Canada headquartered solar cell and module producer Canadian Solar Inc., improved its annual revenues in Q3/2021 by 34% to $1.23 billion thanks to increase in module shipments and higher ASPs, while declining 14% QoQ due to lower revenues from pre-construction project sales or projects sold at notice to proceed (NTP).
Higher module ASPs, manufacturing efficiency gains high margin contribution from project sales and a benefit from US anti-dumping (AD) and countervailing duty (CVD) were cited as reasons that helped the company report gross margin of 18.6%, exceeding the guidance of 14% to 16%.
Shipment
During the reporting quarter, it shipped 22% more modules annually and 6% higher than it sold in Q2/2021, with 3.87 GW including 173 MW shipped to its own utility scale projects. Top 5 markets were listed as China, the US, Brazil, Germany and Thailand.
At the end of September 30, 2021, Canadian Solar had 23.8 GW of total project pipeline including 5.0 GW of backlog and 17.2 GW of earlier stage pipeline. At the same time, it had 2.9 GWh of battery storage projects under construction and 21 GWh of total storage development pipeline.
Citing challenging operational environment due to global logistics bottleneck, rising material costs and power curtailment in China adversely affecting production, Canadian Solar's management admitted it is deliberately walking away from low priced orders, instead it is raising prices more aggressively to prioritize margins.
That's not all, it is also 'selectively slowing capacity expansion plans to optimize utilization rates'.
Manufacturing plans
At the end of Q3/2021, Canadian Solar had 5.1 GW, 9.5 GW, 13.3 GW and 22.1 GW of annual ingot, wafer, cell and module production capacity, respectively, which it aims to increase to 5.4 GW, 11.5 GW, 13.9 GW and 23.9 GW by the end of 2021.
In 2022, the management has guided to increase its ingot production capacity to 10.1 GW, and module capacity to 32 GW, while not increasing wafer and cell capacities through its principal operating subsidiary CSI Solar.
Guidance
In Q4/2021, Canadian Solar expects to ship 3.7 GW to 3.9 GW of solar modules, including some 250 MW for its own projects, expecting to earn revenues of $1.5 billion and $1.6 billion. Gross margin is likely to be between 14% to 16%.
For 2021, it has further lowered module shipment guidance to 14.4 GW to 14.6 GW, down from 16 GW to 17 GW it guided in Q2/2021 which itself was a drop from 18 GW to 20 GW forecast (see Canadian Solar Shipped 3.7 GW Modules In Q2/2021). Battery storage shipment are guided to be between 840 MWh and 860 MWh, project sales within 1.5 GW and 2.1 GW range along with revenues worth $5.2 billion and $5.3 billion (previously $5.6 billion to $6.0 billion). Gross margin for the year should between 15.6% and 16.2%.
However, in 2022 expecting significant growth Canadian Solar has guided for its annual module shipments to grow over 45% to between 20 GW and 22 GW, battery storage shipments as 1.4 GW to 1.5 GWh, project sales of 2.4 GW and 2.9 GW, and revenues adding up to $6.5 billion and $7.0 billion.
Philip Shen of Roth Capital Partners called the 2022 guidance 'strong yet conservative', and that the company will benefit from the recent court ruling regarding exclusion of imported bifacial solar modules to the US (see Once Again, No Section 201 For Bifacial Panels).