Canadian Solar Reports Second Quarter 2007 Results
-- Q2 net revenues of $60.4 million, a three-fold increase from $17.5
million in Q1
-- Q2 loss of $0.11 per share compared to a loss of $0.14 per share in Q1
-- Full year 2007 net revenue guidance increased to $255-$265 million
from $220-$230 million
JIANGSU, China, Aug. 14 /Xinhua-PRNewswire/ -- Canadian Solar Inc. ("the Company," "CSI," or "we") (Nasdaq: CSIQ) today reported its preliminary unaudited US GAAP financial information for the second quarter of 2007 ended June 30, 2007.
Net revenues for the quarter were $60.4 million, including $2.7 million silicon material sales, compared to net revenues of $17.3 million for the second quarter of 2006 and $17.5 million for the first quarter of 2007. Net revenues for the first quarter of 2007 included $2.8 million in silicon material sales. Net loss for the quarter was $2.9 million, or $0.11 per share, compared to net income of $2.5 million, or $0.16 per diluted share, for the second quarter of 2006 and net loss of $3.9 million, or $0.14 per share, for the first quarter of 2007. Excluding share-based compensation expenses of $2.4 million, the net loss for the quarter would have been $0.5 million, or $0.02 per share.
Dr. Shawn Qu, Chairman and CEO of CSI, commented: "Our Q2 revenues were at the high end of our guidance range. We continue to benefit from our strong international sales and marketing network and our focus on tier one distributors and project-based companies. During the quarter, we saw sustained demand for our products in Germany and Spain. We expect to complete our Phase One in-house solar cell production facility in the middle of October, which would bring our total cell capacity to 100MW per year. We have recently ramped up our module production capacity to 180MW per year. These successful steps in our expansion strategy will help to solidify our position as a major player in the industry and enable us to meet increased customer demand."
Bing Zhu, CFO of CSI, noted: "Our gross margins improved slightly in Q2 due to our increasing in-house solar cell manufacturing capability. We would have been profitable on a cash operating basis during the quarter without the following two factors: first, we cleared out 1.63MW of high-priced solar cells inventory purchased in 2006 and secondly, we incurred slightly higher yield loss, as we almost quadrupled our production within one quarter. Entering the third quarter, we are experiencing stable module pricing and expect this to continue during the second half of 2007. We have also experienced modest materials price increases from certain suppliers. We are working on improving our cost structure and operating efficiencies to offset these increases and expect our operating margins to improve significantly in Q4 as we speed up our in-house solar cell manufacturing production."
Recent Developments
We recently started to ramp up production at our second 25MW solar cell production line, following installation and acceptance tests in June and July. We expect to install our third and fourth 25MW cell production lines in September and October 2007, ahead of our original schedule. By doing so, we expect to increase our in-house solar cell manufacturing capacity to 100 MW by the middle of Q4.
We also recently entered into agreements for syndicated loans of US$50 million with Industrial and Commercial Bank of China and China Communications Bank. Both banks announced their intention to continue to support our newly revised three-year growth plan. Together with other existing banking arrangements, CSI has approximately US$90 million in available credit lines.
Revenue by Geography (US$ thousands)
Q207 Q107 Q206
Region Revenue % Revenue % Revenue %
Asia 2,959 4.9 % 3,308 18.9 % 96 0.6 %
Europe
57,282 94.8 % 12,139 69.4 % 16,602 96.3 %
North America
142 0.2 % 225 1.3 % 528 3.1 %
South America
-- -- 1,817 10.4 % -- --
Other
30 0.1 % -- 0.0 % 24 0.0 %
Total Net
Revenue 60,413 100.0 % 17,489 100.0 % 17,250 100.0 %
Note: Asian revenue included $2.7 million silicon materials sales in Q207
and $2.8 million silicon materials sales in Q107.
Outlook
Based on current market conditions, our order backlog and our production capacity, we are increasing our prior guidance of net revenues for the full year 2007 to $255-$265 million from $220-$230 million. Shipments for the year are expected to be 70-75MW, compared to our original estimate of 64MW. Based on indications from our key customers, the Company estimates that the demand for CSI module products in 2008 is now over 200MW.
Net revenues for the third quarter of 2007 are expected to be $80-$85 million, with cash operating income, determined on a non-GAAP basis by excluding share based compensation, in the range of $1.6-$2.0 million. Shipments for the third quarter of 2007 are expected to be 20-23 MW. In the third quarter, our current customer backlog orders are enabling us to better utilize our existing inventory of all cell grades, which will help us increase our product efficiency and improve our profit margins on the module sales.
Investor Conference Call / Webcast Details
A conference call has been scheduled for 9:00 p.m. on Tuesday, August 14, 2007 (in Jiangsu). This will be 9:00 a.m. on Tuesday, August 14, 2007 in New York. During the call, time will be set aside for analysts and interested investors to ask questions of executive officers.
The call may be accessed by dialing +1-866-202-0886 (domestic) or +1-617- 213-8841 (international). The passcode to access the call is 62629322. A replay of the call will be available starting one hour after the call and continuing until 11:00p.m. on Tuesday, August 21, 2007 (in Jiangsu) or 11:00a.m. on Tuesday, August 21, 2007 (in New York) at http://www.csisolar.com and by telephone at +1-888-286-8010 (domestic) or +1-617-801-6888 (international). The passcode to access the replay is 54310460.
About Canadian Solar Inc. (Nasdaq: CSIQ)
Founded in 2001, Canadian Solar Inc. (CSI) is a vertically integrated manufacturer of solar cell, solar module and custom-designed solar application products serving worldwide customers. CSI 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, CSI has become a major global provider of solar power products for a wide range of applications. For more information, please visit http://www.csisolar.com .
Safe Harbor/Forward-Looking Statements
Certain statements in this press release including statements regarding expected future financial and industry growth 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; governmental support for the deployment of solar power; future shortage or availability of the supply 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, including customers of our silicon materials sales; changes in demand from major markets such as Germany; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling price; delays in new product introduction; 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 originally filed on May 29, 2007 and its registration statement on Form F-1 originally filed on October 23, 2006, as amended. 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. You 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 CSI undertakes no duty to update such information, except as required under applicable law.
Canadian Solar Inc.
Condensed Consolidated Statements of Operations
(In Thousands of U.S. Dollars, except share and per share data and
unless otherwise stated)
Q2 2007 Q2 2006 H1 2007 H1 2006
Net Revenues:
Net Revenues - product 60,413 17,240 77,902 25,973
Net Revenues - others -- 10 -- 68
Total Net revenues 60,413 17,250 77,902 26,041
Cost of Revenues:
Cost of Revenues -
product 57,940 12,294 75,084 18,555
Cost of Revenues -
others -- 10 -- 68
Total Cost of Sales 57,940 12,304 75,084 18,623
Gross profit 2,473 4,946 2,818 7,418
Operating expenses
Selling expenses 1,294 404 2,347 529
General and
administrative expenses 3,765 1,354 6,851 1,750
Research and
development expenses 204 17 390 44
Total operating expenses 5,263 1,775 9,588 2,323
Income/(Loss) from
operations: (2,790) 3,171 (6,770) 5,095
Other income (expenses):
Interest expenses (275) (881) (342) (1,635)
Interest income 41 34 326 53
Loss on change in fair
value of derivatives -- -- -- (6,997)
Loss on change in fair
value of instruments
related to convertible
notes -- -- -- (1,190)
Others - net -- (7) -- (1)
Income (loss) before
taxes (3,024) 2,317 (6,786) (4,675)
Income taxes 153 183 61 111
Net Income (loss) (2,871) 2,500 (6,725) (4,564)
Basic (loss)/gain per
share (0.11) 0.16 (0.25) (0.30)
Basic weighted averaging
outstanding shares 27,276,699 15,427,995 27,273,350 15,427,995
Canadian Solar Inc.
Reconciliation of US GAAP Gross Profit, Operating Income (Loss) and
Net Income (Loss) to
Non-US GAAP Gross Profit, Operating Income (Loss) and Net Income
(Loss)
(Unaudited)
Use of Non-GAAP Financial Information
To supplement its condensed consolidated financial statements presented in
accordance with GAAP, CSI uses the following measures as defined as non-GAAP
financial measures by the SEC: adjusted gross profit, 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. CSI believes that non-GAAP adjusted gross profit,
adjusted operating income (loss) and adjusted net income (loss) measures indicate the company's baseline performance before subtracting other charges. In addition, these non-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-GAAP measures is not intended to be considered
in isolation or as a substitute for the financial information prepared and
presented in accordance with GAAP.
Q2 2007 Q2 2006
Gross Operating Net Gross Operating Net
Profit Income Income Profit Income Income
(Loss) (Loss) (Loss) (Loss)
US GAAP
Profit/(Loss) 2,473 (2,790) (2,871) 4,946 3,171 2,500
Convertible
Note charge 303
Share-based
compensation
charge 57 2,365 2,365 24 590 590
Total special
items 57 2,365 2,365 24 590 893
Non-US GAAP
Profit/(Loss) 2,530 (425) (506) 4,970 3,761 3,393
Adjusted Gross
Margin 4.19 % 28.67 %
Adjusted
Operating
Expense - % of
Revenue 4.89 % 7.01 %
Adjusted
Operating Margin (0.70)% 21.80 %
H1 2007 H1 2006
Gross Operating Net Gross Operating Net
Profit Income Income Profit Income Income
(Loss) (Loss) (Loss) (Loss)
US GAAP
Profit/(Loss) 2,818 (6,770) (6,725) 7,418 5,095 (4,564)
Convertible
Note charge 8,893
Share-based
compensation
charge 126 4,589 4,589 24 590 590
Total special
items 126 4,589 4,589 24 590 9,483
Non-US GAAP
Profit/(Loss) 2,944 (2,181) (2,136) 7,442 5,685 4,919
Adjusted Gross
Margin 3.78 % 28.58 %
Adjusted
Operating
Expense - % of
Revenue 6.58 % 6.75 %
Adjusted
Operating Margin (2.80)% 21.83 %
Non-US GAAP adjusted condensed consolidated statements of operations
are intended to present the Company's operating results, excluding
special items.
Canadian Solar Inc.
Unaudited Condensed Consolidated Balance Sheets
(In Thousands of U.S. Dollars)
June 30 December 31
2007 2006
ASSETS
Current Assets:
Cash and cash equivalents 22,869 40,911
Restricted cash 1,577 825
Accounts receivable, net 39,249 17,344
Inventories 59,775 39,700
Value added tax recoverable 6,696 2,281
Advances to suppliers 13,244 13,484
Prepaid and other current
assets 1,251 2,398
Total current assets 144,661 116,943
Property, plant and equipment,
net 21,656 7,910
Intangible assets 54 39
Prepaid lease payments 1,168 1,103
Deferred tax assets - non
current 3,508 3,639
TOTAL ASSETS 171,047 129,634
LIABILITIES AND STOCKHOLDER'S
EQUITY
Current liabilities:
Short term borrowings 37,679 3,311
Accounts payable 6,033 6,874
Other payables 4,332 993
Advances from suppliers and
customers 7,785 3,225
Income tax payable 492 112
Amounts due to related parties 188 149
Other current liabilities 1,025 1,191
Total current liabilities 57,534 15,855
Accrued warranty costs 1,597 875
TOTAL LIABILITIES 59,131 16,730
Stockholders' equity
Common shares 97,354 97,302
Additional paid in capital 21,923 17,334
Accumulated deficit (10,119) (2,783)
Accumulated other
comprehensive income 2,758 1,051
Total stockholders' equity 111,916 112,904
LIABILITIES AND STOCKHOLDER'S
EQUITY 171,047 129,634
For more information, please contact:
In Jiangsu, P.R. China:
Bing Zhu, Chief Financial Officer
Canadian Solar Inc.
Phone: +86-512-6269-6755
Email: ir@csisolar.com
In the U.S.:
David Pasquale
The Ruth Group
Phone: +1-646-536-7006
Email: dpasquale@theruthgroup.com
SOURCE Canadian Solar Inc.
-0- 08/14/2007
/CONTACT: In Jiangsu, P.R. China, contact Bing Zhu, Chief Financial
Officer of Canadian Solar Inc. at +86-512-6269-6755, or ir@csisolar.com; in
the U.S., contact David Pasquale of The Ruth Group at +1-646-536-7006, or
dpasquale@theruthgroup.com /
/Web site: http://www.csisolar.com /
(CSIQ)
CO: Canadian Solar Inc.
ST: China
IN: OIL UTI
SU: ASI CCA ERN
MM
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6490 08/14/2007 07:00 EDT http://www.prnewswire.com