's subsidiary in the US, secured two PPAs for a total of 150 MWac with 180 MWh of storage attached. These landmark PPA wins have allowed Recurrent to develop deep in-house expertise on everything related to energy storage, including permitting, interconnection, engineering and design, structuring of off-take agreements to meet customer's needs, as well as plant operation. As a result of Recurrent's early mover advantage in the promising solar plus storage space, the Energy Business has been selected and is in negotiation with multiple different off-take parties for additional energy storage projects totaling 705 MWac with 2,820 MWh of storage.
The table below sets forth the Company's storage project backlog and pipeline as of
Backlog |
Pipeline |
Total |
|
Storage (MWh) |
320 |
2,500 |
2,820 |
Projects in Construction
In addition to its project backlog and pipeline, the Company has 512 MW of solar projects in construction.
Projects in Construction (as |
MWp |
Expected COD |
Latin America Portfolio |
449 |
2020-21 |
Japan Portfolio |
63 |
2020 |
Total |
512 |
- |
Note: Approximately 264 MWp from LatAm portfolio in |
Solar Power Plants in Operation
In addition to its backlog, pipeline and projects in construction, as of
Plants in Operation – MWp (as of |
||||||
|
|
EMEA |
|
|
Total |
|
216 |
100 |
18 |
230 |
459 |
1,023 |
|
Note: 880 MWp is owned by the Company and a minority interest of 143 MWp is owned by business |
Energy Business Strategy Update
The Company's Energy business model has been to develop solar projects for sales and to selectively retain partial ownership of certain projects to capture long-term recurring cash flow and to leverage EPC, operations and management ("O&M"), asset management and other service business. Canadian Soar has one of the world's largest solar energy development platforms, with a track record of originating, developing, financing, building and bringing into commercial operation over 5.6 GWp of solar power plants across six continents. It currently employs 400 professionals to support its integrated business model. The Energy business team includes developers with expertise in developing both greenfield and brownfield projects, engineers who can design and manage the construction of solar power plants, energy experts that specialize in power marketing who focus on negotiating power purchase agreements ("PPAs") and hedging instruments, and experts in the O&M, as well as asset management of solar power plants. In addition, the Energy business has an in-house finance team with experience in a wide range of debt and equity instruments used to finance solar assets, including establishing private and public fund vehicles to optimize equity returns.
The Energy business has traditionally sold most of its project ownership at notice to proceed ("NTP") or commercial operation date ("COD"), depending on the best exit point for each particular project. The Company has also retained minority ownerships in certain projects to capture additional value. A successful example is the Canadian Solar Infrastructure Fund, which is sponsored by the Company and has been listed on
Module and System Solutions (MSS) Business Segment
Operating Results
MSS Business Segment Summary Financial Results* - (In Thousands of |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
|
|
|
|
|
||||
Net revenues |
765,696 |
674,921 |
629,716 |
2,582,635 |
2,413,889 |
|||
Cost of revenues |
551,517 |
493,505 |
472,229 |
1,934,062 |
1,923,131 |
|||
Gross profit |
214,179 |
181,416 |
157,487 |
648,573 |
490,758 |
|||
Operating expenses |
100,329 |
94,730 |
104,658 |
368,858 |
349,149 |
|||
Income from operations |
113,850 |
86,686 |
52,829 |
279,715 |
141,609 |
|||
Gross margin |
28.0% |
26.9% |
25.0% |
25.1% |
20.3% |
|||
Operating margin |
14.9% |
12.8% |
8.4% |
10.8% |
5.9% |
|||
Note: *Included effects of both sales to third party customers and to the Company's Energy Segment. Please refer to the attached financial tables for the |
The table below provides the geographic distribution of MSS business net revenue:
MSS Net Revenue Geographic Distribution* (In Millions of |
|||||
The fourth |
% of Net |
Full year |
% of Net |
||
|
239 |
34 |
891 |
36 |
|
|
320 |
45 |
836 |
34 |
|
|
145 |
21 |
754 |
30 |
|
Total |
704 |
100 |
2,481 |
100 |
|
*Note: Values do not include sales from the MSS business |
Multi-crystalline modules accounted for 68% of the Company's module shipments in the fourth quarter and 74% for the full year of 2019, with mono-crystalline modules representing 32% and 26%, respectively. The Company's manufacturing capacity has the flexibility to produce both multi-crystalline and mono-crystalline modules, with the mix decision depending on the relative profitability and levelized cost of electricity ("LCOE") of the alternative products.
Manufacturing Capacity
The table below sets forth the Company's manufacturing capacity expansion plan from
Manufacturing Capacity (MW)
Actual |
Planned |
Planned |
|
Ingot |
1,850 |
1,850 |
2,350 |
Wafer |
5,000 |
5,000 |
5,000 |
Cell |
9,600 |
10,100 |
10,100 |
Module |
13,040 |
14,850 |
16,050 |
The Company's manufacturing capacity expansion plan is subject to change based on market conditions.
Business Outlook
The Company's business outlook is based on management's current views and estimates given existing market conditions, order book, production capacity, anticipated timing of project sales, and the global economic environment. This outlook is subject to uncertainty with respect to, among other things, final customer demand and project construction and sale schedules, and in particular the impact of COVID-19. Management's views and estimates are subject to change without notice.
For the first quarter of 2020, the Company expects total module shipments to be in the range of 2.15 GW to 2.25 GW, including approximately 250 MW of module shipments to the Company's own projects that may not immediately be recognized as revenue. Total revenue is expected to be in the range of $780 million to $810 million, with gross margin expected to be between 26% and 28%.
For the full year of 2020, the Company expects total module shipments to be in the range of approximately 10 GW to 12 GW, with total revenue expected to be in the range of
Recent Developments
On
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Conference Call Information
The Company will hold a conference call at
A replay of the call will be available two hours after the conclusion of the call until
About Canadian Solar Inc.
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
FINANCIAL TABLES FOLLOW
The following tables provide unaudited select financial data for the Company's Module and System Solutions ("MSS") and Energy businesses:
Select Financial Data - Module and System Solutions, and |
|||||||||||
Three Months Ended |
|||||||||||
MSS |
Energy |
Elimination |
Total |
||||||||
Net revenues |
|
|
|
|
|||||||
Cost of revenues |
551,517 |
182,424 |
(43,736) |
690,205 |
|||||||
Gross profit |
214,179 |
32,946 |
(17,623) |
229,502 |
|||||||
Gross margin |
28.0% |
15.3% |
—— |
25.0% |
|||||||
Income (loss) from |
113,850 |
15,199 |
(17,623) |
111,426 |
Twelve Months Ended |
|||||||||||
MSS |
Energy |
Elimination |
Total |
||||||||
Net revenues |
|
|
|
|
|||||||
Cost of revenues |
1,934,062 |
635,716 |
(87,692) |
2,482,086 |
|||||||
Gross profit |
648,573 |
83,729 |
(13,805) |
718,497 |
|||||||
Gross margin |
25.1% |
11.6% |
—— |
22.4% |
|||||||
Income (loss) from |
279,715 |
(7,031) |
(13,805) |
258,879 |
Select Financial Data - Module and System |
|||||||
Three Months Ended December 31, 2019 |
Twelve Months 31, 2019 |
||||||
(In Thousands of |
|||||||
MSS Revenues: |
|||||||
Solar modules and other solar power products |
|
|
|||||
Solar system kits |
31,430 |
116,449 |
|||||
EPC services |
29,890 |
223,423 |
|||||
O&M services |
5,963 |
19,405 |
|||||
Others (materials and components) |
17,066 |
66,612 |
|||||
Subtotal |
|
|
|||||
Energy Revenues: |
|||||||
Solar power projects |
|
|
|||||
Electricity |
1,801 |
5,866 |
|||||
Others (EPC and development services) |
19,599 |
45,103 |
|||||
Subtotal |
|
|
|||||
Total net revenues |
|
|
|
|||||||||||
Unaudited Condensed Consolidated Statements of Operations |
|||||||||||
(In Thousands of |
|||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||
December |
September |
December 31, |
December 31, |
December 31, |
|||||||
2019 |
2019 |
2018 |
2019 |
2018 |
|||||||
Net revenues |
|
|
|
|
|
||||||
Cost of revenues |
690,205 |
560,968 |
629,732 |
2,482,086 |
2,969,430 |
||||||
Gross profit |
229,502 |
198,914 |
271,309 |
718,497 |
775,082 |
||||||
Operating expenses: |
|||||||||||
Selling expenses |
50,099 |
46,935 |
44,372 |
180,326 |
165,402 |
||||||
General and administrative |
64,133 |
61,491 |
81,309 |
242,783 |
245,376 |
||||||
Research and development |
10,179 |
11,567 |
15,417 |
47,045 |
44,193 |
||||||
Other operating income |
(6,335) |
(1,186) |
(6,353) |
(10,536) |
(44,546) |
||||||
Total operating expenses |
118,076 |
118,807 |
134,745 |
459,618 |
410,425 |
||||||
Income from operations |
111,426 |
80,107 |
136,564 |
258,879 |
364,657 |
||||||
Other income (expenses): |
|||||||||||
Interest expense |
(19,734) |
(19,240) |
(23,003) |
(81,326) |
(106,032) |
||||||
Interest income |
2,979 |
2,579 |
2,180 |
12,039 |
11,207 |
||||||
Loss on change in fair value of |
(6,294) |
(2,176) |
(7,256) |
(22,218) |
(19,230) |
||||||
Foreign exchange gain, net |
3,717 |
2,825 |
7,328 |
10,370 |
6,529 |
||||||
Investment income (loss) |
120 |
(738) |
35,416 |
1,929 |
41,361 |
||||||
Other income (expenses), net |
(19,212) |
(16,750) |
14,665 |
(79,206) |
(66,165) |
||||||
Income before income taxes and |
92,214 |
63,357 |
151,229 |
179,673 |
298,492 |
||||||
Income tax expense |
(25,209) |
(10,434) |
(36,684) |
(42,066) |
(61,969) |
||||||
Equity in earnings (loss) of |
923 |
2,303 |
(445) |
28,948 |
5,908 |
||||||
Net income |
67,928 |
55,226 |
114,100 |
166,555 |
242,431 |
||||||
Less: Net income (loss) |
191 |
(3,105) |
2,516 |
(5,030) |
5,361 |
||||||
Net income attributable to |
|
|
|
|
|
||||||
Earnings per share - basic |
$ 1.13 |
$ 0.97 |
$ 1.89 |
$ 2.88 |
$ 4.02 |
||||||
Shares used in computation - basic |
59,846,779 |
59,900,740 |
59,160,338 |
59,633,855 |
58,914,540 |
||||||
Earnings per share - diluted |
$ 1.12 |
$ 0.96 |
$ 1.81 |
$ 2.83 |
$ 3.88 |
||||||
Shares used in computation - diluted |
60,407,086 |
60,846,753 |
62,356,019 |
60,777,696 |
62,291,670 |
|
||||||||||
Unaudited Condensed Consolidated Statement of Comprehensive Income |
||||||||||
(In Thousands of |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December |
September |
December 31, |
December 31, |
December 31, |
||||||
2019 |
2019 |
2018 |
2019 |
2018 |
||||||
Net Income |
67,928 |
55,226 |
114,100 |
166,555 |
242,431 |
|||||
Other comprehensive income (net of |
||||||||||
Foreign currency translation adjustment |
8,923 |
(13,419) |
(38,399) |
319 |
(50,577) |
|||||
Loss on commodity hedge |
—— |
—— |
(8,752) |
—— |
(8,752) |
|||||
Gain (loss) on changes in fair value of |
1,147 |
(1,314) |
(3,416) |
(5,847) |
6,094 |
|||||
Comprehensive income |
77,998 |
40,493 |
63,533 |
161,027 |
189,196 |
|||||
Less: comprehensive income (loss) |
(2,216) |
(3,529) |
1,189 |
(11,100) |
8,241 |
|||||
Comprehensive income attributable |
80,214 |
44,022 |
62,344 |
172,127 |
180,955 |
|
|||||||
Unaudited Condensed Consolidated Balance Sheets |
|||||||
(In Thousands of |
|||||||
|
|
||||||
2019 |
2018 |
||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ 668,770 |
$ 444,298 |
|||||
Restricted cash |
526,723 |
480,976 |
|||||
Accounts receivable trade, net |
436,815 |
498,231 |
|||||
Accounts receivable, unbilled |
15,256 |
38 |
|||||
Amounts due from related parties |
31,232 |
16,740 |
|||||
Inventories |
554,070 |
262,022 |
|||||
Value added tax recoverable |
108,920 |
107,222 |
|||||
Advances to suppliers |
47,978 |
37,011 |
|||||
Derivative assets |
5,547 |
4,761 |
|||||
Project assets |
604,083 |
933,563 |
|||||
Prepaid expenses and other current |
253,542 |
289,459 |
|||||
Total current assets |
3,252,936 |
3,074,321 |
|||||
Restricted cash |
9,927 |
15,716 |
|||||
Property, plant and equipment, net |
1,046,035 |
884,986 |
|||||
Solar power systems, net |
52,957 |
54,898 |
|||||
Deferred tax assets, net |
153,963 |
121,087 |
|||||
Advances to suppliers |
40,897 |
48,908 |
|||||
Prepaid land use right |
60,836 |
65,718 |
|||||
Investments in affiliates |
152,828 |
126,095 |
|||||
Intangible assets, net |
22,791 |
14,903 |
|||||
|
—— |
1,005 |
|||||
Derivatives assets |
—— |
3,216 |
|||||
Project assets |
483,051 |
352,200 |
|||||
Right-of-use assets* |
37,733 |
—— |
|||||
Other non-current assets |
153,253 |
129,605 |
|||||
TOTAL ASSETS |
$ 5,467,207 |
$ 4,892,658 |
|
||||
Unaudited Condensed Consolidated Balance Sheets (Continued) |
||||
(In Thousands of |
||||
|
|
|||
2019 |
2018 |
|||
Current liabilities: |
||||
Short-term borrowings |
$ 933,120 |
$ 1,027,927 |
||
Long-term borrowings on project assets - |
286,173 |
265,770 |
||
Accounts payable |
585,601 |
379,462 |
||
Notes payable |
544,991 |
369,722 |
||
Amounts due to related parties |
10,077 |
16,847 |
||
Other payables |
446,454 |
408,013 |
||
Convertible notes |
—— |
127,428 |
||
Advance from customers |
134,806 |
39,024 |
||
Derivative liabilities |
10,481 |
13,698 |
||
Operating lease liabilities* |
18,767 |
—— |
||
Tax equity liabilities |
—— |
158,496 |
||
Other current liabilities |
121,527 |
141,970 |
||
Total current liabilities |
3,091,997 |
2,948,357 |
||
Accrued warranty costs |
55,878 |
50,605 |
||
Long-term borrowings |
619,477 |
393,614 |
||
Amounts due to related parties |
—— |
568 |
||
Derivatives liabilities |
1,841 |
—— |
||
Liability for uncertain tax positions |
15,353 |
20,128 |
||
Deferred tax liabilities |
56,463 |
35,698 |
||
Loss contingency accruals |
28,513 |
24,608 |
||
Operating lease liabilities* |
20,718 |
—— |
||
Financing liabilities |
76,575 |
77,835 |
||
Other non-current liabilities |
75,334 |
68,400 |
||
Total LIABILITIES |
4,042,149 |
3,619,813 |
||
Equity: |
||||
Common shares |
703,806 |
702,931 |
||
|
(11,845) |
—— |
||
Additional paid-in capital |
17,179 |
10,675 |
||
Retained earnings |
793,601 |
622,016 |
||
Accumulated other comprehensive loss |
(109,607) |
(110,149) |
||
|
1,393,134 |
1,225,473 |
||
Non-controlling interests in subsidiaries |
31,924 |
47,372 |
||
TOTAL EQUITY |
1,425,058 |
1,272,845 |
||
TOTAL LIABILITIES AND EQUITY |
$ 5,467,207 |
$ 4,892,658 |
||
Note: * The Company adopted ASU 2016-02 – Leases (Topic ASC842) in the first quarter of 2019 using the |
About Non-GAAP Financial Measures
To supplement its financial disclosures presented in accordance with GAAP, the Company uses non-GAAP measures which are adjusted from the most comparable GAAP measures for certain items as described below. The Company presents non-GAAP net income and diluted earnings per share so that readers can better understand the underlying operating performance of the business before the impact of AD/CVD true-up provisions. The non-GAAP numbers are not measures of financial performance under
Statement of Operations Data: |
||||||||||
(In Thousands of |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 2019 |
September 2019 |
December 2018 |
December 2019 |
December 2018 |
||||||
GAAP net income attributable to Canadian |
67,737 |
58,331 |
111,584 |
171,585 |
237,070 |
|||||
Non-GAAP income adjustment items: |
||||||||||
AD/CVD provision true-up |
(6,415) |
(24,291) |
(16,098) |
(52,323) |
(50,172) |
|||||
Tax impact |
1,592 |
6,029 |
3,995 |
12,987 |
12,452 |
|||||
Non-GAAP net income attributable to |
62,914 |
40,069 |
99,481 |
132,249 |
199,350 |
|||||
GAAP income per share - diluted |
$ 1.12 |
$ 0.96 |
$ 1.81 |
$ 2.83 |
$ 3.88 |
|||||
Non-GAAP income per share - diluted |
$ 1.04 |
$ 0.66 |
$ 1.61 |
$ 2.19 |
$ 3.28 |
|||||
Shares used in computation - diluted |
60,407,086 |
60,846,753 |
62,356,019 |
60,777,696 |
62,291,670 |
View original content:http://www.prnewswire.com/news-releases/canadian-solar-reports-fourth-quarter-and-full-year-2019-results-301030252.html
SOURCE
Investor Relations Contacts: Ed Job, Managing Director, Investor Relations, Canadian Solar Inc., investor@canadiansolar.com; David Pasquale, Global IR Partners, Tel: +1-914-337-8801, csiq@globalirpartners.com