Q3 Earnings: Canadian Solar Rocket Past Guidance, Expectations

Canadian Solar, one of the world’s leading solar power companies, announced its third quarter earnings Wednesday, with figures beating all expectations and the company’s own guidance for the quarter. However, despite strong growth over the quarter, tentative guidance for the fourth quarter based on the US trade case has seen the company’s shares drop.

Canadian Solar beat all expectations in the third quarter, even surpassing their own guidance. Solar module shipments were up nearly 20% over the previous quarter, growing from 646 MW to 770 MW, and passing the company’s guidance of between 720 MW and 750 MW.

Revenue was up significantly as well, jumping to $914.4 million for the quarter. This figure was up from $623.8 million in the second quarter of 2014, $490.9 in the third quarter a year earlier, and up from Canadian Solar guidance for the quarter of $760 to $810 million.

“We are on-track to deliver the best year in the history of Canadian Solar, in terms of revenue and profitability and MW shipment,” commented Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, adding that the company expects “the global solar demand to continue its growth momentum in 2015.”

Solar Plant Sales

Part of the reason for the tremendous third quarter growth was due to the sale of five solar plants in Ontario, Canada, valued together at a total of C$306 million.

“This was an excellent quarter for Canadian Solar as our revenue, shipments, and net income all set quarterly records for the Company,” said Michael G. Potter, Senior Vice President and Chief Financial Officer of Canadian Solar.

“The five Canadian project sales, combined with better than expected module ASP, and the fact that we are running near full capacity, enabled us to achieve gross margin of 22.9% in the third quarter, compared to 19.0% in the second quarter.”

The five projects included Mighty Solar, Good Light, William Rutley, Liskeard 3, and Liskeard 4, and totalled 50 MW together.

Q4’14 Guidance

However, despite such a strong quarter, guidance for the following fourth quarter sent Canadian Solar’s stock into a sharp decline. Claudia Assis at MarketWatch noted that shares fell “more than 10% on Wednesday” after the company “forecast potentially lighter revenues for the fourth quarter.”

In its press release accompanying the third quarter earnings conference call, Canadian Solar noted that its “gross margin guidance for the fourth quarter of 2014 factors in the impact of the US trade case,” amidst other factors. Nevertheless, Canadian Solar is still forecasting module shipments to be in the range of between 810 MW and 860 MW, and revenue to be between $925 and $975 million (with a gross margin between 17% and 19%).