Canadian Solar Inc. Q4 FY2025 earnings call

• 2025 was a challenging year with market headwinds and regulatory shifts. Prioritized margin and diversified profit drivers, especially in energy storage.
• In fourth quarter, solar module shipment was 4.3 gigawatts, below guidance; storage shipments delayed.
• Canadian Solar announced strategic initiative to resume direct oversight of US operations with ES PowerTech.
• In US manufacturing, Mesquite solar module factory ramped to over 5 gigawatts annual run rate, plans to double capacity to 10 gigawatts by end of 2026. Jeffersonville solar cell factory expanding, phase I to have 2.1 gigawatt peak, phase II to add 4.2 gigawatt.
• Delayed progress at battery cell and batch production facility in Kentucky. Recurrent Energy rebalancing business towards monetizing construction and operating assets.

In the fourth quarter, Canadian Solar shipped 4.3 gigawatts of solar modules. For the year, total global solar module shipments were 24.3 gigawatts. In energy storage, global shipments were 7.8 gigawatt hours for the year, including 3.9 gigawatt hours to the US. Total revenue in 2025 was $5.6 billion. Growth margin improved by 160 basis points year over year. Recurrent Energy's project sales were lighter, leading to operating loss. Solar module ASPs were at record lows. Storage shipments were delayed. Gross margin was impacted by project asset impairments and inventory write-downs.

• First quarter 2026: Solar module shipments 2.2 - 2.4 gigawatts; energy storage shipments 1.7 - 1.9 gigawatt hours; total revenue $900 million - $1.1 billion; gross margin 13 - 15%.
• Full year 2026: Module shipments 6.5 - 7 gigawatts; US energy storage shipments 4.5 - 5.5 gigawatt hours. Solar module shipments in US slightly lower in 2026 due to limited non - PFE solar cell supply initially, but expected to improve as domestic production ramps; storage shipments weighted towards second half.

• Volatile macroenvironment causing FX losses and increased interest costs.
• Policy uncertainties impacting energy storage customers' project planning.
• Project delays due to permitting issues in some countries.
• IP legal cases and potential impacts on technology and market position.
• Market turbulence and supply chain issues affecting volume and margin.

Q: Curious about the pricing environment in the U.S. and long - term support for pricing that supports aggressive capacity expansion.

A: Sean spoke about solar long - term price in US being stable, US utility - scale project market pricing per watt up, storage price also stable reflecting lithium and other commodity price increases, allowing to maintain growth margin.

Q: From an organizational perspective, how to think about operating expenses and baseline for operating leverage as top line grows again.

A: Operating expenses proportional to shipment volume, shipping cost and overhead cost part of it, volume growth leads to operating expense growth, volume down leads to expense down, but challenges if solar price continues down.

Q: What drove project sale delays from Q4 to 2026 and impairments.

A: Ismail said mainly permitting delays, also changes in legislation in some countries and interconnection cost issues, and impairments due to changes in regulations and non - viable projects.

Q: Why 2026 guidance focused on US although Q1 has global numbers and capex.

A: Sean explained provided global guidance in Nov last year, new US guidance put in writing, CapEx mainly in US with some in Southeast Asia for energy storage production.

Q: On JTA expansion, capital needs, FEOC compliance, gross margins target, and orders for US factories.

A: Sean talked about compliance with OBBA through structure, CAPEX for US manufacturing, not guiding gross margin typically but shared previous margins, and volume not priority over profit with challenges in volume.

Q: About data center energy storage project.

A: Colin commented on the 2.5 gigawatt hour order for a major US utility as front - of - the - meter solution, and total power solution approach for data centers including auxiliary and generation equipment.