Canadian Solar Q3 Outlook Lags Consensus

Canadian Solar Inc CSIQ reported second-quarter FY21 revenue growth of 105% year-on-year to $1.43 billion at par with the analyst consensus.
An increase in module shipments and average selling price (ASP), growth in beyond-module sales, and a higher revenue contribution from battery storage shipments drove the Q/Q growth of 31%.
Total module shipments increased 26% Y/Y to 3.66 GW at the top end of 3.5 GW - 3.7 GW guidance.
Margin: The gross margin contracted 830 bps to 12.9%, exceeding thea company guidance of 9.5% - 10.5%
CSI Solar's gross margin declined 910 bps to 13.1%. Global Energy's gross margin reduced 610 bps to 4.2%.
EPS of $0.18 beat the analyst consensus loss of $(0.30).
Canadian Solar used $61 million in operating cash flow and held $1.3 billion in cash and equivalents.
Canadian Solar is likely to benefit from demand for its solar and battery storage projects driven by the low cost of capital market players. It has a global solar project pipeline of 22 GW and a global battery storage project pipeline of 19 GWh.
Outlook: Canadian Solar sees Q3 revenue between $1.2 billion - $1.4 billion below the analyst consensus of $1.62 billion. The company expects total module shipments between 3.8 GW - 4.0 GW. It considers a gross margin between 14% - 16%.
Canadian Solar reiterated FY21 revenue between $5.6 billion - $6.0 billion compared to the analyst consensus of $5.9 billion. The company lowered the total module shipment guidance from 18 GW - 20 GW to 16 GW - 17 GW.
Price Action: CSIQ shares traded lower by 0.05% at $41.46 in the premarket session on the last check Thursday.

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