Canadian Solar Reports First Quarter 2021 Results

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Canadian Solar Inc. (“Canadian Solar” or the “Company”) (NASDAQ: CSIQ) today announced financial results for the quarter ended March 31, 2021.



  • Solar module shipments of 3.1 GW in the first quarter of 2021, compared to guidance of 3.0 GW to 3.2 GW.
  • Revenue increased 32% year-over-year (“yoy”) to $1.1 billion, compared to guidance of $1.0 billion to $1.1 billion.
  • Gross margin of 17.9%, compared to guidance range of 16% to 18%.
  • Net income attributable to Canadian Solar of $23 million, or $0.36 per diluted share.
  • 1.2 GWh of battery storage projects under construction.
  • Total battery storage project development pipeline nearly doubled to 17 GWh.
  • Strategic partnership and investment in Habitat Energy to strengthen battery storage capabilities.
  • Carve-out IPO of CSI Solar subsidiary remains on track.

Dr. Shawn Qu, Chairman and CEO, commented, “First quarter 2021 revenue and gross margin came in at the high-end of our guidance, as our team remained focused on achieving financial and business improvements despite the challenging market conditions. We nearly doubled our total storage project development pipeline and expect this positive momentum to continue, which should greatly enhance the value of our development pipeline. We further strengthened our competitive position with our recent strategic partnership with Habitat Energy, which will leverage our global scale and platform, while helping us improve the software capabilities of our battery storage projects. As always, Canadian Solar is at the forefront of developing and commercializing the energy innovations that matter to our customers. The latest example is the Q1 production of our first N-type heterojunction (HJT) solar cell from our newest state-of-the-art 250 MW pilot line. Our teams are rapidly improving the cell conversion efficiency of these new cells, and we expect to start delivering our first cutting-edge HJT solar modules in the third quarter this year.


“Separately, the carve-out IPO of CSI Solar remains on track. We officially submitted the listing application materials to the securities regulatory authorities in China, which are now under review per usual procedures.”


Ismael Guerrero, Corporate VP and President of Canadian Solar’s Global Energy subsidiary, said, “In the first quarter of 2021, we delivered approximately 500 MWp of project sales, including 61 MWp in Japan, which were acquired by Canadian Solar Infrastructure Fund, the largest listed infrastructure fund on the Tokyo Stock Exchange. We also continued to grow our solar and storage project pipelines totaling 21 GW and 17 GWh at the end of March, respectively, building one of the largest solar and storage project pipelines in the world. We are excited to report that we have established a new Brazilian Participation Fund for Infrastructure Projects (FIP-IE) and are currently executing on approximately 2 GWp of contracted solar projects in Brazil. Last month, we set up the structure of a Real Estate Investment Fund (REIF) in Italy, which will be a private investment vehicle for our Italian projects currently under development. We will continue to work on investment vehicles in our Global Energy business as we work to build and monetize value for the Company and shareholders.”

Yan Zhuang, President of Canadian Solar’s CSI Solar subsidiary, said, “The first quarter was challenging, as expected, with cost inflation driven by continued higher raw material and transportation costs, and unfavorable foreign exchange fluctuations. For instance, the price of polysilicon has tripled over the past twelve months. We were able to partially mitigate the impact by raising our module prices, which saw a near double digit percentage increase relative to the previous quarter, and prioritizing margins ahead of shipment volumes. Underlying demand for solar energy remains strong driven by ambitious public and private sector targets, yet we are seeing increasing price elasticity of demand and the prospect that certain utility scale projects may be delayed. Meanwhile, we continue to focus on developing our technology differentiation, enhancing our product offering through high value-add system solutions, and working closely with our customers and partners.”

Dr. Huifeng Chang, Senior VP and CFO, added, “In the first quarter of 2021, we achieved $1.1 billion in revenue, 17.9% gross margin and $23 million net income, executing to the high end of guidance. Net income increased to $0.36 per diluted share from $0.11 per diluted share in the fourth quarter of 2020, even with higher taxes and unfavorable foreign exchange conditions. We ended the first quarter with $1.5 billion in cash, allowing us to selectively build strategic stock of key materials in support of higher customer demand and lessen the impact of increasing raw material costs. We remain disciplined and will continue to invest in long-term growth opportunities, including our expanding battery storage pipeline.”

First Quarter 2021 Results

Total module shipments in the first quarter of 2021 were 3,139 MW, a 42% yoy increase and 5% quarter-over-quarter (“qoq”) increase. Of the total, 267 MW was shipped to the Company’s own utility-scale solar power projects.

Net revenue in the first quarter of 2021 grew by 32% yoy and 5% qoq to $1,089 million. The sequential increase was driven by higher project sales in Japan and the United States, a higher module average selling price (“ASP”), which was partially offset by lower module shipments recognized as revenues.

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Gross profit in the first quarter of 2021 was $195 million, up 38% qoq but down 13% yoy. Gross margin in the first quarter of 2021 was 17.9%, compared to guidance of 16% to 18%, and 13.6% in the fourth quarter of 2020. The sequential gross margin expansion was mainly driven by an increased contribution of high margin project sales and higher module ASP, which was partially offset by higher manufacturing costs.

Total operating expenses in the first quarter of 2021 were $151 million compared to $139 million in the fourth quarter of 2020. The sequential increase was primarily driven by an increase in shipping and handling expenses, partially offset by a decrease in asset impairment expenses.

Non-cash depreciation and amortization charges in the first quarter of 2021 were $62 million, compared to $59 million in the fourth quarter of 2020, and $45 million in the first quarter of 2020.

Net foreign exchange loss in the first quarter of 2021 was $7 million, compared to a net gain of $4 million in the fourth quarter of 2020 and a net loss of $1 million in the first quarter of 2020. The net loss was primarily driven by strength in the U.S. Dollar relative to the Japanese Yen.

Income tax expense in the first quarter of 2021 was $14 million, compared to $2 million of income tax benefit in the fourth quarter of 2020 and $29 million of income tax benefits in the first quarter of 2020. The expense was mainly driven by an increase in pre-tax income from high tax jurisdictions and certain non-deductible items.

Net income attributable to Canadian Solar in the first quarter of 2021 was $23 million, or $0.36 per diluted share, compared to net income of $7 million, or $0.11 per diluted share in the fourth quarter of 2020. 

Net cash used by operating activities in the first quarter of 2021 was $83 million, compared to $120 million provided by operating activities in the fourth quarter of 2020. The operating cash outflow was mainly driven by an increase in strategic inventory in key markets such as the U.S. and Europe to reduce the impact of upstream supply chain disruptions.

Total debt in the first quarter of 2021 was $2.28 billion, compared to $2.18 billion in the fourth quarter of 2020. The increase in total debt was mainly driven by increase in non-recourse debt used to finance solar power projects, which increased to $522 million in the first quarter of 2021 from $434 million in the fourth quarter of 2020.

Battery Storage Opportunities

Canadian Solar is one of the early movers in developing and supplying energy storage solutions and projects. The Company has strategically positioned itself in the battery storage market, both in solar plus battery storage, as well as in stand-alone storage opportunities. The rapid growth of the energy storage market is being driven by technology improvements, declining battery storage costs, rising penetration of renewable energy and accelerating retirements of fossil fuel capacity.

Canadian Solar has a competitive advantage given its global leadership in both module manufacturing and solar project development. Both CSI Solar and Global Energy have focused strategically on their respective energy storage businesses:

  • Under Global Energy, energy storage project development is now fully integrated within the main solar development teams. Given the segment’s large and growing pipeline, it is positioned to capture utility-scale energy storage projects.
  • Under CSI Solar, the battery storage solutions’ team focuses on delivering bankable, end-to-end, integrated battery storage solutions for utility scale, commercial and industrial, as well as residential applications. These systems solutions will be complemented with long term service agreements, including future battery capacity augmentation services.

While there are synergies between the project team and the solutions team, both operate independently and on different sections of the battery storage value chain. The project pipeline for each team should be assessed independently. Please refer to the Global Energy and CSI Solar sections of this document for specific pipeline figures.

Global Energy Segment

Canadian Solar has one of the world’s largest and most geographically diversified utility-scale solar and energy storage project development platforms, with a strong track record of originating, developing, financing and building over 5.7 GWp of solar power plants across six continents. As one of the early movers, the Company has built a leadership position in solar as well as energy storage project development and currently has an aggregate pipeline of nearly 21 GWp and 17 GWh, respectively.

The continued pipeline expansion and strong project development track record will support Global Energy’s growth in three key areas:

  1. Project sales: The Company intends to grow its volume of project sales by a compound annual growth rate of 25% over the next five years, well ahead of global market growth rate of approximately 20% according to many research reports.
  2. Investment vehicles: The Company intends to optimize its project monetization strategy by establishing local investment vehicles that will help maximize the value of its project assets. The Company also intends to retain minority ownership in these vehicles. By 2025, the Company intends to reach at least 1 GW of combined net ownership in solar power projects through these vehicles. This approach will help the Company build and grow a stable base of long-term cash flows from contracted electricity. The Company will be able to recycle a large portion of the capital into developing new solar projects for growth. Meanwhile, Canadian Solar expects to capture additional operational value throughout the partial ownership period, including long-term cash flows from power sales, operations and maintenance (O&M), asset management and other services (see point 3). The Company currently owns a 15% stake in the Canadian Solar Infrastructure Fund (“CSIF”, TSE: 9284), the largest listed Japanese infrastructure fund on the Tokyo Stock Exchange. The Company also established the Brazilian Participation Fund for Infrastructure projects (FIP-IE). Similar project investment vehicles in certain European countries are also currently underway. Through launching these localized vehicles, Canadian Solar is building up its expertise in designing investment vehicles in local markets that will help maximize value of its project assets.
  3. Services: Canadian Solar currently manages over 2 GW of operational projects under long-term O&M agreements, and an additional 2 GW of contracted projects that will be operated and maintained by the Company once they are placed in operation. The Company’s target is to reach 11 GW of projects under O&M agreements by 2025.
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Management targets to achieve the following over the next 5 years:

Global Energy Targets20212022202320242025
Annual Project Sales, GWp1.8-2.32.4-2.93.2-3.73.6-4.14.0-4.5
Cumulative Projects Retained, MWp~200~400~760~960~1,000
Operational O&M projects, GWp~2.6~4.0~6.5~9.2~11.0

Total Solar Project Pipeline

As March 31, 2021, the Company’s total project pipeline was 20.8 GWp, including 1.8 GWp under construction, 3.7 GWp of backlog, and 15.4 GWp of earlier stage pipeline. The backlog includes projects that have passed their Risk Cliff Date and are expected to be built in the next one to four years. A project’s Risk Cliff Date depends on the country where the project is located and is defined as the date on which the project passes the last high-risk development stage. This is usually after the projects have received all the required environmental and regulatory approvals, interconnection agreements, feed-in tariff (“FIT”) arrangements and power purchase agreements (“PPAs”). Over 90% of projects in backlog are contracted (i.e., have secured a PPA or FIT), and the remaining are reasonably assured of securing PPAs.

The Company’s pipeline includes early- to mid-stage project opportunities currently under development but that are yet to be de-risked.

The following table presents the Company’s total project pipeline.

Total Project Pipeline (as of March 31, 2021) – MWp
RegionIn ConstructionBacklogPipelineTotal
North America4437444,7585,945
Latin America859*2,098*3,3716,328
Europe, the Middle East and Africa (“EMEA”)400*3,5193,919
Asia Pacific excluding Japan and China3481911,6672,206
China (part of CSI Solar)801,9001,980
*Note: Gross MWp size of projects includes 573 MWp in construction in Latin America,and 110 MWp in backlog in EMEA, that are not owned by Canadian Solar or have been sold to third parties. 

The Company has a sizable amount of premium, high FIT projects in Japan. The table below sets forth the expected COD schedule of the Company’s project backlog in development and construction in Japan, as of March 31, 2021:

Expected COD Schedule – MWp 

202120222023 and

Battery Storage Project Pipeline

The Global Energy segment has been actively developing utility-scale solar plus energy storage projects, as well as stand-alone battery storage projects. The Company found that virtually all its solar power projects under development can co-host energy storage facilities and has done so during the first quarter of 2021. This approach has helped the Company nearly double its energy storage pipeline to almost 17 GWh during the quarter. By co-hosting energy storage facilities with solar power plants on the same piece of land and using the same interconnection point, the Company expects to significantly enhance the value of its assets under development.

Over the past years, Canadian Solar has signed several new storage tolling agreements with a variety of power purchasers, including community choice aggregators, investor-owned utilities, universities, and public utility districts. The Company has also signed development services agreements to retrofit operational solar projects with battery storage, many of which were previously developed by the Company.

The table below sets forth Global Energy’s storage project development backlog and pipeline.

Storage Project Development Backlog and Pipeline(as of March 31, 2021) – MWh
RegionIn ConstructionBacklogPipelineTotal
North America1,2011,1008,40510,706
Latin America3,2003,200
Europe, the Middle East and Africa (“EMEA”)1,3141,314
Asia Pacific excluding Japan 1,6501,650

Solar Power Plants and Battery Storage Projects in Operation

As of March 31, 2021, the Company’s solar power plants in operation totaled 477 MWp, with a combined estimated net resale value of approximately $420 million to Canadian Solar. The estimated resale value is based on selling prices that Canadian Solar is currently negotiating or transaction prices of similar assets in the relevant markets.

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The Company owned 3 MWh of battery storage projects in operation in North America.

Solar Power Plants in Operation – MWp
Latin AmericaJapanAsia Pacific ex. Japan and ChinaChinaTotal

Note: Gross MWp size of projects, includes 26 MWp in Asia Pacific ex. Japan and China already sold to third parties. China portfolio is part of CSI Solar.

Operating Results

The following table presents unaudited select results of operations data of the Company’s Global Energy segment.

Global Energy Segment Financial Results(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)
Three Months Ended
March 31,
December31, 2020March 31,
Net revenues471,062372,617242,550
Cost of revenues358,037340,403153,934
Gross profit113,02532,21488,616
Operating expenses27,94430,43427,786
Income from operations85,0811,78060,830
Gross margin24.0%8.6%36.5%
Operating margin18.1%0.5%25.1%
*Historical values of first quarter of 2020 have been revised to conform to current period presentation

CSI Solar Segment

CSI Solar’s 2021 capacity expansion targets are detailed below.  All new capacity will produce CSI Solar’s next generation high-power, high-efficiency modules in the HiKu and BiHiKu product portfolios

Manufacturing Capacity, GW (period-end)

FY201H21 PlanFY21 Plan

Note: CSI Solar’s capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans.

Operating Results 

The following table presents unaudited select results of operations data of the CSI Solar segment for the periods indicated.

CSI Solar Segment Financial Results*(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)
Three Months Ended
March 31,
December31, 2020March 31,
Net revenues695,152784,588689,747
Cost of revenues627,694678,410527,578
Gross profit67,458106,178162,169
Operating expenses120,126103,37877,988
Income (loss) from operations(52,668)­ 2,80084,181
Gross margin9.7%13.5%23.5%
Operating margin-7.6%0.4%12.2%

Includes effects of both sales to third party customers and to the Company’s Global Energy Segment. Please refer to the attached financial tables for intercompany transaction elimination information. Income from operations reflects management’s allocation and estimate as some services are shared by the Company’s two business segments.

** Historical values of first quarter of 2020 have been revised to conform with current period presentation

The table below provides the geographic distribution of the net revenue of CSI Solar:

CSI Solar Net Revenues Geographic Distribution* (In Millions of U.S. Dollars, Except Percentages)
Q1 2021% of Net
Q4 2020% of Net
Q1 2020% of Net
Europe and others117191051616027

*Excludes sales from CSI Solar to Global Energy.

CSI Solar shipped 3.1 GW of modules to more than 70 countries in the first quarter of 2021. The top five markets ranked by shipments were the U.S., China, Brazil, Australia and Japan.

Battery Storage Solutions

The Company is one of the early movers in developing system solutions and energy storage integration services. Within CSI Solar, the battery storage solutions team delivers competitive turnkey, integrated battery storage solutions, including bankable and fully wrapped capacity and performance guarantees. These guarantees are complemented with long term operations and maintenance agreements, which include future battery capacity augmentation services and bring in longer term, stable income.

The table below sets forth CSI Solar’s battery storage system integration’s contracted projects and/or under construction, those in high probability forecast, and pipeline, as of March 31, 2021.

Contracted/In ConstructionForecastPipelineTotal
Storage (MWh)8611,4004,8427,103

Contracted/in construction projects are expected to be delivered within the next 12 to 18 months. Forecast projects include those that have more than 75% probability of being contracted within the next 12 months, and the remaining pipeline includes projects that have been identified but have a below 75% probability of being contracted.

Business Outlook

The Company’s business outlook is based on management’s current views and estimates given factors such as existing market conditions, order book, production capacity, input material prices, foreign exchange fluctuations, anticipated timing of project sales, and the global economic environment. This outlook is subject to uncertainty with respect to, among other things, customer demand, project construction and sale schedules, product sales prices and costs, and the global impact of the ongoing COVID-19 pandemic. Management’s views and estimates are subject to change without notice.

For the second quarter of 2021, the Company expects total module shipments to be in the range of 3.5 GW to 3.7 GW, including approximately 80 MW of module shipments to the Company’s own projects. Total revenues are expected to be in the range of $1.4 billion to $1.5 billion. Gross margin is expected to be between 9.5% and 10.5%.

The Company reiterates full year 2021 total module shipment guidance of 18 GW to 20 GW and project sales guidance of 1.8 GW to 2.3 GW. The Company introduces 2021 total battery storage shipment guidance of 810 MWh to 860 MWh. Total revenue guidance for 2021 remains unchanged, expected to be in the range of $5.6 billion to $6.0 billion.

Dr. Shawn Qu, Chairman and CEO, commented, “Despite the market uncertainties, we still expect significant growth in solar module shipments in the second quarter, as reflected in our guidance. The updated outlook also incorporates our capacity expansion plans, as well as our efforts to protect profitability ahead of volume. Underlying demand remains strong globally across our markets, while new markets, like battery storage, are growing at an exponential rate. We will continue to invest in technology and R&D, enhance our battery storage solutions capabilities and expand our pipeline of high-quality solar and storage assets, as we further strengthen our global leadership position, and deliver long-term sustainable returns for shareholders.”

Recent Developments

On May 13, 2021, Canadian Solar announced it executed a strategic partnership and investment with Habitat Energy. The partnership will allow Canadian Solar to offer enhanced technology solutions for developers and owners of battery storage assets to capture additional revenue from trading optimization, while improving grid stability and contributing to the global energy transition to a cleaner, smarter and more efficient power grid.

On April 22, 2021, Canadian Solar announced that its wholly-owned subsidiary, Recurrent Energy, commenced construction on the 100 MWac Sunflower Solar Project located in Sunflower County, Mississippi.

On April 12, 2021, Canadian Solar announced it started mass production of the high-power, high-efficiency monofacial HiKu7 and bifacial BiHiKu7 modules with power output of up to 665 W.

On April 7, 2021, Canadian Solar announced it commenced construction on four solar projects in Japan totaling 143 MWp, including the Company’s flagship mega-project, the 100 MWp Azuma Kofuji project in the Fukushima Prefecture.

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