August 6, 2009

Kitchener, Canada: Canadian Solar Reports Second Quarter 2009 Results

Chinese manufacturer, Canadian Solar 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.

Q209 shipments were 48.2 MW, including 39.5 MW of conventional high efficiency polysilicon modules, 7.0 MW of 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 the largest contributing geographic market. 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 new, higher efficiency monocrystalline cells, Canadian Solar 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, average efficiency was about 16.1% during the quarter.

For the proprietary low-cost e-Modules, the average cell efficiency was about 15% during the quarter. On the cost side, Canadian Solar successfully reduced 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."

Based on the market situation, forecast and current order book, Canadian Solar expects to have shipments of approximately 90 MW to 100 MW in Q309. Canadian Solar now expects 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 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."

Further details about: Canadian Solar