UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2023

 

Commission File Number: 001-33107

 

 

CANADIAN SOLAR INC.

 

 

545 Speedvale Avenue West, Guelph,

Ontario, Canada N1K 1E6

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x       Form 40-F ¨

 

 

 

CANADIAN SOLAR INC.

 

Form 6-K

 

TABLE OF CONTENTS

 

Signature

Exhibit Index

Exhibit 99.1

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	CANADIAN SOLAR INC.
	By:	/s/ Shawn (Xiaohua) Qu
	Name:	Shawn (Xiaohua) Qu
	Title:	Chairman and Chief Executive Officer

 

Date: August 22, 2023

 

 

EXHIBIT INDEX

 

Exhibit 99.1 — Second Quarter 2023 Earnings Release

 

 

 

Exhibit 99.1

 

 

 

Canadian Solar Reports Second Quarter 2023 Results

 

Guelph, Ontario, August 22, 2023 – Canadian Solar Inc. (“Canadian Solar” or the “Company”) (NASDAQ: CSIQ) today announced financial results for the second quarter ended June 30, 2023.

 

Highlights

 

·

Record quarterly net income attributable to Canadian Solar of $170 million or $2.39 per diluted share, compared to net income of $84 million, or $1.19 per diluted share, in the first quarter of 2023, and net income of $74 million, or $1.07 per diluted share, in the second quarter of 2022.

·

62% increase in solar module shipments year-over-year (“yoy”) to 8.2 GW, compared to guidance of 8.1 GW to 8.4 GW.

·

39% increase in net revenues quarter-over-quarter (“qoq”) and 2% yoy to $2.4 billion, compared to guidance of $2.4 billion to $2.6 billion.

·

39% increase in gross profit qoq and 19% yoy to $441 million, with an 18.6% gross margin, including an inventory write-down, compared to guidance of 19% to 21%.

·

Gross proceeds of approximately $975 million from the initial public offering (“IPO”) of its majority-owned subsidiary CSI Solar Co., Ltd. (“CSI Solar”) on the Shanghai Stock Exchange’s Sci-Tech Innovation Board under the stock code 688472.

·

25 GWp of solar development pipeline and 52 GWh of battery energy storage development pipeline, as of June 30, 2023 (Recurrent Energy, formerly Global Energy).

 

Dr. Shawn Qu, Chairman and CEO, commented, “We achieved strong results in the second quarter of 2023 delivering record net income of $170 million, or $2.39 per diluted share. We successfully completed the IPO of our CSI Solar subsidiary, raising approximately $975 million in gross proceeds to support our ambitious growth plans across our solar and battery energy storage businesses. We also continued to strengthen our competitive position in core markets such as the U.S., where we are making long-term investments and building a state-of-the-art 5 GW solar module manufacturing plant under the backdrop of the Inflation Reduction Act. We are proud to be embarking on these growth initiatives with long-term partners such as EDF Renewables, working together to advance sustainable energy solutions to decarbonize the grid. We also recently published our latest ESG Sustainability Report, providing comprehensive updates on our efforts to conduct business ethically and sustainably.”

 

Yan Zhuang, President of Canadian Solar’s CSI Solar subsidiary, said, “CSI Solar achieved strong results in the second quarter despite the sharp decline in market prices. Raw material costs declined faster than anticipated and have now likely bottomed. This led to an inventory write-down of raw materials during the second quarter, directly impacting our gross margin. However, this was more than offset by operating leverage, resulting in strong operating income. Looking ahead, we expect to significantly optimize our cost structure as we ramp up our internal cell and wafer capacity in the second half of the year and meaningfully improve on our capacity’s vertical integration.

 

“In addition, we made the strategic decision to rebrand our utility-scale turnkey battery energy storage business under our new e-STORAGE brand, which we believe more clearly articulates our business. We continue to build momentum in this fast-growing business, with our e-STORAGE platform now having a contracted backlog of $2.1 billion, including approximately $630 million in new bookings signed during the second quarter of 2023. We are well positioned for growth and focused on further enhancing value for our customers, as we drive long-term profitable growth in our key markets and segments.”

 

Ismael Guerrero, CEO of Canadian Solar’s Recurrent Energy subsidiary, said, “We achieved significant revenue and profit growth in the second quarter with the sale of our flagship 100 MWp Azuma Kofuji project in Japan. We continue to develop high-quality clean energy assets and execute on our 25 GWp solar and 52 GWh battery energy storage development pipeline. Among these, we have over 2 GWp of pre-construction solar projects with PPAs signed over the past three years and an additional 1.5 GWp under late-stage PPA negotiations where our secured or advanced interconnection status gives us a leadership position and high visibility to complete these projects in the near term. This is part of our strategy to execute and own more of the solar and battery energy storage projects we develop, thereby capturing greater long-term value for our shareholders.”

 

 

Dr. Huifeng Chang, Senior VP and CFO, added, “In the second quarter, we achieved $2.4 billion in revenue, a gross margin of 18.6%, and net income of $2.39 per diluted share. We continued to prioritize cash generation with the increase in operating cash flow to $290 million. Our total cash position reached $3.3 billion following the successful completion of the CSI Solar IPO. Our priority remains on deploying capital productively, including strategic capacity expansion plans, as we drive long-term growth and build value for the Company and shareholders.”

 

Second Quarter 2023 Results

 

Total module shipments recognized as revenues in the second quarter of 2023 were 8.2 GW, up 62% yoy and 35% qoq. Of the total, 41 MW were shipped to the Company’s own utility-scale solar power projects.

 

Net revenues in the second quarter of 2023 increased 39% qoq and 2% yoy to $2.4 billion. The sequential increase reflects higher solar module shipment volume and higher project sales, partially offset by a decline in module average selling price (“ASP”).

 

Gross profit in the second quarter of 2023 was $441 million, up 39% qoq and 19% yoy. Gross margin in the second quarter of 2023 was 18.6%, compared to 18.7% in the first quarter of 2023. The gross margin decline was primarily due to the decline in module ASPs that adversely impacted the broader industry, and a $31 million inventory write-down, both of which were impacted by the sharp decline in silicon material prices. This was partially offset by lower manufacturing costs and a higher margin contribution from project sales.

 

Total operating expenses in the second quarter of 2023 were $216 million, compared to $172 million in the first quarter of 2023 and $255 million in the second quarter of 2022. The second quarter of 2023 included a $36 million share-based compensation expense related to the CSI Solar IPO. Operating expenses increased at lower rates than the revenue growth rate qoq reflecting the Company’s operating leverage and a further decline of unit logistics costs.

 

Depreciation and amortization charges in the second quarter of 2023 were $73 million, compared to $68 million in the first quarter of 2023 and $63 million in the second quarter of 2022. The sequential increase was primarily driven by the Company’s continued capacity expansion.

 

Net interest expense in the second quarter of 2023 was $21 million, compared to $12 million in the first quarter of 2023 and $15 million in the second quarter of 2022. The sequential and yoy increases reflect the Company’s increased total debt and the higher interest rate environment.

 

Net foreign exchange and derivative gain in the second quarter of 2023 was $34 million, compared to a net loss of $13 million in the first quarter of 2023 and a net gain of $6 million in the second quarter of 2022. The net foreign exchange and derivative gain was mainly due to a weaker Renminbi relative to the U.S. Dollar.

 

Net income attributable to Canadian Solar in the second quarter of 2023 was $170 million, or $2.39 per diluted share, compared to net income of $84 million, or $1.19 per diluted share, in the first quarter of 2023, and net income of $74 million, or $1.07 per diluted share, in the second quarter of 2022.

 

Net cash flow provided by operating activities in the second quarter of 2023 was $290 million, compared to $47 million in the first quarter of 2023. The qoq increase in operating cash flow primarily resulted from higher profits, reduced inventories as a result of declined supply chain costs, and changes in working capital.

 

Total debt was $3.3 billion as of June 30, 2023, compared to $3.0 billion as of March 31, 2023, including $721 million and $831 million of debt related to Recurrent Energy project assets as of June 30, 2023 and March 31, 2023, respectively. The qoq total debt increase was due to new borrowings for capacity expansion and working capital, partially offset by the reduction of project financing upon project sales.

 

Total project assets were $687 million, as of June 30, 2023, compared to $864 million as of March 31, 2023. Project assets are projects that are developed and built for sale, as part of Recurrent Energy’s business model.

 

The net value of solar power systems was $613 million, as of June 30, 2023, compared to $472 million, as of March 31, 2023. Solar power systems are projects that are developed and built to be held on the Company’s balance sheet.

 

 

Corporate Structure

 

The Company has two business segments: Recurrent Energy, formerly Global Energy, and CSI Solar. The two businesses operate as follows:

 

·

Recurrent Energy (formerly Global Energy) is one of the world’s largest clean energy project development platforms with 14 years of experience, having delivered over 9 GWp of solar power projects and over 3 GWh of battery storage projects. It is vertically integrated and has strong expertise in greenfield origination, development, financing, execution, operations and maintenance, and asset management.

 

·

CSI Solar consists of solar module and battery storage manufacturing, and delivery of total system solutions, including inverters, solar system kits and EPC (engineering, procurement, and construction) services. CSI Solar’s e-STORAGE branded battery storage business includes both its utility-scale turnkey battery system solutions, as well as a small but growing residential battery storage business. These storage systems solutions are complemented with long-term service agreements, including future battery capacity augmentation services.

 

Recurrent Energy Segment (formerly Global Energy)

 

As of June 30, 2023, the Company had a leading position with a total global solar development pipeline of approximately 25 GWp and an energy storage development pipeline of over 52 GWh.

 

While Recurrent Energy’s business model was historically develop-to-sell, as previously communicated, the Company is in the process of adjusting its strategy to create greater asset value and retain greater ownership of projects in select markets to increase revenues generated through recurring income, such as power sales, operations and maintenance, and asset management income.

 

The business model will consist of three key drivers:

 

·

Operating portfolio to drive stable, diversified cash flows in growth markets with stable currencies;

 

·

Project sales (or asset rotations) in the rest of the world to drive cash-efficient growth model as value from project sales will help fund growth in operating assets in stable currency markets;

 

·

Power services through long-term operations and maintenance (“O&M”) contracts, currently with 6 GW of contracted projects, to drive stable and long-term recurring earnings and synergies with the project development platform.

 

Recurrent Energy is continuing to evaluate adjustments in its growth strategy to hold valuable solar assets for the longer term.

 

Project Development Pipeline – Solar

 

As of June 30, 2023, Recurrent Energy’s total solar project development pipeline was 25.0 GWp, including 1.6 GWp under construction, 6.2 GWp of backlog, and 17.2 GWp of projects in advanced and early-stage pipelines, defined as follows:

 

·

Backlog projects are late-stage projects that have passed their risk cliff date and are expected to start construction in the next 1-4 years. A project’s risk cliff date is the date on which the project passes the last high-risk development stage and varies depending on the country where it is located. This is usually after the projects have received all the required environmental and regulatory approvals, and entered into interconnection agreements, feed-in tariff (“FIT”) arrangements and power purchase agreements (“PPAs”). A significant majority of projects in backlog are contracted (i.e., have secured a PPA or FIT), and the remaining are reasonably assured of securing PPAs.

 

·

Advanced pipeline projects are mid-stage projects that have secured or have more than 90% certainty of securing an interconnection agreement.

 

·

Early-stage pipeline projects are early-stage projects controlled by Recurrent Energy that are in the process of securing interconnection.

 

The following table presents Recurrent Energy’s total solar project development pipeline.

 

		Solar Project Development Pipeline (as of June 30, 2023) – MWp*
Region		In Construction				Backlog				Advanced Pipeline				Early-Stage Pipeline				Total
North America			-				422				1,642				4,559				6,623
Latin America			1,228**				2,272**				887				451				4,838
Europe, the Middle East, and Africa (“EMEA”)			89				1,596				2,770				3,499				7,954
Japan			4				170				14				-				188
China			300				1,745**				-				1,500				3,545
Asia Pacific excluding Japan and China			-				3				1,001				837				1,841
Total			1,621				6,208				6,314				10,846				24,989

 

*All numbers are gross MWp.

**Including 671 MWp in construction and 711 MWp in backlog that are owned by or already sold to third parties.         

 

 

Project Development Pipeline – Battery Energy Storage

 

As of June 30, 2023, Recurrent Energy’s total battery storage project development pipeline was 51.7 GWh, including 1.7 GWh under construction and in backlog, and 50.0 GWh of projects in advanced and early-stage pipelines.

 

The table below sets forth Recurrent Energy’s total storage project development pipeline.

 

Energy Storage Project Development Pipeline (as of June 30, 2023) – MWh
Region		In Construction				Backlog				Advanced Pipeline				Early-Stage Pipeline				Total
North America			-				-				3,898				14,747				18,645
Latin America			-				1,085				2,040				-				3,125
EMEA			-				110				4,418				14,769				19,297
Japan			-				-				-				1,054				1,054
China			-				-				-				7,500				7,500
Asia Pacific excluding Japan and China			24				454				200				1,440				2,118
Total			24				1,649				10,556				39,510				51,739

 

Projects in Operation – Solar and Battery Energy Storage Power Plants

 

As of June 30, 2023, Recurrent Energy’s solar power plants in operation totaled 681 MWp, with a combined estimated net resale value of approximately $570 million to Recurrent Energy. The estimated net resale value is based on selling prices that Recurrent Energy is currently negotiating or comparable asset sales.

 

Solar Power Plants in Operation – MWp*
Latin America		Japan				China				Asia Pacific ex. Japan and China				Total
508			76			85				12				681

 

*All numbers are net MWp owned by Recurrent Energy; total gross MWp of projects is 1,135 MWp, including volume that is already sold to third parties.

 

As of June 30, 2023, Recurrent Energy’s energy storage power plants in operation totaled 580 MWh, comprising Recurrent Energy’s 20% interest in the 1,400 MWh Crimson standalone battery energy storage project in California and 100% interest in the 300 MWh Minle battery energy storage project in China.

 

Operating Results

 

The following table presents select unaudited results of operations data of the Recurrent Energy segment for the periods indicated.

 

Recurrent Energy Segment Financial Results (In Thousands of U.S. Dollars, Except Percentages)
		Three Months Ended												Six Months Ended
		June 30, 2023				March 31, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Net revenues			360,045				20,052				553,984				380,097				646,950
Cost of revenues			201,981				12,843				473,979				214,824				549,109
Gross profit			158,064				7,209				80,005				165,273				97,841
Operating expenses			35,874				22,414				24,326				58,288				43,173
Income (loss) from operations*			122,190				(15,205	)			55,679				106,985				54,668
Gross margin			43.9	%			36.0	%			14.4	%			43.5	%			15.1	%
Operating margin			33.9	%			-75.8	%			10.1	%			28.1	%			8.5	%

 

* Income (loss) from operations reflects management’s allocation and estimate as some services are shared by the Company’s two business segments.        

 

 

CSI Solar Segment

 

Solar Modules

 

CSI Solar shipped 8.2 GW of solar modules to more than 70 countries in the second quarter of 2023. For the second quarter of 2023, the top five markets ranked by shipments were China, Brazil, the U.S., Spain, and Germany.

 

CSI Solar’s 2024 solar capacity expansion targets are set forth below.

 

			Solar Manufacturing Capacity, GW*
			June 2023 Actual				December 2023 Plan				March 2024 Plan				December 2024 Plan
Ingot				20.4				20.4				20.4				50.4
Wafer				21.0				21.0				30.0				60.0
Cell				26.0				50.0				54.0				70.0
Module				37.7				50.0				59.0				80.0

 

*Nameplate annualized capacities at said point in time. Capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans.

 

Battery Storage Solutions

 

e-STORAGE, formerly known as CSI Energy Storage, is CSI Solar’s utility-scale battery energy storage subsidiary and platform. e-STORAGE provides customers with competitive turnkey, integrated, utility-scale battery storage solutions, including bankable, end-to-end, utility-scale, turnkey battery storage system solutions across various applications. System performance is complemented with long-term service agreements, which include future battery capacity augmentation services and bring in long-term, stable income.

 

As of June 30, 2023, e-STORAGE had a total project turnkey pipeline of 26 GWh, which includes both contracted and in-construction projects, as well as projects at different stages of the negotiation process. In addition, e-STORAGE had 2.4 GWh of operating battery storage projects contracted under long-term service agreements, all of which were battery energy storage projects previously executed by e-STORAGE.

 

During the second quarter of 2023, e-STORAGE signed approximately $630 million in new bookings, including long-term service agreements. As of June 30, 2023, the contracted backlog, including contracted long-term service agreements, was $2.1 billion. These are signed orders with contractual obligations with customers and provide significant earnings visibility over a multi-year period.

 

The table below sets forth e-Storage’s battery storage manufacturing capacity expansion targets.

 

Battery Storage Manufacturing Capacity, GWh*		June 2023 Actual				December 2023 Plan
SolBank			2.5				10.0

 

*Nameplate annualized capacities at said point in time. Capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans.

 

Operating Results 

 

The following table presents select unaudited results of operations data of the CSI Solar segment for the periods indicated.

 

 

 

CSI Solar Segment Financial Results* (In Thousands of U.S. Dollars, Except Percentages)
		Three Months Ended												Six Months Ended
		June 30, 2023				March 31, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Net revenues			2,013,993				1,709,730				1,816,410				3,723,723				3,026,404
Cost of revenues			1,726,154				1,394,121				1,526,755				3,120,275				2,560,920
Gross profit			287,839				315,609				289,655				603,448				465,484
Operating expenses			168,455				146,151				227,262				314,606				371,193
Income from operations			119,384				169,458				62,393				288,842				94,291
Gross margin			14.3	%			18.5	%			15.9	%			16.2	%			15.4	%
Operating margin			5.9	%			9.9	%			3.4	%			7.8	%			3.1	%

 

*Include effects of both sales to third-party customers and to the Company’s Recurrent Energy segment. Please refer to the attached financial tables for intercompany transaction elimination information. Income from operations reflects management’s allocation and estimate as some services are shared by the Company’s two business segments.

                   

The table below provides the geographic distribution of the net revenues of CSI Solar:

 

CSI Solar Net Revenues Geographic Distribution* (In Millions of U.S. Dollars, Except Percentages)
		Q2 2023				% of Net Revenues				Q1 2023				% of Net Revenues				Q2 2022				% of Net Revenues
Asia			722				36				555				33				587				33
Americas			716				36				632				38				742				42
Europe and others			566				28				494				29				431				25
Total			2,004				100				1,681				100				1,760				100

 

*Excludes sales from CSI Solar to Recurrent Energy.

 

Business Outlook

 

The Company’s business outlook is based on management’s current views and estimates given factors such as existing market conditions, order book, production capacity, input material prices, foreign exchange fluctuations, the anticipated timing of project sales, and the global economic environment. This outlook is subject to uncertainty with respect to, among other things, customer demand, project construction and sale schedules, product sales prices and costs, supply chain constraints, and geopolitical conflicts. Management’s views and estimates are subject to change without notice.

 

For the third quarter of 2023, the Company expects total revenue to be in the range of $1.9 billion to $2.1 billion. Gross margin is expected to be between 17.5% and 19.5%. Total module shipments recognized as revenues by CSI Solar are expected to be in the range of 8.5 GW to 8.7 GW, including approximately 30 MW to the Company’s own projects.

 

For the full year of 2023, the Company reiterates its prior outlook for CSI Solar’s total module shipments to be in the range of 30 GW to 35 GW. CSI Solar’s battery storage shipments are expected to be in the range of 1.8 GWh to 2.0 GWh. The Company’s total revenue is expected to be in the range of $8.5 billion to $9.0 billion.

 

Dr. Shawn Qu, Chairman and CEO, commented, “We expect margins to rebalance through the year as we restrict the production of non-vertically integrated solar module shipments while strengthening our leadership position in premium markets and segments. While competition remains intense, the successful IPO of our CSI Solar subsidiary, strong balance sheet and brand solidly position us to achieve profitable growth, as we continue making long-term investments that create lasting value for shareholders.”

 

 

Recent Developments

 

On July 31, 2023, Canadian Solar released its 2022 Sustainability Report, which highlights the Company’s progress toward advancing its sustainability strategy from an environmental, social, and governance (ESG) perspective. The sustainability disclosures in this report are aligned with global standards set by the TCFD (Task Force on Climate-Related Disclosures), SASB (the Sustainability Accounting Standards Board) and GRI (Global Reporting Initiative).

 

Recurrent Energy (formerly Global Energy)

 

On August 16, 2023, Canadian Solar announced its wholly-owned subsidiary Recurrent Energy secured a 20-year tolling agreement with Arizona Public Service Company (“APS”) for the 1,200 MWh Papago energy storage project under development in Maricopa County, Arizona. Construction of the project is expected to begin in the third quarter of 2024, and the project is expected to reach commercial operation in the second quarter of 2025. Canadian Solar’s majority-owned subsidiary e-Storage will deliver its SolBank battery energy storage system and provide the full integration and commissioning services for the project.

 

On June 26, 2023, Canadian Solar announced its wholly-owned subsidiary Recurrent Energy secured a EUR150 million multicurrency facility with Santander Corporate & Investment Banking. The facility will support Recurrent Energy’s growth and strategy to retain greater asset ownership in selected markets.

 

On May 31, 2023, Canadian Solar announced its wholly owned subsidiary Recurrent Energy completed the sale of its flagship 100 MWp Azuma Kofuji solar mega-project located in Fukushima prefecture to Japanese investors arranged by Mizuho Securities Co., Ltd. Canadian Solar recognized the revenue from the transaction in the second quarter of 2023. Recurrent Energy’s local subsidiary will continue to provide long term operations and maintenance service for the plant after the transaction.

 

CSI Solar

 

Canadian Solar announced its majority-owned subsidiary CSI Solar completed its IPO and its shares started trading on the Shanghai Stock Exchange’s Sci-Tech Innovation Board on June 9, 2023 under the stock code 688472. In the IPO, CSI Solar issued 541,058,824 shares, representing 15% of the 3,607,058,824 shares outstanding immediately after the IPO. CSI Solar issued an additional 81,158,500 shares at the IPO price of RMB11.10 per share to cover over-allotments. As a result, CSI Solar raised an aggregate of RMB6.9 billion (approximately US$975 million) in gross proceeds from the IPO. After deducting the offering expenses of RMB278 million, the net proceeds from the IPO were RMB6.6 billion (approximately US$925 million). CSI Solar issued a total of 622,217,324 shares, representing approximately 17% of the 3,688,217,324 shares outstanding after the IPO. Following the exercise of the over-allotment option, Canadian Solar owns approximately 62% of CSI Solar.

 

On August 17, 2023, Canadian Solar announced e-STORAGE, which is part of its majority-owned subsidiary CSI Solar, will deliver 1,200 MWh of energy storage solutions to the Company’s wholly-owned subsidiary Recurrent Energy Papago energy storage project in Arizona. Construction of the project is expected to begin in the third quarter of 2024, with commercial operation expected in the second quarter of 2025. The project will utilize e-STORAGE’s SolBank products and e-STORAGE will provide O&M services and a performance guarantee under a 20-year long-term service agreement.

 

On August 9, 2023, Canadian Solar announced the signing of a multi-year module supply agreement with EDF Renewables North America to deliver up to 7 GW of high-efficiency N-type TOPCon solar modules, which will be produced at Canadian Solar’s new factory in Mesquite, Texas. Under the agreement, Canadian Solar will supply its TOPCon solar modules to support EDF Renewables’ project pipeline in the U.S. between 2024 and 2030.

 

On July 19, 2023, Canadian Solar announced its majority-owned subsidiary CSI Solar entered into a multi-year investment agreement with the municipal government of Hohhot, in Inner Mongolia, China, to invest in 20 GW of ingot, 40 GW of crucible, 10 GW of wafer, 10 GW of cell, 5 GW of module and 5 GW of ancillary products manufacturing capacities as the initial phase of the agreement. The ingot capacity is expected to commence production in March 2024, and the remaining capacities are expected to start production in the second half of 2024. Total capital expenditures for the initial phase of this investment are expected to be around RMB11.5 billion (approximately US$1.6 billion), most of which will occur in 2024. 

 

On July 10, 2023, Canadian Solar and its majority-owned subsidiary CSI Solar announced the rebranding of e-STORAGE, CSI Solar’s utility-scale battery energy storage subsidiary and platform. Through e-STORAGE, Canadian Solar will accelerate its growth in the global energy storage market by operating e-STORAGE as a distinct business unit under CSI Solar. e-STORAGE launches with nearly 26 GWh of energy storage projects in its total pipeline and over $1.7 billion of contracted revenues as of July 2023, up from $1 billion in January 2023. Previously, e-STORAGE operated under the name CSI Energy Storage.

 

On June 15, 2023, Canadian Solar announced the establishment of a solar PV module production facility in Mesquite, Texas. The plant will have an annual output of 5 GW, with an investment of over $250 million. The plant will create approximately 1,500 skilled jobs once it is fully ramped up. Production is expected to begin near the end of 2023.

 

 

 

On June 8, 2023, Canadian Solar announced its majority-owned subsidiary CSI Solar entered into an agreement with Unibal, a joint venture between Union Group and Capbal Limited, to deliver battery storage systems for two projects totaling 40 MWh in the United Kingdom. The projects are expected to reach commercial operation in the first quarter of 2024.

 

On May 22, 2023, Canadian Solar announced its majority-owned subsidiary CSI Solar entered into an agreement to deliver 49.5MW/99MWh of turnkey battery energy storage solutions to Cero Generation and Enso Energy for their 49.5MW/99MWh battery energy storage co-located with the Larks Green solar PV project in South Gloucestershire, United Kingdom. CSI Solar will also provide full commissioning and integration services for the projects, in addition to long-term operations and maintenance, warranties and performance guarantees. The projects covered by the agreement are expected to reach commercial operation in late 2024.

 

Conference Call Information

 

The Company will hold a conference call on Tuesday, August 22, 2023, at 8:00 a.m. U.S. Eastern Daylight Time (8:00 p.m., Tuesday, August 22, 2023, in Hong Kong) to discuss its second quarter 2023 results and business outlook. The dial-in phone number for the live audio call is +1-877-704-4453 (toll-free from the U.S.), 800-965-561 (toll-free from Hong Kong), 400-120-2840 (local dial-in from Mainland China) or +1-201-389-0920 from international locations. The conference ID is 13740376. A live webcast of the conference call will also be available on the investor relations section of Canadian Solar’s website at www.canadiansolar.com.

 

A replay of the call will be available 2 hours after the conclusion of the call until 11:00 p.m. U.S. Eastern Daylight Time on Tuesday, September 5, 2023 (11:00 a.m., September 6, 2023, in Hong Kong) and can be accessed by +1-844-512-2921 (toll-free from the U.S.), or +1-412-317-6671 from international locations. The replay pin number is 13740376. A webcast replay will also be available on the investor relations section of Canadian Solar’s website at www.canadiansolar.com.

 

About Canadian Solar Inc.

 

Canadian Solar was founded in 2001 in Canada and is one of the world’s largest solar technology and renewable energy companies. It is a leading manufacturer of solar photovoltaic modules, provider of solar energy and battery storage solutions, and developer of utility-scale solar power and battery storage projects with a geographically diversified pipeline in various stages of development. Over the past 22 years, Canadian Solar has successfully delivered over 102 GW of premium-quality, solar photovoltaic modules to customers across the world. Likewise, since entering the project development business in 2010, Canadian Solar has developed, built, and connected over 9 GWp of solar power projects and over 3 GWh of battery storage projects across the world. Currently, the Company has approximately 700 MWp of solar power projects in operation, 8 GWp of projects under construction or in backlog (late-stage), and an additional 17 GWp of projects in advanced and early-stage pipeline. In addition, the Company has a total battery storage project development pipeline of 52 GWh, including approximately 2 GWh under construction or in backlog, and an additional 50 GWh at advanced and early-stage development. Canadian Solar is one of the most bankable companies in the solar and renewable energy industry, having been publicly listed on the NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn or visit www.canadiansolar.com.

 

Safe Harbor/Forward-Looking Statements

 

Certain statements in this press release, including those regarding the Company’s expected future shipment volumes, revenues, gross margins, and project sales 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, regulatory and economic conditions and the state of the solar and battery storage market and industry; geopolitical tensions and conflicts, including impasses, sanctions and export controls; volatility, uncertainty, delays and disruptions related to the COVID-19 pandemic; supply chain disruptions; 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 Japan, the U.S., China, Brazil and Europe; changes in effective tax rates; changes in customer order patterns; changes in product mix; changes in corporate responsibility, especially environmental, social and governance (“ESG”) requirements; capacity utilization; level of competition; pricing pressure and declines in or failure to timely adjust average selling prices; delays in new product introduction; delays in utility-scale project approval process; delays in utility-scale project construction; delays in the completion of project sales; continued success in technological innovations and delivery of products with the features that customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange and inflation rate fluctuations; litigation and other risks as described in the Company’s filings with the Securities and Exchange Commission, including its annual report on Form 20-F filed on April 18, 2023. 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. Investors 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.

 

FINANCIAL TABLES FOLLOW

 

 

The following tables provide unaudited select financial data for the Company’s CSI Solar and Recurrent Energy businesses.

 

		Select Financial Data – CSI Solar and Recurrent Energy
		Three Months Ended and As of June 30, 2023 (In Thousands of U.S. Dollars, Except Percentages)
		CSI Solar				Recurrent Energy				Elimination and unallocated items (1)				Total
Net revenues		$	2,013,993			$	360,045			$	(10,015	)		$	2,364,023
Cost of revenues			1,726,154				201,981				(4,686	)			1,923,449
Gross profit			287,839				158,064				(5,329	)			440,574
Gross margin			14.3	%			43.9	%			—				18.6	%
Income from operations (2)		$	119,384			$	122,190			$	(17,451	)		$	224,123
Supplementary Information:
Interest expense (3)		$	(15,833	)		$	(12,824	)		$	(1,798	)		$	(30,455	)
Interest income (3)			7,550				1,905				1				9,456
Cash and cash equivalents		$	1,607,189			$	395,417			$	8,819			$	2,011,425
Restricted cash – current and noncurrent			1,227,340				11,374				—				1,238,714
Non-recourse borrowings			—				296,668				—				296,668
Other short-term and long-term borrowings			1,735,482				881,059				—				2,616,541

 

		Select Financial Data – CSI Solar and Recurrent Energy
		Six Months Ended June 30, 2023 (In Thousands of U.S. Dollars, Except Percentages)
		CSI Solar				Recurrent Energy				Elimination and unallocated items (1)				Total
Net revenues		$	3,723,723			$	380,097			$	(38,516	)		$	4,065,304
Cost of revenues			3,120,275				214,824				(28,370	)			3,306,729
Gross profit			603,448				165,273				(10,146	)			758,575
Gross margin			16.2	%			43.5	%			—				18.7	%
Income from operations (2)		$	288,842			$	106,985			$	(26,100	)		$	369,727
Supplementary Information:
Interest expense (3)		$	(29,421	)		$	(17,889	)		$	(3,593	)		$	(50,903	)
Interest income (3)			14,027				3,357				28				17,412

 

		Select Financial Data – CSI Solar and Recurrent Energy
		Three Months Ended and As of June 30, 2022 (In Thousands of U.S. Dollars, Except Percentages)
		CSI Solar				Recurrent Energy				Elimination and unallocated items (1)				Total
Net revenues		$	1,816,410			$	553,984			$	(56,208	)		$	2,314,186
Cost of revenues			1,526,755				473,979				(57,598	)			1,943,136
Gross profit			289,655				80,005				1,390				371,050
Gross margin			15.9	%			14.4	%			—				16.0	%
Income from operations (2)		$	62,393			$	55,679			$	(1,955	)		$	116,117
Supplementary Information:
Interest expense (3)		$	(12,415	)		$	(5,507	)		$	(1,787	)		$	(19,709	)
Interest income (3)			3,955				261				—				4,216
Cash and cash equivalents		$	606,252			$	420,118			$	27,197			$	1,053,567
Restricted cash – current and noncurrent			889,745				5,042				—				894,787
Non-recourse borrowings			36,595				263,586				—				300,181
Other short-term and long-term borrowings			1,348,771				652,747				—				2,001,518

 

 

		Select Financial Data – CSI Solar and Recurrent Energy
		Six Months Ended June 30, 2022 (In Thousands of U.S. Dollars, Except Percentages)
		CSI Solar				Recurrent Energy				Elimination and unallocated items (1)				Total
Net revenues		$	3,026,404			$	646,950			$	(108,819	)		$	3,564,535
Cost of revenues			2,560,920				549,109				(97,435	)			3,012,594
Gross profit			465,484				97,841				(11,384	)			551,941
Gross margin			15.4	%			15.1	%			—				15.5	%
Income from operations (2)		$	94,291			$	54,668			$	(17,327	)		$	131,632
Supplementary Information:
Interest expense (3)		$	(24,405	)		$	(7,036	)		$	(3,570	)		$	(35,011	)
Interest income (3)			6,857				1,571				—				8,428

 

(1) Includes inter-segment elimination, and unallocated corporate costs not considered part of management’s evaluation of business segment operating performance.

(2) Income from operations reflects management’s allocation and estimate as some services are shared by the Company’s two business segments.

(3) Represents interest expenses payable to and interest income earned from third parties. 

 

		Select Financial Data - CSI Solar and Recurrent Energy
		Three Months Ended June 30, 2023				Three Months Ended March 31, 2023				Three Months Ended June 30, 2022
		(In Thousands of U.S. Dollars)
CSI Solar Revenues:
Solar modules		$	1,722,687			$	1,454,876			$	1,350,495
Solar system kits			216,867				133,587				150,765
Utility-scale battery storage			13,438				9,815				227,438
Residential battery storage			1,451				4,995				—
EPC and others			49,535				77,956				31,504
Subtotal			2,003,978				1,681,229				1,760,202
Recurrent Energy Revenues:
Solar and battery storage projects			338,487				4,621				540,056
O&M and asset management services			13,408				8,687				7,745
Electricity sales and others			8,150				6,744				6,183
Subtotal			360,045				20,052				553,984
Total net revenues		$	2,364,023			$	1,701,281			$	2,314,186

 

 

		Select Financial Data - CSI Solar and Recurrent Energy
		Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
		(In Thousands of U.S. Dollars)
CSI Solar Revenues:
Solar modules		$	3,177,563			$	2,313,540
Solar system kits			350,454				241,221
Utility-scale battery storage			23,253				309,938
Residential battery storage			6,446				—
EPC and others			127,491				52,886
Subtotal			3,685,207				2,917,585
Recurrent Energy Revenues:
Solar and battery storage projects			343,108				618,448
O&M and asset management services			22,095				15,693
Electricity sales and others			14,894				12,809
Subtotal			380,097				646,950
Total net revenues		$	4,065,304			$	3,564,535

 

 

Canadian Solar Inc.

Unaudited Condensed Consolidated Statements of Operations

(In Thousands of U.S. Dollars, Except Share and Per Share Data)

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
		2023				2023				2022				2023				2022
Net revenues		$	2,364,023			$	1,701,281			$	2,314,186			$	4,065,304			$	3,564,535
Cost of revenues			1,923,449				1,383,280				1,943,136				3,306,729				3,012,594
Gross profit			440,574				318,001				371,050				758,575				551,941
Operating expenses:
Selling and distribution expenses			87,686				88,371				158,017				176,057				266,862
General and administrative expenses			139,571				78,648				87,920				218,219				150,730
Research and development expenses			23,137				17,307				18,050				40,444				31,330
Other operating income, net			(33,943	)			(11,929	)			(9,054	)			(45,872	)			(28,613	)
Total operating expenses			216,451				172,397				254,933				388,848				420,309
Income from operations			224,123				145,604				116,117				369,727				131,632
Other income (expenses):
Interest expense			(30,455	)			(20,448	)			(19,709	)			(50,903	)			(35,011	)
Interest income			9,456				7,956				4,216				17,412				8,428
Gain (loss) on change in fair value of derivatives, net			(23,775	)			7,601				(4,869	)			(16,174	)			(29,607	)
Foreign exchange gain (loss), net			57,532				(20,860	)			11,333				36,672				39,195
Investment income, net			1,955				8,380				6,984				10,335				1,460
Total other income (expenses)			14,713				(17,371	)			(2,045	)			(2,658	)			(15,535	)
Income before income taxes and equity in earnings of affiliates			238,836				128,233				114,072				367,069				116,097
Income tax expense			(46,019	)			(28,715	)			(27,731	)			(74,734	)			(22,548	)
Equity in earnings of affiliates			4,719				7,311				2,214				12,030				3,940
Net income			197,536				106,829				88,555				304,365				97,489
Less: Net income attributable to non-controlling interests			27,566				23,117				14,093				50,683				13,820
Net income attributable to Canadian Solar Inc.		$	169,970			$	83,712			$	74,462			$	253,682			$	83,669
Earnings per share - basic		$	2.62			$	1.30			$	1.16			$	3.92			$	1.30
Shares used in computation - basic			64,912,928				64,517,935				64,262,556				64,716,522				64,146,383
Earnings per share - diluted		$	2.39			$	1.19			$	1.07			$	3.58			$	1.21
Shares used in computation - diluted			71,689,925				71,424,749				71,103,568				71,571,041				71,067,215

 

 

Canadian Solar Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss)

(In Thousands of U.S. Dollars)

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
		2023				2023				2022				2023				2022
Net Income		$	197,536			$	106,829			$	88,555			$	304,365			$	97,489
Other comprehensive income (loss):
Foreign currency translation adjustment			(68,507	)			23,250				(126,367	)			(45,257	)			(118,856	)
Gain (loss) on changes in fair value of available-for-sale debt securities, net of tax			(1,050	)			339				229				(711	)			229
Gain (loss) on interest rate swap, net of tax			(67	)			(105	)			160				(172	)			350
Share of gain (loss) on changes in fair value of derivatives of affiliate, net of tax			503				(610	)			—				(107	)			—
Comprehensive income (loss)			128,415				129,703				(37,423	)			258,118				(20,788	)
Less: comprehensive income (loss) attributable to non-controlling interests			3,690				25,162				(3,960	)			28,852				(2,833	)
Comprehensive income (loss) attributable to Canadian Solar Inc.		$	124,725			$	104,541			$	(33,463	)		$	229,266			$	(17,955	)

 

 

Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets

(In Thousands of U.S. Dollars)  

 

		June 30,				December 31,
		2023				2022
ASSETS
Current assets:
Cash and cash equivalents		$	2,011,425			$	981,434
Restricted cash			1,234,008				978,116
Accounts receivable trade, net			1,266,608				970,950
Accounts receivable, unbilled			65,282				57,770
Amounts due from related parties			71,249				48,614
Inventories			1,532,149				1,524,095
Value added tax recoverable			186,349				158,773
Advances to suppliers, net			333,182				253,484
Derivative assets			7,637				17,516
Project assets			339,916				385,964
Prepaid expenses and other current assets			269,228				267,941
Total current assets			7,317,033				5,644,657
Restricted cash			4,706				9,953
Property, plant and equipment, net			2,000,396				1,826,643
Solar power systems, net			612,518				364,816
Deferred tax assets, net			219,367				229,226
Advances to suppliers, net			140,430				65,352
Investments in affiliates			159,486				115,784
Intangible assets, net			13,942				17,530
Project assets			347,012				438,529
Right-of-use assets			146,364				103,600
Amounts due from related parties			35,423				33,489
Other non-current assets			201,973				187,549
TOTAL ASSETS		$	11,198,650			$	9,037,128

 

 

Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets (Continued)

(In Thousands of U.S. Dollars)  

 

		June 30,				December 31,
		2023				2022
Current liabilities:
Short-term borrowings		$	1,899,055			$	1,443,816
Accounts payable			770,606				805,300
Short-term notes payable			1,703,615				1,493,399
Amounts due to related parties			11,306				89
Other payables			798,032				853,040
Advances from customers			313,971				334,943
Derivative liabilities			18,113				25,359
Operating lease liabilities			10,693				9,810
Other current liabilities			477,091				293,012
Total current liabilities			6,002,482				5,258,768
Long-term borrowings			1,014,154				813,406
Convertible notes			226,695				225,977
Liability for uncertain tax positions			5,730				5,730
Deferred tax liabilities			68,457				66,630
Loss contingency accruals			7,150				5,000
Operating lease liabilities			75,707				25,714
Other non-current liabilities			357,001				329,209
TOTAL LIABILITIES			7,757,376				6,730,434
Equity:
Common shares			835,543				835,543
Additional paid-in capital			241,557				1,127
Retained earnings			1,529,202				1,275,520
Accumulated other comprehensive loss			(158,782	)			(170,551	)
Total Canadian Solar Inc. shareholders’ equity			2,447,520				1,941,639
Non-controlling interests			993,754				365,055
TOTAL EQUITY			3,441,274				2,306,694
TOTAL LIABILITIES AND EQUITY		$	11,198,650			$	9,037,128

 

 

Canadian Solar Inc.

Unaudited Condensed Statements of Cash Flows

(In Thousands of U.S. Dollars)

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
		2023				2023				2022				2023				2022
Operating Activities:
Net income		$	197,536			$	106,829			$	88,555			$	304,365			$	97,489
Adjustments to reconcile net income to net cash provided by operating activities			190,634				67,738				57,852				258,372				173,944
Changes in operating assets and liabilities			(98,611	)			(127,395	)			146,857				(226,006	)			181,130
Net cash provided by operating activities			289,559				47,172				293,264				336,731				452,563
Investing Activities:
Purchase of property, plant and equipment			(283,065	)			(233,032	)			(147,629	)			(516,097	)			(235,629	)
Purchase of solar power systems			(36,329	)			(109,866	)			—				(146,195	)			(101	)
Other investing activities			(17,927	)			(11,083	)			(8,056	)			(29,010	)			(10,825	)
Net cash used in investing activities			(337,321	)			(353,981	)			(155,685	)			(691,302	)			(246,555	)
Financing Activities:
Net proceeds from subsidiary’s public offering of ordinary shares			803,645				—				—				803,645				—
Other financing activities			547,492				379,749				212,743				927,241				440,354
Net cash provided by financing activities			1,351,137				379,749				212,743				1,730,886				440,354
Effect of exchange rate changes			(128,769	)			33,090				(95,453	)			(95,679	)			(132,290	)
Net increase in cash, cash equivalents and restricted cash			1,174,606				106,030				254,869				1,280,636				514,072
Cash, cash equivalents and restricted cash at the beginning of the period		$	2,075,533			$	1,969,503			$	1,693,485			$	1,969,503			$	1,434,282
Cash, cash equivalents and restricted cash at the end of the period		$	3,250,139			$	2,075,533			$	1,948,354			$	3,250,139			$	1,948,354