Canadian Solar Turns To Profit In Q4; But Sees Q1 Revenues Below View

(RTTNews) - Solar power products company Canadian Solar Inc. (CSIQ) on Wednesday reported a turnaround to profit in the fourth quarter, helped by strong revenue growth and higher margins. Revenue for the quarter beat analysts' expectations.

Looking ahead, the company forecast revenue for the first quarter below Street estimates, citing severe winter conditions in North America, but forecast fiscal 2014 revenues in line with their expectations. Shares of the company are down almost 4 percent in pre-market trades.

For the fourth quarter, net income attributable to the company was $20.95 million or $0.39 per share, compared to net loss of $104.99 million or $2.43 per share in the year-ago period. On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.41 per share for the quarter. Analysts' estimates typically exclude special items.

The company recorded a gain on change in fair value of derivatives of $8.9 million in the latest quarter, compared to gain of $2.3 million in the year-ago period. Net foreign exchange loss in the quarter was $18.5 million, compared to net foreign exchange loss of $10.8 million in the prior-year quarter.

Net revenue for the quarter surged 76 percent to $519.47 million from $294.84 million in the year-ago period and beat analysts' consensus revenue estimate of $512.95 million.

Total solar module shipments in the quarter rose 54 percent to 621 MW from 404 MW in the same period last year.

In the latest quarter, solar module shipments to the Chinese market and the Japanese market represented 42.9 percent and 19.7 percent of total shipments respectively. The Chinese and the Japanese markets represented 9.9 percent and 11.7 percent of total solar module shipments respectively in the year-ago period.

Gross margin for the quarter rose to 19.49 percent from 5.04 percent in the year-ago quarter, primarily due to the increase in revenue contribution from the company's higher margin total solutions business, as well as higher module shipments and lower module manufacturing costs. These were partly offset by a slight decline in module average selling price.

Canadian Solar aid its management's expectations in respect to profitability in the fourth quarter and fiscal year 2013 are subject to the final ruling by the Suzhou Intermediate Court on a contract dispute between the company and LDK as previously disclosed.

If the court was to rule against Canadian Solar and order the company to pay the award to LDK, before the company files its annual report on Form 20-F in April 2014, Canadian Solar may have to make a provision for the fourth quarter and fiscal 2013, which would impact the company's profitability.

Looking ahead to the first quarter of 2014, Canadian Solar forecasts module shipments in a range of about 470 MW to 490 MW and revenue in a range of $415 million to $430 million, with gross margin expected between 14 percent and 16 percent. Analysts expect the company to report revenues of $517.78 million for the quarter.

Canadian Solar expects revenue and gross margin in the first quarter to be adversely affected by the severe winter conditions in North America, which delayed construction and recognition of about $100 million in revenue from some of its utility-scale projects in Canada. The company expects to recognize this revenue in the second and third quarters of 2014.

For fiscal 2014, Canadian Solar forecasts annual module shipments of 2.5 GW to 2.7 GW, including 400 MW to 500 MW of project recognition. In addition, the company expects to build and hold up to 250MW of project assets during 2014.

The company forecasts full-year net revenue in a range of about $2.7 billion to $2.9 billion, with approximately 50 percent of revenue being derived from its total solutions business. Analysts expect revenue of $2.88 billion for the year.

CSIQ closed Tuesday's trading at $43.67. In Wednesday's pre-market, the stock is down $1.72 or 3.94 percent to $41.95.