Canadian Solar Reports First Quarter 2008 Results

Canadian Solar Reports First Quarter 2008 Results



JIANGSU, China, May 13 2008 -- Canadian Solar Inc.(Nasdaq: CSIQ) today reported its preliminary unaudited US GAAP financial information for the first quarter ended March 31, 2008.

Net revenues for the quarter were $171.2 million (including $2.2 million of silicon material sales), compared to net revenues of $17.5 million for the first quarter of 2007 (including $2.8 million of silicon materials sales) and $127.5 million for the fourth quarter of 2007 (including $2.4 million of silicon materials sales). Net income for the quarter was $19.0 million, or $0.61 per diluted share, compared to a net loss of $3.9 million, or $0.14 per diluted share, for the first quarter of 2007 and net income of $5.9 million, or $0.21 per diluted share, for the fourth quarter of 2007. If share-based compensation expenses of $2.2 million were excluded, non-GAAP net income for the quarter would have been $21.2 million, or $0.65 per diluted share.

Dr. Shawn Qu, Chairman and CEO of CSI, commented: "I am very pleased with our first quarter results and proud to say that our team has now achieved four consecutive quarters of revenue growth and profit margin improvement. Our impressive performance in the first quarter was due to a result of robust market demand for our products, strong pricing, effective management of foreign exchange exposure, strong operational execution of our flexible vertical integration business model, and our balanced supply strategy, which allowed us to increase our product delivery despite a general market shortage of silicon materials. In Q1, we significantly increased our internal solar cell production, which resulted in a positive impact on our bottom line. Our new Changshu solar module plant was completed on schedule during the quarter. This gave us the ability to quickly increase shipments in March following the severe weather conditions earlier in the year. Deliveries from most of our strategic suppliers are now generally on track."

Bing Zhu, CFO of CSI, noted: "We delivered on our promise to improve our gross margins and we were able to increase diluted earnings per share by close to 200% compared with Q4 2007 due to our disciplined financial management and continued operational efficiency. The significant upside to our bottom line was mainly contributed by three factors -- strong pricing, the strong Euro vs. USD, and our internal cost cutting. Although the large foreign exchange gain is likely a one-time event, we believe that the other factors will remain positive, and will, therefore, help us maintain a similar level of profitability going forward."

Revenue by Geography (US $ millions)

Q108 Q407 Q107 Region Revenue % Revenue % Revenue % Europe 167.6 97.9% 124.1 97.3% 12.1 69.4% Asia 2.4 1.4% 2.9 2.3% 3.3 18.9% Americas 1.2 0.7% 0.5 0.4% 2.1 11.7% Total Net 171.2 100% 127.5 100% 17.5 100% Revenue

Note: Asian revenue included $2.2 million of silicon materials sales in the first quarter of 2008 and $2.4 million of silicon materials sales in the fourth quarter of 2007.

Recent Developments

We commenced commercial production of e-Modules, a cost-effective medium power solar module product using 100% upgraded metallurgical grade (UMG) silicon, in March. We converted one of our solar cell lines and dedicated it to UMG cells in early April and ramped up to full production shortly thereafter. We have produced approximately one MW of UMG cells over the past four weeks. We believe that we have so far achieved the technical and economic parameters which we preset for the ramp up phase. Delivery of e-Modules to our European and US customers started in early May. We believe that we are on track to achieve our prior estimate of shipping 30-40MW of e-Modules in 2008.

Outlook

Dr. Qu continued: "We also believe that we are on track to achieve our prior guidance of shipping 200 -220MW of regular solar modules in 2008, not including shipments of e-Modules, and to continue our record of quarter over quarter revenue growth. We intend to continue our long-term and proven supply chain strategy of combining internal solar wafer and cell production with direct purchasing from a select number of long-term strategic wafer and cell suppliers. We expect that many of the positive market trends that we witnessed in Q1 will continue for the rest of the year, and believe that the gross margin that we were able to achieve in Q1 bodes well for our ability to achieve our 13% - 15% gross margin target for the year."

Net revenue for Q208 is expected to be in the range of $185 - $190 million, with non-GAAP net income, determined by excluding share based compensation expenses, expected to be in the range of $17 - $18 million. Shipments for Q208 are expected to be approximately 45MW, including some tolling business.

Looking ahead to 2009, if all of our long-term supply contracts are fully implemented, we will have access to 200MW of regular polysilicon and wafers. Based on our strong position as a worldwide photovoltaic solar module supplier and the expansion plans of our strategic partners, we believe that we should be able to secure an additional 200MW of regular polysilicon and wafers, thereby enabling us to produce approximately 400MW of regular photovoltaic solar modules. In addition, we expect to produce 100 - 150MW of UMG silicon products in 2009.

Investor Conference Call / Webcast Details

A conference call has been scheduled for 8:00 p.m. on Tuesday, May 13, 2008 (in Jiangsu). This will be 8:00 a.m. on Tuesday, May 13, 2008 in New York. During the call, time will be set-aside for analysts and interested investors to ask questions of senior executive officers of the Company.

The call may be accessed by dialing: +1-800-688-0836 (domestic) or +1-617- 614-4072 (international). The passcode to access the call is: 98964967. A replay of the call will be available starting one hour after the call and continuing until 10:00 p.m. on Tuesday, May 20, 2008 (in Jiangsu) or 10:00 a.m. on Tuesday, May 10, 2008 (in New York) at http://www.csisolar.com and by telephone at 1-888-286-8010 (domestic) or +1-617-801-6888 (international). The passcode to access the replay is: 11545239.

About Canadian Solar Inc. (Nasdaq: CSIQ)

Founded in 2001, Canadian Solar Inc. (CSI) is a vertically integrated manufacturer of solar cell, solar module and custom-designed solar application products serving customers worldwide. CSI is incorporated in Canada and conducts all of its manufacturing operations in China. Backed by years of experience and knowledge in the solar power market and the silicon industry, CSI has become a major global provider of solar power products for a wide range of applications. For more information, please visit http://www.csisolar.com .