2021-04-23CANADIAN SOLAR REPORTS FOURTH QUARTER AND FULL YEAR 2020 RESULTS
GUELPH, ON, March 18, 2021 /PRNewswire/ — Canadian Solar Inc. (“Canadian Solar” or the “Company”) (NASDAQ: CSIQ) today announced financial results for the quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights
Full Year 2020 Highlights
Fourth Quarter 2020 Results
Total module shipments in the fourth quarter of 2020 were 2,998 MW, an increase of 22% year-over-year (“yoy”) and decrease of 5% quarter-over-quarter (“qoq”). Of the total, 359 MW was shipped to the Company’s own utility-scale solar power projects.
Net revenue in the fourth quarter of 2020 grew by 9% yoy and 14% qoq to $1,041 million. The sequential increase was driven by higher project sales spanning the United States, Mexico, Japan, Canada and Italy, and a slightly higher module average selling price (“ASP”), which was partly offset by lower module shipments.
Gross profit in the fourth quarter of 2020 was $141 million, down 21% qoq. Gross margin in the fourth quarter of 2020 was 13.6%, compared to guidance of 8% to 10%, and 19.5% in the third quarter of 2020. The gross margin decline was mainly driven by the previously anticipated increase in manufacturing costs, which was partly offset by higher module ASP and a more favorable mix.
Total operating expenses in the fourth quarter of 2020 were $139 million compared to $119 million in the third quarter of 2020. The sequential increase was primarily driven by higher shipping expenses and an impairment charge related to certain manufacturing assets.
Non-cash depreciation and amortization charges in the fourth quarter of 2020 were $59 million, compared to $56 million in the third quarter of 2020, and $45 million in the fourth quarter of 2019.
Net foreign exchange gain in the fourth quarter of 2020 was $4 million, compared to a net loss of $13 million in the third quarter of 2020 and a net loss of $3 million in the fourth quarter of 2019.
Income tax benefit in the fourth quarter of 2020 was $2 million, compared to $21 million of income tax expense in the third quarter of 2020 and $25 million of income tax expense in the fourth quarter of 2019. The benefit was driven by higher expected utilization of tax losses carried forward due to expansion in manufacturing capacity and improvement in process efficiency at the Company’s factories.
Net income attributable to Canadian Solar in the fourth quarter of 2020 was $7 million, or $0.11 per diluted share, compared to net income of $9 million, or $0.15 per diluted share in the third quarter of 2020.
Net cash provided by operating activities in the fourth quarter of 2020 was $120 million, compared to $47 million provided by operating activities in the third quarter of 2020.
New Corporate Structure
In July 2020, the Company announced its plan to carve-out and publicly list its Module and System Solutions (“MSS”) subsidiary, CSI Solar Co., Ltd. (“CSI Solar”), in China. In preparation for the listing, the Company successfully completed the restructuring of its business segments during the fourth quarter of 2020. The table below is a summary comparison of the adjustments made in reporting structures. The main change being the transfer and inclusion of the China Energy business within the scope of CSI Solar.
As of December 31, 2020, Canadian Solar owned 80% of CSI Solar, with the remaining 20% owned by strategic investors who purchased CSI Solar shares during the pre-IPO transaction. An additional 5% of CSI Solar shares were purchased by CSI Solar’s employee stock ownership plan (“ESOP”), for which the vesting condition is the successful completion of the IPO. Both the CSI Solar and Global Energy segments are fully consolidated within Canadian Solar.
|Historical reporting structure||New reporting structure|
|Module and System Solutions (“MSS”) Business
|CSI Solar (entity to be listed in China)
Battery Storage Opportunities
The Company will start reporting revenues from its energy storage business in this quarter. Canadian Solar is one of the first movers in developing and supplying energy storage solutions and projects. Given the exponential market opportunities driven by rapid technology improvements, declining battery storage costs, rising penetration of renewable energy and accelerating retirements of fossil fuel capacity, the Company has strategically positioned itself in the battery storage market, both in solar plus battery storage as well as in stand-alone storage opportunities.
Canadian Solar has a unique advantage in tapping into the large energy storage market opportunities given its position as a global leader both in module manufacturing as well as a solar project development. Thus, both the CSI Solar and Global Energy segments have focused strategically on their respective energy storage businesses:
CSI Solar Segment
The table below sets forth Canadian Solar’s 2021 capacity expansion targets along the solar module value chain. All new capacity will produce Canadian Solar’s next generation high-power, high-efficiency modules in the HiKu and BiHiKu product portfolios.
Manufacturing Capacity, GW (period-end)
Note: The Company’s capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans.
The following table presents unaudited select results of operations data of the Company’s CSI Solar segment for the periods indicated.
|CSI Solar Segment Financial Results*
(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)
|Three Months Ended||Twelve Months Ended|
|December 31, 2020||September 30,2020||December 31, 2019||December 31, 2020||December 31, 2019|
|Cost of revenues||678,410||738,352||574,687||2,496,153||1,977,502|
|Income from operations||2,800||88,241||106,711||253,105||267,642|
*Includes effects of both sales to third party customers and to the Company’s Global Energy Segment. Please refer to the attached financial tables for intercompany transaction elimination information. Income from operations reflects management’s allocation and estimate as some services are shared by the Company’s two business segments. Historical values have been revised to conform to current period presentation.
The table below provides the geographic distribution of the net revenue of CSI Solar.
|CSI Solar Net Revenues Geographic Distribution*
(In Millions of U.S. Dollars, Except Percentages)
|Q4 2020||% of Net Revenues||Full year 2020||% of Net Revenues|
|Europe and others||105||16||595||22|
Canadian Solar shipped 3 GW of modules to more than 70 countries in the fourth quarter of 2020. The top five markets ranked by shipments were the Vietnam, China, the U.S., Brazil and Australia. For the full year of 2020, the top five markets ranked by shipments were the U.S., Vietnam, China, Brazil and Japan.*Excludes sales from CSI Solar to Global Energy.
Battery Storage Solutions
The Company is one of the early movers in developing system solutions and energy storage integration services. Within CSI Solar, the battery storage solutions team delivers competitive turnkey, integrated battery storage solutions, including bankable and fully wrapped capacity and performance guarantees. These guarantees are complemented with long term operations and maintenance agreements, which include future battery capacity augmentation services and bring in longer term stable income.
The table below sets forth CSI Solar’s battery storage system integration’s contracted projects and/or under construction, those in high probability forecast, and pipeline as of January 31, 2021.
Contracted/in construction projects are expected to be delivered within the next 12 to 18 months. Forecast projects include those that have more than 75% probability of being contracted within the next 12 months, and the remaining pipeline includes projects that have been identified but have a below 75% probability of being contracted.
Total Solar Project Pipeline
As January 31, 2021, the Company’s total project pipeline was 20.2 GWp, including, 1.6 GWp under construction, 3.8 GWp of backlog, and 14.8 GWp of earlier stage pipeline. The backlog includes projects that have passed their Risk Cliff Date and are expected to be built in the next one to four years. A project’s Risk Cliff Date depends on the country where the project is located and is defined as the date on which the project passes the last high-risk development stage. This is usually after the projects have received all the required environmental and regulatory approvals, interconnection agreements, feed-in tariff (“FIT”) arrangements and power purchase agreements (“PPAs”). Over 90% of projects in backlog are contracted (i.e., have secured a PPA or FIT), and the remaining are reasonably assured of securing PPAs.
The Company’s pipeline includes early- to mid-stage project opportunities currently under development but that are yet to be de-risked.
The following table presents the Company’s full pipeline as of January 31, 2021.
|Total Project Pipeline (as of January 31, 2021) – MWp|
|Europe, the Middle East and Africa (“EMEA”)||–||429*||2,912||3,341|
|Asia Pacific excluding Japan and China||345||191||1,810||2,346|
|China (part of CSI Solar)||–||125||1,500||1,625|
|Note: Gross MWp size of projects includes 510 MWp and 63 MWp of projects in construction and backlog, respectively, in Latin America, and 129 MWp in backlog in EMEA, that are not owned by Canadian Solar or have been sold to third parties.|
The Company has a sizable amount of premium, high FIT projects in Japan. The table below sets forth the expected COD schedule of the Company’s project backlog in development and construction in Japan, as of January 31, 2021:
Expected COD Schedule – MWp
Solar Power Plants in Operation
As of January 31, 2021, the Company’s power plants in operation totaled 493 MWp, with a combined estimated net resale value of approximately $620 million to Canadian Solar. The estimated resale value is based on selling prices that Canadian Solar is currently negotiating or transaction prices of similar assets in the relevant markets.
|Latin America||Japan||Asia Pacific
ex. Japan & China
Note: Gross MWp size of projects, includes 26 MWp in Asia Pacific ex. Japan already sold to third parties. Also includes 61 MWp of projects in Japan which were sold in March 2021. China portfolio is part of CSI Solar.
Total Battery Storage Project Pipeline
The Global Energy segment has been actively developing utility-scale solar plus energy storage projects, as well as stand-alone battery storage projects. Over the past year, Canadian Solar has signed several new storage tolling agreements with a variety of power purchasers, including community choice aggregators, investor-owned utilities, universities, and public utility districts. The Company has also signed development services agreements to retrofit operational solar projects with battery storage, many of which were previously developed by the Company. Canadian Solar is uniquely positioned to deliver energy storage solutions to its customers, especially in solar plus storage solutions, given its proprietary integrated technologies and expertise in battery storage system integration and its unique positioning as both a top-tier module manufacturer and global project developer.
The table below sets forth Global Energy’s storage project development backlog and pipeline as of January 31, 2021.
|In Operation||In Construction||Backlog||Pipeline||Total|
SOURCE Canadian Solar Inc.
Investor Relations Contacts: Isabel Zhang, Investor Relations, Canadian Solar Inc., email@example.com; David Pasquale, Global IR Partners, Tel: +1-914-337-8801, firstname.lastname@example.org