Canadian Solar announced its financial results for the fourth quarter ended December 31, 2014. Net revenue for Q4 was $956.2 million, up 4.6% from $914.4 million in Q3 2014 and up 84.1% from $519.5 million in Q4 2013.
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Total solar module shipments in the fourth quarter of 2014 were 1,125 MW, with 897 MW recognized in revenue, compared to 770 MW recognized in the third quarter of 2014 and 621 MW in the fourth quarter of 2013. Solar module shipments recognized in revenue in the fourth quarter of 2014 included 163 MW used in the Company's total solutions business, compared to 173 MW in the third quarter of 2014 and 41 MW in the fourth quarter of 2013.
By geographic area, in the fourth quarter of 2014, sales to the Americas represented 61.8% of net revenue, sales to Asia and other markets represented 32.7% of net revenue, and sales to Europe represented 5.5% of net revenue, compared to 71.7%, 20.9% and 7.4%, respectively, in the third quarter of 2014 and 32.1%, 62.4% and 5.5%, respectively, in the fourth quarter of 2013.
Gross profit for the fourth quarter of 2014 was $184.9 million, compared to $209.3 million in the third quarter of 2014 and $101.3 million in the fourth quarter of 2013. Gross margin in the fourth quarter of 2014 was 19.3%, compared to 22.9% in the third quarter of 2014 and 19.5% in the fourth quarter of 2013.
The sequential decrease in gross margin was primarily due to the impact of the U.S. trade case, lower average selling price of modules as a result of the depreciation of Japanese Yen and Euro against the U.S. dollar, and lower margin from the total solutions business in Canada.
Total operating expenses were $68.9 million in the fourth quarter of 2014, up 29.5% from $53.2 million in the third quarter of 2014 and 23.1% from $56.0 million in the fourth quarter of 2013. The sequential and year-over-year increases in total operating expenses were primarily due to higher general and administrative expenses as explained below.
Selling expenses were $36.2 million in the fourth quarter of 2014, up 2.4% from $35.4 million in the third quarter of 2014 and 27.3% from $28.5 million in the fourth quarter of 2013. The sequential increase in selling expenses was primarily due to higher salary and bonus expenses as well as higher shipping and handling expenses.
The year-over-year increase in selling expenses was primarily due to higher shipment volume as well as increases in salaries.
General and administrative expenses were $29.3 million in the fourth quarter of 2014, up 99.7% from $14.7 million in the third quarter of 2014 and 20.6% from $24.3 million in the fourth quarter of 2013.
Excluding the $4.3 million reversal of bad debt provision in the third quarter of 2014, the sequential increase in general and administrative expenses was primarily due to higher legal fees related to trade and other cases, impairment of certain idle assets of approximately $2 million and higher salary and bonus expenses. The year-over-year increase in general and administrative expenses was primarily due to higher salary and bonus expenses and higher legal fees and consulting expenses.
Research and development expenses were $3.4 million in the fourth quarter of 2014, compared to $3.2 million in the third quarter of 2014 and $3.2 million in the fourth quarter of 2013.
Income from operations was $116.0 million in the fourth quarter of 2014, compared to $156.1 million in the third quarter of 2014 and $45.3 million in the fourth quarter of 2013.Operating margin was 12.1% in the fourth quarter of 2014, compared to 17.1% in the third quarter of 2014 and 8.7% in the fourth quarter of 2013.
Non-cash, depreciation and amortization charges were approximately $22.2 million in the fourth quarter of 2014, compared to $20.8 million in the third quarter of 2014, and $19.2 million in the fourth quarter of 2013. Non-cash, equity compensation expense was $1.2 million in the fourth quarter of 2014, compared to $1.4 million in the third quarter of 2014, and $0.8 million in the fourth quarter of 2013.
Interest expense was $12.1 million in the fourth quarter of 2014, compared to $12.0 million in the third quarter of 2014 and $9.9 million in the fourth quarter of 2013. The year-over-year increase in interest expense was primarily due to the interest payable on the convertible senior notes issued in the first quarter 2014.
Interest income in the fourth quarter of 2014 was $4.2 million, compared to $3.7 million in the third quarter of 2014 and $2.8 million in the fourth quarter of 2013.
The Company recorded a gain on change in fair value of derivatives of $14.9 million in the fourth quarter of 2014, compared to a gain of $15.4 million in the third quarter of 2014 and a gain of $8.9 million in the fourth quarter of 2013. Foreign exchange loss in the fourth quarter of 2014 was $19.8 million compared to foreign exchange loss of $20.9 million in the third quarter of 2014 and foreign exchange loss of $18.5 million in the fourth quarter of 2013.
Income tax expense in the fourth quarter of 2014 was $27.5 million, compared to income tax expense of $34.4 million in the third quarter of 2014 and income tax expense of $3.7 million in the fourth quarter of 2013.
Net income attributable to Canadian Solar in the fourth quarter of 2014 was $75.7 million, or $1.28 per diluted share, compared to net income of $104.2 million, or $1.75 per diluted share, in the third quarter of 2014, and net income of $20.9 million, or $0.39 per diluted share, in the fourth quarter of 2013.
The company had $1.02 billion of cash, cash equivalents and restricted cash as of December 31, 2014, compared to $817.2 million as of September 30, 2014. ■