Solar cell manufacturer
Canadian Solar Inc.
) reported earnings of 7 cents per share in the first quarter of
2014 as against a loss of 10 cents per share in the year-ago
quarter. The bottom line, however, was short of the Zacks Consensus
Estimate by a penny. The lower-than-expected earnings evoked a
negative market reaction with the shares losing 9% in the
on May 16, 2014.
However, the company swung to a profit in the quarter as against a
loss incurred a year ago. The upside was driven by an increase in
shipment volume and higher revenues.
Canadian Solar posted revenues of $466.3 million in the first
quarter, beating the Zacks Consensus Estimate of $435.0 million by
7.2%. Total revenues were 76.9% higher than $263.6 million reported
in the prior-year quarter.
Canadian Solar generates a major part of its revenues from global
operations. Geographically, in the first quarter of 2014, sales to
Asia and all other markets came to 50.4% of net revenues; sales to
America comprised 43.6% while sales to European markets represented
6.0% of net revenues.
The contribution from Europe decreased significantly from the
prior-year quarter, while American markets performed remarkably
well over that period. Again, Asia and other markets decreased both
year over year as well as sequentially.
Solar module shipments in the reported quarter totaled 500
megawatts ("MW"), compared with 340 MW in the year-ago quarter.
However, shipments decreased from 621 MW in the sequentially
Gross profit in the first quarter was $68.6 million, much higher
than the year-ago gross profit of $25.6 million but took a 32.3%
sequential hit. The year-over-year increase in gross profit was
primarily due to more revenues coming in from the company's
higher-margin total solutions business, as well as higher module
shipments. The sequential drop mainly reflects lower module
Total operating expenses were $42.0 million in the quarter, much
higher than the year-ago figure of $7.5 million. Tthe company
however reduced operating expenses by 24.9% sequentially.
Canadian Solar reported an operating income of $26.6 million in the
quarter under review versus $18.0 million in the comparable
year-ago quarter. The favorable results were a function of a robust
Research and development (R&D) expenses were $2.5 million in
the first quarter of 2014 versus $2.4 million in the first quarter
of 2013. The steady R&D investment reflects technological
progress at this solar firm.
Interest expense was $12.0 million, lower than $14.6 million
incurred in the year-ago period.
Canadian Solar had a pipeline of late stage utility-scale solar
projects totaling about 1.2 gigawatt (GW) DC at the end of the
quarter. These projects comprise owned and joint-venture
projects as well as engineering, procurement and construction (EPC)
In the first quarter of 2014, the company closed the sale of the
Little Creek project in Ontario, Canada to BluEarth for more than
As of Mar 31, 2014, cash and cash equivalents were $364.2 million,
higher than $228.3 million as of Dec 31, 2013.
Net cash used in operating activities was $153.7 million, compared
to net cash provided by operating activities of $73.2 million in
the fourth quarter of 2013.
Long-term debt as of Mar 31, 2014, was $163.5 million, up from
$151.4 million as of Dec 31, 2013.
Canadian Solar expects shipments in the range of 600 MW to 630 MW
in the second quarter of 2014. Total revenues are expected in the
range of $560.0 million to $590.0 million with gross margin between
17% and 19%.
Guidance for total annual shipments is maintained in the range of
2.5 GW to 2.7 GW and total revenues are expected in the $2.7
billion to $2.9 billion band for 2014.
The company expects to earn 50% of its total revenues in 2014 from
its total solution business.
Canadian Solar expects China to be the biggest solar market in the
world in 2014 and beyond, with at least 11 GW to 12 GW of solar
module installations this year. The company believes that this
Asian superpower will likely achieve its total target of 14 GW.
The company presently holds a Zacks Rank #3 (Hold). Other stocks to
look out for in the space are
JA Solar Holdings Co. Ltd.
Trina Solar Ltd.
). JA Solar and Trina Solar sport a Zacks Rank #1 (Strong Buy),
while ReneSola carries a Zacks Rank #2 (Buy).
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CANADIAN SOLAR (CSIQ): Free Stock Analysis
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