Canadian Solar Inc. (CSIQ) now expects fourth quarter 2013 revenues to increase by approximately 75% on the back of a surge in demand for its solar panels. Canadian Solar, one of the world's largest solar power companies, will report the final results on Mar 5, 2014.
For fourth-quarter 2013, Canadian Solar expects revenues in the range of $510 - $520 million. The quarterly estimate is approximately 75% higher than the year-ago level at the midpoint of the guided range. As per the Zacks Consensus Estimate, the company’s quarterly revenues stand at $508 million.
Canadian Solar expects solar module shipments in the fourth quarter to increase in the range of approximately 605 - 620 megawatt (“MW”) from the previous guidance of 480 - 500 MW provided on Nov 13, 2013. The current estimate is also higher than the third-quarter 2013 shipment of 478 MW and the prior-year figure of 404 MW.
Canadian Solar now expects its quarterly gross margin in the band of 16% - 18% compared with the previous projection of 13% - 15%. The quarterly guidance now takes into account the sale of the Mississippi Mills project in Ontario, Canada to TransCanada Corp. (TRP - Snapshot Report) which was not included in the previous projection. The company sold the project for over $57.4 million (C$61.0 million).
For fiscal 2013, Canadian Solar provided estimates for solar module shipments in the band of 1,878 - 1,893 MW. The annual projection is higher than the year-ago figure of 1,543 MW.
In addition, Canadian Solar expects to report profit on a U.S.-GAAP basis in the fourth quarter as well as in 2013. The company will report in the green for the first time since 2010.
The projections are subject to the final verdict of the Suzhou Intermediate Court on a contract dispute between Canadian Solar and LDK Solar Co., Ltd. . Canadian Solar’s quarterly and fiscal year performance may be negatively impacted if the court’s verdict goes against the company and the award is allotted to LDK Solar.
We note that the solar products and services provider is progressing well on its utility-scale solar projects as well as other solar projects where it acts as an Engineering, Procurement and Construction contractor. The company caters to a geographically diversified customer base, spread across Germany, Spain, the U.S., and the emerging solar markets in France, India, Italy, South Korea, Canada, Japan and China.
Canadian Solar has a strong order book and wins orders from both domestic as well as international clients at regular intervals. Recently, Canadian Solar’s subsidiary Canadian Solar Solutions Inc. signed a contract with a fund managed by BlackRock, Inc. (BLK) to sell Oro-Medonte, a utility scale solar power plant, to the latter.
On Jan 29, 2014, the company had announced that it will provide solar photovoltaic ("PV") modules for a 2.1-MW solar power plant at the Delhi International Airport in India. We believe a steady flow of contracts will enable the company to beat estimates while improving future performance.