GUELPH, ON, May 9, 2024 /PRNewswire/ -- Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ:CSIQ) today announced financial results for the first quarter ended March 31, 2024. Highlights Solar module shipments of 6.3 GW, in line with guidance of 6.1 GW to 6.4 GW. Net revenues of $1.3 billion, in line with guidance of $1.2 billion to $1.4 billion. 19.0% gross margin, at the high end of 17% to 19% guidance range. Net income attributable to Canadian Solar of $12 million or $0.19 per diluted share. Record quarterly delivery by e-STORAGE, with revenue topping the total of 2023. Appointment of Mr. Xinbo Zhu as Senior Vice President and Chief Financial Officer, effective May 15, 2024. Most recently, Mr. Zhu served as Chief Supply and Risk Officer of Recurrent Energy. Dr. Huifeng Chang, who has served as Chief Financial Officer since May 2016, will transition into his new role within the Company as Chief Strategy Officer. Dr. Shawn Qu, Chairman and CEO, commented, "Shipments, revenue, and gross margin met our expectations. We continue to apply tailored strategies across our diverse businesses. In our module business, we are concentrating on profitable growth and expanding our market share in key strategic markets. Demand remains robust, and we are witnessing signs of improvement in distributed generation markets and select geographies. At Recurrent Energy, we are working to close the BlackRock investment and executing on our expansive solar and battery energy storage project development pipeline. At the same time, our e-STORAGE platform continues to grow rapidly, as we secure contracts in new markets and advance our proprietary technologies for both utility-scale and residential applications." Yan Zhuang, President of Canadian Solar's CSI Solar subsidiary, said, "Despite the seasonally softer first quarter, we delivered strong results. Our strategic approach to managing volume significantly enhanced our margins. This improvement was supported by a decrease in polysilicon prices and our continued ramping of N-type TOPCon capacity. With the rapid phaseout of PERC and the narrowing cost differential between these technologies, TOPCon has become the market's preferred choice. We are well-positioned, as we continue to reduce our manufacturing costs and enhance vertical integration. Additionally, e-STORAGE delivered a record quarter, achieving volume and revenue comparable to the totals for all of 2023." Ismael Guerrero, CEO of Canadian Solar's Recurrent Energy subsidiary, said, "Following our announcement of a $500 million capital commitment from BlackRock in January, we have secured most requisite regulatory approvals and are expecting to obtain the rest in due course. We are dedicated to executing our extensive project pipeline, which includes nearly 1.5 GW of solar projects currently under construction. This quarter, we also expanded our presence in Spain with a strategic acquisition, adding over 420 MWp to our pipeline." Dr. Huifeng Chang, Senior VP and CFO, added, "For the first quarter of 2024, we reported $1.3 billion in revenue, a gross margin of 19.0%, and net income of $12 million, achieving results within our guidance. We efficiently progressed our strategic manufacturing initiatives across vertical integration, N-type TOPCon capacity, and U.S. supply chain. Our total assets have surpassed $12 billion, driven by significant growth in project assets and solar power systems, setting the stage for future profit generation. Finally, we concluded the quarter with a strong cash position of $2.9 billion." First Quarter 2024 Results Total module shipments recognized as revenues in the first quarter of 2024 were 6.3 GW, up 4% year-over-year ("yoy"). Of the total, 236 MW were shipped to the Company's own utility-scale solar power projects. Net revenues in the first quarter of 2024 decreased 22% quarter-over-quarter ("qoq") and 22% yoy to $1.3 billion. The sequential decrease primarily reflects a decline in solar module shipment volume, a decline in module average selling price ("ASP"), partially offset by higher battery energy storage solutions sales. The yoy decrease primarily reflects a decline in module ASP, partially offset by higher battery energy storage solutions sales and an increase in solar module shipment volume. Gross profit in the first quarter of 2024 was $253 million, up 18% qoq and down 21% yoy. Gross margin in the first quarter of 2024 was 19.0%, compared to 12.5% in the fourth quarter of 2023 and 18.7% in the first quarter of 2023. The gross margin sequential increase was primarily caused by lower manufacturing costs, partially offset by lower module ASPs. The gross margin yoy increase was primarily driven by lower manufacturing costs and a higher margin contribution from battery energy storage solutions sales, partially offset by lower module ASPs. Total operating expenses in the first quarter of 2024 were $204 million, compared to $213 million in the fourth quarter of 2023 and $172 million in the first quarter of 2023. Depreciation and amortization charges in the first quarter of 2024 were $110 million, compared to $89 million in the fourth quarter of 2023 and $68 million in the first quarter of 2023. The sequential and yoy increases were primarily driven by the Company's continued investment in vertical integration and incremental capacity expansion. Net interest expense in the first quarter of 2024 was less than $1 million, compared to $18 million in the fourth quarter of 2023 and $12 million in the first quarter of 2023. The sequential and yoy decreases in net interest expense were mainly driven by an interest benefit deriving from the interest income generated by anti-dumping and countervailing duty deposit refunds. Net foreign exchange and derivative loss in the first quarter of 2024 was $4 million, compared to a net gain of less than $1 million in the fourth quarter of 2023 and a net loss of $13 million in the first quarter of 2023. Net income attributable to Canadian Solar in the first quarter of 2024 was $12 million, or $0.19 per diluted share, compared to a net loss of $1 million, or $0.02 per diluted share, in the fourth quarter of 2023, and net income of $84 million, or $1.19 per diluted share, in the first quarter of 2023. Net cash flow used in operating activities in the first quarter of 2024 was $291 million, compared to net cash flow provided by operating activities of $190 million in the fourth quarter of 2023 and $47 million in the first quarter of 2023. The operating cash outflow primarily resulted from increased inventories and project assets. Total debt was $4.3 billion as of March 31, 2024, including $2.2 billion, $1.9 billion, and $0.2 billion related to CSI Solar, Recurrent Energy, and convertible notes respectively. Total debt increased as compared to $3.6 billion as of December 31, 2023 due to incremental borrowings for working capital and additional vertical integration for CSI Solar, and new project development for Recurrent Energy. Business Segments The Company has two business segments: Recurrent Energy and CSI Solar. The two businesses operate as follows:   Recurrent Energy is one of the world's largest clean energy project development platforms with 15 years of experience, having delivered over 10 GWp of solar power projects and 3.3 GWh of battery energy storage projects. It is vertically integrated and has strong expertise in greenfield origination, development, financing, execution, operations and maintenance, and asset management. CSI Solar consists of solar module and battery energy storage manufacturing, and delivery of total system solutions, including inverters, solar system kits, and EPC (engineering, procurement, and construction) services. CSI Solar's e-STORAGE branded battery energy storage business includes its utility-scale turnkey battery energy system solutions, as well as a small but growing residential battery energy storage business. These battery energy storage systems solutions are complemented with long-term service agreements, including future battery capacity augmentation services. Recurrent Energy Segment As of March 31, 2024, the Company held a leading position with a total global solar development pipeline of 26 GWp and a battery energy storage development pipeline of 56 GWh. While Recurrent Energy's business model was historically predominantly develop-to-sell, the Company has been adjusting its strategy to create greater asset value and retain greater ownership of projects in select markets to increase revenues generated through recurring income, such as power sales, operations and maintenance, and asset management income. The business model consists of three key drivers: Electricity revenue from operating portfolio to drive stable, diversified cash flows in growth markets with stable currencies; Asset sales (solar power and battery energy storage) in the rest of the world to drive cash-efficient growth model, as value from project sales will help fund growth in operating assets in stable currency markets; and Power services (O&M) and asset management through long-term operations and maintenance ("O&M") contracts, currently with 9.3 GW of contracted projects, to drive stable and long-term recurring earnings and synergies with the project development platform. In January 2024, the Company announced a $500 million investment from BlackRock. The investment will provide Recurrent Energy with additional capital to grow its high value project development pipeline while executing its strategy to transition from a pure developer to a developer plus long-term owner and operator in select markets including the U.S. and Europe. This transition is expected to create a more diversified portfolio and provide more stable long-term revenue in low-risk currencies and enable Recurrent Energy to create and retain greater value in its own project development pipeline. The perimeter of the transaction includes the U.S., Canada, Spain, Italy, the U.K., France, the Netherlands, Germany, South Africa, Brazil, Chile, Colombia, Australia, South Korea and Taiwan; and excludes Canadian Solar's project development business in China and Japan, and certain assets in Latin America and Taiwan. Closing of the transaction is subject to regulatory approvals and certain terms and conditions in accordance with the transaction agreements. The $500 million investment will represent 20% of the outstanding fully diluted shares of Recurrent Energy on an as-converted basis. Canadian Solar will continue to own the remaining majority shares of Recurrent Energy after the closing of the investment. Project Development Pipeline – Solar As of March 31, 2024, Recurrent Energy's total solar project development pipeline was 26.3 GWp, including 1.5 GWp under construction, 5.0 GWp of backlog, and 19.8 GWp of projects in advanced and early-stage pipelines, defined as follows:  Backlog projects are late-stage projects that have passed their risk cliff date and are expected to start construction in the next 1-4 years. A project's risk cliff date is the date on which the project passes the last high-risk development stage and varies depending on the country where it is located. This is usually after the projects have received all the required environmental and regulatory approvals, and entered into interconnection agreements, feed-in tariff ("FIT") arrangements, and power purchase agreements ("PPAs"). A significant majority of backlog projects are contracted (i.e., have secured a PPA or FIT), and the remaining have a reasonable assurance of securing PPAs. Advanced pipeline projects are mid-stage projects that have secured or have more than 90% certainty of securing an interconnection agreement. Early-stage pipeline projects are early-stage projects controlled by Recurrent Energy that are in the process of securing interconnection. While the magnitude of the Company's project development pipeline is an important indicator of potential expanded power generation and battery energy storage capacity as well as potential future revenue growth, the development of projects in its pipeline is inherently uncertain. If the Company does not successfully complete the pipeline projects in a timely manner, it may not realize the anticipated benefits of the projects to the extent anticipated, which could adversely affect its business, financial condition, or results of operations. In addition, the Company's guidance and estimates for its future operating and financial results assume the completion of certain solar projects and battery energy storage projects that are in its pipeline. If the Company is unable to execute on its actionable pipeline, it may miss its guidance, which could adversely affect the market price of its common shares and its business, financial condition, or results of operations. The following table presents Recurrent Energy's total solar project development pipeline. Solar Project Development Pipeline (as of March 31, 2024) – MWp* Region In Construction Backlog Advanced Pipeline Early-Stage Pipeline Total North America 424 212 1,432 4,281 6,349 Europe, the Middle East, and Africa ("EMEA") 47** 2,377 2,408 5,110 9,942 Latin America 896** 867 83 2,832 4,678 Asia Pacific excluding China and Japan - 173 718 1,418 2,309 China 100 1,220** - 1,460 2,780 Japan 32 164 14 30 240 Total 1,499 5,013 4,655 15,131 26,298 *All numbers are gross MWp. **Including 388 MWp in construction and 159 MWp in backlog that are owned by or already sold to third parties. Project Development Pipeline – Battery Energy Storage As of March 31, 2024, Recurrent Energy's total battery energy storage project development pipeline was 55.9 GWh, including 4.3 GWh under construction and in backlog, and 51.6 GWh of projects in advanced and early-stage pipelines. The table below sets forth Recurrent Energy's total battery energy storage project development pipeline. Battery Energy Storage Project Development Pipeline (as of March 31, 2024) – MWh Region In Construction Backlog Advanced Pipeline Early-Stage Pipeline Total North America - 1,600 2,180 15,084 18,864 EMEA - 150 6,057 18,174 24,381 Latin America - 1,725 800 - 2,525 Asia Pacific excluding China and Japan 8 440 400 1,240 2,088 China 400 - - 6,000 6,400 Japan - 8 767 900 1,675 Total 408 3,923 10,204 41,398 55,933 Projects in Operation – Solar Power and Battery Energy Storage Power Plants (Including Unconsolidated Projects) As of March 31, 2024, the solar power plants in operation totaled around 1.2 GWp, with a combined estimated net resale value of approximately $850 million. The estimated net resale value is based on selling prices that Recurrent Energy is currently negotiating or comparable asset sales. Battery energy storage plants in operation totaled 600 MWh as of March 31, 2024. Power Plants in Operation* North America EMEA Latin America Asia Pacific ex. China and Japan China Japan Total Solar (MWp) - 54 836 6 292 59 1,247 Battery Energy Storage (MWh) 280 - 20 300 - 600 *All numbers are net MWp or MWh owned by Recurrent Energy; total gross MWp of solar projects is 1,992MWp and total gross battery energy storage projects is 1,720 MWh, including volume that is already sold to third parties.   Operating Results The following table presents select unaudited results of operations data of the Recurrent Energy segment for the periods indicated. Recurrent Energy Segment Financial Results (In Thousands of U.S. Dollars, Except Percentages) Three Months Ended March 31, 2024 December 31, 2023 March 31, 2023 Net revenues 39,433 53,750 20,052 Cost of revenues 26,381 31,995 12,843 Gross profit 13,052 21,755 7,209 Operating expenses 33,573 22,938 22,414 Loss from operations* (20,521) (1,183) (15,205) Gross margin 33.1 % 40.5 % 36.0 % Operating margin -52.0 % -2.2 % -75.8 % * Loss from operations reflects management's allocation and estimate as some services are shared by the Company's two business segments. CSI Solar Segment  Solar Modules and Solar System Kits CSI Solar shipped 6.3 GW of solar modules and solar system kits to more than 70 countries in the first quarter of 2024. For the first quarter of 2024, the top five markets ranked by shipments were China, the U.S., Pakistan, Brazil, and Spain. CSI Solar's revised manufacturing capacity expansion targets are set forth below. Solar Manufacturing Capacity, GW* March 2024 Actual June 2024 Plan December 2024 Plan Ingot 20.4 20.4 50.4 Wafer 24.0 28.0 50.0 Cell 48.4 48.4 55.7 Module 58.0 60.0 61.0 *Nameplate annualized capacities at said point in time. Capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans.  e-STORAGE: Battery Energy Storage Solutions e-STORAGE is CSI Solar's utility-scale battery energy storage platform. e-STORAGE provides customers with competitive turnkey, integrated, utility-scale battery energy storage solutions, including bankable, end-to-end, utility-scale, turnkey battery energy storage system solutions across various applications. System performance is complemented with long-term service agreements, which include future battery capacity augmentation services and bring in long-term, stable income. As of March 31, 2024, e-STORAGE had a total project turnkey pipeline of around 56 GWh, which includes both contracted and in-construction projects, as well as projects at different stages of the negotiation process. In addition, e-STORAGE had approximately 3.1 GWh of operating battery energy storage projects contracted under long-term service agreements, all of which were battery energy storage projects previously executed by e-STORAGE. As of March 31, 2024, the contracted backlog, including contracted long-term service agreements, was $2.5 billion. These are signed orders with contractual obligations to customers, providing significant earnings visibility over a multi-year period. The table below sets forth e-STORAGE's manufacturing capacity expansion targets. Battery Energy Storage Manufacturing Capacity, GWh* March 2024 Actual December 2025 Plan SolBank 20.0 30.0 *Nameplate annualized capacities at said point in time. Capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans. Operating Results  The following table presents select unaudited 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) Three Months Ended March 31, 2024 December 31, 2023 March 31, 2023 Net revenues 1,342,153 1,701,320 1,709,730 Cost of revenues 1,094,568 1,494,723 1,394,121 Gross profit 247,585 206,597 315,609 Operating expenses 165,113 166,120 146,151 Income from operations 82,472 40,477 169,458 Gross margin 18.4 % 12.1 % 18.5 % Operating margin 6.1 % 2.4 % 9.9 % *Include effects of both sales to third-party customers and to the Company's Recurrent 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. The table below provides the geographic distribution of the net revenues of CSI Solar: CSI Solar Net Revenues Geographic Distribution* (In Millions of U.S. Dollars, Except Percentages) Q1 2024 % of Net Revenues Q4 2023 % of Net Revenues