Why Canadian Solar Shares Are Trading Lower Today

Canadian Solar Inc CSIQ reported a 4.5% year-on-year decline in third-quarter FY23 revenue to $1.85 billion, missing the consensus estimate of $2.03 billion. 

The 22% sequential revenue decrease reflects lower project sales during the quarter and a decline in the average selling price of modules, partially offset by higher solar module shipment volumes.

Total module shipments reached 8.3 GW, up 39% Y/Y and 1% sequentially. Gross profit decreased by 15% Y/Y to $308 million, with the margin contracting by 208 basis points to 16.7%.

Operating income fell 6.4% Y/Y to $83.02 million, with the margin contracting 10 basis points to 4.5%. 

EPS was $0.32, down from $2.39 last quarter and $1.12 in 3Q22.

Canadian Solar generated $494.62 million in operating cash flow for the first nine months, compared to $521.22 million a year ago. The company held $2.99 billion in cash and equivalents at the end of the quarter.

CSIQ has a $2.6 billion e-STORAGE contracted backlog as of November 14, 2023, with half expected for delivery in 2024. These deliveries will likely significantly increase gross and net margins, aided by the favorable cost environment.

Recurrent Energy expanded its total development pipeline to 26 GWp of solar and 55 GWh of battery energy storage as of September 30, 2023.

Dr. Shawn Qu, Chairman, and CEO, commented, "We continued to make strategic, long-term investments in key premium markets, including the recent announcement of our 5 GW solar cell facility in Jeffersonville, Indiana, and our 5 GW solar wafer facility in Thailand, both of which will serve U.S. customers. These will complement our 5 GW solar module facility in Mesquite, Texas, set to start production in a few weeks."

Also Read: Canadian Solar Invests Over $800M In Indiana, Plans For 1,200 High-Tech Jobs By 2025

Outlook: For Q4 2023, Canadian Solar expects total revenue of $1.6 billion to $1.8 billion, versus a consensus estimate of $2.65 billion, and anticipates a gross margin of 14%-16%. The company expects total module shipments recognized as revenues by CSI Solar to be in the range of 7.6 GW to 8.1 GW, with total battery energy storage shipments of 1.4 GWh to 1.5 GWh.

For FY23, CSIQ expects total module shipments to be 42 GW to 47 GW and total battery energy storage shipments of 6.0 GWh to 6.5 GWh.

Price Action: CSIQ shares are trading down 3.53% at $20.23 on Tuesday.