Canadian Solar showed strong revenue growth in Q2 2022 off the back of sales of solar modules and solar projects. (Courtesy Canadian Solar)

Canadian Solar (CSIQ-Q) reported “significant” growth driven by shipments of solar modules and project sales in Q2 2022, as its revenue and gross margin beat expectations.

The Guelph, Ont.-headquartered firm said it earned $3 billion in revenue in Q2 2022 (ended June 30) from its CSI Solar and Global Energy subsidiaries. It exceeded the $1.6 billion in revenue earned in Q1 2022 and $1.8 billion in Q2 2021.

The company beat a revenue guidance range expecting $2.8 billion to $2.9 billion in Q2 2022. Gross margin was similar, as the 16 per cent figure beat the guidance of 14.5 per cent to 15.5 per cent for the quarter.

Operating expenses saw a notable increase however, with the company spending $330 million in Q2 2022. In Q1 2022, Canadian Solar spent $214 million on operating expenses, while in Q2 2021 it spent $205 million.

Canadian Solar profit, net income both rise

Canadian Solar reported a gross profit of $480 million and net income of $114 million, compared to a $234 million gross profit and $11.5 million net income in Q1 2022. The company said higher shipping, handling expenses and an impairment charge related to certain manufacturing assets impacted the bottom line.

CEO Shawn Qu attributed the better-than-expected revenue growth in Q2 2022 to its module shipments, which grew by nearly 40 per cent, and its battery storage solutions. Canadian Solar shipped 5.06 GW of modules to more than 70 countries in Q2 2022, with the top five markets being China, the U.S., Spain, Brazil and Germany.

He said the company’s capacity growth strategy is “well on track, which we expanded per our recent announcement to invest in our own polysilicon capacity in a region rich in renewable energy resources.”

Qu added this will allow Canadian Solar to gain further control over sourcing, technology and supply chain, which is “part of a long-term plan to increase our market share while meaningfully reducing the carbon footprint of our supply chain.”

Yan Zhuang, president of CSI Solar, said its Q2 2022 performance was also boosted by a substantial foreign exchange gain from a strong U.S. dollar relative to the renminbi.

Total debt stood at $3.4 billion in Q2 2022, largely unchanged from Q1 2022.

Shining a light on the future

The company’s current pipeline of solar projects is 26.2 GWp, including 1.3 GWp under construction, 3.9 GWp of backlog, and 21.0 GWp of projects in advanced and early-stage pipelines.

Of its 10,000 solar projects in the advanced pipeline, most are in Europe, the Middle East and Africa region (4,033), Latin America (3,417) and North America (2,767). Almost three-fourths of its 1,323 solar projects under construction are in Latin America.

“From a market standpoint, we are encouraged by signs of a shift in customer behaviour driven by a growing awareness of solar energy’s attractive economics and its importance in energy security and climate change mitigation efforts, especially when paired with battery storage,” Zhuang said.

In Q2 2022, Canadian Solar made battery storage shipments totalling 800 MWh.

Ismael Guerrero, corporate vice president and president of Global Energy, said Canadian Solar was encouraged by the Inflation Reduction Act (IRA), recently signed into law in the U.S. Qu anticipates the IRA to accelerate demand for clean energy, particularly solar energy and battery storage.

Guerrero pointed to Recurrent Energy, a subsidiary, as a beneficiary of the billions of dollars available from the IRA. It has eight GWp of solar and 16.5 GWh of battery storage in the pipeline.

Strong cash position

Senior vice president and CFO Huifeng Chang noted the company’s total cash position of $2.5 billion, which grants “significant financial flexibility to fund long-term growth opportunities, including accelerating our upstream capacity expansion.”

A conference call document shows the company expects 6.0 to 6.2 GW of solar module shipments in Q3 2022, revenues between $2.6 billion to $2.7 billion and a gross margin of 15 per cent to 16.5 per cent.

The company’s latest developments include: the publishing of its ESG report; an investment agreement with the municipal government of Haidong City in Qinghai Province to invest in a polysilicon manufacturing facility; and completing the sale of two fully permitted and construction-ready solar and battery energy storage projects in the U.K. to Gresham House.