Canadian Solar announced its financial results for the third quarter ended September 30, 2015. Net revenue was $849.8 million, up 33.5% from $636.7 million in Q2 2015 and down 7.1% from $914.4 million in Q3 2014.
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Total solar module shipments in Q3 2015 were 1,198 MW, of which 1,150 MW were recognized in revenue, compared to 809 MW recognized in revenue in the second quarter of 2015 and 770 MW recognized in revenue in Q3 2014.
Solar module shipments recognized in revenue in Q3 2015 included 110.5 MW used in the Company's total solutions, compared to 90 MW in the second quarter of 2015 and 173 MW in Q3 2014.
By geography, in Q3 2015, sales to the Americas represented 52.6% of net revenue, sales to Asia represented 41.3% of net revenue, and sales to Europe and others represented 6.1% of net revenue, compared to 47.6%, 45.5% and 6.9% respectively, in the second quarter of 2015 and 71.7%, 20.4%, 7.9% respectively, in Q3 2014.
Gross profit in Q3 2015 was $126.8 million, compared to $96.5 million in the second quarter of 2015 and $209.3 million in Q3 2014. Gross margin in Q3 2015 was 14.9%, compared to 15.2% in the second quarter of 2015 and 22.9% in Q3 2014.
The sequential decrease in gross margin was primarily due to lower margin and lower contribution from the Company's total solutions business partially offset by lower module manufacturing cost.
Total operating expenses were $95.9 million in Q3 2015, up 49.8% from $64.1 million in the second quarter of 2015 and up 80.3% from $53.2 million in Q3 2014.
Selling expenses were $37.2 million in Q3 2015, up 15.5% from $32.2 million in the second quarter of 2015 and up 5.3% from $35.4 million in Q3 2014. The sequential increase in selling expenses was primarily due to an increase in sales commission and labor costs, partially offset by a decrease in shipping and handling costs.
The year-over-year increase in selling expenses was primarily due to an increase in sales commission, partially offset by a decrease in shipping and handling expenses.
General and administrative expenses were $54.6 million in Q3 2015, up 98.7% from $27.5 million in the second quarter of 2015 and up 272.7% from $14.7 million in Q3 2014.
The sequential increase in general and administrative expenses was primarily due to a provision of $20.8 million related to settlement of the LDK arbitration case, as well as higher legal and consulting fees. The year-over-year increase was primarily due to the "LDK provision", as well as consolidation of Recurrent Energy general and administrative expenses.
Research and development expenses were $4.1 million in Q3 2015, compared to $4.3 million in the second quarter of 2015 and $3.2 million in Q3 2014.
Income from operations was $30.9 million in Q3 2015, compared to $32.5 million in the second quarter of 2015, and $156.1 million in Q3 2014. Operating margin was 3.6% in Q3 2015, compared to 5.1% in the second quarter of 2015 and 17.1% in Q3 2014.
Non-cash, depreciation and amortization charges were approximately $24.8 million in Q3 2015, compared to $22.7 million in the second quarter of 2015, and $19.8 million in Q3 2014. Non-cash, equity compensation expense was $1.4 million in Q3 2015, compared to $2.0 million in the second quarter of 2015, and $1.4 million in Q3 2014.
Interest expense was $13.0 million in Q3 2015, compared to $12.9 million in the second quarter of 2015, and $12.0 million in Q3 2014.
Interest income was $4.2 million in Q3 2015, compared to $4.1 million in the second quarter of 2015 and $3.7 million in Q3 2014.
The Company recorded a loss on change in fair value of derivatives of $12.3 million in Q3 2015, compared to a gain of $1.6 million in the second quarter of 2015 and a gain of $15.4 million in Q3 2014.
Foreign exchange gain in Q3 2015 was $17.1 million compared to a foreign exchange loss of $4.4 million in the second quarter of 2015 and a foreign exchange loss of $20.9 million in Q3 2014.
Income tax benefit was $3.9 million in Q3 2015, compared to income tax expense of $2.7 million in the second quarter of 2015 and income tax expense of $34.4 million in Q3 2014.
Net income attributable to Canadian Solar was $30.4 million, or $0.53 per diluted share in Q3 2015, compared to net income of $17.9 million, or $0.31 per diluted share, in the second quarter of 2015, and net income of $104.2 million, or $1.75 per diluted share, in Q3 2014.
Non-GAAP net income attributable to Canadian Solar, excluding the impact of the LDK provision, was $46.0 million, or $0.79 per diluted share in Q3 2015. ■