Canadian Solar Reports First Quarter 2022 Results

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Overig advies 24/05/2022 16:18
Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ: CSIQ) today announced financial results for the first quarter ended March 31, 2022.

Highlights

Solar module shipments of 3.63 GW, in line with guidance of 3.6 GW to 3.8 GW.
15% increase in revenue year-over-year ("yoy") to $1.25 billion, in line with guidance of $1.25 billion to $1.35 billion.
14.5% gross margin, in line with guidance of 14.5% to 15.5%.
Net income attributable to Canadian Solar of $9 million, or $0.14 per diluted share.
Global Energy solar project pipeline of 24 GWp and storage pipeline of over 27 GWh, as of March 2022.
Carve-out IPO of CSI Solar Co., Ltd. ("CSI Solar" or the "CSI Solar subsidiary") remains on track.
Accelerating upstream capacity expansion plan.
Dr. Shawn Qu, Chairman and CEO, commented, "First quarter 2022 shipments, revenue and gross margin all came in as expected, despite the challenging operating environment. Our teams continued to focus on executing the strategy of building our long-term competitive position across solar module, battery storage, system solutions and global project development businesses. Today we are announcing an acceleration of our upstream capacity expansion plan for 2022 with the latest state-of-the-art technologies. This will meaningfully increase the vertical integration level of our manufacturing capacity and solidify our global leadership position. In this process, we expect to gain better control of cost, technology and product quality. At the same time, we are growing our battery storage business, winning contracts in new markets and segments, while continuing our development of proprietary battery storage technologies for both utility-scale and residential solutions.

"Regarding the carve-out IPO of CSI Solar, despite the slowdown caused by severe COVID-related lockdowns in China, its registration process with the China Securities Regulatory Commission remains on track."

Yan Zhuang, President of Canadian Solar's CSI Solar subsidiary, said, "While the first quarter was challenging, as we expected, with polysilicon price cost inflation coming back, we took mitigating measures by continuing to raise prices and optimize capacity utilization, improve product efficiencies, and further reduce our processing costs. Despite the headwinds, we grew CSI Solar revenue by 74% and gross profit by 161% yoy. While it is still early into 2022, we are encouraged to see logistic costs starting to come down, albeit from a high level, and currencies starting to move in our favor after two years of headwinds. Longer term, with demand for renewable energy expected to remain as strong as ever, we will continue to build on our strong brand and track record, gain market share in established markets and enter new and rapidly growing markets."

Ismael Guerrero, Corporate VP and President of Canadian Solar's Global Energy subsidiary, said, "In the first quarter of 2022, we delivered approximately 350 MWp of project sales in the U.S., which were mostly pre-construction projects. We also made significant progress in our development activities, signing new power purchase agreements ("PPAs") in Brazil, Italy and the U.S. In the current inflationary environment, underlying demand for clean energy assets continues to accelerate. Our strategy remains unchanged, that is to grow the base of recurring revenue from retained assets and contracted services, which is why we have raised our long-term operational O&M (operations and maintenance) project targets, while proactively managing policy and currency risks across our key markets."

Dr. Huifeng Chang, Senior VP and CFO, added, "In the first quarter, we achieved $1.25 billion in revenue and a 14.5% gross margin, both within our guidance range. We strategically increased our inventories of raw materials as well as finished goods, as we support customer demand and work to mitigate the impact of inflation. Net cash provided by operating activities in the first quarter of 2022 was $159 million, compared to net cash used in operating activities of $235 million in the fourth quarter of 2021. We ended the quarter with a total cash position of $1.7 billion, which gives us continued financial flexibility to fund long-term growth opportunities, including accelerating our upstream capacity expansion."

First Quarter 2022 Results

Total module shipments recognized as revenues in the first quarter of 2022 were 3.63 GW, up 42% yoy. Of the total, 156 MW were shipped to the Company's own utility-scale solar power projects.

Net revenues in the first quarter of 2022 were $1.25 billion, up 15% yoy and down 18% quarter-over-quarter ("qoq"). The yoy increase was mainly driven by higher solar shipment volumes and ASP, and significant growth in the Company's battery storage solutions business, partially offset by lower project sales. The sequential decrease was mainly driven by lower project sales.

Gross profit in the first quarter of 2022 was $181 million, down 7% yoy and 40% qoq. Gross margin in the first quarter of 2022 was 14.5%, within prior guidance, and compared to 19.7% in the fourth quarter of 2021. The sequential gross margin decline was mainly driven by higher raw material costs and the absence of U.S. anti-dumping and countervailing duty true up benefit in the current quarter relative to the prior quarter, which was partially offset by higher modules pricing and higher margin project sales.

Total operating expenses in the first quarter of 2022 were $165 million compared to $234 million in the fourth quarter of 2021 and $151 million in the first quarter of 2021. The sequential decrease was mainly driven by lower shipping and handling expenses and an increase in other operating income.

Non-cash depreciation and amortization charges in the first quarter of 2022 were $66 million, compared to $76 million in the fourth quarter of 2021 and $62 million in the first quarter of 2021.

Net foreign exchange gain in the first quarter of 2022 was $3 million, compared to a net gain of $1 million in the fourth quarter of 2021 and a net loss of $7 million in the first quarter of 2021.

Income tax benefit in the first quarter of 2022 was $5 million, compared to a $27 million income tax expense in the fourth quarter of 2021 and a $14 million income tax expense in the first quarter of 2021. The benefit was a result of a lower income before income tax and a Canadian tax refund.

Net income attributable to Canadian Solar in the first quarter of 2022 was $9 million, or $0.14 per diluted share, compared to net income of $26 million, or $0.39 per diluted share, in the fourth quarter of 2021, and net income of $23 million, or $0.36 per diluted share, in the first quarter of 2021.

For the three months ended March 31, 2022, earnings per share – diluted ("Diluted EPS") of $0.14 was calculated from total earnings of $9 million divided by 64.7 million diluted shares. For the three months ended December 31, 2021, Diluted EPS of $0.39 was calculated from total earnings of $27 million, including 2.5% coupon of $1.3 million, divided by 70.5 million diluted shares, including 6.3 million shares issuable upon the conversion of the convertible notes. For the three months ended March 31, 2021, Diluted EPS of $0.36 was calculated from total earnings of $23 million, including 2.5% coupon of $1.3 million, divided by 67.5 million diluted shares, including 6.3 million shares issuable upon the conversion of the convertible notes.

Net cash provided by operating activities in the first quarter of 2022 was $159 million, compared to net cash used in operating activities of $235 million in the fourth quarter of 2021. The operating cash inflow was mainly driven by changes in working capital, specifically, an increase in accounts payable and short-term notes payable, partially offset by an increase in inventories.

Total debt was $2.7 billion as of March 31, 2022, compared to $2.5 billion as of December 31, 2021. The increase was mainly driven by an increase in project financing and working capital facilities. Non-recourse debt used to finance solar power projects increased to $550 million as of March 31, 2022, from $515 million as of December 31, 2021.

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