CSIQ [Canadian Solar] 6-K: Canadian Solar Reports Second Quarter 2019 Results Guelph,

Ticker: CSIQ, Company: Canadian Solar Inc., Type: 6-K, Date: 2019-08-15
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Webplus: CSIQ/20190815/6-K_1/2_EX-99.1/000.htm SEC Original: a19-17227_1ex99d1.htm
Canadian Solar Reports Second Quarter 2019 Results Guelph, Ontario, August 15, 2019 Second Quarter 2019 Highlights · · · · · · · Second Quarter 2019 Results Net revenue in the second quarter of 2019 was $1,036.3 million, compared to $484.7 million in the first quarter of 2019, and $650.6 million in the second quarter of 2018. The sequential increase



EX-99.1 2 a19-17227_1ex99d1.htm EX-99.1

Exhibit 99.1

Canadian Solar Reports Second Quarter 2019 Results

Guelph, Ontario, August 15, 2019 — Canadian Solar Inc. (“Canadian Solar” or the “Company”) (NASDAQ: CSIQ), one of the world’s largest solar power companies, today announced financial results for the second quarter ended June 30, 2019.

Second Quarter 2019 Highlights

·Total solar module shipments were 2,143 MW, compared to 1,575 MW in the first quarter of 2019 and second quarter 2019 guidance of 1.95 GW to 2.05 GW.

·Net revenue was $1,036.3 million, compared to $484.7 million in the first quarter of 2019 and second quarter 2019 guidance of $970 million to $1.01 billion.

·Gross margin was 17.6%, including the benefit of an anti-dumping (“AD”) and countervailing duty (“CVD”) true-up of $21.6 million, or 15.5% without taking into account the true-up benefit which represents the non-GAAP gross margin, compared to 22.2% in the first quarter of 2019 and second quarter 2019 guidance of 13% to 15%.

·Net income attributable to Canadian Solar on a GAAP basis was $62.7 million, or $1.04 per diluted share, compared to net loss of $17.2 million, or $0.29 per diluted share, in the first quarter of 2019.

·Net income attributable to Canadian Solar on a non-GAAP basis was $46.4 million, or $0.77 per diluted share. Non-GAAP net income excludes an AD and CVD true-up of $21.6 million, net of income tax effect. For a reconciliation of results under generally accepted accounting principles in the United States (“GAAP”) to non-GAAP results, see the accompanying table “About Non-GAAP Financial Measures”.

·Net cash provided by operating activities was approximately $225.8 million, compared to $104.9 million in the first quarter of 2019.

·As of July 31, 2019, the Company’s portfolio of utility-scale solar power plants in operation was 795.8 MWp with an estimated total resale value of approximately $1.0 billion.

Second Quarter 2019 Results

Net revenue in the second quarter of 2019 was $1,036.3 million, compared to $484.7 million in the first quarter of 2019, and $650.6 million in the second quarter of 2018. The sequential increasewas primarily due to higher solar module shipments and higher revenue from the sale of solar power plants.

Total solar module shipments in the second quarter of 2019 were 2,143 MW, compared to 1,575 MW in the first quarter of 2019 andsecond quarter 2019 guidance of 1.95 GW to 2.05 GW. Total solar module shipments in the second quarter of 2019 included 65 MW shipped to the Company’s utility-scale solar power projects. Module shipments recognized in revenue in the second quarter of 2019 totaled 2,376 MW, compared to 1,423 MW in the first quarter of 2019 and 1,454 MW in the second quarter of 2018.

Gross profit in the second quarter of 2019 was $182.6 million, compared to $107.4 million in the first quarter of 2019 and $159.4 million in the second quarter of 2018. Gross margin in the second quarter of 2019 was 17.6%, including the benefit of an AD and CVD true-up of $21.6 million, or 15.5% without the true-up benefit which represents the non-GAAP gross margin, compared to 22.2% in the first quarter of 2019, and 24.5% in the second quarter of 2018, including the benefits of AD and CVD true-ups of $25.8 million in the second quarter of 2018, or 20.5% without the true-up benefit. The non-GAAP gross margin achieved in the second quarter was higher than previous guidance of 13.0% to 15.0% primarily due to lower blended module manufacturing costs and slightly higher than expected average selling price of solar modules.

The Company’s Module and System Solutions (MSS) business comprises primarily the design, development, manufacture and sale of solar modules, other solar power products and solar system kits. The MSS business also provides engineering, procurement and construction (EPC) and operating and maintenance (O&M) services. The Company’s Energy business includes primarily the development and sale of solar projects, operating solar power projects and the sale of electricity. Module sales from the Company’s MSS business to the Energy business are on terms and conditions similar to sales to third parties.

1


The Company develops solar power projects worldwide. Where applicable, the Company may apply for and/or be entitled to receive a feed-in tariff (FIT) for its projects. Alternatively, the Company may participate in public or private energy auctions and bidding, which result in long-term power purchase agreements (PPAs). The Company may also sell all or part of the electricity generated from its solar power projects on the merchant power market. Due to the relatively long lead times (two to four years) required to develop solar power projects and bring them to a commercial operation date (COD), the actual gross margin of a project may deviate from the expected gross margin. The deviation may be caused by, among other things, changes in the political and economic conditions in host countries, project specific conditions, price movements of solar modules and other components, changes in the cost of EPC services and the capital return requirements of solar asset buyers. In recent years, the Company has sold some solar power projects before COD. We typically refer to these sales as “notice to proceed” or NTP sales. In NTP sales, revenue is lower while the gross margin percentage is higher than in COD sales, even if the absolute margin is the same. Results from the Company’s Energy business may be lumpy from quarter to quarter, depending on whether projects are sold at NTP or COD, project sale transaction dates and the profit level of each project.

The following tables provide selected financial data for the Company’s MSS and Energy businesses:

Three Months Ended June 30, 2019
(In Thousands of U.S. Dollars)

MSS

Energy

Elimination

Total

Net revenue

673,116

374,938

(11,779

)

1,036,275

Cost of revenue

519,376

353,529

(19,272

)

853,633

Gross profit

153,740

21,409

7,493

182,642

Gross Margin

22.8

%

5.7

%

17.6

%

Income (loss) from operations

58,437

(5,188

)

7,493

60,742

Six Months Ended June 30, 2019
(In Thousands of U.S. Dollars)

MSS

Energy

Elimination

Total

Net revenue

1,142,017

406,525

(27,548

)

1,520,994

Cost of revenue

889,040

375,703

(33,830

)

1,230,913

Gross profit

252,977

30,822

6,282

290,081

Gross Margin

22.2

%

7.6

%

19.1

%

Income (loss) from operations

79,178

(18,113

)

6,282

67,347

Three Months Ended
June 30, 2019

Six Months Ended
June 30, 2019

(In Thousands of U.S. Dollars)

MSS:

Solar modules and other solar power products

525,130

896,224

Solar system kits

31,844

56,920

EPC services

84,424

124,104

O&M services

3,397

7,907

Others (materials and components)

16,542

29,314

Subtotal

661,337

1,114,469

Energy:

Solar power projects

365,962

390,533

Electricity

1,693

2,976

Others (EPC and development services)

7,283

13,016

Subtotal

374,938

406,525

Total net revenue

1,036,275

1,520,994

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Total operating expenses in the second quarter of 2019 were $121.9 million, compared to $100.8 million in the first quarter of 2019 and $105.5 million in the second quarter of 2018.

Selling expenses in the second quarter of 2019 were $45.4 million, compared to $37.9 million in the first quarter of 2019 and $40.3 million in the second quarter of 2018. The sequential increase was primarily due to the increase in shipping and handling costs and project transaction fees associated with the higher quarterly revenue level.

General and administrative expenses in the second quarter of 2019 were $65.7 million, compared to $51.4 million in the first quarter of 2019 and $56.4 million in the second quarter of 2018. The sequential increase was mainly due to the impairmentof $9.7 million for certain manufacturing equipment, as well as a $2.9 million increase in bad debt provision.

Research and development expenses in the second quarter of 2019 were $12.1 million, compared to $13.2 million in the first quarter of 2019 and $9.1 million in the second quarter of 2018.

Other operating income in the second quarter of 2019 was $1.3 million, compared to $1.7 million in the first quarter of 2019 and $0.3 million in the second quarter of 2018.

Income from operations in the second quarter of 2019 was $60.7 million, compared to $6.6 million in the first quarter of 2019, and $53.9 million in the second quarter of 2018. Operating margin was 5.9% in the second quarter of 2019, compared to 1.4% in the first quarter of 2019 and 8.3% in the second quarter of 2018.

Non-cash depreciation and amortization charges in the second quarter of 2019 were$39.7 million, compared to $37.6 million in the first quarter of 2019 and $30.2 million in the second quarter of 2018. Non-cash equity compensation expense in the second quarter of 2019 was $3.5 million, compared to $2.4 million in the first quarter of 2019 and $3.3 million in the second quarter of 2018.

Interest expense in the second quarter of 2019 was $20.7 million, compared to $21.7 million in the first quarter of 2019 and $26.6 million in the second quarter of 2018.

Interest income in the second quarter of 2019 was $4.5 million, compared to $2.0 million in the first quarter of 2019 and $2.9 million in the second quarter of 2018.

The Company recorded a loss on the change in fair value of derivatives in the second quarter of 2019 of $12.5 million, compared to $1.3 million in the first quarter of 2019 and $7.6 million in the second quarter of 2018. Foreign exchange gain in the second quarter of 2019 was $16.4 million, compared to a loss of $12.6 million in the first quarter of 2019, and a loss of $2.5 million in the second quarter of 2018.

Income tax expense in the second quarter of 2019 was $14.0 million, compared to income tax benefit of $7.5 million in the first quarter of 2019 and income tax expense of $7.8 million in the second quarter of 2018.

Net income attributable to Canadian Solar in the second quarter of 2019 was $62.7 million, or $1.04 per diluted share, compared to net loss of $17.2 million, or $0.29 per diluted share, in the first quarter of 2019 and net income of $15.6 million, or $0.26 per diluted share, in the second quarter of 2018.

Financial Condition

The Company had $981.0 million of cash, cash equivalents and restricted cash as of June 30, 2019, compared to $912.3 million as of March 31, 2019.

Accounts receivable, net of allowance for doubtful accounts, at the end of the second quarter of 2019 were $454.6 million, compared to $388.7 million at the end of the first quarter of 2019. Accounts receivable turnover in the second quarter of 2019 was 41 days, compared to 91 days in the first quarter of 2019.

Inventories at the end of the second quarter of 2019 were $337.8 million, compared to $385.1 million at the end of the first quarter of 2019. Inventory turnover in the second quarter of2019 was 40 days, compared to 81 days in the first quarter of 2019.

Accounts and notes payable at the end of the second quarter of 2019 were $926.2 million, compared to $934.0 million at the end of the first quarter of 2019.

Short-term borrowings and the current portion of long-term borrowings on project assets at the end of the second quarter of 2019 were $1.3 billion, compared to $1.4 billion at the end of the first quarter of 2019. Long-term borrowings at the end of the second quarter of 2019 were $462.9 million, compared to $433.5 million at the end of the first quarter of 2019.

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Total borrowings directly related to the Company’s utility-scale solar power projects were$640.5 million at the end of the second quarter of 2019, compared to $735.0 million at the end of the first quarter of 2019. Total debt at the end of the second quarter of 2019 was $1.86 billion, compared to $1.92 billion at the end of the first quarter of 2019.

Dr. Shawn Qu, Chairman and Chief Executive Officer, commented: “Canadian Solar’s strong Q2 financial performance is principally due to the resiliency of our business model and our team’s solid execution of the business plan. Our focus on achieving improved operating efficiencies with reduced manufacturing costs across global operations, while continuing to invest in R&D to ensure long-term success, puts us in the most competitive position in the Company’s history. Overall, we are incrementally more positive in the outlook for the second half of 2019 based on the improved visibility, healthy demand levels in key markets, more stable average selling prices and higher capacity utilization levels.”

Yan Zhuang, Acting Chief Executive Officer, commented: “We are pleased with the 2019 second quarter results and continue to focus on increasing shareholder value. Solar module shipments, revenue and gross margin were all above expectations, underscoring the combined strengths of the MSS and Energy businesses. The MSS business benefited from higher capacity utilization, healthy demand levels and a slightly higher average selling price than previously forecasted. We are also encouraged with the execution on the R&D roadmap, which gives us an added competitive advantage with a leadership position in sought-after high efficiency modules. During the quarter, we signed a multi-year contract with EDF Renewables North America to supply 1.8 GW of high-efficiency modules.This module supply agreement represents the largest single module supply agreement in Canadian Solar’s 18-year history and is the latest example of the trust that our clients place in our ability to execute and deliver. In the Energy business, we completed the sale of 228 MWp projects globally in the second quarter, including 134 MWp in the U.S., 68 MWp in Mexico, 20 MWp in China and 6 MWp in Namibia. We also further expanded the global late-stage, utility-scale solar power project pipeline to over 3.6 GWp as of July 31, 2019, while maintaining a portfolio of solar power plants in operation at 795.8 MWp, with an estimated resale value of approximately $1.0 billion.”

Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer, added: “Our solid execution resulted in the better than expected profitability for the second quarter. We improved the gross margin to 17.6% and delivereda net income of $1.04 per diluted share on a GAAP basis, compared to a loss of $0.29 per diluted share in the first quarter. The improved profitability was driven by lower overall manufacturing costs, higher earnings contribution from unconsolidated investees, and a foreign exchange gain. In the second quarter, as compared to the first quarter, we reduced operating expenses to 11.8% of revenues from 20.8% and reduced inventories by $47.3 million. Importantly, we generated $225.8 million in cash from operations, which allowed us to further reduce total debt and strengthen the balance sheet. We are firmly on track for continued business success as we move into the second half of 2019.”

Utility-Scale Solar Project Pipeline

The Company divides its utility-scale solar project pipeline into two categories: an early-to-mid-stage pipeline and a late-stage pipeline. The late-stage pipeline includes primarily those projects that have feed-in tariffs (FITs) or power purchase agreements (PPAs) and are expected to be built within the next four years. The Company cautions that some late-stage projects may not reach completion due to such factors as failure to secure permits and grid connection, and changes of political and economic conditions in host countries, among others.

Late-Stage Utility-Scale Solar Project Pipeline

As of July 31, 2019, the Company’s late-stage,utility-scale solar project pipeline, including those in construction, totaled approximately 3.6 GWp, with 1,565 MWp in the U.S., 508.2 MWp in Brazil, 368 MWp in Mexico, 311.8 MWp in Japan, 385 MWp in China and additional 465.2 MWp in total in Australia, Canada, Israel, Taiwan, the Philippines, Malaysia, Italy and South Korea.

In the United States,as of July 31, 2019, the Company’s late-stage, utility-scale solar project pipeline in the U.S. totaled 1,565 MWp* as detailed in the table below.

Project

MWp

Storage (MWh)

Location

Status

Expected COD

Gaskell West 2

147

N/A

California

Development

2021

Pflugerville

185

N/A

Texas

Development

2021

Texas Project

280

N/A

Texas

Development

2021

Texas Project 3

280

N/A

Texas

Development

2020

Maplewood(1)

310

N/A

Texas

Development

2021

Maplewood 2(1)

40

N/A

Texas

Development

2021

Slate

235

180

California

Development

2021

Stanford Solar Generating Station #2

88

N/A

California

Development

2021

Total

1,565

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(1)In June, the Company announced the addition of two new commercial and industrial (C&I) electricity contracts: the first with Anheuser-Busch on the 310 MWp Maplewood project, and the second with Energy Transfer on the 40 MWp Maplewood 2 project. The electricity contract with Maplewood was signed in December 2018 but announced in June 2019.

*This table does not include the 100 MWac Sunflower project located in Mississippi. In November 2018, the Company entered into a build-to-transfer agreement with Entergy Mississippi for the Sunflower project. As part of the agreement, Entergy Mississippi will serve as both project owner and electricity off-taker once the project is constructed and transferred to them. This build-to-transfer agreement is pending approval by the Mississippi Public Service Commission.

In Japan, as of July 31, 2019, the Company’s late-stage, utility-scale solar project pipeline, for which interconnection agreements and FIT have been secured, totaled approximately 311.8 MWp, including 94.4 MWp under construction and 217.4 MWp under development. In July 2019, two projects totaling 3.3 MWp reached COD.

The table below sets forth the expected COD schedule of the Company’s late-stage utility-scale solar power projects in Japan, as of July 31, 2019:

Expected COD Schedule (MWp)

2019

2020

2021 and
Thereafter

Total

61.8

62.3

187.7

311.8

In Brazil, as of July 31, 2019, the Company has a 508.2 MWp late-stage, utility-scale solar project pipeline as detailed in the table below.

Project

MWp

Location

Status

Expected
COD

Francisco Sa

114.3

*

Minas Gerais

Development

2021

Jaiba

101.6

*

Minas Gerais

Development

2021

Jaiba Expansao

25.6

Minas Gerais

Development

2021

Lavras

152.4

*

Ceara

Development

2021

Salgueiro

114.3

*

Pernambuco

Development

2020

Total

508.2


*In April 2019, the Company signed an agreement to sell its 80% interest in the 482.6 MWp of solar power projects to Nebras Power Investment Management B.V., a Dutch affiliate of Nebras Q.P.S.C. Canadian Solar will supply high efficiency bi-facial solar modules to the projects. The Company expects to complete the sale and recognize revenues over the coming months.

In Mexico, as of July 31, 2019, the Company has a 368 MWp late-stage, utility-scale solar project pipeline as detailed in the table below.

Project

MWp

Location

Status

Expected
COD

EL Mayo

124

Sonora

Development

2021

Horus

119

Aguascalientes

Development

2020

Tastiota

125

Sonora

Development

2020

Total

368

In China,as of July 31, 2019, the Company’s late-stage power pipeline was 385 MWp.

5


Solar Power Plants in Operation

In addition to its late-stage, utility-scale solar project pipeline, as of July 31, 2019, the Company had a portfolio of utility-scale, solar power plants in operation totaling 795.8 MWp. The Company records these power plants on the balance sheet as “project assets (build to sell)”, “assets held-for-sale” and “solar power systems, net (build to own)”. The proceeds of project sales recorded as “project assets (build to sell)” on the balance sheet will be recorded as revenue in the income statement once revenue recognition criteria are met. The gain or loss from the sale of projects recorded as “assets held-for-sale” and “solar power systems, net (build to own)” on the balance sheet will be recorded within “other operating income (expenses)” in the income statement.

The table below sets forth the Company’s total portfolio of utility-scale, solar power plants in operation, as of July 31, 2019 (MWp):

U.S.

Japan

China

India

Argentina

Others

Total

205.9

89.6

350.3

35.0

100.1

14.9

795.8

Manufacturing Capacity

The table below sets forth the Company’s manufacturing capacity expansion plan for 2019.

Manufacturing Capacity (MW)

31-Dec-18
(Actual)

30-Jun-19
(Actual)

31-Dec-19
(Planned)

Ingot

1,650

1,650

1,650

Wafer

5,000

5,000

5,000

Cell

6,300

7,800

9,300

Module

8,880

9,400

12,220

The Company’s manufacturing capacity expansion plan is subject to change based on market conditions.

Senior Management Appointments

At the beginning of Q3 2019, the Company appointed Ismael Guerrero Arias as Corporate Vice President and President of the Energy Group, and Ed Job as Managing Director, Investor Relations.

Mr. Guerrero brings over fifteen years of solar energy experience to Canadian Solar, most recently as President, Head of Origination for Asia of TerraForm Global, Inc. Before joining TerraForm, Mr. Guerrero served as Canadian Solar’s Vice President of Global Projects and led the Company’s Energy Group’s project development, sales and EPC activities. He was previously Director of Operations for Asia of the Global Sustainable Fund based in Singapore. Mr. Guerrero replaces Arthur Chien, who will continue to act as an advisor on special projects, and will report to Yan Zhuang, Acting Chief Executive Officer of the Company.

Mr. Job returns to Canadian Solar following a three-year sabbatical after serving as Canadian Solar’s Director of Investor Relations. Mr. Job has over twenty years of experience in the areas of strategic development, corporate finance and investor relations. He will report to Huifeng Chang, Senior Vice President and Chief Financial Officer.

Dr. Shawn Qu, Chairman and Chief Executive Officer commented: “I am pleased to welcome back Ismael and Ed, two former colleagues who know Canadian Solar well. Both have a proven track record of excellence in their fields. Their return will further strengthen the focus of our Energy business and bolster our engagement with the investment community.”

Business Outlook

The Company’s business outlook is based on management’s current views and estimates with respect to market conditions, production capacity, the Company’s order book and the global economic environment. This outlook is subject to uncertainty on final customer demand, solar project construction and sale schedules. Management’s views and estimates are subject to change without notice.

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For the third quarter of 2019, the Company expects total solar module shipments to be in the range of2.2 GW to 2.3 GW, including approximately 160 MW of shipments to the Company’s utility-scale solar power projects that may not be recognized as revenue in the third quarter of 2019. Total revenue for the third quarter is expected to be in the range of $780 million to $810 million. Gross margin for the third quarter is expected to be between 24% and 26%, reflecting the positive impact of planned higher gross margin project sales primarily in Japan and the U.S.  The aforementioned revenue forecast does not include the potential sales of a project that may be completed in the third quarter. If the transaction is closed in time, total revenue for the third quarter is expected to be in the range of $970 million to $1 billion and gross margin between 27% and 29%.

For the full year 2019, the Company now raises its guidance for total module shipments to the range of approximately 8.4 GW to 8.5 GW from the previous guidance of 7.4 GW to 7.8 GW. Total revenue for the year is expected to be in the range of $3.5 billion to $3.8 billion.

Yan Zhuang, Acting Chief Executive Officer of Canadian Solar commented: “At our recent Solar Future Forum in New York City, we highlighted Canadian Solar’s considerable technology leadership advantages, our efforts to lower the levelized cost of energy and long-term track record. Among other things, there was a lot of excitement around the completion of the transition of all our cell capacity to PERC, which should be achieved by the end of August. This will give us a further competitive advantage as bi-facial capacity is expanded to meet increasing global demand. In the Energy business, we look forward to monetizing the late-stage, utility scale project pipeline, which now stands at 3.6 GWp and the portfolio of utility-scale, solar power plants in operation, which currently stands at 795.8 MWp. There is considerable interest in Canadian Solar power plants given the unparalleled track record of consistent module performance and reliability. As part of these efforts, we expect to complete the sale of our 80% interest in the 482.6 MWp Brazil portfolio of solar power plants in the coming months.”

Mr. Zhuang added: “We remain committed to increasing shareholder value by executing on Canadian Solar’s strategy for both the MSS and Energy businesses, while strengthening the balance sheet. In addition, we have expanded our Investor Relations team to improve our shareholder communication. We strive to enhance the investment community’s understanding of the strengths of Canadian Solar’s business model, strategy and performance track record.”

Recent Developments

On July 25, 2019, Canadian Solar announced that it signed an agreement for the purchase of electricity from its 32 MWp/23 MWac Suffield solar facility with Direct Energy. The Suffield project, located in Southeast Alberta, is anticipated to be the largest solar photovoltaic (PV) facility in the province of Alberta when it enters operation in 2020.

On July 17, 2019, Canadian Solar announced that it was awarded a 51.1 MWp solar photovoltaic project in the Sixth Brazilian Federal Energy Auction (A-4) held on June 28, 2019.50% of the electricity generated will be purchased by two utilities under awarded 20-year power purchase agreements, with an average contracted price of 73.60 BRL/MWh, or approximately US$19.37/MWh, and the other 50% will be purchased under a long-term private PPA.

On July 11, 2019, Canadian Solar announced that it achieved commercial operation on its first third-party EPC project in Vietnam. Canadian Solar provided solar modules, inverter stations and EPC services in a joint venture with IPC Technique JSC and SD668 Vietnam JSC for the 15 MWp Chu Ngoc Solar Project owned by Licogi 16 JSC. The 15 MWp project reached commercial operation in June 2019.

On June 6, 2019, Canadian Solar announced that it signed a module contract with Solar Century to supply 500 MW modules to Solar Century’s two projects in Spain.

On June 4, 2019, Canadian Solar announced that its wholly-owned subsidiary, Recurrent Energy, LLC signed a 15-year power purchase agreement with Energy Transfer for 40 MWp/28 MWac of electricity from its Maplewood 2 solar project.

On June 4, 2019, Canadian Solar announced that its wholly-owned subsidiary, Recurrent Energy, LLC signed 15-year power purchase agreement with Anheuser-Busch for 310 MWp/222 MWac of electricity from its Maplewood solar project.

7


Conference Call Information

The Company will hold a conference call at 8:00 a.m. U.S. Eastern Daylight Time on August 15, 2019 (8:00 p.m., August 15, 2019 in Hong Kong) to discuss the Company’s second quarter 2019 results and business outlook. The dial-in phone number for the live audio call is +1 866-519-4004 (toll-free from the U.S.), +852-3018-6771 (local dial-in from HK) or +1 845-675-0437 (from international locations). The passcode for the call is7591587.  A live webcast of the conference call will also be available on the Investor Relations section of Canadian Solar’s website at www.canadiansolar.com.

A replay of the call will be available 2 hours after the conclusion of the call until 8:00 a.m. U.S. Eastern Daylight Time on Friday, August 23, 2019 (8:00 p.m., August 23, 2019 in Hong Kong) and can be accessed by dialing +1-855-452-5696 (toll-free from the U.S.), +852-3051-2780 (local dial-in from HK) or +1-646-254-3697 (from international locations), with passcode7591587.  A webcast replay will also be available on the investor relations section of Canadian Solar’s at www.canadiansolar.com.

About Canadian Solar Inc.

Canadian Solar was founded in 2001 in Canada and is one of the world’s largest and foremost solar power companies. It is a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions and has a geographically diversified pipeline of utility-scale solar power projects in various stages of development. Over the past 18 years, Canadian Solar has successfully delivered over 36 GW of premium-quality, solar photovoltaic modules to customers in over 150 countries. Canadian Solar is one of the most bankable companies in the solar industry, having been publicly listed on NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn or visitwww.canadiansolar.com.

Safe Harbor/Forward-Looking Statements

Certain statements in this press release regarding the Company’s expected future shipment volumes, gross margins are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the “Safe Harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as “believes,” “expects,” “anticipates,” “intends,” “estimates,” the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business and economic conditions and the state of the solar industry; governmental support for the deployment of solar power; future available supplies of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand from major markets such as Japan, the U.S., India and China; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling prices; delays in new product introduction; delays in utility-scale project approval process; delays in utility-scale project construction; delays in the completion of project sales; continued success in technological innovations and delivery of products with the features customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company’s SEC filings, including its annual report on Form 20-F filed on April 25, 2019. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. Investors should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.

FINANCIAL TABLES FOLLOW

8


Canadian Solar Inc.

Unaudited Condensed Consolidated Statement of Operations

(In Thousands of U.S. Dollars, Except Share and Per Share Data and Unless Otherwise Stated)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2019

2019

2018

2019

2018

Net revenues

$

1,036,275

$

484,719

$

650,590

$

1,520,994

$

2,075,501

Cost of revenues

853,633

377,280

491,155

1,230,913

1,772,119

Gross profit

182,642

107,439

159,435

290,081

303,382

Operating expenses:

Selling expenses

45,361

37,931

40,275

83,292

82,607

General and administrative expenses

65,735

51,423

56,433

117,159

105,208

Research and development expenses

12,133

13,166

9,134

25,298

18,633

Other operating income

(1,329

)

(1,686

)

(345

)

(3,015

)

(35,251

)

Total operating expenses

121,900

100,834

105,497

222,734

171,197

Income from operations

60,742

6,605

53,938

67,347

132,185

Other income (expenses):

Interest expense

(20,654

)

(21,699

)

(26,596

)

(42,352

)

(56,190

)

Interest income

4,452

2,029

2,883

6,481

6,459

Loss on change in fair value of derivatives

(12,489

)

(1,260

)

(7,567

)

(13,748

)

(3,093

)

Foreign exchange gain (loss)

16,415

(12,586

)

(2,454

)

3,828

(10,911

)

Investment income (loss)

2,002

545

(584

)

2,547

(584

)

Other expenses, net

(10,274

)

(32,971

)

(34,318

)

(43,244

)

(64,319

)

Income (loss) before income taxes and equity in earnings of unconsolidated investees

50,468

(26,366

)

19,620

24,103

67,866

Income tax benefit (expense)

(13,951

)

7,529

(7,766

)

(6,423

)

(11,857

)

Equity in earnings of unconsolidated investees

23,740

1,981

4,119

25,721

3,850

Net income (loss)

60,257

(16,856

)

15,973

43,401

59,859

Less: Net income (loss) attributable to non-controlling interests

(2,425

)

309

404

(2,116

)

913

Net income (loss) attributable to Canadian Solar Inc.

$

62,682

$

(17,165

)

$

15,569

$

45,517

$

58,946

Earnings (loss) per share - basic

$

1.05

$

(0.29

)

$

0.26

$

0.77

$

1.00

Shares used in computation - basic

59,547,209

59,231,227

58,826,343

59,389,975

58,690,736

Earnings (loss) per share - diluted

$

1.04

$

(0.29

)

$

0.26

$

0.76

$

1.00

Shares used in computation - diluted

60,260,410

59,231,227

59,215,958

60,272,536

59,183,822

9


Canadian Solar Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income

(In Thousands of U.S. Dollars)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2019

2019

2018

2019

2018

Net Income (loss)

60,257

(16,856

)

15,973

43,401

59,859

Other comprehensive income (net of tax of nil):

Foreign currency translation adjustment

(11,170

)

15,985

(62,068

)

4,815

(38,887

)

Gain (loss) on changes in fair value of derivatives

(3,310

)

(2,370

)

1,918

(5,680

)

7,046

Comprehensive income (loss)

45,777

(3,241

)

(44,177

)

42,536

28,018

Less: comprehensive income (loss) attributable to non-controlling interests

(1,028

)

(4,327

)

(1,292

)

(5,355

)

2,208

Comprehensive income (loss) attributable to Canadian Solar Inc.

46,805

1,086

(42,885

)

47,891

25,810

10


Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets

(In Thousands ofU.S. Dollars)

June 30,

December 31,

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

438,496

$

444,298

Restricted cash

525,835

480,976

Accounts receivable trade, net

454,645

498,231

Accounts receivable, unbilled

19,519

38

Amounts due from related parties

14,190

16,740

Inventories

337,819

262,022

Value added tax recoverable

100,505

107,222

Advances to suppliers

62,237

37,011

Derivative assets

4,246

4,761

Project assets

690,493

933,563

Prepaid expenses and other current assets

247,337

289,459

Total current assets

2,895,322

3,074,321

Restricted cash

16,620

15,716

Property, plant and equipment, net

957,905

884,986

Solar power systems, net

57,131

54,898

Deferred tax assets, net

178,165

121,087

Advances to suppliers

105,557

48,908

Prepaid land use right

64,755

65,718

Investments in affiliates

153,317

126,095

Intangible assets, net

19,305

14,903

Goodwill

1,005

Derivatives assets

3,216

Project assets

404,192

352,200

Right-of-use assets*

39,559

Other non-current assets

146,834

129,605

TOTAL ASSETS

$

5,038,662

$

4,892,658

11


Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets (Continued)

(In Thousands ofU.S. Dollars)

June 30,

December 31,

2019

2018

Current liabilities:

Short-term borrowings

$

1,080,488

$

1,027,927

Long-term borrowings on project assets - current

176,595

265,770

Accounts payable

505,840

379,462

Notes payable

420,399

369,722

Amounts due to related parties

10,023

16,847

Other payables

440,363

408,013

Convertible notes

127,428

Advance from customers

53,713

39,024

Derivative liabilities

14,481

13,698

Lease Liabilities*

17,236

Tax equity liabilities

50,428

158,496

Other current liabilities

160,943

141,970

Total current liabilities

2,930,509

2,948,357

Accrued warranty costs

49,937

50,605

Long-term borrowings

462,908

393,614

Amounts due to related parties

422

568

Derivatives liabilities

1,760

Liability for uncertain tax positions

24,118

20,128

Deferred tax liabilities

64,239

35,698

Loss contingency accruals

24,713

24,608

Lease Liabilities*

23,532

Financing liabilities

77,705

77,835

Other non-current liabilities

57,476

68,400

Total LIABILITIES

3,717,319

3,619,813

Equity:

Common shares

703,014

702,931

Additional paid-in capital

16,554

10,675

Retained earnings

667,533

622,016

Accumulated other comprehensive loss

(107,775

)

(110,149

)

Total Canadian Solar Inc. shareholders’ equity

1,279,326

1,225,473

Non-controlling interests in subsidiaries

42,017

47,372

TOTAL EQUITY

1,321,343

1,272,845

TOTAL LIABILITIES AND EQUITY

$

5,038,662

$

4,892,658


Note:* The Company adopted ASU 2016-02 — Leases (Topic ASC842) in the first quarter of 2019 using the optional transition method and elected certain practical expedients, which were permitted under the guidance ASU 2018-11, Leases (Topic 842) — Targeted Improvements. The transition guidance allowed the Company not to reassess prior conclusions related to contracts containing leases or lease classification. The adoption primarily affected the condensed consolidated balance sheet through the recognition of right-of-use assets and lease liabilities as of January 1, 2019. The adoption did not have a significant impact on the results of operations or cash flows.

12


About Non-GAAP Financial Measures

To supplement its financial disclosures presented in accordance with GAAP, the Company uses non-GAAP measures which are adjusted from the most comparable GAAP measures for certain items as described below. The Company presents non-GAAP net income and diluted earnings per share so that readers can better understand the underlying operating performance of the business before the impact of AD/CVD true-up provisions. The non-GAAP numbers are not measures of financial performance under U.S. GAAP, and should not be considered in isolation or as an alternative to other measures determined in accordance with GAAP. These non-GAAP measures may differ from non-GAAP measures used by other companies, and therefore their comparability may be limited.

Statement of Operations Data:

(In Thousands of U.S. Dollars, Except Share and Per Share Data)

Three Months Ended

Six Months Ended

June 30,
2019

June 30,
2018

June 30,
2019

June 30,
2018

GAAP net income attributable to Canadian Solar Inc.

62,682

15,569

45,517

58,946

Non-GAAP income adjustment items:

AD/CVD provision true-up

(21,617

)

(25,803

)

(21,617

)

(25,803

)

Tax impact

5,365

6,551

5,365

6,551

Non-GAAP net income (loss) attributable to Canadian Solar Inc.

46,430

(3,683

)

29,265

39,694

GAAP income per share - diluted

$

1.04

$

0.26

$

0.76

$

1.00

Non-GAAP income (loss) per share - diluted

$

0.77

$

(0.06

)

$

0.49

$

0.67

Shares used in computation - diluted

60,260,410

59,215,958

60,272,536

59,183,822

13



Webplus: CSIQ/20190815/6-K_1/1/000.htm SEC Original: a19-17227_16k.htm
FORM 6-K CANADIAN SOLAR INC. 545 Speedvale Avenue, West Guelph, Ontario, Canada N1K 1E6 Form 20-F x o o o CANADIAN SOLAR INC. Form 6-K TABLE OF 3 4



6-K 1 a19-17227_16k.htm 6-K

Table of Contents


FORM 6-K


REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2019

Commission File Number: 001-33107


CANADIAN SOLAR INC.


545 Speedvale Avenue, West Guelph,

Ontario, Canada N1K 1E6

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-Fx        Form 40-Fo

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):o


Table of Contents

CANADIAN SOLAR INC.

Form 6-K

TABLE OF CONTENTS

Signature

3

Exhibit Index

4

Exhibit 99.1

2


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CANADIAN SOLAR INC.

By:

/s/ Shawn (Xiaohua) Qu

Name:

Shawn (Xiaohua) Qu

Title:

Chairman, President and

Chief Executive Officer

Date: August 15, 2019

3


Table of Contents

EXHIBIT INDEX

Exhibit 99.1 — Press Release

4


Company Info:

Ticker: CSIQ, Company: Canadian Solar Inc., Type: 6-K, Date: 2019-08-15CIK: 0001375877, Location: A6, SIC: 3674, SIC Desc: SEMICONDUCTORS & RELATED DEVICES
Business Phone & Address:
545 SPEEDVALE AVENUE, WEST GUELPH
ONTARIO, A6 N1K 1E6

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