Solar(CSIQ) - 2024 Q1 - Quarterly Report

Financial & Operational Highlights The company achieved record-breaking financial and operational results in 2023, highlighted by significant growth in shipments and revenue Fourth Quarter and Full Year 2023 Highlights The company achieved record full-year 2023 results driven by strong module shipments and secured a key investment for its Recurrent Energy segment Full Year 2023 Performance Highlights | Metric | Value | Note | | :--- | :--- | :--- | | Full Year Module Shipments | 30.7 GW | Record, +45% YoY | | Full Year Revenues | $7.6 billion | Record | | Full Year Net Income | $274 million | Record | | Full Year Diluted EPS | $3.87 | Record | | Q4 Module Shipments | 8.2 GW | +26% YoY, above guidance | | e-STORAGE Pipeline | 63 GWh | Record, as of Jan 31, 2024 | | e-STORAGE Contracted Backlog | $2.6 billion | As of Jan 31, 2024 | - Secured a $500 million investment in its Recurrent Energy subsidiary from BlackRock, which is instrumental for its business transformation[2][3] Management Commentary Executives highlighted the company's strategic evolution, operational resilience, and the pivotal role of recent investments and partnerships Executive Summary Management commentary emphasized the company's strategic transformation, technological advancements, and strong financial position despite quarterly challenges - Dr. Shawn Qu (Chairman and CEO): Emphasized the company's evolution into a 'full stack' solar and storage business, the swift transition to N-type TOPCon technology, the ramp-up of the Texas module factory, and the strategic partnership with BlackRock for Recurrent Energy[3] - Yan Zhuang (President of CSI Solar): Highlighted CSI Solar's resilience, exceptional shipment growth despite challenging market conditions, and strategic investments in vertical integration and U.S. manufacturing. e-STORAGE is projected to surpass $1 billion in revenue in 2024[3] - Ismael Guerrero (CEO of Recurrent Energy): Stated the $500 million capital commitment from BlackRock is instrumental to Recurrent Energy's transition from a pure developer to a developer plus long-term owner and operator, enabling a more diversified and stable revenue portfolio[3] - Dr. Huifeng Chang (Senior VP and CFO): Noted Q4 revenue of $1.7 billion and a gross margin of 12.5%. Full-year net income was a record $274 million, and the company ended the year with a strong cash position of $3 billion[3] Financial Performance The report details the company's consolidated financial results, including a quarterly downturn but record full-year performance and balance sheet growth Q4 & Full Year 2023 Consolidated Results The company experienced a challenging Q4 with lower revenue and a net loss, but achieved record full-year revenue and net income for 2023 Q4 2023 Financial Performance vs. Prior Periods | Metric | Q4 2023 | Q3 2023 | Q4 2022 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $1.70B | $1.85B | $1.97B | -14% | | Gross Profit | $213M | $308M | $349M | -39% | | Gross Margin | 12.5% | 16.7% | 17.7% | -5.2 p.p. | | Net Income (Loss) | ($1M) | $22M | $78M | -101% | | Diluted EPS | ($0.02) | $0.32 | $1.11 | -102% | - The Q4 gross margin decline to 12.5% was primarily caused by lower module ASPs and an inventory write-down, partially offset by lower manufacturing costs[6] - Net cash flow from operating activities was $190 million in Q4 2023, an increase from $158 million in Q3 2023, mainly due to reduced inventories[11] - Total debt increased to $3.6 billion as of December 31, 2023, from $3.3 billion as of September 30, 2023, to fund working capital and project development[12] Financial Statements Analysis Analysis of financial statements reveals record 2023 revenue and net income, significant asset growth, and strong operating cash flow Consolidated Statements of Operations The company's 2023 income statement shows record revenue and net income, with a significant increase in operating income year-over-year Full Year Consolidated Statement of Operations (2023 vs. 2022) | Metric (in thousands USD) | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $7,613,626 | $7,468,610 | +1.9% | | Gross Profit | $1,279,983 | $1,263,136 | +1.3% | | Income from Operations | $453,320 | $356,061 | +27.3% | | Net Income Attributable to CSI | $274,187 | $239,968 | +14.3% | | Diluted EPS | $3.87 | $3.44 | +12.5% | Consolidated Balance Sheets The balance sheet expanded significantly in 2023, driven by growth in total assets, liabilities, and shareholders' equity Consolidated Balance Sheet Highlights (As of Dec 31) | Metric (in thousands USD) | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,938,689 | $981,434 | | Total Current Assets | $6,095,453 | $5,644,657 | | Property, plant and equipment, net | $3,088,442 | $1,826,643 | | TOTAL ASSETS | $11,895,760 | $9,037,128 | | Total Current Liabilities | $5,864,391 | $5,258,768 | | TOTAL LIABILITIES | $8,190,516 | $6,730,434 | | TOTAL EQUITY | $3,705,244 | $2,306,694 | Consolidated Statements of Cash Flows The 2023 cash flow statement reflects robust operating cash flow, high investment spending, and strong financing inflows Full Year Consolidated Statement of Cash Flows (2023 vs. 2022) | Metric (in thousands USD) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $684,615 | $916,631 | | Net cash used in investing activities | ($1,671,416) | ($630,488) | | Net cash provided by financing activities | $2,052,828 | $428,639 | | Cash, cash equivalents and restricted cash at end of period | $2,946,432 | $1,969,503 | Segment Performance This section details the performance of the Recurrent Energy and CSI Solar segments, including strategic shifts and key operational metrics Recurrent Energy Segment The segment is transitioning to a long-term owner model, supported by a major investment and a substantial project pipeline - The business is transitioning from a pure developer to a developer plus long-term owner/operator, enabled by a $500 million investment from BlackRock for a 20% stake in the subsidiary[16][18][20] Recurrent Energy Project Pipeline (as of Jan 31, 2024) | Project Type | Under Construction | Backlog | Advanced & Early-Stage | Total Pipeline | | :--- | :--- | :--- | :--- | :--- | | Solar (GWp) | 1.9 | 5.5 | 19.9 | 27.3 | | Battery Storage (GWh) | 0.4 | 3.1 | 51.3 | 54.8 | Recurrent Energy Segment Financials (Full Year) | Metric (in thousands USD) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net Revenues | $497,653 | $821,525 | | Gross Profit | $204,727 | $161,364 | | Income from Operations | $96,621 | $80,364 | | Gross Margin | 41.1% | 19.6% | CSI Solar Segment The segment achieved record module shipments and is aggressively expanding manufacturing capacity, with e-STORAGE emerging as a key growth driver - Shipped 8.2 GW of solar modules in Q4 2023, with top five markets being China, the U.S., Brazil, Spain, and Pakistan[33] - The e-STORAGE business has a total project turnkey pipeline of 63 GWh and a contracted backlog of $2.6 billion as of January 31, 2024[37][38] CSI Solar Manufacturing Capacity Expansion Plan (GW) | Production Stage | Dec 2023 Actual | Dec 2024 Plan | Change | | :--- | :--- | :--- | :--- | | Ingot | 20.4 | 50.4 | +147% | | Wafer | 21.0 | 50.0 | +138% | | Cell | 50.0 | 55.7 | +11% | | Module | 57.0 | 61.0 | +7% | CSI Solar Segment Financials (Full Year) | Metric (in thousands USD) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net Revenues | $7,230,550 | $6,975,612 | | Gross Profit | $1,109,218 | $1,150,757 | | Income from Operations | $456,083 | $343,798 | | Gross Margin | 15.3% | 16.5% | Business Outlook The company provides its financial and operational guidance for the first quarter and the full fiscal year of 2024 Guidance for Q1 and Full Year 2024 The company projects a soft Q1 but maintains strong full-year 2024 guidance for revenue, module shipments, and battery storage shipments Q1 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $1.2B - $1.4B | | Gross Margin | 17% - 19% | | Total Module Shipments | 6.1 GW - 6.4 GW | | Total Battery Storage Shipments | ~1 GWh | Full Year 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $8.5B - $9.5B | | CSI Solar Module Shipments | 42 GW - 47 GW | | CSI Solar Battery Storage Shipments | 6.0 GWh - 6.5 GWh | - Management expects accelerated growth momentum in the latter part of 2024, driven by the clearance of channel inventory and burgeoning demand from emerging markets[48] Recent Developments This section outlines key corporate events, including major financing deals, supply agreements, and strategic partnerships across business segments Key Corporate Events The company announced significant project financings, a pivotal equity investment, and major supply agreements for both solar and storage - Recurrent Energy: - Announced a $500M preferred equity investment from BlackRock (Jan 2024)[49] - Secured $160M in project financing for the 127 MWdc Bayou Galion Solar project in Louisiana (Feb 2024)[50] - Closed non-recourse project financing for the 119 MW Horus Solar Project in Mexico (Feb 2024)[51] - Completed the sale of the 100 MW / 200 MWh Mannum battery project in South Australia (Jan 2024)[52] - CSI Solar & e-STORAGE: - Secured a framework agreement to supply N-type TOPCon modules from its Texas factory to Sol Systems (Mar 2024)[54] - e-STORAGE awarded a contract to supply 500 MW / 1,170 MWh of battery solutions for the Coalburn 1 Project in the U.K. (Dec 2023)[56] - e-STORAGE selected as preferred supplier for the 240 MW / 480 MWh Summerfield battery project in South Australia (Nov 2023)[58] - Awarded "Top Brand PV Award USA 2024" by EUPD Research (Feb 2024)[60]