Canadian Solar Q2 revenue misses estimates on project delays, shift; margin beats on N.America strength

Overview

• Canadian Solar Q2 revenue of $1.7 bln missed analyst expectations, per LSEG data

• Adjusted EPS for Q2 was a loss of $0.53, missing estimates, per LSEG data

• Gross margin of 29.8% exceeded guidance, driven by North American module shipments

Outlook

• Company expects demand to normalize after surge in China installations in H1

• Company expects Q3 revenue between $1.3 bln and $1.5 bln

• Canadian Solar sees Q3 gross margin at 14%-16%

• Company forecasts full-year revenue of $5.6 bln to $6.3 bln

• Canadian Solar anticipates full-year module shipments of 25 GW to 27 GW

Result Drivers

• H2 SHIFT - Revenue came in below company guidance due to storage shipments shifting to second half and delays in certain project sales

• GROSS MARGIN - Exceeded expectations due to higher North American module shipments and robust storage volumes

• SHIPMENT INCREASE - Solar module shipments rose 14% qoq to 7.9 GW, near the high end of company guidance

• STORAGE PERFORMANCE - e-STORAGE achieved strong performance despite tariff headwinds, contributing to results

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 4 "strong buy" or "buy", 3 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the renewable energy equipment & services peer group is "buy."

• Wall Street's median 12-month price target for Canadian Solar Inc is $12.50, about 2% below its August 20 closing price of $12.75

Press Release: ID:nPn8q1FZTa