Canadian Solar (CSIQ) Q2 Earnings Beat, Revenues Fall Y/Y

Core Viewpoint - Canadian Solar, Inc. reported a significant decline in earnings and revenues for the second quarter of 2024, despite surpassing earnings expectations. The company faces challenges due to lower average selling prices and project sales, although it has seen some growth in battery energy storage solutions sales [1][2]. Revenue Summary - Canadian Solar's revenues for Q2 2024 were $1.63 billion, which was 0.4% below the Zacks Consensus Estimate and represented a 30.8% decline from $2.36 billion in Q2 2023 [2]. - The decrease in revenue was primarily attributed to a decline in the average selling price (ASP) for solar modules and lower project sales, partially offset by increased sales in battery energy storage solutions [2]. Operational Update - The company shipped 8.2 gigawatts (GW) of solar modules in the quarter, exceeding the guidance range of 7.5-8 GW, which included 135 megawatts (MW) from utility-scale solar power projects [3]. - Gross margin for the quarter was 17.2%, consistent with the guidance range of 16%-18%, but down 140 basis points year-over-year due to lower margin contributions from solar power and battery energy storage asset sales [3]. - Total operating expenses increased by 8.3% year-over-year to $234.4 million, with depreciation and amortization charges rising to $122 million from $73 million in the previous year due to investments in vertical integration and capacity expansion [3]. Financial Update - As of June 30, 2024, Canadian Solar had cash and cash equivalents of $1.62 billion, down from $1.94 billion on December 31, 2023 [4]. - Long-term borrowings increased to $1.62 billion from $1.27 billion during the same period [4]. Guidance - For Q3 2024, Canadian Solar expects total module shipments to be between 9.0-9.5 GW, with total revenues projected in the range of $1.6-$1.8 billion [5]. - The Zacks Consensus Estimate for Q3 sales is $1.64 billion, which is lower than the midpoint of the company's guidance range [5]. - The company anticipates a gross margin between 14% and 16% and expects total battery energy storage shipments to be between 1.4-1.7 gigawatt-hours (GWh) [5]. - For the full year 2024, total module shipments are expected to be in the range of 32 GW-36 GW, with total revenues projected between $6.5 billion and $7.5 billion [5].