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Canadian Solar, one of the world's leading solar power companies, announced its first-quarter earnings last week, beating its own guidance for shipments and revenue, but provided significantly weaker guidance for its second-quarter revenue. 

Clean Power

Canadian Solar’s 1st Quarter Exceeds Expectations But Provides Lackluster 2nd Quarter Guidance

Canadian Solar, one of the world’s leading solar power companies, announced its first-quarter earnings last week, beating its own guidance for shipments and revenue, but provided significantly weaker guidance for its second-quarter revenue. 

Canadian Solar, one of the world’s leading solar power companies, announced its first-quarter earnings last week, beating its own guidance for shipments and revenue, but provided significantly weaker guidance for its second-quarter revenue.

Only two months after the company announced guidance-beating fourth quarter and full-year 2017 efforts, Canadian Solar has again beat its own guidance, though only slightly. In the fourth quarter of 2017 Canadian Solar recorded total solar module shipments of 1,831 megawatts (MW), well in line with the 1,870 MW shipped during the third quarter and exceeding the company’s own guidance in the range of 1,720 MW to 1,820 MW. At the time, the company provided guidance for its first quarter of shipments in the range of 1,300 MW to 1,350 MW which, as announced last week, the company exceeded with total solar module shipments for the first quarter of 1,374 MW.

Similarly, net revenue for the fourth quarter reached $1.11 billion, compared to $912.2 million taken in during the third quarter and guidance in the range of $1.04 billion to $1.08 billion. Guidance for the first quarter was set in the range of $13 billion to $1.4 billion, which Canadian Solar exceeded with $1.42 billion. The company’s gross margin for the first quarter was 10.1% and earnings per share was $0.72, down slightly on the $1.01 recorded in the fourth quarter.

“Results for the first quarter 2018 are within our expectations, with solar module shipments and revenue exceeding our guidance,” said Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar. “The capacity utilization level was lower than the fourth quarter of 2017, due to several reasons, including seasonally low demand and holidays in China, the Section 201 safeguard decision on solar products by the U.S. government and the safeguard trade investigations in India. On the positive side, we maintained a flat to slightly up module average selling price during the quarter.”

It is also worth noting that Dr Qu is also leading a proposal to take Canadian Solar private, making the offer in December to acquire all outstanding common shares not already owned by Qu and his wife, Ms Hanbing Zhang. Canadian Solar is only one of several solar companies currently entertaining the idea of going private or having already done so — such as Trina Solar, JA Solar, and ReneSola.

While Canadian Solar’s share price has remained relatively strong after an uptick last week, following the announcement of the company’s first-quarter earnings, there has been variability, with most analysts attributing it to the company’s weak second-quarter guidance.

Specifically, while Canadian Solar expects shipments for the second quarter to remain strong in the range of 1,500 MW to 1,600 MW, the company predicted its revenue for the second quarter to be in the range of $690 million to $730 million — a decline of around 50% at best.

The company’s first-quarter revenue was bolstered by increased solar PV power plant sales, including in the UK and Japan.

“We are encouraged by our success in monetizing our solar power plants globally,” explained Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer of Canadian Solar. “During the quarter, we completed the sale of the 28 MWp Gaskell West 1 project to Southern Power, sold 142 MWp of solar power plants in the U.K. to Greencoat and sold three solar power plants in the U.S., totaling 309 MWp to KEPCO.”

 
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