Canadian Solar, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Shawn Qu: Reviewed 2024 performance, noting 31.1 GW annual module shipments and $6B revenue. Highlighted growth in energy storage, with SolBank 3.0 as an industry-leading solution. Updated on U.S. manufacturing facilities: Mesquite, Texas module factory ramping up, Indiana solar cell facility progressing, Kentucky energy storage facility set to deliver SolBanks in 2025.
• Yan Zhuang: Discussed CSI Solar's module shipments, with Q4 8.2 GW and full-year 31.1 GW. Energy storage saw record shipments in 2024, with 6.6 GWh full-year, +500% YOY. Focused on margin management through vertical integration and strategic market focus.
• Ismael Guerrero: Outlined Recurrent Energy's 2024 execution, with 1.3 GW solar projects to commercial operation and 1.4 GW solar/1.8 GWh BESS under construction. O&M business expanded, managing significant capacity, and pipeline stood at 25 GW solar/75 GWh storage.
• Xinbo Zhu: Presented financial results, noting Q4 revenue $1.5B, net income $34M, cash flow details, and significant impairments impacting margins.

Segment Performance

• CSI Solar: In Q4 2024, shipped 8.2 gigawatts of solar modules, with full-year 2024 module shipments totaling 31.1 gigawatts and revenue of US$6 billion. For energy storage, Q4 2024 shipments were 2.2 gigawatt hours, with full-year 2024 reaching 6.6 gigawatt hours, a more than 500% year-over-year increase. Revenue contribution from segments was tied to module shipments and energy storage growth.
• Recurrent Energy: 2024 was the largest execution year, with 1.3 gigawatts of solar projects brought to commercial operation across multiple regions. Sold 1.2 gigawatts of PV projects in 2024, and its O&M business expanded to become the 7th largest globally, managing 4.2 gigawatts of solar, 5.7 gigawatts of co-located solar plus storage, and 3.2 gigawatt hours of standalone storage worldwide.

Guidance

• Q1 2025: CSI Solar module shipments expected 6.4-6.7 GW (inc. ~400 MW to own project), energy storage 800 MWh (inc. 150 MWh to own project). Total revenue Q1 $1-1.2B, gross margin 9%-11%.
• Full-year 2025: Reiterated module shipment guidance 30-35 GW (inc. ~1 GW to own project), energy storage 11-13 GWh (inc. ~1 GWh to own project), revenue $7.3-8.3B. Anticipated margin improvement Q-to-Q due to ramping storage shipments and U.S. manufacturing ramp.

Risks

• Trade-related challenges: Tariffs/duties on solar modules and energy storage, including AD/CVD rulings on Southeast Asian imports and new U.S. tariffs impacting energy storage from China.
• Geopolitical uncertainties: Impact on all business lines, including policy changes in U.S. and China affecting market dynamics and margins.

Question and Answer

• **Q: Given changes in battery chemistries and price dynamics, talk about energy storage margins and Europe infrastructure.

A: Shawn Qu discussed battery chemistries, passing savings to customers while maintaining margin; Ismael Guerrero noted strong pipeline in EMEA but weak PV installations in Europe but strong storage demand.

• **Q: On Q1 guidance and manufacturing capacity, clarify cell capacity and TOPCon/PERC mix.

A: Yan Zhuang discussed price trends, ramping U.S. manufacturing, and focus on high-margin channels; Shawn Qu clarified cell capacity shift from PERC to TOPCon, Indiana facility to contribute in 2026.

• **Q: On Q1 margin factors, e-STORAGE shipments, trade duties.

A: Yan Zhuang and Xinbo Zhu explained Q1 margin impact from impairments, lower e-STORAGE shipments, and tariff inclusion in G&A.

• **Q: On G&A expenses, module shipment mix, steel tariffs.

A: Xinbo Zhu noted G&A impairments were one-off; Yan Zhuang discussed module shipment mix and steel tariffs already baked into cost structure.

• **Q: On Q1 margins, storage margins, pricing rebound.

A: Xinbo Zhu confirmed storage margins intact, module margins stable; Shawn Qu discussed pricing rebound in China due to policy changes, but second half expected price pressure.

• **Q: On tariff impacts, storage margins, cash deposits.

A: Shawn Qu and Xinbo Zhu discussed AD/CVD tariffs on Southeast Asian modules, impact on margins, and cash deposits related to retroactivity of duties pending final rulings.

• **Q: On margin impacts, AD/CVD, storage margin dynamics.

A: Shawn Qu and Brian Lee discussed tariff impacts on storage shipments, margin renegotiation with customers, and structural downtick in storage margins due to competition and new tariffs.