Canadian Solar Reports First Quarter 2009 Results
TORONTO, -- Canadian Solar Inc. ("the Company", "Canadian Solar" or "we") (Nasdaq: CSIQ) announced its unaudited financial results for the first quarter of 2009 ended March 31, 2009 and updated outlook for full year 2009 shipments.
First Quarter 2009 Results
-- Net revenues for the quarter were $49.5 million, compared to net
revenues of $171.2 million for the first quarter of 2008 and $68.8
million for the fourth quarter of 2008.
-- Shipments for the quarter were approximately 18 MW, including 1.2 MW of
solar grade e-Modules and 1.6 MW of solar cells and specialty solar
application products.
-- Net loss for the quarter on a GAAP basis was $4.8 million, or $0.13 per
diluted share, compared to net income of $18.6 million, or $0.57 per
diluted share, for the first quarter of 2008 and net loss of $49.2
million, or $1.38 per diluted share, for the fourth quarter of 2008.
-- Non-GAAP net loss for the quarter was $0.10 per diluted share, compared
to non-GAAP net income of $0.64 per diluted share for the first quarter
of 2008 and non-GAAP net loss of $1.35 per diluted share for the fourth
quarter of 2008, in all cases excluding stock based compensation costs.
Dr. Shawn Qu, Chairman and CEO of Canadian Solar, commented: "Our results for the first quarter were in line with our expectations, as we continued to exercise prudent financial management in response to the global economic downturn and the resulting pressure on all levels of the solar industry value chain. We are working closely with our supply partners to make sure that our cost structure remains competitive. The Company ended the quarter with a strong, liquid balance sheet providing our customers and banking partners with confidence in our ability to honor our long term commitment to our products. We exercised a conservative shipment strategy in order to minimize channel inventory buildup. Consistent with our positive long-term view, over the past five months, we have doubled the size of our sales force, with further additions planned in Europe, North America and Asia. We have started to see success in our strategy as demonstrated by our increased sales into a few non- traditional markets such as Korea and China."
Arthur Chien, CFO of Canadian Solar, noted: "Cash and cash equivalents changed from $115.7 million as of December 31, 2008 to $92.6 million as of March 31, 2009. The change was primarily due to increases in working capital commitments and long-term prepayments. The moderate increase in inventories was attributable to support for anticipated customer sales over the next few quarters. Restricted cash increased from $20.6 million as of December 31, 2008 to $113.1 million as of March 31, 2009. The increase was mainly due to pledges of cash to support outstanding short-term borrowings."
Revenue by Geographical Location (US $ millions)
Region Q1 2009 Q4 2008 Q1 2008
Revenue % Revenue % Revenue %
Europe 36.0 72.7% 52.8 76.8% 167.6 97.9%
Asia 10.8 21.8% 9.6 13.9% 2.4 1.4%
America 2.7 5.5% 6.4 9.3% 1.2 0.7%
Total 49.5 100% 68.8 100% 171.2 100%
Recent Developments
-- Based on an updated assessment of long-term demand for our solar
products and in order to improve our margin structure, we resumed the
Phase II expansion of our solar cell facility. This is expected to
increase our total solar cell capacity from 270 MW to 420 MW by the
middle of Q3 2009. We expect to spend approximately $18 million to
complete this expansion.
-- We plan to continue to expand our internal ingot capacity to 200 MW
from the current 120 MW to 150 MW level in order to better control the
supply chain and improve our margin structure.
-- We expect to maintain our module capacity at the current 620MW level.
We expect to stay on course with our flexible vertical integration
model and continue to strengthen strategic partnerships with our long-
term wafer and cell suppliers. At the same time, the increased level
of internal ingot, wafer and cell capacity is expected to help us
improve our overall margin structure.
-- We successfully renegotiated our long-term supply contract with a major
Chinese polisilicon and wafer manufacturer. The recently signed
amendment reduced our silicon and wafer purchase obligations for 2009
and reset the price to the current market level. The amendment also
provided a flexible mechanism to allow both sides to adjust the price
for the future year according to market conditions.
-- We signed an amendment to the long term supply agreement with another
major China based wafer company to allow both sides to continue the
supply relationship on a basis that reflects current market conditions,
while also opening discussions on the long term supply contract between
the two companies.
-- As part of the Company's sales force growth, we are pleased to announce
that Mr. Yan Zhuang, will become our Vice President, Sales and
Marketing effective June 1, 2009. He will resign from Canadian Solar's
Board of Directors where he has served as an independent director since
September 2007. Mr. Zhuang has worked in corporate branding, sales and
marketing positions with, or provided consulting services to, a variety
of multinational companies for over 20 years. He previously served as
Senior Vice President, Sales and Marketing, and Head of Asia for Hands-
on Mobile Ltd., a global media and entertainment company with Asian
operations in China, Korea and India. Before joining Hands-on Mobile,
he held various marketing and business operation positions with
Motorola Inc., including as its Asia Pacific Regional Director of
Marketing Planning and Consumer Insight. Mr. Zhuang founded and until
recently served as CEO of K's Media. Mr. Zhuang holds a Bachelor of
Electrical Engineering degree from Northern Jiao-Tong University,
China, an MSc in Applied Statistics from the University of Alberta,
Canada and an MSc in Marketing Management from the University of
Guelph, Canada.
Outlook
Within the first quarter, shipments increased sequentially month over month. This positive trend continued into Q2 and we expect further increases in Q3. Offsetting this positive trend, however, customers, especially those in United States, continue to face an uncertain financing environment. Additionally, recent inventory clearance efforts by some of our competitors have resulted in declining module ASPs, which may cause delays in project purchase decisions by customers. We expect that these issues may ultimately lead to some order reductions or push-outs into 2010. As a result, we are taking a more conservative outlook and now expect full year 2009 shipments to be around 200 MW to 220 MW, with previously issued net revenue outlook adjusted accordingly.
We expect our Q2 shipment level will be significantly higher than that of Q1, reflecting improved solar installation levels around the world and increased demand for our high-quality and cost-competitive solar products. We also expect that we will achieve greater market diversification as we now have order booking to sell into Germany, Spain, Italy, the Czech Republic, France, Korea, the U.S., China, Japan and several other countries in Q2.
Dr. Shawn Qu continued: "Canadian Solar has achieved the scale and cost structure to be a long-term player in the solar industry. We currently have one of the most complete crystalline solar module product lines, consisting of high-efficiency mono-crystalline solar modules, multi-crystalline solar modules and our medium power but low cost e-Modules. Our high-efficiency crystalline solar products compete favorably with our competitors, while our medium power e-Modules supplement our high-efficiency product line by offering the quality and durability of crystalline products at prices approaching those of thin-film products.
Our processing costs remain very competitive. We expect that this benefit coupled with declining raw materials costs and increased internal capacity from ingot to cell, will allow us to offer favorable pricing to maintain and hopefully build share in 2009. Overall, we remain positive in our outlook and in our long-term prospects for profitable growth and industry leadership."
Investor Conference Call / Webcast Details
A conference call has been scheduled for Tuesday May 26th 2009 at 8:00 a.m. ET or Tuesday May 26th 8:00 p.m. China time. During the call, time will be set-aside for analysts and interested investors to ask questions of senior executive officers of the Company.
The dial-in number for the live audio call is +1-866-783-2140 (U.S) or +1- 857-350-1599 (International). The passcode is 62082354. A live webcast of the conference call will be available on Canadian Solar's website at http://www.canadian-solar.com .
A replay of the call will be available 1 hour after the conclusion of the conference call, for one week, through noon on Wednesday, June 3, 2009 (in Jiangsu) or midnight on Tuesday, June 2, 2009 (in New York) at http://www.canadian-solar.com and by telephone at +1-888-286-8010 (U.S.) or +1-617-801-6888 (International). The passcode to access the replay is 58998621.
About Canadian Solar Inc. (Nasdaq: CSIQ)
Founded in 2001, Canadian Solar Inc. (Canadian Solar) is a vertically integrated manufacturer of solar cell, solar module and custom-designed solar application products serving customers worldwide. Canadian Solar 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, Canadian Solar has become a major global provider of solar power products for a wide range of applications. For more information, please visit http://www.canadian-solar.com .
First Quarter 2009 Results
-- Net revenues for the quarter were $49.5 million, compared to net
revenues of $171.2 million for the first quarter of 2008 and $68.8
million for the fourth quarter of 2008.
-- Shipments for the quarter were approximately 18 MW, including 1.2 MW of
solar grade e-Modules and 1.6 MW of solar cells and specialty solar
application products.
-- Net loss for the quarter on a GAAP basis was $4.8 million, or $0.13 per
diluted share, compared to net income of $18.6 million, or $0.57 per
diluted share, for the first quarter of 2008 and net loss of $49.2
million, or $1.38 per diluted share, for the fourth quarter of 2008.
-- Non-GAAP net loss for the quarter was $0.10 per diluted share, compared
to non-GAAP net income of $0.64 per diluted share for the first quarter
of 2008 and non-GAAP net loss of $1.35 per diluted share for the fourth
quarter of 2008, in all cases excluding stock based compensation costs.
Dr. Shawn Qu, Chairman and CEO of Canadian Solar, commented: "Our results for the first quarter were in line with our expectations, as we continued to exercise prudent financial management in response to the global economic downturn and the resulting pressure on all levels of the solar industry value chain. We are working closely with our supply partners to make sure that our cost structure remains competitive. The Company ended the quarter with a strong, liquid balance sheet providing our customers and banking partners with confidence in our ability to honor our long term commitment to our products. We exercised a conservative shipment strategy in order to minimize channel inventory buildup. Consistent with our positive long-term view, over the past five months, we have doubled the size of our sales force, with further additions planned in Europe, North America and Asia. We have started to see success in our strategy as demonstrated by our increased sales into a few non- traditional markets such as Korea and China."
Arthur Chien, CFO of Canadian Solar, noted: "Cash and cash equivalents changed from $115.7 million as of December 31, 2008 to $92.6 million as of March 31, 2009. The change was primarily due to increases in working capital commitments and long-term prepayments. The moderate increase in inventories was attributable to support for anticipated customer sales over the next few quarters. Restricted cash increased from $20.6 million as of December 31, 2008 to $113.1 million as of March 31, 2009. The increase was mainly due to pledges of cash to support outstanding short-term borrowings."
Revenue by Geographical Location (US $ millions)
Region Q1 2009 Q4 2008 Q1 2008
Revenue % Revenue % Revenue %
Europe 36.0 72.7% 52.8 76.8% 167.6 97.9%
Asia 10.8 21.8% 9.6 13.9% 2.4 1.4%
America 2.7 5.5% 6.4 9.3% 1.2 0.7%
Total 49.5 100% 68.8 100% 171.2 100%
Recent Developments
-- Based on an updated assessment of long-term demand for our solar
products and in order to improve our margin structure, we resumed the
Phase II expansion of our solar cell facility. This is expected to
increase our total solar cell capacity from 270 MW to 420 MW by the
middle of Q3 2009. We expect to spend approximately $18 million to
complete this expansion.
-- We plan to continue to expand our internal ingot capacity to 200 MW
from the current 120 MW to 150 MW level in order to better control the
supply chain and improve our margin structure.
-- We expect to maintain our module capacity at the current 620MW level.
We expect to stay on course with our flexible vertical integration
model and continue to strengthen strategic partnerships with our long-
term wafer and cell suppliers. At the same time, the increased level
of internal ingot, wafer and cell capacity is expected to help us
improve our overall margin structure.
-- We successfully renegotiated our long-term supply contract with a major
Chinese polisilicon and wafer manufacturer. The recently signed
amendment reduced our silicon and wafer purchase obligations for 2009
and reset the price to the current market level. The amendment also
provided a flexible mechanism to allow both sides to adjust the price
for the future year according to market conditions.
-- We signed an amendment to the long term supply agreement with another
major China based wafer company to allow both sides to continue the
supply relationship on a basis that reflects current market conditions,
while also opening discussions on the long term supply contract between
the two companies.
-- As part of the Company's sales force growth, we are pleased to announce
that Mr. Yan Zhuang, will become our Vice President, Sales and
Marketing effective June 1, 2009. He will resign from Canadian Solar's
Board of Directors where he has served as an independent director since
September 2007. Mr. Zhuang has worked in corporate branding, sales and
marketing positions with, or provided consulting services to, a variety
of multinational companies for over 20 years. He previously served as
Senior Vice President, Sales and Marketing, and Head of Asia for Hands-
on Mobile Ltd., a global media and entertainment company with Asian
operations in China, Korea and India. Before joining Hands-on Mobile,
he held various marketing and business operation positions with
Motorola Inc., including as its Asia Pacific Regional Director of
Marketing Planning and Consumer Insight. Mr. Zhuang founded and until
recently served as CEO of K's Media. Mr. Zhuang holds a Bachelor of
Electrical Engineering degree from Northern Jiao-Tong University,
China, an MSc in Applied Statistics from the University of Alberta,
Canada and an MSc in Marketing Management from the University of
Guelph, Canada.
Outlook
Within the first quarter, shipments increased sequentially month over month. This positive trend continued into Q2 and we expect further increases in Q3. Offsetting this positive trend, however, customers, especially those in United States, continue to face an uncertain financing environment. Additionally, recent inventory clearance efforts by some of our competitors have resulted in declining module ASPs, which may cause delays in project purchase decisions by customers. We expect that these issues may ultimately lead to some order reductions or push-outs into 2010. As a result, we are taking a more conservative outlook and now expect full year 2009 shipments to be around 200 MW to 220 MW, with previously issued net revenue outlook adjusted accordingly.
We expect our Q2 shipment level will be significantly higher than that of Q1, reflecting improved solar installation levels around the world and increased demand for our high-quality and cost-competitive solar products. We also expect that we will achieve greater market diversification as we now have order booking to sell into Germany, Spain, Italy, the Czech Republic, France, Korea, the U.S., China, Japan and several other countries in Q2.
Dr. Shawn Qu continued: "Canadian Solar has achieved the scale and cost structure to be a long-term player in the solar industry. We currently have one of the most complete crystalline solar module product lines, consisting of high-efficiency mono-crystalline solar modules, multi-crystalline solar modules and our medium power but low cost e-Modules. Our high-efficiency crystalline solar products compete favorably with our competitors, while our medium power e-Modules supplement our high-efficiency product line by offering the quality and durability of crystalline products at prices approaching those of thin-film products.
Our processing costs remain very competitive. We expect that this benefit coupled with declining raw materials costs and increased internal capacity from ingot to cell, will allow us to offer favorable pricing to maintain and hopefully build share in 2009. Overall, we remain positive in our outlook and in our long-term prospects for profitable growth and industry leadership."
Investor Conference Call / Webcast Details
A conference call has been scheduled for Tuesday May 26th 2009 at 8:00 a.m. ET or Tuesday May 26th 8:00 p.m. China time. During the call, time will be set-aside for analysts and interested investors to ask questions of senior executive officers of the Company.
The dial-in number for the live audio call is +1-866-783-2140 (U.S) or +1- 857-350-1599 (International). The passcode is 62082354. A live webcast of the conference call will be available on Canadian Solar's website at http://www.canadian-solar.com .
A replay of the call will be available 1 hour after the conclusion of the conference call, for one week, through noon on Wednesday, June 3, 2009 (in Jiangsu) or midnight on Tuesday, June 2, 2009 (in New York) at http://www.canadian-solar.com and by telephone at +1-888-286-8010 (U.S.) or +1-617-801-6888 (International). The passcode to access the replay is 58998621.
About Canadian Solar Inc. (Nasdaq: CSIQ)
Founded in 2001, Canadian Solar Inc. (Canadian Solar) is a vertically integrated manufacturer of solar cell, solar module and custom-designed solar application products serving customers worldwide. Canadian Solar 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, Canadian Solar has become a major global provider of solar power products for a wide range of applications. For more information, please visit http://www.canadian-solar.com .
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