Canadian Solar Inc. (Nasdaq; CSIQ), a Chinese solar manufacturer, reported preliminary unaudited Q1 financial results.
Revenues almost doubled to $17.5 million, including $2.8 million silicon material sales, compared to $8.8 million for Q106.
Net loss was almost cut in half to $3.9 million, or $0.14 per diluted share, compared to $7.1 million, or $0.46 per diluted share, for Q106. the first quarter of 2006.
Dr. Shawn Qu, Chairman and CEO said, “Q1 developed as expected, with year-over-year revenue growth, an improvement in blended gross margin and stable pricing compared to Q4 2006. During the quarter, we took the opportunity to reorganize our supply chain to position the Company for success in 2007. In addition, we increased our sales contracts worldwide. The additional sales and marketing resources we added continue to pay off. We saw a clear trend of market demand moving towards high market reputation and financially strong module manufacturers, like CSI. This led to a much higher level of customer activity starting in March 2007, which we expect will further build throughout the year.
CSI continues to ramp up its in-house solar cell manufacturing, while also maintaining long-term strategic purchasing from a few selected supply partners. We believe this balanced supply approach creates a win-win situation and provides us with the ability to respond quickly to increased demand from our customers. We continue to build CSI’s brand as a trusted supplier of solar products based on product design, performance and customization, as well as after-sale services.”
Bing Zhu, Chief Financial Officer, said, “We made good progress in Q1. In line with normal seasonal patterns and the Chinese New Year factory shut down, Q1 2007 started slowly but picked-up in March. The European market, which was weak in Q4 2006, rebounded strongly and represented over 69% of our sales in Q1 2007, compared to about 45% in Q4 2006.
We continue to diversify our geographic reach. Sales to South America represented almost 11% of our revenues in Q1 from nil in previous quarters. In Q2 2007, we expect to also begin selling into Italy and Korea. We are pleased that blended gross margin improved in Q1 2007 compared to Q4 2006 and we expect this trend to continue in Q2 2007 and through the year as we start to benefit from higher solar module shipments, lower materials costs and the continued ramp-up of our in-house cell production lines.”
On April 15, CSI officially opened its first solar cell manufacturing facility, with a manufacturing area of about 10,000 sq meters in Suzhou, China. CSI’s first solar cell line, which was installed on February 10, 2007, approximately one month ahead of schedule, has begun producing solar cells. The Company expects to complete Line 2 on schedule at the end of June. Lines 3 and 4, originally planned for completion in December, will be installed on or ahead of schedule, which would bring the total cell manufacturing capacity to 100MW. The new cell facility, which took just seven months from ground breaking to production
Based on current market conditions and the CSI Solar’s order backlog and production capacity, the Company expects net revenues for the second quarter of 2007 to be $55-$58 million, with cash operating income, determined on a non-GAAP basis by excluding share based compensation and other non-cash items, in the range of $1.5 million to $1.6 million. Blended average solar cell cost is expected to decrease in Q2 compared with Q1, with additional cost reductions through 2007.
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