GUELPH, Ontario, March 5, 2014 /PRNewswire-FirstCall/ -- Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ: CSIQ), one of the world's largest solar power companies, today announced its financial results for the fourth quarter and full year ended December 31, 2013.
Fourth Quarter 2013 Highlights
Solar module shipments were 621 MW, compared to 478 MW in the third quarter of 2013.
Net revenue was $519.5 million, compared to $490.9 million in the third quarter of 2013.
Net revenue from the total solutions business was 23.4% of total net revenue, compared to 41.1% in the third quarter of 2013.
Gross margin was 19.5%, compared to 20.4% in the third quarter of 2013.
Diluted earnings per share was $0.39, compared to diluted earnings per share of $0.56 in the third quarter of 2013.
Cash, cash equivalents and restricted cash balances at the end of the quarter totaled $679.4 million, compared to $681.7 million at the end of the third quarter of 2013.
Cash flow from operations was approximately $73.2 million, compared to $152.0 million in the third quarter of 2013.
Closed the sale of one solar power plant in Ontario, Canada valued at over C$61 million to TransCanada Corporation (TSX, NYSE: TRP) ("TransCanada").
Increased the total late-stage solar project pipeline to approximately 1.3 GW, with geographic diversification in Canada, Japan, the U.S. and China.
Full Year 2013 Highlights
Solar module shipments were 1,894 MW, compared to 1,543 MW in 2012.
Net revenue was $1,654.4 million, compared to $1,294.8 million in 2012.
Net revenue from the total solutions business was 28.6% of total net revenue, compared to 11.5% in 2012.
Diluted earnings per share was $0.63, compared to diluted loss per share of $4.53 in 2012.
Cash flow from operations was approximately $229.5 million, compared to negative $147.8 million in 2012.
Fourth Quarter 2013 Results
Net revenue for the fourth quarter of 2013 was $519.5 million, up 5.8% from $490.9 million in the third quarter of 2013 and up 76.2% from $294.8 million in the fourth quarter of 2012. Total solar module shipments in the fourth quarter of 2013 were 621 MW, compared to 478 MW in the third quarter of 2013 and 404 MW in the fourth quarter of 2012. Solar module shipments to the Chinese market represented 42.9% of total shipments in the fourth quarter of 2013, compared to less than 1% in the third quarter of 2013, and 9.9% in the fourth quarter of 2012. Solar module shipments to the Japanese market represented 19.7% of total shipments in the fourth quarter of 2013, compared to 29.5% in the third quarter of 2013 and 11.7% in the fourth quarter of 2012. Solar module shipments in the fourth quarter of 2013 included 41 MW used in the Company's total solutions business, compared to 60 MW in the third quarter of 2013 and 16 MW in the fourth quarter of 2012.
By geography, in the fourth quarter of 2013, sales to the European markets represented 5.5% of net revenue, sales to the Americas represented 32.1% of net revenue, and sales to Asia and all other markets represented 62.4% of net revenue, compared to 9.5%, 46.9% and 43.6%, respectively, in the third quarter of 2013 and 40.6%, 20.0% and 39.4%, respectively, in the fourth quarter of 2012.
§
Q4 2013
§
Q3 2013
§
Q4 2012
US$M
%§
US$M§
%§
US$M§
%
Europe§
28.7§
5.5§
46.4§
9.5§
119.7§
40.6
Americas§
167.0§
32.1§
230.3§
46.9§
58.8§
20.0
§
Asia and others
323.8§
62.4§
214.2§
43.6§
116.3§
39.4
Total§
519.5§
100.0§
490.9§
100.0§
294.8§
100.0
§
Gross profit in the fourth quarter of 2013 was $101.3 million, compared to $100.2 million in the third quarter of 2013 and $14.9 million in the fourth quarter of 2012. The slight sequential increase in gross profit was primarily due to higher module shipments and a $14 million reduction in warranty cost to reflect the general decline in module prices, which more than off-set the lower contribution from the Company's total solutions business in the fourth quarter of 2013. The year-over-year increase in gross profit was primarily due to the increase in revenue contribution from the Company's higher margin total solutions business, as well as higher module shipments and lower module manufacturing cost, which was partially off-set by a slight decline in module average selling price. Gross margin in the fourth quarter of 2013 was 19.5%, compared to 20.4% in the third quarter of 2013 and 5.0% in the fourth quarter of 2012.
Total operating expenses were $56.0 million in the fourth quarter of 2013, up 24.5% from $44.9 million in the third quarter of 2013 and down 47.4% from $106.4 million in the fourth quarter of 2012.
Selling expenses were $28.5 million in the fourth quarter of 2013, up 33.9% from $21.2 million in the third quarter of 2013 and 14.0% from $25.0 million in the fourth quarter of 2012. The sequential quarterly increase in selling expenses was primarily due to higher shipping, salary and credit insurance expenses. The year-over-year increase in selling expenses was primarily due to higher salary and bonus as well as higher shipping, credit insurance and rental expenses, partially offset by lower marketing expenses.
General and administrative expenses were $24.3 million in the fourth quarter of 2013, up 17.1% from $20.7 million in the third quarter of 2013 and down 69.0% from $78.3 million in the fourth quarter of 2012. The sequential increase in general and administrative expenses was primarily due to an asset impairment charge of $3.7 million related to the write-down of the Company's mono-crystalline ingot furnaces, as well as increased salary expenses, partially off-set by a $2.2 million decrease in bad debt expenses. The year-over-year decrease in general and administrative expenses was primarily due to provisions for bad debt and for an arbitration decision against the Company totaled approximately $61.2 million in the fourth quarter of 2012.
Research and development expenses were $3.2 million in the fourth quarter of 2013, compared to $3.0 million in the third quarter of 2013 and $3.1 million in the fourth quarter of 2012.
Operating margin was 8.7% in the fourth quarter of 2013, compared to 11.3% in the third quarter of 2013 and negative 31.0% in the fourth quarter of 2012. The sequential decline in operating margin was primarily due to the higher selling expenses, decline in gross margin as well as the asset impairment charge in the fourth quarter of 2013. The year-over-year increase in operating margin was primarily due to higher gross margin and lower operating expenses in the fourth quarter of 2013 compared to the same period in 2012.
Interest expense in the fourth quarter of 2013 was $9.9 million, compared to $11.8 million in the third quarter of 2013 and $9.9 million in the fourth quarter of 2012. The sequential decrease in interest expense was primarily due to lower bank charges in the fourth quarter of 2013.
Interest income in the fourth quarter of 2013 was $2.8 million, compared to $2.7 million in the third quarter of 2013 and $3.7 million in the fourth quarter of 2012.
The Company recorded a gain on change in fair value of derivatives of $8.9 million in the fourth quarter of 2013, compared to a loss of $1.6 million in the third quarter of 2013 and a gain of $2.3 million in the fourth quarter of 2012. Net foreign exchange loss in the fourth quarter of 2013 was $18.5 million compared to a net foreign exchange gain of $2.3 million in the third quarter of 2013 and a net foreign exchange loss of $10.8 million in the fourth quarter of 2012.
Income tax expense in the fourth quarter of 2013 was $3.7million, compared to income tax expense of $12.4 million in the third quarter of 2013 and income tax benefit of $3.3 million in the fourth quarter of 2012.
Net income attributable to Canadian Solar in the fourth quarter of 2013 was $20.9 million, or $0.39 per diluted share, compared to net income of $27.7 million, or $0.56 per diluted share, in the third quarter of 2013, and net loss of $105.0 million, or $2.43 per diluted share, in the fourth quarter of 2012.
Management's expectations in respect to profitability in the fourth quarter and the fiscal year 2013 are subject to the final ruling by the Suzhou Intermediate Court on a contract dispute between Canadian Solar and LDK as previously disclosed. If the court was to rule against Canadian Solar and order the Company to pay the award to LDK, before the company files its Annual Report on Form 20-F in April of 2014, Canadian Solar may have to make a provision for the fourth quarter of 2013 and the full year of 2013, which would impact the Company's profitability.
Financial Condition
As of December 31, 2013, the Company had $679.4 million of cash, cash equivalents and restricted cash, compared to $681.7million as of September 30, 2013.
On February 18, 2014, the Company closed a concurrent offering of 3,194,700 common shares and US$150 million in aggregate principal amount of 4.25% convertible senior notes due 2019 and received aggregate net proceeds of approximately US$255.7 million after deducting discounts and commissions but before offering expenses.
Accounts receivable, net of allowance for doubtful accounts, at the end of the fourth quarter of 2013 were $280.7 million, compared to $271.8 million at the end of the third quarter of 2013. Accounts receivable turnover was 59 days in the fourth quarter of 2013, compared to 62 days in the third quarter of 2013.
Inventories at the end of the fourth quarter of 2013 were $231.2 million, compared to $220.6 million at the end of the third quarter of 2013. Inventory turnover was 53 days in the fourth quarter of 2013, compared to 55 days in the third quarter of 2013.
Accounts and notes payable at the end of the fourth quarter of 2013 were $639.4 million, compared to $589.7 million at the end of the third quarter of 2013.
Short-term borrowings at the end of the fourth quarter of 2013 were $778.5 million, compared to $801.6 million at the end of the third quarter of 2013. Long-term debt at the end of the fourth quarter of 2013 was $151.4 million, compared to $190.5 million at the end of the third quarter of 2013. Short-term borrowings and long-term debt directly related to utility-scale solar power projects totaled $201.9 million at the end of fourth quarter of 2013.
Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, remarked: "We are very pleased to have achieved our goal to return the Company to profitability in 2013, underscoring the successful execution of our strategy of expanding our higher margin total solutions business, and seeking profitable growth in our module business, rather than simply competing on MW volume and price. We continue to capitalize on our high-visibility contracted late-stage solar project pipeline, which increased to 1.3 GW DC, even after completing construction of over 200 MW in 2013. Reflecting our geographic diversity, our late-stage solar project pipeline, including those projects currently in construction comprises approximately 477 MW DC in Canada, 329 MW DC in Japan, 164 MW DC in the U.S. and 290 MW DC in China. We also have confidence in the ongoing development of our early to mid-state project pipeline, which now exceeds 3.2 GW DC, and we hope many of these opportunities will be converted into real projects in the next 2-3 years. Finally, while our growth in 2013 was led by our total solutions business, we had a positive contribution from our solar module business due to global capacity rationalization, stable average selling prices and robust demand across many key geographies."
Michael G. Potter, Senior Vice President and Chief Financial Officer of Canadian Solar, commented: "We achieved a 19.5% gross margin in the fourth quarter of 2013, exceeding our previously upwardly revised guidance of 16% to 18%, with total solar module shipments of 621 MW. We remain focused on driving profitable growth, while prudently investing in support of our solar project pipeline growth. We exited the fourth quarter of 2013 with one of the industry's strongest and most flexible balance sheets. We have taken advantage of the favorable financing environment to raise funds and lay the foundation for future sustained, long-term profitable growth. Our strong cash position helps us to fund the development of our existing project pipeline and to take advantage of numerous other actionable project opportunities."
Utility Scale Project Pipeline Update
At the end of January of 2014, the Company had a pipeline of late stage utility-scale solar projects totaling approximately 1.3 GW DC. These projects include owned and joint-venture projects as well as projects where we provide engineering, procurement and construction (EPC) services.
In Canada, during the fourth quarter of 2013, the Company closed the sale of the Mississippi Mills project in Ontario, Canada to TransCanada for over C$61.0 million. In addition, one project, William Rutley is in commercial operation pending completion of the sale to an investor. The Company's late stage solar project pipeline in Ontario, Canada, including those in construction now stands at, approximately 477 MW DC, including owned projects and EPC service contracts, which combined represent a revenue opportunity of over C$1.7 billion once the projects are built and connected to the grid.
The following table summarizes the status of the Company's Ontario, Canada solar projects
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