24 June 2025 | 2:17PM CST China Solar Lower for longer Bottom line: Profitability inflection to be pushed out due to slower demand growth and long run normalized earnings to stay low, but still on track to reach a cyclical bottom in 2025E. We believe China's solar industry is on track to reach a cyclical bottom in 2025E with improving supply/demand balance on back of larger capex cut by Group 1 players, but mid-to-long run normalized profitability will likely stay low in our view, given demand growth slowdo ...

26 May 2025 | 7:05AM CST China Solar: Tracking profitability inflection May profitability to drop below pre-rush installation levels, price stabilization efforts as key to watch Our China Solar Profitability Tracker follows monthly supply/demand and inventory dynamics by sub-sector, and the spot prices/input costs implied cash GP & EBITDA margin trends for companies under our coverage. Key highlights in May MTD: Goldman Sachs does and seeks to do business with companies covered in its research reports. As a ...

Core Viewpoint - Canadian Solar reported a quarterly loss of $1.07 per share, which was better than the Zacks Consensus Estimate of a loss of $1.50, indicating an earnings surprise of 28.67% [1][2] Financial Performance - The company posted revenues of $1.2 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 9.92%, although this was a decrease from $1.33 billion in the same quarter last year [2] - Over the last four quarters, Canadian Solar has exceeded consensus EPS estimates three times [2] Stock Performance and Outlook - Canadian Solar shares have declined approximately 9.1% since the beginning of the year, contrasting with the S&P 500's gain of 0.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.37 on revenues of $1.76 billion, and for the current fiscal year, it is -$0.72 on revenues of $7.4 billion [7] Industry Context - The solar industry, to which Canadian Solar belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, which may negatively impact stock performance [8] - Sunnova Energy, another company in the same industry, is expected to report a quarterly loss of $0.74 per share, reflecting a year-over-year change of -29.8% [9]

Group 1: Earnings Performance - Nextracker reported quarterly earnings of $1.29 per share, exceeding the Zacks Consensus Estimate of $0.98 per share, and up from $0.96 per share a year ago, representing an earnings surprise of 31.63% [1] - The company posted revenues of $924.34 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 11.60%, compared to year-ago revenues of $736.52 million [2] - Nextracker has surpassed consensus EPS estimates for four consecutive quarters [2] Group 2: Stock Performance and Outlook - Nextracker shares have increased approximately 48.1% since the beginning of the year, significantly outperforming the S&P 500's gain of 0.1% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.95 on revenues of $762.26 million, and for the current fiscal year, it is $3.85 on revenues of $3.17 billion [7] Group 3: Industry Context - The solar industry, to which Nextracker belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, indicating potential challenges ahead [8] - Another company in the same industry, Canadian Solar, is expected to report a quarterly loss of $1.50 per share, reflecting a significant year-over-year decline of 889.5% [9] - Canadian Solar's anticipated revenues are projected to be $1.09 billion, down 18.1% from the previous year [10]

Array Technologies, Inc. (ARRY) came out with quarterly earnings of $0.13 per share, beating the Zacks Consensus Estimate of $0.09 per share. This compares to earnings of $0.06 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 44.44%. A quarter ago, it was expected that this company would post earnings of $0.17 per share when it actually produced earnings of $0.16, delivering a surprise of -5.88%.Over the last four quarters, the ...

Core Viewpoint - The market anticipates a significant year-over-year decline in earnings for Canadian Solar, with a consensus estimate of a quarterly loss of $1.50 per share and revenues expected to drop by 18.1% to $1.09 billion [3][4]. Company Summary - Canadian Solar is projected to report a quarterly loss of $1.50 per share, reflecting a drastic year-over-year change of -889.5% [3]. - The expected revenue for the quarter is $1.09 billion, which is an 18.1% decrease compared to the same quarter last year [3]. - The consensus EPS estimate has been revised down by 164.29% over the last 30 days, indicating a significant reassessment by analysts [4]. - The Most Accurate Estimate for Canadian Solar is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +13.81% [10][11]. - Despite the positive Earnings ESP, the stock carries a Zacks Rank of 5, complicating predictions of an earnings beat [11]. Industry Summary - SolarEdge Technologies, a competitor in the solar industry, is expected to report earnings per share of $1.20 for the same quarter, indicating a year-over-year increase of +36.8% [17]. - SolarEdge's revenues are projected to be $203.8 million, reflecting a slight decrease of 0.3% from the previous year [17]. - The consensus EPS estimate for SolarEdge has been revised down by 2.5% over the last 30 days, resulting in an Earnings ESP of -8.73% [18].

Financial Data and Key Metrics Changes - Company reported a 13% year-over-year sales growth to $3.7 billion in Q1 2025, with EPS growing more than three times the rate of sales to $0.54 [5][32] - Operating margin expanded by 250 basis points year-over-year to 18% [5][32] - For Q2 2025, the company expects sales to be approximately $3.85 billion and EPS guidance of $0.55 to $0.59, indicating a year-over-year EPS growth of about 21% [6][32] Business Line Data and Key Metrics Changes - Optical communications sales were $1.4 billion, up 46% year-over-year, with net income increasing by 101% [35] - Enterprise sales reached $705 million, up 106% year-over-year, driven by demand for new Gen AI products [35] - Display sales were $905 million, up 4% year-over-year, with a net income margin of 26.9% [37] - Specialty materials sales increased by 10% year-over-year to $501 million, with net income growing 68% [39] - Automotive sales were $440 million, down 10% year-over-year, primarily due to softness in European markets [42] Market Data and Key Metrics Changes - The company noted strong demand for US-made innovations, particularly in optical communications and solar sectors [14][26] - In the solar market, the company expects to grow from a $1 billion business in 2024 to a $2.5 billion business by 2028, driven by increased energy demand and favorable government policies [26][28] Company Strategy and Development Direction - The company is focused on its SpringBoard plan, aiming to add more than $4 billion in annualized sales and achieve a 20% operating margin by the end of 2026 [9][51] - The strategy includes leveraging US manufacturing capabilities to mitigate tariff impacts and capitalize on domestic demand [8][14] - The company is also emphasizing innovation in Gen AI and solar technologies as key growth drivers [22][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering the SpringBoard plan even in a potential macroeconomic downturn, citing a risk-adjusted approach to planning [9][21] - The company is seeing early signs of stronger demand for US-made products, which is expected to positively impact financial performance [14][26] - Management reiterated that the direct impact of current tariffs is minimal, with a projected impact of $10 million to $15 million for Q2 2025 [13][34] Other Important Information - The company plans to invest approximately $1.3 billion in capital expenditures and expects to generate significant free cash flow in 2025 [45][46] - The company has a strong balance sheet with a long average debt maturity of about 23 years [47] Q&A Session Summary Question: Pricing power in uncertain markets - Management highlighted their ability to pass on increased costs to customers, particularly in solar and optical segments, due to strong demand and unique product offerings [54][56] Question: Temporary capacity ramp costs - Management clarified that the costs associated with ramping up production are primarily operational expenses, not capital expenditures, and are expected to normalize as production scales [59][60] Question: Visibility in Gen AI orders - Management confirmed strong demand from major hyperscale customers, reinforcing growth expectations despite potential market fluctuations [64] Question: Supply constraints in optical segment - Management acknowledged supply constraints and indicated that pricing power could strengthen further with the introduction of next-generation products [69][71] Question: Customer conversations regarding tariffs and recession - Management noted increasing demand for US-based manufacturing and emphasized the importance of long-term commitments from customers amid tariff uncertainties [78][79] Question: End market demand in display segment - Management expects flat unit demand for displays but anticipates growth in the glass market driven by increasing screen sizes [87][88]