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Canadian Solar Reports Second Quarter 2009 Results

    ONTARIO, Canada, Aug. 6 /PRNewswire-Asia-FirstCall/ --

    Q209 Highlights

    -- Net revenues of $114.2 million, a 131% increase from Q109 net revenues
       of $49.5 million.
    -- Shipments of 48.2 MW, a 168% increase from Q109 shipments of 18 MW.
    -- Gross margin of 20.2% and net margin of 15.5%, compared to Q109
       negative gross margin of 7.9% and Q109 negative net margin of 9.7%.
    -- Earnings per diluted share of $0.49, compared to Q109 net loss per
       diluted share of $0.13.

Canadian Solar Inc. ("the Company", "Canadian Solar" or "we") (Nasdaq: CSIQ) today announced its unaudited financial results for the second quarter of 2009 ended June 30, 2009 and its outlook for third quarter 2009 shipments.

Net revenues for the quarter were $114.2 million, compared to net revenues of $212.6 million for the second quarter of 2008 and $49.5 million for the first quarter of 2009.

Net income for the quarter was $17.7 million, or $0.49 per diluted share, compared to $12.1 million, or $0.41 per diluted share, for the second quarter of 2008 and a net loss of $4.8 million, or $0.13 per diluted share, for the first quarter of 2009.

Our Q209 shipments were 48.2 MW, including 39.5 MW of conventional high efficiency polysilicon modules, 7.0 MW of our proprietary e-Modules, and 1.7 MW of cells and solar application products.

The increase in Q209 sales came from all geographic markets important to the solar industry. Europe continues to be our largest contributing geographic market. Our sales in this region increased 86% to $66.9 million in Q209 from $36.0 million in Q109. The Company also experienced strong sales growth in Asia and America, with sequential gains of 188% and 500%, respectively, over Q109, resulting in a diversified and balanced global market distribution.

The company has been making continuous improvements on solar cell conversion efficiency and production cost. For our new, higher efficiency monocrystalline cells, we reached over 18.5% cell efficiency in pilot production, while the average efficiency of the current monocrystalline cell in mass production was 17.2% during Q2. For multicrystalline cells, our average efficiency was about 16.1% during the quarter. For our proprietary low-cost e-Modules, the average cell efficiency was about 15% during the quarter. On the cost side, we have successfully reduced our wafer to module processing cost for polysilicon solar modules to $0.60 per watt in Q209 from $0.71 per watt in Q109.

Dr. Shawn Qu, Chairman and CEO of Canadian Solar, commented: "Our second quarter revenue came in well ahead of expectations as we benefitted from robust customer orders around the world. We are glad that we took a conservative financial management strategy in Q4 of 2008 and Q1 this year, including prudent inventory measures and cash management, which allowed us to compete in Q2 with low materials and financing costs. These advantages, combined with our competitive processing costs and lean operating structure, resulted in a significant improvement in our gross margin and net margin, and position us for success in future quarters. We have noticed that many customers and their financing banks choose Canadian Solar products due to our competitive prices, product quality and strength of our balance sheet. Our flexible vertical integration business model, reputation for high-quality and our solid customer relationships allow us not only to compete, but also to gain market share in a tough economic environment."

Arthur Chien, CFO of Canadian Solar, noted: "We significantly reduced our higher priced inventory in Q2, and are now very well positioned to benefit from further declines in raw materials costs as we work to increase our market share. Our current inventory primarily consists of feedstock, wafer and cells we will use for Q3 shipments."



                 Revenue by Geographical Location (US $ millions)
        Region             2009 Q2             2009 Q1             2008 Q2
                       Revenue    %        Revenue    %        Revenue    %
    Asia                 31.1  27.2 %        10.8  21.8 %        13.1   6.2 %
    Europe               66.9  58.6 %        36.0  72.7 %       188.3  88.6 %
    America              16.2  14.2 %         2.7   5.5 %        11.2   5.2 %
    Total               114.2   100 %        49.5   100 %       212.6   100 %


        Region                 2009 H1                   2008 H1
                               Revenue       %           Revenue       %
    Asia                         41.9     25.6 %           15.5      4.0 %
    Europe                      102.9     62.9 %          355.9     92.7 %
    America                      18.9     11.5 %           12.4      3.3 %
    Total                       163.7      100 %          383.8      100 %


    Recent Developments

    -- On track to expand module capacity to 820 MW, cell plant capacity to
       420 MW by the end of Q3 and to expand the ingot and wafer plant to 200
       MW by year end.

    -- As part of its growth plan Canadian Solar has recently arranged for
       approximately $300 million in additional bank lines that can be drawn
       down at any time. This gives the Company a total of $524 million in
       available bank lines.

    -- Established and staffed Canadian Solar Japan, Inc., a wholly owned
       subsidiary, to address the growing market in Japan and expect to start
       sales in Q4 of 2009.

    -- Incorporated and staffed Canadian Solar Solutions, Inc., a wholly owned
       subsidiary in Ontario, Canada to address the significant market
       opportunities in Canada.

Outlook

Based on the market situation, forecast and our current order book, we expect to have shipments of approximately 90 MW to 100 MW in Q309. We now expect shipments of approximately 260-270 MW for the full year 2009, up from prior guidance of 200 MW to 220 MW. The above outlook is based on the Company's current views with respect to operating and market conditions, which are subject to change. The risks to our guidance also include change of product pricing and project financing environment.

Dr. Shawn Qu, Chairman and CEO, remarked: "We believe that the very large growth in customer orders in Q309 over Q209 demonstrates our ability to gain market share. These share gains are the result of our competitive pricing, high product quality and the bankability of our products. Although the market remains uncertain and the solar project financing remains challenging, we think that we will carry this momentum forward into Q4 as we continue to expand our business in diversified geographies, including Germany, Italy, the Czech Republic, Spain, Korea and US. We also expect to see sales contributions from Japan, China and Canada in the near future."

Investor Conference Call / Webcast Details

The dial-in number for the live audio call, which will begin today, Thursday, August 6, 2009 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. August 6, 2009 in Hong Kong), is +1-617-847-8712. The conference call passcode is 63818298. A live webcast of the conference call will also be available on Canadian Solar's website at http://www.canadian-solar.com .

A replay of the call will be available approximately one hour after the conclusion of the live call through 12:00 p.m. on August 13, 2009, U.S. Eastern Time (12:00 a.m., August 14, 2009 in Hong Kong) by telephone at +1-617-801-6888. To access the replay, use passcode 52551852. A webcast replay will also be available at http://www.canadian-solar.com .

About Canadian Solar Inc. (NASDAQ: CSIQ)

Canadian Solar Inc. is a leading vertically integrated provider of ingot, wafer, solar cell, solar module and other solar applications. Canadian Solar designs, manufactures and delivers solar products and solar systems for on-grid and off-grid use to customers worldwide. Canadian Solar is one of the world's largest solar module producers by manufacturing capacity. With operations in North America, Europe and Asia, Canadian Solar provides premium quality, cost-effective and environmentally-friendly solar solutions to support global sustainable development. For more information, visit http://www.canadian-solar.com .

Safe Harbor/Forward-Looking Statements:

Certain statements in this press release including statements regarding expected future financial and industry growth are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business and economic conditions and the state of the solar industry; governmental support for the deployment of solar power; future shortage or availability of the supply of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers, including customers of our silicon materials sales; changes in demand from major markets such as Germany; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling prices; delays in new product introduction; continued success in technological innovations and delivery of products with the features customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company's SEC filings, including its annual report on Form 20-F originally filed on June 8, 2009. Although the Company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.



                               Canadian Solar Inc.
            Unaudited Condensed Consolidated Statements of Operations
    (In Thousands of U.S. Dollars, Except Share And Per Share Data And Unless
                                Otherwise Stated)

         Item         2009 Q2     2009 Q1     2008 Q2     2009 H1     2008 H1

    Net revenues     $114,176     $49,465    $212,585    $163,641    $383,820

    Cost of revenues   91,096      53,360     179,509     144,456     322,509

    Gross profit
     (loss)            23,080      (3,895)     33,076      19,185      61,311

    Selling expenses    3,229       1,881       2,852       5,110       5,357
    General and
     administrative
     expenses           6,410       4,518       6,485      10,928      11,911
    Research and
     development
     expenses             530         470         447       1,000         749

    Total operating
     expenses          10,169       6,869       9,784      17,038      18,017
    Income (loss)
     from operations   12,911     (10,764)     23,292       2,147      43,294

    Interest expenses  (1,913)     (2,254)     (3,509)     (4,167)     (6,332)

    Interest income     2,849         563          59       3,412         161
    Gain on debt
     extinguishment        --          --       2,430          --       2,430

    Debt conversion
     expenses              --          --     (10,170)         --     (10,170)
    Gain (Loss)
     on foreign
     currency
    derivatives        (1,050)     11,366          --      10,316          --

    Exchange gain
    (loss)              6,038      (2,876)       (619)      3,162       7,693

    Income (loss)
     before taxes      18,835      (3,965)     11,483      14,870      37,076

    Income tax         (1,163)       (820)        580      (1,983)     (6,428)

    Net income
     (loss)           $17,672     $(4,785)    $12,063     $12,887     $30,648

    Basic earnings
     (loss) per
     share              $0.50      $(0.13)      $0.43       $0.36       $1.10
    Basic weighted
     average out-
     standing
     shares        35,699,453  35,686,313  28,085,875  35,692,919  27,738,862
    Diluted
     earnings (loss)
     per share          $0.49      $(0.13)      $0.41       $0.36       $1.05
    Diluted weighted
     average
     outstanding
     shares        36,141,329  35,686,313  29,384,701  35,802,842  29,210,678


    Note: The Q2 08 and H1 08 net profit were increased by $1.5 million and
          $1.1 million respectively as compared to the Q2 08 and H1 08 net
          profit as per press release announcements after the retrospective
          application of FASB Staff Position - APB 14-1 on January 1, 2009.



                               Canadian Solar Inc.
                 Unaudited Condensed Consolidated Balance Sheets
                          (In Thousands of U.S. Dollars)

                   Item                         2009.6.30         2008.12.31
    Assets
    Current assets
    Cash and cash equivalents                     $86,832           $115,661
    Restricted cash                               158,558             20,622
    Accounts receivable, net of
     allowance for doubtful accounts              115,679             51,611
    Inventories                                   107,635             92,683
    Value added tax recoverable                    18,728             15,900
    Advances to suppliers                          19,572             24,654
    Foreign currency derivative assets                 --              6,974
    Prepaid and other current assets               15,809             10,910
    Current assets - subtotal                     522,813            339,015
    Property, plant and equipment, net            172,348            165,542
    Intangible assets                                 219                263
    Advances to suppliers                          43,582             43,087
    Prepaid land use right                         12,658             12,782
    Investment                                      3,000              3,000
    Deferred tax assets - non current               6,537              6,966
    Total assets                                  761,157            570,655
    Liabilities and stockholders' equity
    Current liabilities
    Short term borrowings                         266,744            110,665
    Accounts payable                               59,536             29,957
    Other payables                                 21,810             24,043
    Advances from customers                         4,107              3,571
    Amounts due to related parties                     41                 94
    Foreign currency derivative liabilities           169                 --
    Other current liabilities                       6,608              4,333
    Current liabilities - subtotal                359,015            172,663
    Accrued warranty costs                         12,190             10,847
    Liability for uncertain tax positions           9,882              8,704
    Convertible notes                                 848                830
    Long term borrowings                           30,738             45,357
    Total liabilities                             412,673            238,401
    Common shares                                 395,252            395,154
    Additional paid in capitals                   (63,548)           (66,705)
    Retained earnings (Accumulated deficit)         1,783            (11,104)
    Accumulated other comprehensive income         14,997             14,909
    Total stockholders' equity                    348,484            332,254
    Total liabilities and stockholders'
     equity                                      $761,157           $570,655

SOURCE Canadian Solar Inc.

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