Canadian Solar Beats Estimates

Canadian Solar Inc. (CSIQ - Analyst Report) reported adjusted EPS of 69 cents in the third quarter of fiscal 2009, which pushed past the Zacks Consensus Estimate of 52 cents per share. Also, adjusted EPS for the quarter was far higher than the year-ago quarter’s 31 cents.

Canadian Solar net revenues in the reported quarter escalated to $213.1 million, compared to net revenues of $114.2 million in the second quarter of 2009 and $252.4 million in the year-ago quarter. In the reported quarter, following industry trends, the company witnessed a large spike in shipments, which rose to 102.6 MW, compared to shipments of 48.2 MW in the second quarter of 2009 and 60 MW in the year-ago quarter.

The reported quarter witnessed a huge demand for solar products, with a number of companies setting new peaks of volume sales. JA Solar Holdings Co. Ltd. (JASO - Analyst Report) and ReneSola Ltd. (SOL - Analyst Report) also set individual company records of higher shipments during the quarter.

Revenue from the European market in the reported quarter accounted for 87.6% of the company’s sales, marginally down from 88.1% in the year-ago quarter. Also, in real terms, revenue from the European market decreased to $186.6 million in the reported quarter from $222.4 million in the year-ago quarter. However the European market witnessed 179% growth in revenues in the reported quarter when compared to only $66.9 million generated in the second quarter of 2009.

Sales from Asia decreased marginally both in real and percentage terms to $13.6 million and 6.4% of sales in the reported quarter from $16.4 million and 6.5% of sales in the year-ago quarter. Similarly, sales from the American market decreased to $12.9 million compared to $13.5 million in the prior-year quarter.

Canadian Solar reported cash and cash equivalents of $103.1 million at the end of first nine months of fiscal 2009 from $115.7 million at fiscal year end 2008. Long-term borrowings decreased to $30.8 million at the end of the first nine months of fiscal 2009 from $45.4 million at the end of fiscal 2008.

Outlook

Canadian Solar reaffirmed its fourth quarter 2009 guidance of shipment range of 128 MW - 138 MW, with gross margins expected to be in the high-teens on a percentage basis. For fiscal 2009, the company expects shipments to be in the range of 295 MW to 305 MW. Fiscal 2010 shipments are expects to be in the range of 600 MW to 700 MW. The company plans to increase its solar module production capacity from existing 820 MW to 1 GW by the end of April 2010, and to increase its internal cell production capacity from 420 MW to 700 MW by June 2010.

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