North Coast Solar Stocks

May 26, 2009

Canadian Solar Reports First Quarter 2009 Results

Filed under: CSIQ — Tags: , , , , , , — Jason @ 5:16 am

Tuesday May 26, 2009, 5:16 am EDT

TORONTO, May 26 /PRNewswire-Asia/ — Canadian Solar Inc. (“the Company”, “Canadian Solar” or “we”) (CSIQ) today 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.

                              Canadian Solar Inc.
      Reconciliation of US GAAP Gross Profit (Loss), Operating Income
     (Loss) and Net Income (Loss) to Non-US GAAP Gross Profit (Loss),
                 Operating Income (Loss) and Net Income (Loss)
                                 (Unaudited)
                   Use of Non-US GAAP Financial Information
      (In Thousands of U.S. Dollars, Except Share And Per Share Data And
                           Unless Otherwise Stated)

     To supplement its unaudited condensed consolidated financial statements
     presented in accordance with US GAAP, Canadian Solar uses the following
     measures defined as non-US GAAP financial measures by the SEC: adjusted
     gross profit (loss), adjusted operating income (loss) and adjusted net
     income (loss), each excluding share-based compensation and other one-time
     non-cash charges, expenses or gains, which we refer to as special items.
     Canadian Solar believes that non-US GAAP adjusted gross profit (loss),
     adjusted operating income (loss) and adjusted net income (loss) measures
     indicate the Company's baseline performance before subtracting those
     charges.  In addition, these non-US GAAP measures are among the primary \\
     indicators used by the management as a basis for its planning and
     forecasting of future periods. The presentation of these non-US GAAP
     measures is not intended to be considered in isolation or as a substitute
     for the financial information prepared and presented in accordance with
     US GAAP.

                                     Q1 2009                  Q4 2008
                              Gross Operating  Net    Gross  Operating   Net
                               loss    loss    loss    loss      loss    loss

    US GAAP Profit/(Loss)   (3,895) (10,764) (4,785)(29,409) (44,982) (49,244)
    Share-based compensation   111    1,242   1,242      85    1,029    1,029

    Total special items        111    1,242   1,242      85    1,029    1,029
    Non-US GAAP Profit/
     (Loss)                 (3,784)  (9,522) (3,543)(29,324) (43,953) (48,215)

    Adjusted Gross Margin    (7.65)%                 (42.61)%
    Adjusted Operating
     Margin                          (19.25)%                 (63.86)%
    Per diluted share                        $(0.10)                   $(1.35)

    (Cont.)

                                                  Q1 2008
                                    Gross        Operating
                                    profit         income      Net income
    US GAAP
    Profit/(Loss)                   28,236         20,002        18,585
    Share-based compensation            90          2,199         2,199

    Total special items                 90          2,199         2,199
    Non-US GAAP Profit/(Loss)       28,326         22,201        20,784

    Adjusted Gross Margin            16.54%
    Adjusted Operating Margin                       12.97%
    Per diluted share                                             $0.64

                               Canadian Solar Inc.
            Unaudited Condensed Consolidated Statements of Operations
                 (In Thousands of U.S. Dollars, Except Share And
                   Per Share Data And Unless Otherwise Stated)

                                             Q1 2009     Q4 2008     Q1 2008

    Net revenues                              49,465      68,824     171,236
    Cost of revenues                          53,360      98,233     143,000

    Gross profit (loss)                       (3,895)    (29,409)     28,236

    Selling expenses                           1,881       1,768       2,505
    General and administrative expenses        4,518      13,332       5,426
    Research and development expenses            470         473         303

    Total operating expenses                   6,869      15,573       8,234

    Income (loss) from operations            (10,764)    (44,982)     20,002
    Interest expenses                         (2,254)     (2,484)     (2,823)
    Interest income                              563       2,552         102
    Gain on foreign currency derivative
     assets                                   11,366       7,031          --
    Foreign currency gain (loss)              (2,876)    (10,387)      8,312

    Income (loss) before taxes                (3,965)    (48,270)     25,593
    Income tax expenses                         (820)       (974)     (7,008)

    Net income (loss)                         (4,785)    (49,244)     18,585

    Basic earnings (loss) per share            (0.13)      (1.38)       0.68
    Basic weighted average outstanding
     shares                               35,686,313  35,686,313  27,391,315
    Diluted earning (loss) per share           (0.13)      (1.38)       0.57
    Diluted weighted average
     outstanding shares                   35,686,313  35,686,313  32,392,020

                               Canadian Solar Inc.
                 Unaudited Condensed Consolidated Balance Sheets
                          (In Thousands of U.S. Dollars)

                                                 March 31,        December 31,
                                                    2009               2008
    Assets
    Current assets
    Cash and cash equivalents                      92,630            115,661
    Restricted cash                               113,116             20,622
    Accounts receivable, net of allowance
     for doubtful accounts                         67,743             51,611
    Inventories                                   100,937             92,683
    Value added tax recoverable                    14,344             15,900
    Advances to suppliers                          17,241             24,654
    Foreign currency derivative assets              2,713              6,974
    Prepaid and other current assets               11,030             10,910

    Current assets - subtotal                     419,754            339,015
    Property, plant and equipment, net            166,938            165,542
    Intangible assets                                 239                263
    Long term prepayments                          50,590             43,087
    Land use right                                 12,715             12,782
    Equity investment                               3,000              3,000
    Deferred tax assets - non current               6,498              6,966

    Total assets                                  659,734            570,655

    Liabilities and stockholders' equity
    Current liabilities
    Short term borrowings                         208,856            110,665
    Accounts payable                               24,804             29,957
    Other payables                                 18,038             24,043
    Advances from customers                         9,470              3,571
    Amounts due to related parties                     94                 94
    Other current liabilities                       2,321              4,333

    Current liabilities - subtotal                263,583            172,663
    Accrued warranty costs                         11,161             10,847
    Convertible notes                                 839                830
    Long term borrowings                           45,349             45,357
    Liability for uncertain tax positions          10,136              8,704

    Total liabilities                             331,068            238,401

    Common shares                                 395,154            395,154
    Additional paid-in-capital                    (65,464)           (66,705)
    Accumulated deficits                          (15,889)           (11,104)
    Accumulated other comprehensive income         14,865             14,909

    Total stockholders' equity                    328,666            332,254

    Total liabilities and stockholders'
     equity                                       659,734            570,655

     Note:   The Q408 net loss was reduced by $1.4 million compared to the
     Q408 results press release after adjusting for the occurrence of several
     subsequent events and the retrospective application of FASB Staff
     Position - APB 14-1 on January 1, 2009, "Accounting for Convertible Debt
     Instruments That May Be Settled in Cash upon Conversion (Including
     Partial Cash Settlement). The Q108 net profit was reduced by $0.4 million
     compared to the Q108 results press release after the retrospective
     application of FASB Staff Position - APB 14-1 on January 1, 2009.

    For more information, please contact:

    In Canada
     Alex Taylor, IR Director
     Canadian Solar Inc.
     Tel:   +1-905-530-2334
     Fax:   +1-905-530-2001
     Email: ir@csisolar.com

    In the U.S.
     Joseph Villalta
     The Ruth Group
     Tel:   +1-646-536-7003
     Email: jvillalta@theruthgroup.com
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