Thursday, May 15, 2008

Canadian Solar Reports First Quarter 2008 Results

Q108 Results
-- Q108 net revenues of $171.2 million, a 34% increase over Q407 net revenues of $127.5 million -- Q108 net income per diluted share of $0.61, compared to Q407 net income per diluted share of $0.21
-- Q108 shipments of 41.8MW, compared to Q407 shipments of 37.8MW 2008 Outlook and Developments
-- Reiterating full year 2008 net revenue guidance of $650-$750 million on shipments of 200-220MW, excluding e-Module shipments.
-- Production of e-Modules, a medium power module product using 100% upgraded metallurgical grade (UMG) silicon, began in March and shipments started in May.
-- Phase Two of the solar cell plant on track with the installation of an additional 150MW of annual nameplate cell capacity starting in May
-- Phase One of our ingot and wafer plant in Luoyang on track with installation of 60MW annual nameplate wafer capacity starting in May

JIANGSU, China, May 13 /Xinhua-PRNewswire/ -- Canadian Solar Inc. ("theCompany," "CSI" or "we") (Nasdaq: CSIQ) today reported its preliminary unaudited US GAAP financial information for the first quarter ended March31, 2008.

Net revenues for the quarter were $171.2 million (including $2.2million of silicon material sales), compared to net revenues of $17.5million for the first quarter of 2007 (including $2.8 million of silicon materials sales) and $127.5 million for the fourth quarter of 2007(including $2.4 million of silicon materials sales). Net income for the quarter was $19.0 million, or $0.61 per diluted share, compared to a netloss of $3.9 million, or $0.14 per diluted share, for the first quarter of2007 and net income of $5.9 million, or $0.21 per diluted share, for the fourth quarter of 2007. If share-based compensation expenses of $2.2million were excluded, non-GAAP net income for the quarter would have been$21.2 million, or $0.65 per diluted share.

Dr. Shawn Qu, Chairman and CEO of CSI, commented: "I am very pleased with our first quarter results and proud to say that our team has now achieved four consecutive quarters of revenue growth and profit margin improvement. Our impressive performance in the first quarter was due to aresult of robust market demand for our products, strong pricing, effective management of foreign exchange exposure, strong operational execution of our flexible vertical integration business model, and our balanced supply strategy, which allowed us to increase our product delivery despite ageneral market shortage of silicon materials. In Q1, we significantly increased our internal solar cell production, which resulted in a positive impact on our bottom line. Our new Changshu solar module plant was completed on schedule during the quarter. This gave us the ability to quickly increase shipments in March following the severe weather conditions earlier in the year. Deliveries from most of our strategic suppliers are now generally on track."

Bing Zhu, CFO of CSI, noted: "We delivered on our promise to improve our gross margins and we were able to increase diluted earnings per shareby close to 200% compared with Q4 2007 due to our disciplined financial management and continued operational efficiency. The significant upside to our bottom line was mainly contributed by three factors -- strong pricing, the strong Euro vs. USD, and our internal cost cutting. Although the large foreign exchange gain is likely a one-time event, we believe that the other factors will remain positive, and will, therefore, help us maintain asimilar level of profitability going forward."

Revenue by Geography (US $ millions)
Q108 Q407 Q107
Region Revenue % Revenue % Revenue %
Europe 167.6 97.9% 124.1 97.3% 12.1 69.4%
Asia 2.4 1.4% 2.9 2.3% 3.3 18.9%
Americas 1.2 0.7% 0.5 0.4% 2.1 11.7%
Total Net 171.2 100% 127.5 100% 17.5 100%

Note: Asian revenue included $2.2 million of silicon materials sales in the first quarter of 2008 and $2.4 million of silicon materials sales in the fourth quarter of 2007.

Recent Developments

We commenced commercial production of e-Modules, a cost-effective medium power solar module product using 100% upgraded metallurgical grade(UMG) silicon, in March. We converted one of our solar cell lines and dedicated it to UMG cells in early April and ramped up to full production shortly thereafter. We have produced approximately one MW of UMG cells over the past four weeks. We believe that we have so far achieved the technical and economic parameters which we preset for the ramp up phase. Delivery of e-Modules to our European and US customers started in early May. We believe that we are on track to achieve our prior estimate of shipping 30-40MW of e-Modules in 2008.


Dr. Qu continued: "We also believe that we are on track to achieve our prior guidance of shipping 200 -220MW of regular solar modules in 2008, not including shipments of e-Modules, and to continue our record of quarter over quarter revenue growth. We intend to continue our long-term and proven supply chain strategy of combining internal solar wafer and cell production with direct purchasing from a select number of long-term strategic wafer and cell suppliers. We expect that many of the positive market trends that we witnessed in Q1 will continue for the rest of the year, and believe that the gross margin that we were able to achieve in Q1 bodes well for our ability to achieve our 13% - 15% gross margin target for the year."

Net revenue for Q208 is expected to be in the range of $185 - $190 million, with non-GAAP net income, determined by excluding share based compensation expenses, expected to be in the range of $17 - $18 million. Shipments for Q208 are expected to be approximately 45MW, including some tolling business.

Looking ahead to 2009, if all of our long-term supply contracts are fully implemented, we will have access to 200MW of regular polysilicon and wafers. Based on our strong position as a worldwide photovoltaic solar module supplier and the expansion plans of our strategic partners, we believe that we should be able to secure an additional 200MW of regular polysilicon and wafers, thereby enabling us to produce approximately 400MW of regular photovoltaic solar modules. In addition, we expect to produce100 - 150MW of UMG silicon products in 2009.

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