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Canadian Solar (CSIQ) Q4 Earnings & Revenues Top Estimates

Zacks Equity Research

Canadian Solar Inc. CSIQ reported adjusted fourth-quarter 2018 earnings of $1.61 per share, which outpaced the Zacks Consensus Estimate of 87 cents by 85.5%.

Including one-time adjustments, the company reported earnings of $1.81 per share compared with $1.01 in the year-ago quarter.

For 2018, the company’s adjusted earnings came in at $3.28 per share, which missed the Zacks Consensus Estimate of $3.33.

Canadian Solar Inc. Price, Consensus and EPS Surprise

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

Total Revenues

In the reported quarter, total revenues of this solar cell manufacturer came in at $901 million, beating the Zacks Consensus Estimate of $874.1 million by 3.7%. However, the top line declined 18.7% from $1,108.7 million reported in fourth-quarter 2017.

For 2018, Canadian Solar generated revenues of $3.74 billion, which comfortably beat the Zacks Consensus Estimate of $3.62 billion. However, the top line declined 10.4% from $3.39 billion reported at the end of 2017.

Operational Update

Solar module shipments in the quarter totaled 1,951 megawatts (MW), up 22.7% from third-quarter’s shipment of 1,590 MW. The figure matched the upper end of management’s revised guidance of 1.90-1.95 gigawatt (GW).

Gross profit was $271.3 million, up 24.1% from the year-ago level of $218.6 million. Gross margin was 28.3% in the quarter (excluding the CVD reversal benefits). Including the benefits, gross margin was 30.1% compared with 19.7% in the fourth quarter of 2017.The year-over-year increase in gross margin was driven by the benefit of the CVD reversal and lower blended module manufacturing cost,

Total operating expenses amounted to $134.7 million, up 52.4% year over year. Selling expenses totaled $44.4 million, up 11.3% year over year. General and administrative expenses were $81.3 million, up 16.7% year over year. Research and development expenses were $15.4 million compared with $8.6 million in the year-ago period.

Interest expenses were $23 million, down from $33.5 million recorded in the year-ago period..

Financial Update

As of Dec 31, 2018, cash and cash equivalents were $444.3 million, down from $561.7 million as of Dec 31, 2017.

Long-term debt as of Dec 31, 2018 was $393.6 million, down from $404.3 million as of Dec 31, 2017.

Business Developments

During the reported quarter, Canadian Solar’s subsidiary, Recurrent Energy, signed a build-transfer agreement with Entergy Mississippi for a 100 MWac solar photovoltaic project for a base purchase price of approximately $138.4 million. Moreover, the company entered into a 10-year power purchase agreement with TrailStone GmbH for the electricity produced by a 17.6 MWp solar PV plant portfolio in Sicily, Italy

Also, Recurrent Energy signed a 25-year power purchase agreement for the 63 MWac/88 MWp Stanford Solar Generating Station #2 in the reported quarter.

Guidance

For first-quarter 2019, Canadian Solar expects shipments in the range of 1.30-1.40 GW, including approximately 50 MW of shipments to the company's utility-scale solar power projects. Total revenues are projected in the band of $450-$480 million while gross margin is expected to be in the range of 16-18%.

For 2019, Canadian Solar expects shipments in the range of 7.40-7.80 GW. Total revenues for the full year are projected in the band of $3.5-$3.8 billion. Currently, the Zacks Consensus Estimate for full-year revenues is pegged at $4.01 billion, higher than the guided range.

Zacks Rank

Canadian Solar currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Solar Releases

SunPower Corp. SPWR incurred adjusted loss of 21 cents per share in fourth-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 38 cents.

SolarEdge Technologies SEDG reported fourth-quarter 2018 adjusted earnings of 63 cents per share, which missed the Zacks Consensus Estimate of 70 cents by 10%.

First Solar Inc. FSLR reported fourth-quarter 2018 earnings of 49 cents per share, which missed the Zacks Consensus Estimate of 64 cents by 23.1%.

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