Canadian Solar module shipments hit record in Q4

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Canadian Solar has reported net reviews of $668.4 million for the fourth quarter and full year ended December 31, 2016, compared to $657.3 million in the third quarter of 2016.

Total solar module shipments set a record high at 1,612 MW, of which 1,581 MW were recognized in revenue.

Net revenue from the total solutions business as a percentage of total net revenue was 6.6 percent compared to 10.4 percent in the third quarter of 2016.

Gross margin was 7.3 percent including an anti-dumping and countervailing duties (AD/CVD) true-up provision of $44.1 million associated with the prior years’ module sales.

If excluding this charge, the gross margin would be 13.9 percent, compared to 17.8 percent in the third quarter of 2016, and fourth quarter guidance in the range of 11.0 percent to 16.0 percent, Canadian Solar said.

Net loss attributable to Canadian Solar was $13.3 million, compared to net income of $15.6 million, in the third quarter of 2016.

During the quarter the Company completed the sale of two solar power plants in Canada for over C$152.5 million ($115 million) and two solar power plants in China for RMB223.5 million ($32.2 million).

The Company completed three additional solar power plant sales in Canada for over C$257 million ($195.32 million) on February 1, 2017.

The Company’s portfolio of operating solar power plants was 1,195.5 MWp as of February 28, 2017, with an estimated total resale value of approximately $1.6 billion.

For the full year, total solar module shipments set a record high at 5,232 MW in 2016, compared to 4,706 MW in 2015, with 5,204 MW recognized in revenue in 2016, compared to 4,384 MW recognized in revenue in 2015, and full year 2016 guidance in the range of 5,073 MW to 5,173 MW.

Net revenue was $2.85 billion, compared to $3.47 billion in 2015, and full year 2016 guidance in the range of $2.78 billion to $2.94 billion.

Net revenue from the total solutions business was 6.9 percent of total net revenue, compared to 30.9 percent in 2015.

Net income attributable to Canadian Solar was $65.2 million, compared to $171.9 million, in 2015.

“The preliminary results for the Company are hugely different from both the past rates imposed on the Company and the AR3 preliminary results on our peers. We are vigorously contesting the preliminary results and have filed Case Brief and Rebuttal Brief for AD with DOC on January 25, 2017 and February 3, 2017, respectively. DOC currently plans to issue its final results for AR3 AD on April 21, 2017 and AR3 CVD on May 9, 2017, with the discretion to extend these dates for up to 60 days. We expect to appeal any adverse DOC findings, if any, to the U.S. Court of International Trade,” said a statement from the company.

Canadian Solar’s imports into the U.S. are subject to DOC AD/CVD orders on solar products incorporating solar cells from China (“Solar 1”) and other solar products incorporating solar cells from Taiwan (“Solar 2”).

Dr. Shawn Qu, chairman and chief executive officer of Canadian Solar, remarked: “Despite strong demand levels, our revenue for both the fourth quarter and full year was lower compared to the prior year’s periods due to the industry-wide declines in average selling price that have been persistent all year.  We will continue to work to offset any negative impact of future declines in average selling price with the introduction of new products and through our supply chain and manufacturing efficiency programs.”

Dr. Huifeng Chang, senior vice president and chief financial officer of Canadian Solar, said, “Our fourth quarter of 2016 gross margin was impacted by the significant AD/CVD true-up that was based on the preliminary Department of Commerce ruling. We plan to vigorously contest the preliminary results in the final phase of the DOC reviews. Excluding the AD/CVD adjustment, the gross margin in the fourth quarter of 2016 would have been 13.9 percent, which is inline with our guidance range of 11.0 percent to 16.0 percent. We continue to execute on our cost down model through diligent management of our existing manufacturing and supply chain assets, while enhancing our cost profile and competitive position with the selective expansion of our state-of-the-art manufacturing capacity. We expect to be even more vertically integrated and geographically diversified as we seek to maintain our industry leading cost position.”

The Company plans to increase its ingot manufacturing capacity to 1.7 GW by December 31, 2017 in order to reduce the purchase cost of ingots and thus reduce its all-in module manufacturing costs.

The Company’s wafer manufacturing capacity is expected to reach 2.0 GW by June 30, 2017 and 4.0 GW by December 31, 2017, all of which will use diamond wire-saw technology. Diamond wire-saw technology works compatibly with the Company’s proprietary and highly efficient Onyx black silicon multi-crystalline solar cell technology, reducing silicon usage and therefore manufacturing cost.

The Company’s solar cell manufacturing capacity as of December 31, 2016 was 2.44 GW. The Company restored two cell production lines, with a total capacity of 240 MW, at its Funing cell factory in December 2016. The Company expects to restore an additional 480 MW and 720 MW cell capacity at its Funing cell factory in March and June 2017, respectively. Construction of the Company’s new 850 MW cell plant in Southeast Asia was completed in February of 2017 and production started to ramp up in March of 2017.

The Company’s cell manufacturing capacity is expected to reach 4.49 GW by June 30, 2017.

The Company expects that its total worldwide internal module capacity will reach approximately 7.0 GW by June 30, 2017.

For the first quarter of 2017, the Company expects total solar module shipments to be in the range of approximately 1.15 GW to 1.2 GW, including approximately 120 MW of shipments to the Company’s utility-scale solar power projects that may not be recognized as revenue in first quarter 2017. Total revenue for the first quarter of 2017 is expected to be in the range of $570 million to $590 million. Gross margin for the first quarter is expected to be between 13 percent and 15 percent.

For the full year 2017, the Company expects total module shipments to be in the range of approximately 6.5 GW to 7.0 GW, with approximately 6.17 GW recognized in revenue. The Company expects to connect (COD) approximately 1 GW to 1.2GW of new solar projects globally in 2017. These projects are located in the U.S., Japan, China, UK, India, Brazil and Africa. Total revenue for the full year 2017 is expected to be in the range of $4.0 billion to $4.2 billion.

The company expects 50 percent to 60 percent of the total full year 2017 revenue to come from our Solar Module and Components Business, while the balance will come from our Energy Business. The Energy Business revenue will mainly come from monetization of the Company’s high quality solar power plant assets in the U.S., Japan, China, UK and Brazil. The Company expects its cost of production will decrease throughout the year as new internal wafer, cell and module capacity comes online, both inside and outside China, and the percentage of external purchases and OEM is reduced. Management expects that the increase in vertical integration along the manufacturing steps will help the Company maintain or improve its gross margin.

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