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Canadian Solar first quarter earnings and revenue beat expectations however $CSIQ guided lower for Q2. The solar space got a boost last week when California voted to require all new homes to house solar energy panels by 2025

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Earnings

Net income attributable to Canadian Solar was $43.4 million, or $0.72 per diluted share. Revenues doubled to $1.42 billion, a growth of 110.5% compared to a year ago. Revenue strength was due in part to solid total solar module shipments.  

Canadian Solar Inc. NASDAQ: $CSIQ

Market Reaction > 17.36 USD +0.57 (+3.39%) May 16, 12:01 PM EDT 

Gross margins fall

  • Gross margin fell to 10.1%, down fromo 19.7% in the fourth quarter of 2017 however $CSIQ had guided for it with a Q1 guidance range of 10.0-12.0%.
  • The sequential decrease was primarily due to the low margin associated with 309 megawatt of U.S. solar power plants sold to KEPCO, combined with higher blended module manufacturing costs.
  • There was a partial offset from an increased module average selling price in the first quarter of 2018.

Highlights

  • Net revenue from the total solutions business as a percentage of total net revenue was 64.2% compared to 36.4% in the fourth quarter of 2017. 
  • Canadian Solar completed the sale of three solar power plants in the U.S. totaling 309 MWp to the Korea Electric Power (KEP 16.72, -0.19 -1.1%) for about $720.0 million and completed the sale of 142 MWp of solar power plants in the UK for about GBP 191.2 million ($267.7 million) to Greencoat Capital LLP.

Outlook

  • Canadian Solar sees second quarter total solar module shipments to be in the range of 1.50-1.60 GW, including about 100 MW of shipments to the company's utility-scale, solar power projects that may not be recognized as revenue in second quarter 2018.
  • Canadian Solar projects total revenue for the second quarter of 2018 to be worse than market expectations in the range of $690-$730 million.
  • Gross margin for the second quarter is expected to be between 20.0-22.0%.

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