Canadian Solar Reports Second Quarter 2020 Results – ACROFAN USA

GUELPH,¬†ON, Aug. 7, 2020 /PRNewswire/ —¬†Canadian Solar Inc.¬†(“Canadian Solar” or the “Company”) (NASDAQ: CSIQ) today announced financial results for the quarter ended June 30, 2020.

Second Quarter 2020 Highlights

  • 31% sequential increase in total module shipments to 2.9 GW, exceeding guidance of 2.5 GW to 2.7 GW.
  • Net revenue of $696 million exceeding guidance of $630 million to $680 million.
  • Gross margin of 21.2% exceeding guidance of 18.5% to 20.5%.
  • 17% reduction in operating expenses compared to the second quarter of 2019.
  • Net income attributable to Canadian Solar of $20.6 million or $0.34 per diluted share.
  • Updated shipment guidance to 11 GW to 12 GW for 2020, and 18 GW to 20 GW for 2021.

Dr. Shawn Qu, Chairman and CEO, commented, “Despite challenging market conditions, second quarter results exceeded expectations both on revenue and profits. Over the past 19 years, we have built a strong foundation and track record based on technology innovation, all-around product execution, robust customer channels and prudent capital deployment. This foundation has helped us to dynamically adjust to changing market environments and consistently deliver a market-leading return on capital and equity.

Last week, we announced the plan to list our Module and System Solutions (“MSS”) business on China’s stock market. If successful, it will give us greater access to additional, lower-cost sources of capital and allow us to grow faster at a time when we believe growth in the solar industry and market consolidation are both set to accelerate. We have started the pre-IPO capital raising process to bring in new partners to our MSS business and convert it into a Sino-foreign joint stock company, which is required by Chinese security regulations for listing in China’s stock market. This investment round is expected to be completed by the end of September, and will also allow us to immediately expand our manufacturing capacity using the best available technologies and equipment to support our newly set module shipment plan for 2021.

In addition, we believe the listing will help us unlock value for shareholders by addressing our valuation gap relative to China-listed solar companies. Meanwhile, as a Canadian-based global company, we remain fully committed to our NASDAQ listing and remain focused on expanding our Energy business worldwide by growing our high-quality project pipeline and sales, and increasing our partial ownership of select solar and storage projects.”

Yan Zhuang, President and COO, said, “We are benefiting from a demand rebound across most of our markets, with our order backlog for the second half of 2020 and even next year already exceeding our previous expectations. While the current polysilicon supply disruption and shortage presents a near-term challenge, we are positioning ourselves for long-term growth. On the one hand, we¬†will expand capacity and increase the level of vertical integration in our module business, which will allow us to capture more global market share, enhance pricing power, control costs and improve profitability in an industry that is rapidly consolidating. On the other hand, we are building our technological capabilities in the solar PV plus storage space, gearing up for new growth opportunities as adoption of clean solar energy accelerates.”

Dr. Huifeng Chang, Senior VP and CFO, added, “As the industry demand and capital market conditions are both improving, we are working to strike a balance between investing for long-term growth and preserving cash. In the near term, uncertainties remain around the impact of the ongoing pandemic, geopolitical and policy risks. In the medium- to longer-term,¬†the plan to list our MSS business in China’s stock market will give us the additional resources to deliver higher future earnings growth and return on capital. We remain disciplined in our capital allocation decisions, as always, and will continue to monitor the market and adjust to changes.”

Second Quarter 2020 Results

Total module shipments in the second quarter of 2020 increased to 2,905 MW from 2,214 MW in the first quarter of 2020, and 2,143 MW in the second quarter of 2019. Growth in shipments was driven by moderate market share gains. Of the total, 281¬†MW was shipped¬†to the Company’s utility-scale solar power projects in the second quarter of 2020.

Net revenue in the second quarter of 2020 was $696 million, compared to $826 million in the first quarter of 2020, and $1,036 million in the second quarter of 2019. Growth in module shipments and EPC service revenues were offset by lower average module selling prices (“ASP”) and limited project sales. Project execution and sales schedules have been delayed due to the impact of COVID-19. That said, the Company is making headway and recently announced the financial closing of the 367 MWp Maplewood projects¬†in Texas, for example.

Gross profit in the second quarter of 2020 was $147 million, compared to $223 million in the first quarter of 2020, and $183 million in the second quarter of 2019. Gross margin in the second quarter of 2020 was 21.2%, compared to 27.0% in the first quarter of 2020, and 17.6% in the second quarter of 2019. Gross margin was 18.2% excluding the benefit of a¬†U.S.¬†anti-dumping (“AD”) and countervailing duty (“CVD”) true-up of¬†$20.4 million. The lower gross margin was anticipated given the significant decline in ASPs, partially offset by lower manufacturing costs.

Income from operations in the second quarter of 2020 was $45¬†million, compared to $113 million in the first quarter of 2020, and $61 million in the second quarter of 2019. The decline was partially offset by a 17% year-over-year reduction in the Company’s operating expenses to $102 million in the second quarter of 2020.

Non-cash depreciation and amortization charges in the second quarter of 2020 were $48 million, compared to $45 million in the first quarter of 2020, and $40 million in the second quarter of 2019.

Net foreign exchange loss in the second quarter was $4.5 million, compared to a net loss of $1 million in the first quarter of 2020 and a net gain of $4 million in the second quarter of 2019. The higher foreign exchange loss was mainly due to unfavorable moves in the Brazilian Real and the Thai Baht.

Income tax expense in the second quarter of 2020 was $9 million, compared to an income tax benefit of $29 million in the first quarter of 2020 and an income tax expense of $14 million in the second quarter of 2019.

Net income attributable to Canadian Solar in the second quarter of 2020 was $20.6 million, or $0.34 per diluted share, compared to net income of $110.6 million, or $1.84 per diluted share in the first quarter of 2020, and net income of $62.7 million, or $1.04 per diluted share in the second quarter of 2019.

Net cash used in operating activities in the second quarter of 2020 was approximately $114 million, compared to $105 million in the first quarter of 2019.

Module and System Solutions (MSS) Business Segment

Manufacturing Capacity

The table below sets forth the Company’s manufacturing capacity expansion plan until September 30, 2020. The Company is working on its new 2021 capacity expansion plans and will provide an update in the next quarter.

Manufacturing Capacity (MW)

June 30, 2020


September 30,


December 31,


















The Company’s manufacturing capacity expansion plan is subject to change based on market conditions and the Company’s capital allocation plan.

Operating Results 

The following table presents unaudited select results of operations data of the Company’s MSS business segment for the periods indicated.

MSS Business Segment Financial Results* 

(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)

Three Months Ended

Six Months Ended

June 30, 2020

March 31, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Net revenues






Cost of revenues






Gross profit






Operating expenses






Income (loss) from operations






Gross margin






Operating margin






*Includes effects of both sales to third party customers and to the Company’s Energy Business Segment.¬†Please refer to the attached
financial tables for intercompany transaction elimination information. Income from operations reflect 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 revenue of the MSS business:

MSS Net Revenues Geographic Distribution* (In Millions of U.S. Dollars, Except Percentages)

Q2 2020

% of Net Revenues

Q1 2020

% of Net Revenues

Q2 2019

% of Net Revenues















Europe and others














*Excludes sales from the MSS business to the Energy business.

Canadian Solar shipped 2.9 GW of modules to more than 80 countries in the second quarter of 2020. The top five markets of the MSS business ranked by revenues were the U.S., Japan, China, Spain and Australia.

Multi-crystalline modules accounted for 65% of the Company’s module shipments in the second quarter of 2020, and mono-crystalline modules accounted for 35%. The Company 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.

Energy Business Segment

Energy Business Strategy

Canadian Solar has one of the world’s largest utility-scale solar project 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. As a first mover, the Company has acquired extensive experience and built a leadership position in solar project development, with a current total project backlog and pipeline of 15.1 GWp.

Traditionally, the operating model for the Company’s Energy business has been to sell projects when they reach either their notice to proceed date (“NTP”) or commercial operation date (“COD”), depending on the optimal exit point for each project based on its specific risk and return profile. In certain cases, the Company has retained a minority ownership interest in order to capture additional operational value throughout the partial ownership holding period, while accelerating capital turnover into developing new solar projects. An example of this is the Canadian Solar Infrastructure Fund (“CSIF”), a publicly traded investment fund akin to a real estate investment trust, holding operating solar assets in Japan. CSIF has been listed on the Tokyo Stock Exchange since 2017 and remains 15%-owned by the Company. In addition to continuing to grow its project backlog and pipeline, the Company is evaluating ways to replicate its successful Japanese strategy in other markets, focusing on those regions with strong energy¬†demand, attractive power prices and project returns, and stable capital markets. There are two key benefits to this approach:

  • It will permit Canadian Solar to capture higher margins while recycling a large portion of capital. Meanwhile, it will allow the Company to build a base of stable and long-term cash flows from power sales, operations and maintenance (“O&M”), asset management and other services; and create new growth opportunities, including energy storage systems integration and optimization.
  • Over time, the addition of more predictable and stable revenues and cash flows from power sales, O&M, asset management and other services will help smooth typical lumpiness associated with the development and sale of solar power projects.

Management targets are to achieve the following project sales and accumulated project ownership retained in the next 5 years:

Energy Business Targets






Annual Project Sales, GWp






Cumulative Projects Retained (including inventory to be sold), MWp







Note: There are uncertainties regarding the closing dates of project sales in 2020 due to COVID-19 disruptions. Forecasts for annual project sales
include both projects sold at NTP and COD, which have a significant impact on revenue but more limited impact on profits. Final timing and
recognition of project sales may be impacted by various external factors. These targets are subject to change without notice.

To help finance this business strategy, the Company is evaluating ways to create capital partnerships with investors seeking long-term stable cash flows through investments in clean, profitable and countercyclical solar energy infrastructure investments, via public or private investment vehicles. Given the low interest rate environment, management believes the Company’s solar assets are highly attractive to investors seeking stable yields, which will help build sustainable long-term value for Canadian Solar’s shareholders. The Company will make further progress updates as it executes on this strategy.

Project Backlog and Pipeline

As of June 30, 2020, the Company’s total project backlog and pipeline totaled 15.1 GWp, of which the project backlog totaled 4.2 GWp. The backlog includes projects that have passed their Cliff Risk Date and are expected to be built in the next one to four years. A project’s Cliff Risk Date depends on the country where the project is located and is defined as the date on which the project passes the last of the high-risk development stages. This is usually the receipt of all required environmental and regulatory approvals, interconnection agreements, feed-in tariff (“FIT”) arrangements and power purchase agreements (“PPAs”). All projects in the current backlog have secured a PPA or FIT or are reasonably assured of securing one.

The Company’s project pipeline totaled 10.9 GWp as of June 30, 2020. The pipeline includes early- to mid-stage project opportunities currently under development but that are yet to be de-risked.

Project Backlog and Pipeline (as of June 30, 2020)





North America




Latin America




Europe, the Middle East and Africa (“EMEA”)








Asia Pacific excluding Japan












Note: Backlog represents the gross MWp size of projects, including 63 MWp in Latin America and 124
MWp in EMEA that have already been sold to third parties or are not owned by Canadian Solar.


The Company believes there are significant growth opportunities in the solar plus storage market, given declining battery storage costs, higher capacity needs and accelerating retirements of fossil fuel power plants. The Company further believes it is uniquely positioned to deliver solar plus storage solutions to its customers given its integrated business model as a top-tier module technology manufacturer and global project developer, and is committed to expanding its presence in this space.

The table below sets forth the Company’s storage project backlog and pipeline as of June 30, 2020, which almost doubled compared to the previous quarter.




Storage (MWh)




Projects in Construction

In addition to its project backlog and pipeline, the Company has 839 MWp of solar projects in construction.

Projects in Construction (as of June 30, 2020)



Expected COD

North America



Latin America






Asia Pacific ex. Japan





Note: Latin America portfolio includes 508 MWp of projects already
sold at NTP, with milestone revenue recognition over the 2019-2021

The Company has a sizable amount of premium, high FIT projects in Japan. The table below sets forth the expected COD schedule of the Company’s project backlog in development and construction in Japan, as of June 30, 2020:

Expected COD Schedule (MWp) 



2022 and






Solar Power Plants in Operation

As of June 30, 2020, the Company’s power plants in operation totaled 956 MWp, with an estimated total resale value of approximately $773 million to Canadian Solar. The estimated resale value is based on selling prices that Canadian Solar is currently negotiating or transaction prices of similar assets in the relevant markets.

North America

Latin America


Asia Pacific ex. Japan









Note: The table represents the gross MWp size of the power plants in operation, including 108 MWp in North
America and 26 MWp in Asia Pacific, excluding Japan, already sold to third parties.

Operating Results

The following table presents unaudited select results of operations data of the Company’s Energy business segment for the periods indicated.

Energy Business Segment Financial Results

(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)

Three Months Ended

Six Months Ended

June 30, 2020

March 31, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Net revenues






Cost of revenues






Gross profit






Operating expenses






Income (loss) from operations






Gross margin






Operating margin






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, project construction and sale schedules, and the global impact of the ongoing COVID-19 pandemic. Management’s views and estimates are subject to change without notice.

For the third quarter of 2020, the Company expects total module shipments to be in the range of 2.9 GW to 3.1 GW, including approximately 300 MW of module shipments to the Company’s own projects that may not be immediately recognized as revenues. Total revenues are expected to be in the range of $840 million to $890 million, with gross margin expected to be between 14% and 16%.

For the full year of 2020, the Company now expects shipments to be in the range of 11 GW to 12 GW.

Management expects the demand in 2021 to be strong, according to various research reports and Canadian Solar’s own sales feedback. At the same time, industry consolidation is set to accelerate as customer preferences become more sophisticated around quality and service, increasingly choosing top tier solar brands.

As a result, Canadian Solar is positioning itself more assertively for returns-accretive growth. The Company is currently planning for 18 GW to 20 GW of shipments in 2021.

Dr. Shawn Qu, Chairman and CEO, commented, “We are encouraged to see demand rebounding globally, as more companies and consumers worldwide insist on sustainable power sources. For our Energy Business, our pipeline growth and project execution are making progress, although uncertainty remains around the timing and recognition of certain project sales. On the MSS side, we expect near-term margin pressure given cost increases from polysilicon supply shortages; however, given our leadership position in premium markets, we are able to share a portion of the higher costs with customers. Importantly, we expect the impact of the polysilicon supply disruption to lessen over the coming quarters as polysilicon suppliers restore their temporarily shut-down capacities and restart some of the currently idled, higher-cost capacities.

We plan to expand our market share as we increase our low-cost manufacturing capacity of high-quality modules, which will be supported by the pre-IPO round of capital raising for our MSS business. The improved access to capital through the expected China listing will help us to further capitalize on accelerating secular growth in solar demand, and to unlock sustainable value for our shareholders.”

Changes to the Board of Directors

Mr. Karl Olsoni was nominated by the Company and approved by shareholders as a new independent director during the 2020 Annual Meeting of Shareholders. He will serve on the Audit and Compensation Committees. Mr. Olsoni has served as a strategic advisor to the Board of Directors since January 2020.

Furthermore, the Board of Directors has accepted the resignation of Mr. Robert K. McDermott, who has played an instrumental role in the Company’s success since his appointment as lead independent director in 2006. “On behalf of our Board of Directors and the Company, I thank Bob for his valuable service and contributions and wish him well in future endeavors,” said Dr. Qu.

Recent Developments

On August 4, 2020, Canadian Solar announced that it commenced the construction of a 10 MWp solar power plant in Germany.

On July 27, 2020, Canadian Solar announced that a special committee of independent directors of the Company, with the assistance of outside financial and legal advisors, completed a review of strategic alternatives available to the Company and the board of directors of the Company decided to pursue a listing of the Company’s MSS business on either the Shanghai Stock Exchange’s Science and Technology Innovation Board or the Shenzhen Stock Exchange’s ChiNext Market.

On July 21, 2020, Canadian Solar announced its wholly-owned subsidiary Recurrent Energy closed $282 million of debt financing to construct its Maplewood and Maplewood 2 solar power projects totaling 367 MWp in Texas.

On June 23, 2020, Canadian Solar announced it signed two private power purchase agreements with Braskem S.A. and COPEL Energia for a total of 274 MWp of solar power projects in Brazil.

Conference Call Information

The Company will hold a conference call at 8:00 a.m. U.S. Eastern Daylight Time on August 7, 2020 (8:00 p.m., August 7, 2020 in Hong Kong) to discuss the Company’s second quarter 2020 results and business outlook. The dial-in phone number for the live audio call is 1-866-519-4004 (toll-free from the U.S.), +852-3018-6771 (local dial-in from Hong Kong) or +1 845-675-0437 (from international locations). The passcode for the call is 8068256.¬† A live webcast of the conference call will also be available on the Investor Relations section of Canadian Solar’s website at

A replay of the call will be available two hours after the conclusion of the call until 9:00 a.m. U.S. Eastern Daylight Time on Saturday, August 15, 2020 (9:00 p.m., August 15, 2020 in Hong Kong) and can be accessed by dialing +1-855-452-5696 (toll-free from the U.S.), +852-3051-2780 (local dial-in from Hong Kong) or +1-646-254-3697 (from international locations), with passcode 8068256. ¬†A webcast replay will also be available on the investor relations section of Canadian Solar’s at

About Canadian Solar Inc.

Canadian Solar was founded in 2001 in Canada and is one of the world’s largest solar power companies. It is a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions and has a geographically diversified pipeline of utility-scale solar power projects in various stages of development. Over the past 19 years, Canadian Solar has successfully delivered over 46 GW of premium-quality, solar photovoltaic modules to customers in over 150 countries. Canadian Solar is one of the most bankable companies in the solar industry, having been publicly listed on NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn¬†or visit

Safe Harbor/Forward-Looking Statements

Certain statements in this press release regarding the Company’s expected future shipment volumes, gross margins are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the “Safe Harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as “believes,” “expects,” “anticipates,” “intends,” “estimates,” the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business and economic conditions and the state of the solar industry; volatility, uncertainty, delays and disruptions related to the COVID-19 pandemic; 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., India, China and Brazil; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in 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 customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company’s SEC filings, including its annual report on Form 20-F filed on April 28, 2020. 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 relian

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