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Canadian Solar Shares Shine on Sunny Quarterly Earnings

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Canadian Solar, which operates a portfolio of utility-scale solar operated power plants, reported higher Q2 earnings.

This morning one of the world's largest solar power companies, Canadian Solar Inc. (CSIQ:NASDAQ), announced financial results for the second quarter ended June 30, 2019.

In the release the firm reported significantly higher net revenue in Q2/19 of $1,036.3 million compared to $484.7 million in Q1/19, and $650.6 million in Q2/18. The company advised that the sequential increase was primarily due to higher solar module shipments and higher revenue from the sale of solar power plants. Total solar module shipments in Q2/19 were 2,143 MW, compared to 1,575 MW in Q1/19 and prior Q2/19 guidance provided of 1.952.05 GW.

Gross profit in Q2/19 was $182.6 million, compared to $107.4 million in Q1/19 and $159.4 million in Q2/18. Income from operations in Q2/19 was $60.7 million, compared to $6.6 million in Q1/19, and $53.9 million in Q2/18. Net income in Q2/19 was $62.7 million, or $1.04 per diluted share, compared to a net loss of $17.2 million, or $0.29 per diluted share in Q1/19 and net income of $15.6 million, or $0.26 per diluted share in Q2/18. As of June 30, 2019, the company had $981.0 million of cash, cash equivalents and restricted cash on its balance sheet, compared to $912.3 million on March 31, 2019.

Q2/19 accounts receivable turnover in Q2/19 improved to 41 days, compared to 91 days in Q1/19, and inventory turnover in Q2/19 was 40 days, compared to 81 days in Q1/19.

Dr. Shawn Qu, chairman and CEO of Canadian Solar, commented, "The company's strong Q2/19 financial performance is principally due to the resiliency of our business model and our team's solid execution of the business plan. Our focus on achieving improved operating efficiencies with reduced manufacturing costs across global operations, while continuing to invest in R&D to ensure long-term success, puts us in the most competitive position in the Company's history. Overall, we are incrementally more positive in the outlook for H2/19 based on the improved visibility, healthy demand levels in key markets, more stable average selling prices and higher capacity utilization levels."

Dr. Huifeng Chang, SVP and CFO, added, "Our solid execution resulted in the better than expected profitability for Q2/19. We improved the gross margin to 17.6% and delivered a net income of $1.04 per diluted share on a GAAP basis, compared to a loss of $0.29 per diluted share in Q1/19...Importantly, we generated $225.8 million in cash from operations, which allowed us to further reduce total debt and strengthen the balance sheet."

As of July 31, 2019, the company's late-stage, utility-scale solar project pipeline, including those in construction, totaled approximately 3.6 GWp, with 1,565 MWp in the U.S., 508.2 MWp in Brazil, 368 MWp in Mexico, 311.8 MWp in Japan, 385 MWp in China and additional 465.2 MWp in total in Australia, Canada, Israel, Taiwan, the Philippines, Malaysia, Italy and South Korea. In the report the company cautioned that some late-stage projects may not reach completion due to such factors as failure to secure permits and grid connection, and changes of political and economic conditions in host countries, among others.

The firm also updated its business outlook. For the full year 2019, the company raised its guidance for total module shipments to the range of approximately 8.48.5 GW from the previous guidance of 7.47.8 GW. Total revenue for the year is expected to be in the range of $3.53.8 billion.

Canadian Solar is a global energy provider based in Ontario, Canada, with subsidiaries in 19 countries on six continents. The company states that it is both a global leading manufacturer of solar photovoltaic modules (PV) and a provider of solar energy solutions. The firm indicates that it has over 13,000 employees globally, and operates state-of-the-art manufacturing facilities in Canada, China, Brazil and Southeast Asian countries. The firm has module manufacturing capacity and has delivered more than 36 GW of premium quality solar modules to customers in over 150 countries in the past 18 years.

The firm's (CSIQ) shares opened today at $21.35 (+$0.75, +3.64%) versus the prior day's close of $20.60. Today, the stock has traded between $21.1224.25 and at present is priced at $23.19 (+$2.59, +12.57%).

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