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Canadian Solar Inc. (CSIQ - Analyst Report) reported first quarter 2013 results with adjusted loss per share of 10 cents much narrower than a loss of 49 cents in the first quarter of 2012 and a loss of $1.01 in the fourth quarter of 2012.

Operational Performance

In the reported quarter, Canadian Solar posted revenues of $263.6 million, beating the Zacks Consensus Estimate of $247 million. Revenues were down from $325.8 million in the first quarter of 2012.

Quarterly Highlights

Total solar module shipments in the first quarter were 340 megawatt (MW), compared with 404 MW in the fourth quarter of 2012 and 343 MW in the first quarter of 2012. Total solar module shipments included 23 MW from the company's total solutions business, compared with 16 MW in the fourth quarter of 2012 and 7 MW in the first quarter of 2012.

Solar module shipments to Japan were up 75.9% sequentially and represented 24.5% of total solar module shipments.

Revenues from the European market in the reported quarter accounted for 24.7% of total sales, down from 40.6% in fourth quarter 2012. Also, in real terms, revenues from the European market decreased to $65 million from $119.7 million in fourth quarter of 2012.

Revenues from America accounted for 17.9% of total sales, down from 20% in fourth quarter 2012. The company generated $47.1 million in revenues from America in the reported quarter compared with $58.8 million in fourth quarter 2012.

Asia and others accounted for $151.5 million of revenues, compared with $116.3 million in the fourth quarter of 2012. This represents 57.4% of total sales versus 39.4% in fourth quarter of 2012.

Gross profit in the first quarter of 2013 was $25.6 million, compared with $14.9 million in the fourth quarter of 2012 and $25.1 million in the year-ago period. The sequential increase reflects stable average selling price and lower inventory write-offs partially offset by lower shipment volume. The year-over-year increase is attributable to lower manufacturing cost partially offset by the decline in average selling price during the period.

Total operating expenses were $7.5 million, compared with $106.4 million in the fourth quarter of 2012 and $38.5 million in the first quarter of 2012.

Selling expenses were $18.8 million, down 24.8% from $25 million in fourth quarter 2012 and 7.6% from $23.3 million in the first quarter of 2012. Research and development expenses were $2.4 million, down 21.9% from $3.1 million in the fourth quarter of 2012 and down 19.4% from $3.0 million in the first quarter of 2012.

Financial Condition

Canadian Solar reported cash, cash equivalents and restricted cash of $606.1 million at the end of the reported period, up from $564.3 million as of Dec 31, 2012. Long-term debt declined to $205.3 million from $214.6 million as of Dec 31, 2012.

Guidance

For the second quarter of 2013, the company expects photovoltaic module shipments in the range of approximately 380 MW to 420 MW, with gross margin expected to be between 9% and 11%.

For the full year 2013, the company expects photovoltaic module shipments in the range of approximately 1.6 gigawatt (GW) to 1.8 GW.

At the Peer

Recently, ReneSola Ltd. (SOL - Analyst Report) reported loss per American Depositary Share (“ADS”) of 45 cents per share, wider than the Zacks Consensus Estimate of a loss of 39 cents per ADS. However, its first-quarter loss narrowed from the year-ago quarterly loss of 47 cents per ADS due to lower operating expenses and higher solar module shipments.

Our Take

Canadian Solar Inc. is one of the world's largest solar companies. The company is progressing with its own utility-scale solar projects as well as other solar projects, which it is constructing as an Engineering, Procurement and Construction contractor. Also, the company caters to a geographically-diverse customer base spread across its key markets in Germany, Spain and the U.S., as well as emerging market opportunities in France, the Czech Republic, Italy, South Korea, Canada, Japan and China.

Zacks Rank

Stocks worth considering in the solar space are Trina Solar Limited (TSL - Snapshot Report) and JA Solar Holdings Co., Ltd. (JASO - Analyst Report), both with a Zacks Rank #2 (Buy).

 

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