GUELPH, Ontario — Canadian Solar Inc. (NASDAQ: CSIQ) today announced its financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 Highlights
- Total solar module shipments were 850 MW, of which 809 MW were recognized in revenue, compared to 1.03 GW recognized in revenue in the first quarter of 2015, and second quarter shipment guidance in the range of 950 MW to 1,000 MW.
- Net revenue was $636.7 million, compared to $860.9 million in the first quarter of 2015 and second quarter guidance in the range of$570 million to $620 million.
- Net revenue from the total solutions business as a percentage of total net revenue was 30.6% compared to 35.9% in the first quarter of 2015.
- Gross margin was 15.2%, compared to 17.8% in the first quarter of 2015 and second quarter guidance in the range of 13.0% to 15.0%.
- Net income attributable to Canadian Solar was $17.9 million, or $0.31 per diluted share, compared to $61.3 million, or $1.04 per diluted share, in the first quarter of 2015.
- Cash, cash equivalents and restricted cash balances at the end of the quarter totaled $1.04 billion, the same as at the end of the first quarter of 2015.
- Net cash generated from operating activities was $29.1 million, compared to $124.9 million in the first quarter of 2015.
- During the quarter, the Company closed the sale of one solar power plant in Canada and connected three solar power plants to the grid in Japan.
Second Quarter 2015 Results
Net revenue for the second quarter of 2015 was $636.7 million, down 26.0% from $860.9 million in the first quarter of 2015 and up 2.1% from $623.8 million in the second quarter of 2014. Total solar module shipments in the second quarter of 2015 were 850MW, of which 809 MW were recognized in revenue, compared to 1.03 GW recognized in revenue in the first quarter of 2015 and 646 MW recognized in revenue in the second quarter of 2014. Solar module shipments recognized in revenue in the second quarter of 2015 included 90 MW used in the Company’s total solutions business, compared to 124 MW in the first quarter of 2015 and 49 MW in the second quarter of 2014.
By geography, in the second quarter of 2015, sales to the Americas represented 47.6% of net revenue, sales to Asia and other markets represented 46.5% of net revenue, and sales to Europe represented 5.9% of net revenue, compared to 48.7%, 33.6% and 17.7%, respectively, in the first quarter of 2015 and 55.5%, 29.8% and 14.7%, respectively, in the second quarter of 2014.
Gross profit for the second quarter of 2015 was $96.5 million, compared to $153.0 million in the first quarter of 2015 and $118.2 million in the second quarter of 2014. Gross margin in the second quarter of 2015 was 15.2%, compared to 17.8% in the first quarter of 2015 and 19.0% in the second quarter of 2014. The sequential decrease in gross margin was primarily due to one-time cumulative catch-up countervailing and anti-dumping duties due to the new U.S. Department of Commerce ruling and both lower margin and lower contribution from the Company’s total solution business inCanada.
Total operating expenses were $64.1 million in the second quarter of 2015, down 13.7% from $74.2 million in the first quarter of 2015 and up 26.8% from $50.5 million in the second quarter of 2014.
Selling expenses were $32.2 million in the second quarter of 2015, down 21.1% from $40.8 million in the first quarter of 2015 and up 9.4% from $29.5 million in the second quarter of 2014. The sequential decrease was primarily due to lower shipment volume and lower unit shipping costs, as well as lower sales commission and marketing expenses. The year-over-year increase was primarily due to higher selling expenses to support higher shipment volume.
General and administrative expenses were $27.5 million in the second quarter of 2015, down 6.9% from $29.5 million in the first quarter of 2015 and up 51.5% from $18.2 million in the second quarter of 2014. The sequential decrease was primarily due to the recognition of an insurance gain associated with the cell factory fire incident in early 2014, as well as a reduction in bad debt provision and various professional services expenses, partially offset by the consolidation of Recurrent Energy’s general and administrative expenses of $5.9 million for the second quarter. The year-over-year increase was primarily due to higher labor costs and an increase in various professional fees and expenses, as well as the consolidation of Recurrent Energy’s general and administrative expenses.
Research and development expenses were $4.3 million in the second quarter of 2015, compared to $3.9 million in the first quarter of 2015 and $2.9 million in the second quarter of 2014.
Income from operations was $32.5 million in the second quarter of 2015, compared to $78.7 million in the first quarter of 2015, and $67.7 million in the second quarter of 2014. Operating margin was 5.1% in the second quarter of 2015, compared to 9.1% in the first quarter of 2015 and 10.9% in the second quarter of 2014.
Non-cash, depreciation and amortization charges were approximately $22.7 million in the second quarter of 2015, compared to $22.0 million in the first quarter of 2015, and $19.8 million in the second quarter of 2014. Non-cash, equity compensation expense was $2.0 million in the second quarter of 2015, compared to $1.2 million in the first quarter of 2015, and $1.3 million in the second quarter of 2014.
Interest expense was $12.9 million in the second quarter of 2015, compared to $11.2 million in the first quarter of 2015 and $12.8 million in the second quarter of 2014. The sequential increase was primarily due to higher bank borrowings.
Interest income in the second quarter of 2015 was $4.1 million, compared to $4.3 million in the first quarter of 2015 and $3.6 million in the second quarter of 2014.
The Company recorded a gain on change in fair value of derivatives of $1.6 million in the second quarter of 2015, compared to a gain of $7.9 million in the first quarter of 2015 and a loss of $3.2 million in the second quarter of 2014. Foreign exchange loss in the second quarter of 2015 was $4.4 million compared to foreign exchange loss of $1.0 million in the first quarter of 2015 and foreign exchange gain of $7.6 million in the second quarter of 2014.
Income tax expense in the second quarter of 2015 was $2.7 million, compared to income tax expense of $19.7 million in the first quarter of 2015 and income tax expense of $8.3 million in the second quarter of 2014.
Net income attributable to Canadian Solar in the second quarter of 2015 was $17.9 million, or $0.31 per diluted share, compared to net income of $61.3 million, or $1.04 per diluted share, in the first quarter of 2015, and net income of $55.8 million, or $0.95 per diluted share, in the second quarter of 2014.
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