Before markets opened,
Canadian Solar Inc.
) reported first quarter 2012 results. In the reported quarter, the
company with a loss per share of 49 cents fared better than the
Zacks Consensus Estimate of a loss of 52 cents per share. However,
results were much lower when compared to earnings of 44 cents in
the year-ago period.
Canadian Solar had revenues of $325.8 million, falling behind
the Zacks Consensus Estimate of $371 million. Revenue was also down
31.3% versus $474.1 million in the fourth quarter of 2011 and down
26.5% versus $443.4 million in the first quarter of 2011.
Solar module shipments in the reported quarter totaled 343MW
compared with shipments of 436MW in the fourth quarter of 2011 and
244MW for the first quarter of 2011.
By geography, in the first quarter of 2012, sales to European
markets represented 42.6% of net revenue, sales to North America
represented 45.1% of net revenue, and sales to Asia and all other
markets represented 12.3% of net revenue. In the above order,
fourth quarter of 2011 revenue breakdown was 46.5%, 26.9% and
26.6%, respectively, and in the first quarter of 2011 the breakdown
was 75.6%, 12.2% and 12.2%, respectively,
Gross profit in the first quarter of 2012 was $25.1 million,
compared with $41.4 million in the fourth quarter of 2011 and $65.3
million in the first quarter of 2011. The sequential and
year-over-year decline in gross profit was primarily due to the
continued decline in average selling prices. This was partially
offset by lower manufacturing costs. Gross margin was 7.7% in the
first quarter of 2012, compared with 8.7% in the fourth quarter of
2011 and 14.7% in the first quarter of 2011.
Overall the company in the first quarter of 2012 digested a net
loss of $21.3 million compared with a net loss of $59.9 million in
the fourth quarter 2011, and net income of $5.9 million in the
first quarter of 2011.
Canadian Solar reported cash, cash equivalents and restricted
cash of $625.2 million at the end of the reported period, up from
$522.3 million at fiscal-end 2011. The company generated
approximately $12.1 million of cash from operations in the first
quarter of 2012. Short-term borrowings at the end of the first
quarter of 2012 totaled $861.9 million, compared with $743.7
million at the end of the fourth quarter of 2011. As of March 31,
2012, the company has approximately $764 million in unused bank
lines. Long-term debt at the end of the first quarter 2012 was
$88.3 million, compared with $88.2 million at the end of the fourth
quarter of 2011.
Accounts receivable balance, net of allowance for doubtful
accounts, at the end of the first quarter of 2012 was $250.6
million compared with $292.2 million at the end of the fourth
quarter of 2011. Accounts receivable turnover days however
increased to 78 days in the first quarter of 2012 from 50 days in
the fourth quarter of 2011.
Accounts and notes payable at the end of the first quarter of
2012 were $390.5 million, compared with $306.0 million at the end
of the fourth quarter of 2011. Accounts payable turnover days in
the first quarter of 2012 were 104 days compared with 74 days in
the fourth quarter of 2011.
Canadian Solar 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 430MW to 450MW in the second quarter of 2012, with gross
margin expected to be between 8% and 10%. Despite the challenging
global financing environment that leads to customer demand
uncertainty, the company expects to ship approximately 1,800MW to
2,000MW of solar products in fiscal 2012.
In recent times, Canadian Solar booked positive growth in the
U.S., Europe, China and India. Moreover, its specialization at the
downstream total solutions business makes it a higher margin
However, in the near term, fortunes would be impacted by the
industry-wide oversupply glut leading to sharply falling Average
Selling Prices, tepid module demand in Europe, and rising
competition in the market. Given the industry-wide high inventory
level, we do not foresee any short-term improvement in margins of
the company. The company presently retains a short-term Zacks #5
Rank (Strong Sell). In the near term we would advise investors to
focus on its Zacks #2 Rank (Buy) peer
Ascent Solar Technologies Inc.
Canadian Solar Inc. is one of the world's largest solar
companies. As a leading vertically integrated provider of ingots,
wafers, solar cells, solar modules and other solar applications,
the company designs, manufactures and delivers solar products and
solar system solutions for on-grid and off-grid use to customers
worldwide. With operations in North America, Europe, Australia and
Asia, Canadian Solar provides premium quality, cost-effective and
environmentally-friendly solar solutions to support global,
sustainable development. Over the longer run we thus maintain our
Neutral recommendation on the stock.
ASCENT SOLAR TE (ASTI): Free Stock Analysis
CANADIAN SOLAR (CSIQ): Free Stock Analysis
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