Canadian Solar (CSIQ) Posts Wider-than-Expected Q1 Loss

Solar cell manufacturer Canadian Solar Inc. CSIQ reported first-quarter 2017 adjusted loss of 10 cents per share, wider than the Zacks Consensus Estimate of a loss of a penny.

Barring the adjustments, the company posted a loss of 23 cents per share against the year-ago quarter’s earnings of 37 cents.

Total Revenue

Canadian Solar recorded total revenue of $677 million in the first quarter, which surpassed the Zacks Consensus Estimate of $580 million by 16.8%. However, revenues were down 6.2% from $721.4 million reported in the prior-year quarter.

Canadian Solar Inc. Price, Consensus and EPS Surprise

Canadian Solar Inc. Price, Consensus and EPS Surprise | Canadian Solar Inc. Quote

Of the total revenue, the American markets comprised 29.6%, Asia represented 58.2%, and the European and other markets contributed 12.2% compared with the respective year-ago contributions of 43.1%, 44.4% and 12.5%.

Operational Update

Solar module shipments in the reported quarter totaled 1,489 megawatts (“MW”), up 27% from the year-ago level of 1,172 MW. The figure also exceeded management’s guidance range of 1,150–1,200 MW.

Gross profit was $91.4 million, down 18.8% from the year-ago level of $112.5 million. Gross margin was 13.5% in the quarter compared with 15.6% in the prior-year quarter.

Total operating expenses were $93.7 million, up 26.5% year over year. Operating expenses increased due to higher research and development, and general and administrative expenses.

Selling expenses totaled $33.9 million in the reported quarter, down 2.4%. General and administrative expenses were $55.1 million, up 55%. Research and development expenses were $5.6 million, compared with $4.5 million a year ago.

Interest expenses were $24.1 million, up from the year-ago level of $16.1 million.

Financial Update

As of Mar 31, 2017, cash and cash equivalents were $519.9 million, up from $511 million as of Dec 31, 2016.

Long-term debt as of Mar 31, 2017 was $462.1 million, down from $493.5 million as of Dec 31, 2016.

Guidance

For second-quarter 2017, Canadian Solar expects shipments in the band of 1.53−1.58 gigawatts (“GW”). Total revenue is expected in the range of $615−$635 million, with gross margin of 13–15%.

Considering shipment volume expected in the first half of 2017 and the constraint of internal solar cell and module capacities in the second half of the year, Canadian Solar’s total module shipments in 2017 are now expected to be in the range of 6.0–6.5 GW, lower than the prior range of 6.5–7.0 GW.

Zacks Rank

Canadian Solar currently carries a Zacks Rank #5 (Strong Sell).

Peer Releases

First Solar Inc. FSLR reported first-quarter 2017 earnings of 25 cents a share. The Zacks Consensus Estimate was pegged at a loss of 13 cents. The reported number declined 84.9% from the prior-year figure of $1.66. It carries a Zacks Rank #3 (Hold).

SunPower Corp. SPWR reported first-quarter 2017 loss of 42 cents per share, narrower than the Zacks Consensus Estimate of a loss of 66 cents. In the year-ago period, the company had posted a loss of 42 cents.It holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

JA Solar Holdings Co., Ltd. JASO posted first-quarter 2017 adjusted earnings of 3 cents per diluted American Depositary Share (ADS). The Zacks Consensus Estimate was pegged at a loss of 2 cents. Earnings declined 91.2% from 34 cents in the year-ago period. It carries a Zacks Rank #4 (Sell).

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