Canadian Solar Misses Q2 EPS Expectations, Slashes 2024 Outlook As Market Challenges Mount

Canadian Solar Inc. CSIQ shares plunged after the company reported disappointing second-quarter 2024 results, missing bottom-line expectations.

The company reported a 30.8% year-over-year revenue decline to $1.635 billion, beating the consensus estimate of $1.59 billion. The revenue decline was driven by lower module average selling prices and lower project sales, partially offset by higher battery energy storage solutions sales.

The gross margin declined 36% YoY to $282.09 million, and the margin declined 140 bps to 17.3%. The decrease was mainly due to reduced margins from solar power and battery storage asset sales and lower module ASPs, partially offset by lower manufacturing costs.

Total module shipments reached 8.2 GW, up 30% sequentially, and remained consistent year-over-year. EPS for the quarter was $0.02, down from $0.19 last quarter and $2.39 in second-quarter 2023, missing analyst consensus of $0.11.

Operating cash outflow was $429 million, compared to $291 million in the first quarter and down from $290 million inflow in the second quarter of 2023, driven by increased project assets and accounts receivable.

As of June 30, CSIQ had a $2.6 billion e-STORAGE contracted backlog, backed by a 66 GWh of pipeline. As of June-end, Recurrent Energy’s total solar project development pipeline was 27.4 GWp, including 1.7 GWp under construction, 4.8 GWp of backlog, and 20.9 GWp of projects in advanced and early-stage pipelines.

“While we continue to navigate challenging market conditions, our focus remains on sustainable, profitable growth. We are beginning to see signs of market rationalization, as module pricing and input costs reach record lows. In line with our commitment to strategic future planning, we are adjusting certain capacity investments to ensure a resilient financial profile. We anticipate stabilization in the second half of the year,” commented Shawn Qu, Chairman and CEO.

Outlook: For the third quarter, Canadian Solar expects total revenue of $1.6 billion – $1.8 billion, versus a consensus estimate of $2.18 billion, and anticipates a gross margin of 14% – 16%.

The company expects total module shipments recognized as revenues by CSI Solar of 9.0 GW – 9.5 GW. CSI Solar expects battery storage shipments of 1.4 to 1.7 GWh, including 1.2 GWh for its projects.

2024 Outlook: CSIQ expects revenue of $6.50 billion – $7.50 billion (prior $7.3 billion – $8.3 billion) versus a consensus of $7.565 billion. The company expects total module shipments of 32 – 36 GW and CSI Solar’s battery storage shipments of 6.5 – 7.0 GWh, including around 1 GW and 2.5 GWh for its projects.

Price Action: CSIQ shares traded lower by 7.62% at $13.45 premarket at the last check Thursday.

Photo via Midjourney