Canadian Solar Has Announced Financial Results for The 3Q11

Canadian Solar, a China-based solar firm, has announced financial results for the third quarter ended September 30, 2011. Net revenue for the third quarter of 2011 was US$499.6 million, up 3.7% from US$481.8 million for the second quarter of 2011 and up 32.5% from US$377.2 million for the third quarter of 2010. Total solar module shipments for the third quarter of 2011 were 355MW, compared to total module shipments of 287MW for second-quarter 2011 and 200MW for third-quarter 2010. Total solar module shipments for the third quarter of 2011 included 19.4MW used in Canadian Solar's total solutions business. By geography, in the third quarter of 2011, sales to European markets represented 61.7% of revenue, sales to North America represented 16.1% of revenue, and sales to Asia and others represented 22.2% of revenue, compared to 76.6%, 15.2% and 8.2%, respectively, in the second quarter of 2011 and 77.0%, 6.8% and 16.2%, respectively, in the third quarter of 2010. Gross profit in the third quarter of 2011 was US$11.9 million, compared to US$63.7 million in the second quarter of 2011 and US$65.3 million in the third quarter of 2010. Gross margin was 2.4% in the third quarter of 2011, compared to 13.2% in the second quarter of 2011 and 17.3% in the third quarter of 2010. The sequential and year-over-year declines in gross profit and gross margin were primarily due to lower average selling prices and approximately US$36.1 million in non-cash inventory write-offs and non-cash loss on firm purchase commitment in the third quarter of 2011. Research and development expenses were US$7.9 million in the third quarter of 2011, compared to US$4.9 million in the second quarter of 2011 and US$1.3 million in the third quarter of 2010. The sequential and year-over-year increases were due to Canadian Solar's continued investment in advanced solar technologies. Net loss attributable to Canadian Solar in the third quarter of 2011 was US$43.9 million, or US$1.02 per diluted share, compared to net income of US$7.1 million, or US$0.16 per diluted share, in second-quarter 2011, and net income of US$20.3 million, or US$0.47 per diluted share, in the third quarter of 2010. Financial Condition Inventories at the end of the third quarter of 2011 were US$406.0 million, compared to US$436.3 million at the end of the second quarter of 2011. Inventory turnover days were 85 days in the third quarter of 2011 compared to 84 days in the second quarter of 2011. Shawn Qu, chairman and CEO of Canadian Solar, remarked: "This was another challenging quarter as the solar industry continues to navigate pricing pressures, financing restrictions and fluctuating subsidies. I am proud that Canadian Solar's team remained focused despite the potential distractions. We met our shipment guidance for the quarter, reduced inventory levels and further improved our balance sheet. Customers continue to partner with Canadian Solar because of our global brand, strong track record of execution, the proven high-quality and performance of our modules, and our dedicated service. Based on our results, we believe that Canadian Solar is benefiting from the flight to quality and continues to gain market share." Michael G Potter, senior vice president and CFO of Canadian Solar, commented: "Our previous efforts to closely manage capacity and our flexible business model have positioned Canadian Solar with strong cash flow from operations despite the difficult current market environment. Unlike many other companies, Canadian Solar has adequate capacity - not overcapacity; and an inventory of high performance modules that customers want - not excess inventory of non-desired product. We will continue to evaluate and match resources to demand levels as we manage our cost structure. We are confident that, through continued strict management of our supply chain, inventory, operating costs and balance sheet, especially our working capital, Canadian Solar will emerge from this period in an even stronger financial and competitive position in the markets that we serve worldwide." Business Outlook For the fourth quarter of 2011, shipments are expected to be in the range of approximately 340-360MW, with gross margin expected to be between 5% and 8%. Despite the challenging global financing environment, which continues to result in customer demand uncertainty, Canadian Solar reiterates its previous full year 2011 guidance of shipments of approximately 1.2-1.3GW. Canadian Solar will continue to actively manage manufacturing utilization, inventory and mix levels, and operating expenses as demand levels fluctuate. Canadian Solar will also continue to explore ways to increase manufacturing efficiency and yield and to lower processing and consumable costs where opportunities exist. Capital expenditures in the first nine months of 2011 totaled approximately US$177 million. Reflecting the current demand environment, Canadian Solar will reduce capital expenditures in the fourth quarter 2011 to approximately US$30-35 million, with the full year 2011 expected to be approximately US$210 million, down approximately US$90 million from prior plan. Source: www.digitimes.com