Canadian Solar Inc.
) reported an adjusted loss per share of 80 cents in the third
quarter of 2011, compared with the Zacks Consensus Estimate of a
loss of 51 cents per share.
On a reported basis, Canadian Solar incurred a loss per share of
$1.02 versus an EPS of 47 cents in the year-ago period. The
variance of 22 cents is due to a gain of 33 cents due to change in
fair value of derivatives and a foreign exchange loss of 55 cents
Canadian Solar had revenues of $499.6 million, beating the Zacks
Consensus Estimate of $484 million. Revenues were also up 32.4%
from $377.2 million in the third quarter of 2010.
Solar module shipments in the reported quarter totaled 355 MW
compared with shipments of 200 MW in the third quarter of 2010.
Total solar module shipments include 19.4 MW used in the company's
total solutions business.
Revenues from the European market in the reported quarter
accounted for 61.7% of total sales, down from 77% in the year-ago
quarter. However, in real terms, revenues from the European market
increased to $308.2 million from $290.3 million in the year-ago
The company generated $80.6 million in revenues from America in
the reported quarter compared with $25.6 million last year. Asia
and others accounted for $110.8 million of revenues, compared with
$61.3 million a year ago.
Gross profit for the third quarter of 2011 was $11.9 million,
down 81.8% from $65.3 million in the third quarter of 2010. Gross
margin was 2.4% in the third quarter of 2011, compared with 17.3%
in the third quarter of 2010. The significant year-over-year
decline in gross profit and gross margin was primarily due to lower
average selling prices besides approximately $36.1 million in
non-cash inventory write-offs and non-cash loss on firm purchase
commitment in the third quarter of 2011.
Total operating expenses were $42.6 million in the third quarter
of 2011, compared with $25.3 million in the third quarter of
Selling expenses were $18.7 million in the third quarter of
2011, up 81.3% from the third quarter of 2011. The year-over-year
increase in selling expenses was primarily due to increases in
freight and other export-related expenses associated with higher
shipment volumes. General and administrative expenses were $16.0
million in the third quarter of 2011, compared with $13.7 million
in the third quarter of 2010.
Research and development (R&D) expenses were $7.9 million in
the third quarter of 2011, compared with $1.3 million in the third
quarter of 2010. The year-over-year rise in R&D was due to the
company's continued investment in advanced solar technologies,
which offer customers higher efficiency cells and Commercial AC
modules, among other innovative product initiatives.
Operating margin was (6.1%) in the third quarter of 2011,
compared with 10.6% in the third quarter of 2010. Contraction in
operating margin resulted from lower gross margin and higher
Overall, net income came in at $43.9 million compared with net
income of $20.3 million a year ago.
Canadian Solar reported cash, cash equivalents and restricted
cash of $686.3 million at the end of the reported period, up from
$476.2 million at fiscal-end 2010. Long term borrowings increased
to $153.6 million from $69.5 million at fiscal-end 2010.
The company plans to prudently manage manufacturing utilization,
inventory and mix levels, and operating expenses, as demand levels
fluctuate. It also expects to continue to explore ways to increase
manufacturing efficiency and lower processing and consumable costs
where possible. It expects shipments to be in the range of 340MW to
360 MW in the fourth quarter of 2011. Despite the customer demand
uncertainty due to the challenging global financing environment,
the company maintained its full-year 2011 guidance of 1.2 GW to 1.3
Canadian Solar caters to a geographically diverse customer base
spread across its key markets in Germany, Spain and the U.S., as
well as capture emerging market opportunities in France, the Czech
Republic, Italy, South Korea, Canada, Japan and China. The company
offers one of the broadest crystalline silicon solar module product
lines in the industry ranging from modules made of medium power,
low-cost upgraded metallurgical-grade silicon, or UMG-Si, to high
efficiency, high power output mono-crystalline modules, along with
a range of specialty products.
However, the benefits of its ongoing cost reduction program were
of late offset by higher than forecast wafer prices on the spot
market, steeper polysilicon prices and increasing non-silicon
materials costs, including silver paste.
Also, its shipments were curtailed by higher solar cell prices
in the market, which were eating into its margins. The company is
addressing this by ramping up its captive solar cell capacity.
However, it will take some time before the company becomes fully
self-sufficient for its solar cells requirements. The company
presently retains a short-term Zacks #3 Rank (Hold) that
corresponds with our long-term Neutral recommendation on the
Yesterday, one of its peers,
Suntech Power Holdings Company Ltd.
) also posted third quarter results with an adjusted loss of 64
cents per American Depositary Share (
), falling behind the Zacks Consensus Estimate of 21 cents of loss
per ADS. Results also came in below the year-ago adjusted earnings
of 18 cents per ADS.
CANADIAN SOLAR (
): Free Stock Analysis Report
SUNTECH PWR HLD (
): Free Stock Analysis Report