Canadian Solar (NASDAQ: CSIQ) reported Q2 EPS of $0.26, $0.01 worse than the analyst estimate of $0.27. Revenue for the quarter came in at $650.6 million versus the consensus estimate of $684.63 million.

• Solar module shipments were 1,700 MW, including 246 MW shipped to the Company's own solar projects not recognized into revenue in the quarter. This compares to the module shipment of 1,374 MW in the first quarter of 2018, and second quarter 2018 module shipment guidance in the range of 1,500 MW to 1,600 MW.
• Net revenue was $650.6 million, compared to $1.42 billion in the first quarter of 2018, and second quarter 2018 guidance in the range of $690 million to $730 million. The sequential decrease in net revenue is the result of lower revenue from project sales ($879.9 million in Q1 and $85.6 million in Q2) and lower average selling prices for our solar modules. The lower revenue compared to the guidance is due to the deferral of several planned project sales to later quarters.
• Net revenue from the total solutions business as a percentage of total net revenue was 20.1% compared to 64.2% in the first quarter of 2018.
• Gross margin was 24.5%, including the benefits of two AD/CVD reversals of $13.1 million and $12.6 million, based on the final rates of Solar 2 AD AR2 and Solar 1 CVD AR4, respectively. Excluding these AD/CVD reversal benefits, gross margin was 20.5%, compared to 10.1% in the first quarter of 2018, and second quarter 2018 guidance of a range of 20.0% to 22.0%.
• Net income attributable to Canadian Solar was $15.6 million, or $0.26 per diluted share, compared to net income of $43.4 million, or $0.72 per diluted share, in the first quarter of 2018.
• Cash, cash equivalents and restricted cash balances at the end of the quarter totaled $991.1 million, compared to $1.19 billion at the end of the first quarter of 2018.
• Net cash used in operating activities was approximately $174 million, compared to net cash provided by operating activities of $253 million in the first quarter of 2018.
• The Company's portfolio of utility-scale solar power plants in operation as of July 31, 2018 was approximately 1.4 GWp with an estimated total resale value of approximately $1.6 billion. Only the value of class B shares which the Company holds in its tax equity solar power plants in the U.S. is included in this resale value.

Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar, commented, "Our second quarter revenue was affected by the deferral of several project sales as well as an industrywide lower average module selling price. The solar policy change in China effective on May 31, 2018 has caused a significant disruption in China, and the global solar industry. We also incurred a relatively large foreign exchange loss due to the depreciation of currencies in certain developing countries against US dollar during the quarter. However, we are confident we can navigate this challenging period given our proven track record even in prior periods of volatility. On the energy business side, as of July 31, 2018, we have increased our late-stage, utility-scale solar power project pipeline to 2.2 GWp and our portfolio of solar power plants in operation to 1.4 GWp."

Dr. Huifeng Chang, Senior Vice President and Chief Financial Officer of Canadian Solar, commented, "We were able to improve our gross margin excluding the AD/CVD reversal benefits to 20.5% as we balanced higher than expected shipments of solar modules with our continued focus on cost controls. During the quarter, we achieved several milestones in our energy business. We energized a large fleet of solar power projects in China, Brazil, Japan and Australia. We further diversified our late-stage, utility-scale solar power project pipeline in new countries, including Malaysia. Finally, we are on track to monetize additional solar power assets, including three of our solar power plants in the U.S. totaling 394 MWp.Our continued progress in this regard reflects our ongoing efforts to improve our balance sheet."

GUIDANCE:

Canadian Solar sees FY2018 revenue of $4-4.2 billion, versus the consensus of $4.26 billion.

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