Canadian Solar Reports Fourth Quarter and Full Year 2019 Results
GUELPH, Ontario, March 26, 2020 /PRNewswire/ -- Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ: CSIQ), one of the world's largest solar power companies, today announced its financial results for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Highlights
-- Total module shipments were 2.5 GW, compared to 2.4 GW in the third
quarter of 2019 and fourth quarter 2019 guidance of 2.3 GW to 2.4 GW.
-- Net revenue was $920 million, compared to $760 million in the third
quarter of 2019 and fourth quarter 2019 guidance of $850 million to $880
million.
-- Gross profit was $230 million. Gross margin was 25.0%, compared to 26.2%
in the third quarter of 2019 and fourth quarter 2019 guidance of 19% to
21%. Gross margin was 24.3% excluding the benefit of a U.S. anti-dumping
("AD") and countervailing duty ("CVD") true-up of $6.4 million.
-- Net income attributable to Canadian Solar was $67.7 million, or $1.12
per diluted share, compared to $58.3 million, or $0.96 per diluted
share, in the third quarter of 2019.
-- Net cash provided by operating activities was approximately $247
million, compared to $22 million in the third quarter of 2019.
-- As of January 31, 2020, the Company's portfolio of utility-scale solar
power plants in operation was 880.2 MWp with an estimated total resale
value of approximately $1 billion.
-- The Company's board of directors authorized a $150 million share
repurchase program for a six month-period beginning December 9, 2019.
Full Year 2019 Results
-- Total module shipments were 8.6 GW, compared to 6.6 GW in 2018 and
guidance of 8.4 GW to 8.5 GW.
-- Net revenue was $3.20 billion, compared to $3.74 billion in 2018 and
guidance of $3.13 billion to $3.16 billion.
-- Net income attributable to Canadian Solar was $171.6 million, or $2.83
per diluted share, compared to $237.1 million, or $3.88 per diluted
share in 2018.
-- Net cash provided by operating activities was approximately $600
million, compared to $216 million in 2018.
Fourth Quarter 2019 Results
Net revenue in the fourth quarter of 2019 was $920 million, compared to $760 million in the third quarter of 2019, and $901 million in the fourth quarter of 2018. The sequential increase was due to higher shipments recognized in revenue, stable module average selling price ("ASP") and the ongoing monetization of solar power plants.
Total module shipments in the fourth quarter of 2019 were 2,474 MW, compared to 2,387 MW in the third quarter of 2019 and fourth quarter 2019 guidance of 2,300 MW to 2,400 MW. This included 295 MW for the Company's utility-scale solar power projects.
Gross profit in the fourth quarter of 2019 was $230 million, compared to $199 million in the third quarter of 2019 and $271 million in the fourth quarter of 2018. The benefit of the AD/CVD true-up was $6.4 million in the fourth quarter of 2019, $24 million in the third quarter of 2019 and $16 million in the fourth quarter of 2018. Gross margin in the fourth quarter of 2019 was 25.0%, compared to 26.2% in the third quarter of 2019, 30.1% in the fourth quarter of 2018 and fourth quarter 2019 guidance of 19% to 21%. The improvement was due to a stable ASP and lower manufacturing costs.
Income from operations in the fourth quarter of 2019 was $111 million, compared to $80 million in the third quarter of 2019, and $137 million in the fourth quarter of 2018. Operating margin was 12.1% in the fourth quarter of 2019, compared to 10.5% in the third quarter of 2019 and 15.2% in the fourth quarter of 2018.
Non-cash depreciation and amortization charges in the fourth quarter of 2019 were $45 million, compared to $37 million in the third quarter of 2019 and $32 million in the fourth quarter of 2018.
The Company uses derivative instruments to hedge its foreign exchange positions. In the fourth quarter of 2019, the Company recorded a $6.6 million loss on the change in fair value of derivatives used in the Company's foreign exchange hedging program, partly offset by the foreign exchange gain of $4 million. The net effect of the currency moves and hedging was a $2.6 million loss during the fourth quarter, compared to a $0.5 million gain in the third quarter of 2019 and a net zero effect in the fourth quarter of 2018.
Net income attributable to Canadian Solar on a GAAP basis in the fourth quarter of 2019 was $67.7 million, or $1.12 per diluted share, compared to net income of $58.3 million, or $0.96 per diluted share in the third quarter of 2019, and net income of $111.6 million, or $1.81 per diluted share, in the fourth quarter of 2018. Net income attributable to Canadian Solar on a non-GAAP basis in the fourth quarter of 2019 was $63 million, or $1.04 per diluted share. This excludes the benefit of the AD/CVD true-up during the quarter of $6.4 million, net of income tax effect. For a reconciliation of results under GAAP to non-GAAP results, see the accompanying table "About Non-GAAP Financial Measures".
Dr. Shawn Qu, Chairman and Chief Executive Officer, commented: "I am pleased with the strong 2019 results, as revenue and gross margin were both ahead of expectations. The strategic decisions we made in R&D and production capacity helped us achieve one of the industry's highest margins, as we build upon our strong brand and maintain pricing power. We continue to be an innovation leader, recently setting another world record in cell conversion efficiency of 23.81% for N-type, large-area, multi-crystalline silicon solar cells. This further extends our competitive advantage, as we deliver modules with mono-like efficiencies at an attractive ASP. Along with the rest of the world, we have been working hard to ensure the health and safety of our employees in the face of the COVID-19 pandemic. We believe Canadian Solar's proven 19-year track record and the robust, conservative nature of our long-term strategy will allow the Company to emerge stronger from the current period of uncertainty."
Yan Zhuang, Acting Chief Executive Officer, commented: "We achieved strong results in Q4 and the full year 2019. On the Module and Systems Solutions side, 2019 module shipments grew by almost 30% year-over-year, while underlying gross margin increased by 480 basis points (excluding the benefit of the AD/CVD true-up), resulting in a highly profitable Q4. On the Energy side, we continue to grow and monetize our operating solar assets and pipeline, which currently stand at 880 MWp and 15.4 GWp, respectively. Strategically, we are evaluating ways to capture more value by retaining partial ownership in selected solar project assets we develop to create higher, more predictable and more profitable revenues, thereby creating additional value for the Company and its shareholders. Meanwhile, we have set up a global team focusing on system integration and energy storage, which will help to build the new technology DNA of the Company and lead the next wave of growth in this industry."
Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer, added: "In Q4, we delivered $230 million of gross profit and $67.7 million of net income, both sequentially higher than the previous quarter driven by higher module sales, stable ASPs, lower costs and increased project sales. We generated $247 million of operating cash flow and increased our total cash position to $1.2 billion. We also reduced total debt to $1.95 billion, and lengthened its average maturity. Our liquidity is healthy and our balance sheet continues to improve. We are proactively taking contingency measures to preserve cash and minimize risk, should the macro situation deteriorate further. Likewise, our financial plan has the flexibility to quickly switch gears if the global economy recovers faster than expected. We plan to continue with our stock repurchase program to create extra value for shareholders as recent COVID-19-related panic-selling has brought our equity valuation below book value."
Energy Business Segment
Operating Results
Energy Business Segment Financial Results -
(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)
---
Three Months Ended Twelve Months Ended
---
Dec 31, Sep 30, Dec 31, Dec 31,
Dec 31,
2019 2019 2018 2019 2018
---
Net revenues 215,370 97,550 336,214 719,445 1,575,594
Cost of revenues 182,424 77,589 243,923 635,716 1,302,779
Gross profit 32,946 19,961 92,291 83,729 272,815
Operating expenses 17,747 24,077 30,087 90,760 61,276
Income (loss) from 15,199 (4,116) 62,204 (7,031) 211,539
operations
===
Gross margin 15.3% 20.5% 27.5% 11.6% 17.3%
Operating margin 7.1% -4.2% 18.5% -1.0% 13.4%
Project Backlog and Pipeline
The Company's project backlog (formerly called its late-stage, utility-scale, solar project pipeline) totaled 3.7 GW, as of January 31, 2020. The backlog includes projects that have passed their Cliff Risk Date and are expected to be built in the next one to four years. The Cliff Risk Date depends on the country where a project is located and is defined as the date on which the project passes the last of the high-risk development stages (usually receipt of all required environmental approvals, interconnection agreements, feed-in tariff ("FiT") arrangements and PPAs). All projects in the current backlog have secured or are reasonably assured to secure a PPA or FiT.
The Company's project pipeline (formerly called its early-to-mid-stage, utility-scale, solar project pipeline) totaled 11.7 GW as of January 31, 2020.
Project Backlog and Pipeline by Region* (as of January 31, 2020)
---
Region
Backlog
Pipeline
Total
---
North America 1,597 5,232 6,829
Latin America 1,087 3,246 4,333
EMEA 206 2,113 2,319
Asia Pacific 806 676 1,482
China 45 410 455
Total 3,741 11,677 15,418
---
Note: Backlog and pipeline table represents the gross MWp size of the projects, including minority interest.
More recently, in 2018, the Energy team at Recurrent, the Company's subsidiary in the US, secured two PPAs for a total of 150 MWac with 180 MWh of storage attached. These landmark PPA wins have allowed Recurrent to develop deep in-house expertise on everything related to energy storage, including permitting, interconnection, engineering and design, structuring of off-take agreements to meet customer's needs, as well as plant operation. As a result of Recurrent's early mover advantage in the promising solar plus storage space, the Energy Business has been selected and is in negotiation with multiple different off-take parties for additional energy storage projects totaling 705 MWac with 2,820 MWh of storage.
The table below sets forth the Company's storage project backlog and pipeline as of January 31, 2020.
Backlog
Pipeline
Total
Storage (MWh) 320 2,500 2,820
---
Projects in Construction
In addition to its project backlog and pipeline, the Company has 512 MW of solar projects in construction.
Projects in Construction (as MWp
Expected COD
of January 31, 2020)
--- ---
Latin America Portfolio 449
2020-21
Japan Portfolio 63 2020
---
Total 512 -
---
Note: Approximately 264 MWp from LatAm portfolio in Brazil sold at NTP
to Nebras, with milestone revenue recognition over 2019-2021.
Solar Power Plants in Operation
In addition to its backlog, pipeline and projects in construction, as of January 31, 2020, the Company's power plants in operation totaled 1,023 MWp.
Plants in Operation - MWp (as of January 31, 2020)
---
North America
Latin America
EMEA
Asia Pacific
China Total
--- ---
216 100 18 230 459 1,023
---
Note: 880 MWp is owned by the Company and a minority interest of 143 MWp is owned by business
partners.
Energy Business Strategy Update
The Company's Energy business model has been to develop solar projects for sales and to selectively retain partial ownership of certain projects to capture long-term recurring cash flow and to leverage EPC, operations and management ("O&M"), asset management and other service business. Canadian Soar has one of the world's largest solar energy 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. It currently employs 400 professionals to support its integrated business model. The Energy business team includes developers with expertise in developing both greenfield and brownfield projects, engineers who can design and manage the construction of solar power plants, energy experts that specialize in power marketing who focus on negotiating power purchase agreements ("PPAs") and hedging instruments, and experts in the O&M, as well as asset management of solar power plants. In addition, the Energy business has an in-house finance team with experience in a wide range of debt and equity instruments used to finance solar assets, including establishing private and public fund vehicles to optimize equity returns.
The Energy business has traditionally sold most of its project ownership at notice to proceed ("NTP") or commercial operation date ("COD"), depending on the best exit point for each particular project. The Company has also retained minority ownerships in certain projects to capture additional value. A successful example is the Canadian Solar Infrastructure Fund, which is sponsored by the Company and has been listed on Tokyo Stock Exchange since 2017. The Company is evaluating the expansion of these strategies into other markets as it helps to reduce lumpiness of revenue, profit and cash flow, while increasing the predictability and stability of its business and creating long-term value for shareholders.
Module and System Solutions (MSS) Business Segment
Operating Results
MSS Business Segment Summary Financial Results* - (In Thousands of U.S.
Dollars, Except Percentages and Unless Otherwise Stated)
Three Months Ended
Twelve Months Ended
Dec 31, 2019
Sep 30, 2019
Dec 31, 2018 Dec 31, 2019
Dec 31, 2018
---
Net revenues 765,696 674,921 629,716 2,582,635 2,413,889
Cost of revenues 551,517 493,505 472,229 1,934,062 1,923,131
Gross profit 214,179 181,416 157,487 648,573 490,758
Operating expenses 100,329 94,730 104,658 368,858 349,149
Income from operations 113,850 86,686 52,829 279,715 141,609
===
Gross margin 28.0% 26.9% 25.0% 25.1% 20.3%
Operating margin 14.9% 12.8% 8.4% 10.8% 5.9%
Note: *Included effects of both sales to third party customers and to the Company's Energy Segment. Please refer to the attached financial tables for the
intercompany transaction elimination information. Income from operation amounts reflect management's allocation and estimate as some services are shared
by the two segments of the Company.
The table below provides the geographic distribution of MSS business net revenue:
MSS Net Revenue Geographic Distribution* (In Millions of U.S. Dollars, Except Percentages)
The fourth
% of Net
Full year
% of Net
quarter of Revenue 2019 Revenue
2019
Asia 239 34 891 36
Americas 320 45 836 34
Europe and others 145 21 754 30
---
Total 704 100 2,481 100
*Note: Values do not include sales from the MSS business
to the Energy business.
Canadian Solar shipped 2.5 GW of modules to more than 60 countries in the fourth quarter of 2019 and 8.6 GW to 90 countries for the full year 2019. The top five markets ranked by revenue were the U.S., Brazil, China, Japan and Australia in the fourth quarter; and Brazil, the U.S., Australia, Japan and China for the full year of 2019.
Multi-crystalline modules accounted for 68% of the Company's module shipments in the fourth quarter and 74% for the full year of 2019, with mono-crystalline modules representing 32% and 26%, respectively. The Company's manufacturing capacity 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.
Manufacturing Capacity
The table below sets forth the Company's manufacturing capacity expansion plan from December 31, 2019 to December 31, 2020.
Manufacturing Capacity (MW)
31-Dec-2019 30-Jun-2020 31-Dec-2020
Actual
Planned
Planned
Ingot 1,850 1,850 2,350
Wafer 5,000 5,000 5,000
Cell 9,600 10,100 10,100
Module 13,040 14,850 16,050
The Company's manufacturing capacity expansion plan is subject to change based on market conditions.
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 and project construction and sale schedules, and in particular the impact of COVID-19. Management's views and estimates are subject to change without notice.
For the first quarter of 2020, the Company expects total module shipments to be in the range of 2.15 GW to 2.25 GW, including approximately 250 MW of module shipments to the Company's own projects that may not immediately be recognized as revenue. Total revenue is expected to be in the range of $780 million to $810 million, with gross margin expected to be between 26% and 28%.
For the full year of 2020, the Company expects total module shipments to be in the range of approximately 10 GW to 12 GW, with total revenue expected to be in the range of $3.4 billion to $3.9 billion.
Yan Zhuang, Acting Chief Executive Officer, commented: "We were experiencing strong demand across all regions until the past few days, as we started to see some delays and weakening demand. Our current guidance incorporates the estimated impact to the best of our knowledge today, but the situation is fluid and we are closely monitoring and analyzing market conditions. We have a globally diversified revenue base and tight control over the supply chain, which gives us significant flexibility and room to adjust to external changes. Our long-term outlook remains optimistic and we will continue to execute on our strategy and create value for the Company and its shareholders."
Recent Developments
On March 23, 2020, Canadian Solar announced the closing of a 17.7 MWp solar portfolio in Italy to Sonnedix.
On March 17, 2020, Canadian Solar announced it had secured a EUR55 million bilateral revolving credit facility with Intesa Sanpaolo to fund the construction of a 151 MWp portfolio of solar PV projects in Italy.
On March 12, 2020, Canadian Solar announced that it had signed a PPA with Amazon for its 146 MWp solar power project in Australia.
On March 9, 2020, Canadian Solar announced that it had signed a 15-year PPA contract with Techgen, S.A. de C.V. for a 103 MWp solar power project in Mexico.
On March 6, 2020, Canadian Solar announced that its technology team had set a world record of 23.81% conversion efficiency for n-type large area multi-crystalline silicon solar cell. The record-setting N-type P5 cell conversion efficiency was recently tested and certified by Germany's Institute für Solarenergieforschung GmbH (ISFH)
On February 19, 2020, Canadian Solar announced that it had commenced construction of two solar power projects totaling 26.6 MWp in Japan.
On February 18, 2020, Canadian Solar announced that it had completed the sale of the 56.3 MWp Yamaguchi Shin Mine solar power plant in Japan for an enterprise value of approximately JPY22.3 billion (US$205 million).
On February 10, 2020, Canadian Solar announced that it had secured 225.2 million Brazilian reais (US$55 million) non-recourse project financing from Nordeste do Brasil S.A. for its 152.4 MWp Lavras solar power projects.
On February 6, 2020, Canadian Solar announced that it had acquired a 47.5 MWp portfolio of solar power projects in Chile. These projects will become operational in two different stages beginning in the fourth quarter of 2020.
On February 5, 2020, Canadian Solar announced that it had signed a multi-year module supply agreement with Lightsource BP to deliver 1.2 GW of high efficiency polycrystalline solar modules for projects in the US and Australia.
On January 6, 2020, Canadian Solar announced the appointment of Lauren C. Templeton as an independent director, and Karl E. Olsoni as a strategic advisor to its Board of Directors.
On December 23, 2019, Canadian Solar announced that it had reached commercial operation on a 1.98 MWp solar power plant in Taiwan.
On December 9, 2019, Canadian Solar announced that its Board of Directors authorized a $150 million share repurchase program for a six-month period beginning December 9, 2019 and ending June 8, 2020.
On December 5, 2019, Canadian Solar announced that it had closed the sale of the 3.3 MWp Milborne solar power plant in the UK.
On December 2, 2019, Canadian Solar announced that it had completed the sale of a 10.8 MWp solar power plant in Japan to Canadian Solar Infrastructure Fund, Inc. for $42.1 million.
On November 20, 2019, Canadian Solar announced that it had reached commercial operation on a 53.4 MWp solar power project in Japan.
On November 18, 2019, Canadian Solar announced that its wholly owned subsidiary Recurrent Energy closed the sale of 99 percent of a partnership that owns the Class B membership interest in the 102 MWp NC 102 solar power projects in North Carolina, to NextEnergy Capital.
On November 14, 2019, Canadian Solar announced that it had sold a 49% interest in three solar power projects in Mexico totaling 370 MWp to Korea Electric Power Corporation (KEPCO) and Sprott Korea (Sprott). Under the agreement, KEPCO and Sprott will acquire the Company's remaining interest in the projects following COD.
Conference Call Information
The Company will hold a conference call at 8:00 a.m. U.S. Eastern Daylight Time on March 26, 2020 (8:00 p.m., March 26, 2020 in Hong Kong) to discuss the Company's fourth quarter and full year 2019 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 HK) or +1 845-675-0437 (from international locations). The passcode for the call is 4068575. A live webcast of the conference call will also be available on the Investor Relations section of Canadian Solar's website at www.canadiansolar.com.
A replay of the call will be available two hours after the conclusion of the call until 8:00 a.m. U.S. Daylight Time on Friday, April 3, 2020 (8:00 p.m., April 3, 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 HK) or +1-646-254-3697 (from international locations), with passcode 4068575. A webcast replay will also be available on the investor relations section of Canadian Solar's at www.canadiansolar.com.
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 40 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 www.canadiansolar.com.
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 and China; 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 25, 2019. 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 reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.
FINANCIAL TABLES FOLLOW
The following tables provide unaudited select financial data for the Company's Module and System Solutions ("MSS") and Energy businesses:
Select Financial Data -Module and System Solutions,
and
Energy
Three Months Ended December 31, 2019
(In Thousands of U.S. Dollars, Except Percentages)
MSS
Energy Elimination
Total
Net revenues $765,696 $215,370 $(61,359) $919,707
Cost of revenues 551,517 182,424 (43,736) 690,205
Gross profit 214,179 32,946 (17,623) 229,502
Gross margin 28.0% 15.3% 25.0%
Income (loss) from 113,850 15,199 (17,623) 111,426
operations
Twelve Months Ended December 31, 2019
(In Thousands of U.S. Dollars, Except Percentages)
MSS Energy Elimination
Total
Net revenues $2,582,635 $719,445 $(101,497) $3,200,583
Cost of revenues 1,934,062 635,716 (87,692) 2,482,086
Gross profit 648,573 83,729 (13,805) 718,497
Gross margin 25.1% 11.6% 22.4%
Income (loss) from 279,715 (7,031) (13,805) 258,879
operations
Select Financial Data -Module and System
Solutions, and Energy
Three Months
Twelve Months
Ended December
Ended December
31, 2019
31, 2019
(In Thousands of U.S. Dollars)
MSS Revenues:
Solar modules and other solar power products $619,988 $2,055,249
Solar system kits 31,430 116,449
EPC services 29,890 223,423
O&M services 5,963 19,405
Others (materials and components) 17,066 66,612
Subtotal $704,337 $2,481,138
Energy Revenues:
Solar power projects $193,970 $668,476
Electricity 1,801 5,866
Others (EPC and development services) 19,599 45,103
Subtotal $215,370 $719,445
Total net revenues $919,707 $3,200,583
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)
Three Months Ended Twelve
Months
Ended
December September
December
December
December
31, 30,
31, 31, 31,
2019 2019 2018 2019 2018
Net revenues $919,707 $759,882 $901,041 $3,200,583 $3,744,512
Cost of revenues 690,205 560,968 629,732 2,482,086 2,969,430
Gross profit 229,502 198,914 271,309 718,497 775,082
Operating expenses:
Selling expenses 50,099 46,935 44,372 180,326 165,402
General and administrative 64,133 61,491 81,309 242,783 245,376
expenses
Research and development 10,179 11,567 15,417 47,045 44,193
expenses
Other operating income (6,335) (1,186) (6,353) (10,536) (44,546)
Total operating expenses 118,076 118,807 134,745 459,618 410,425
Income from operations 111,426 80,107 136,564 258,879 364,657
Other income (expenses):
Interest expense (19,734) (19,240) (23,003) (81,326) (106,032)
Interest income 2,979 2,579 2,180 12,039 11,207
Loss on change in fair
value of (6,294) (2,176) (7,256) (22,218) (19,230)
derivatives, net
Foreign exchange gain, net 3,717 2,825 7,328 10,370 6,529
Investment income (loss) 120 (738) 35,416 1,929 41,361
Other income (expenses), net (19,212) (16,750) 14,665 (79,206) (66,165)
Income before income taxes and 92,214 63,357 151,229 179,673 298,492
equity in earnings(loss) of
unconsolidated investees
Income tax expense (25,209) (10,434) (36,684) (42,066) (61,969)
Equity in earnings (loss) of 923 2,303 (445) 28,948 5,908
unconsolidated investees
Net income 67,928 55,226 114,100 166,555 242,431
Less: Net income (loss) 191 (3,105) 2,516 (5,030) 5,361
attributable to non-controlling
interests
Net income attributable to $67,737 $58,331 $111,584 $171,585 $237,070
Canadian Solar Inc.
Earnings per share - basic $1.13 $0.97 $1.89 $2.88 $4.02
Shares used in computation - basic 59,846,779 59,900,740 59,160,338 59,633,855 58,914,540
Earnings per share - diluted $1.12 $0.96 $1.81 $2.83 $3.88
Shares used in computation - diluted 60,407,086 60,846,753 62,356,019 60,777,696 62,291,670
Canadian Solar Inc.
Unaudited Condensed Consolidated Statement of Comprehensive Income
(In Thousands of U.S. Dollars)
Three Months Ended Twelve Months Ended
December September December December December
31, 30,
31, 31, 31,
2019 2019 2018 2019 2018
Net Income 67,928 55,226 114,100 166,555 242,431
Other comprehensive income (net of
tax of nil):
Foreign currency translation adjustment 8,923 (13,419) (38,399) 319 (50,577)
Loss on commodity hedge -- (8,752) (8,752)
Gain (loss) on changes in fair value of 1,147 (1,314) (3,416) (5,847) 6,094
derivatives
Comprehensive income 77,998 40,493 63,533 161,027 189,196
Less: comprehensive income (loss) (2,216) (3,529) 1,189 (11,100) 8,241
attributable to non-controlling interests
Comprehensive income attributable 80,214 44,022 62,344 172,127 180,955
to Canadian Solar Inc.
Canadian Solar Inc.
Unaudited Condensed Consolidated Balance Sheets
(In Thousands of
U.S.
Dollars)
December 31,
December 31,
2019 2018
ASSETS
Current assets:
Cash and cash equivalents $668,770 $444,298
Restricted cash 526,723 480,976
Accounts receivable trade, net 436,815 498,231
Accounts receivable, unbilled 15,256 38
Amounts due from related
parties 31,232 16,740
Inventories 554,070 262,022
Value added tax recoverable 108,920 107,222
Advances to suppliers 47,978 37,011
Derivative assets 5,547 4,761
Project assets 604,083 933,563
Prepaid expenses and other
current 253,542 289,459
assets
Total current assets 3,252,936 3,074,321
Restricted cash 9,927 15,716
Property, plant and equipment, net 1,046,035 884,986
Solar power systems, net 52,957 54,898
Deferred tax assets, net 153,963 121,087
Advances to suppliers 40,897 48,908
Prepaid land use right 60,836 65,718
Investments in affiliates 152,828 126,095
Intangible assets, net 22,791 14,903
Goodwill 1,005
Derivatives assets 3,216
Project assets 483,051 352,200
Right-of-use assets* 37,733
Other non-current assets 153,253 129,605
TOTAL ASSETS $5,467,207 $4,892,658
Canadian Solar Inc.
Unaudited Condensed Consolidated Balance Sheets (Continued)
(In Thousands of
U.S.
Dollars)
December 31,
December 31,
2019 2018
Current liabilities:
Short-term borrowings $933,120 $1,027,927
Long-term borrowings on project assets - 286,173 265,770
current
Accounts payable 585,601 379,462
Notes payable 544,991 369,722
Amounts due to related parties 10,077 16,847
Other payables 446,454 408,013
Convertible notes 127,428
Advance from customers 134,806 39,024
Derivative liabilities 10,481 13,698
Operating lease liabilities* 18,767
Tax equity liabilities 158,496
Other current liabilities 121,527 141,970
Total current liabilities 3,091,997 2,948,357
Accrued warranty costs 55,878 50,605
Long-term borrowings 619,477 393,614
Amounts due to related parties -- 568
Derivatives liabilities 1,841 --
Liability for uncertain tax positions 15,353 20,128
Deferred tax liabilities 56,463 35,698
Loss contingency accruals 28,513 24,608
Operating lease liabilities* 20,718 --
Financing liabilities 76,575 77,835
Other non-current liabilities 75,334 68,400
Total LIABILITIES 4,042,149 3,619,813
Equity:
Common shares 703,806 702,931
Treasury stock (11,845)
Additional paid-in capital 17,179 10,675
Retained earnings 793,601 622,016
Accumulated other comprehensive loss (109,607) (110,149)
Total Canadian Solar Inc. shareholders' 1,393,134 1,225,473
equity
Non-controlling interests in subsidiaries 31,924 47,372
TOTAL EQUITY 1,425,058 1,272,845
TOTAL LIABILITIES AND EQUITY $5,467,207 $4,892,658
===
Note: * The Company adopted ASU 2016-02 - Leases (Topic ASC842) in the first quarter of 2019 using the
optional transition method and elected certain practical expedients, which were permitted under the guidance
ASU 2018-11, Leases (Topic 842) - Targeted Improvements. The transition guidance allowed the Company not
to reassess prior conclusions related to contracts containing leases or lease classification. The adoption primarily
affected the condensed consolidated balance sheet through the recognition of right-of-use assets and lease
liabilities as of January 1, 2019. The adoption did not have a significant impact on the results of operations or cash
flows.
About Non-GAAP Financial Measures
To supplement its financial disclosures presented in accordance with GAAP, the Company uses non-GAAP measures which are adjusted from the most comparable GAAP measures for certain items as described below. The Company presents non-GAAP net income and diluted earnings per share so that readers can better understand the underlying operating performance of the business before the impact of AD/CVD true-up provisions. The non-GAAP numbers are not measures of financial performance under U.S. GAAP, and should not be considered in isolation or as an alternative to other measures determined in accordance with GAAP. These non-GAAP measures may differ from non-GAAP measures used by other companies, and therefore their comparability may be limited.
Statement of Operations Data:
(In Thousands of U.S. Dollars, Except Share and Per
Share Data)
Three Months Ended Twelve
Months
Ended
December September December December December
31
, 30
, 31, 31
, 31
,
2019 2019 2018 2019 2018
GAAP net income attributable to Canadian 67,737 58,331 111,584 171,585 237,070
Solar Inc.
Non-GAAP income adjustment items:
AD/CVD provision true-up (6,415) (24,291) (16,098) (52,323) (50,172)
Tax impact 1,592 6,029 3,995 12,987 12,452
Non-GAAP net income attributable to 62,914 40,069 99,481 132,249 199,350
Canadian Solar Inc.
===
GAAP income per share - diluted $1.12 $0.96 $1.81 $2.83 $3.88
Non-GAAP income per share - diluted $1.04 $0.66 $1.61 $2.19 $3.28
Shares used in computation - diluted 60,407,086 60,846,753 62,356,019 60,777,696 62,291,670
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SOURCE Canadian Solar Inc.
