Canadian Solar Q1 Earnings Call Highlights
Canadian Solar (NASDAQ:CSIQ) reported first-quarter 2026 revenue at the high end of its forecast and a stronger-than-expected gross margin, helped by tariff refund accruals, while the company still posted a net loss amid higher operating costs, foreign exchange losses and tax expense accruals.
Executive Chairman and Chief Technology Officer Dr. Shawn Qu said the company “started the year with strong momentum,” recognizing revenue on 2.5 gigawatts of solar modules and 2.1 gigawatt-hours of energy storage solutions, both above guidance. Total revenue was $1.1 billion, while gross margin was 25.1%.
Canadian Solar recorded a net loss attributable to shareholders of $32 million, or $0.71 per diluted share. Qu said the quarter’s profitability was affected by elevated non-logistics operating expenses, foreign exchange losses and tax expenses tied to the tariff refund.
Qu said the solar downturn has lasted longer than expected, and that Canadian solar has responded by focusing its module business on “key attractive markets” and reducing volumes in less profitable markets. He described the company’s approach as a “profit-first strategy.”
Leadership Transition Announced
Canadian Solar also announced a leadership transition, with Colin Parkin taking over as chief executive officer. Parkin previously served as president of Canadian Solar and president of e-STORAGE.
Qu said the succession followed a long-term planning process approved unanimously by the board. Qu will remain executive chairman and chief technology officer, focusing on the company’s technology roadmap and long-term research and development strategy.
“Today, we are navigating a pivotal shift from volume-driven expansion to value-driven leadership,” Qu said.
U.S. Manufacturing Expansion Remains Central
Parkin said U.S. manufacturing is the first pillar of Canadian Solar’s global strategy. The company’s Solar cell factory in Jeffersonville, Indiana, produced its first trial heterojunction, or HJT, Solar cell at the end of March. Parkin said the first phase has 2.1 gigawatts peak of nameplate capacity and is expected to ramp over the next two quarters.
The company is also expanding beyond its original U.S. solar cell capacity plan. Parkin said Canadian solar expects to begin trial production for a second phase early next year, adding 4.2 gigawatts peak and bringing total U.S. solar cell nameplate capacity to 6.3 gigawatts peak.
Canadian Solar is also expanding its Mesquite, Texas, Solar module factory. Parkin said the facility reached full ramp last year and is expected to double nameplate capacity to 10 gigawatts peak by the second half of this year, enabling the company to fulfill future U.S. volumes from the Texas site.
In the first quarter, the manufacturing segment generated $950 million in revenue and a gross margin of 29.1%. Parkin said the sequential gross margin increase was driven by healthy energy storage volumes and the tariff refund. The segment posted operating income of $127 million.
During the question-and-answer session, Qu said the company expects commercial operations from the U.S. cell facility “somewhere in July,” with the first modules using those cells potentially delivered to customers in August or September. He cautioned that producing HJT cells in the U.S. is a first for the industry and “not an easy task.”
Energy Storage Backlog Reaches $3.5 Billion
Parkin said e-STORAGE shipped 2.6 gigawatt-hours of energy storage solutions during the quarter, including 500 megawatt-hours to internal and external projects under execution. Revenue was recognized on 2.1 gigawatt-hours.
The company said its internal production of lithium iron phosphate prismatic cells has become a competitive advantage, with a cost basis below the market price of third-party cells. Parkin said the company is expanding both battery cell and SolBank capacity at its integrated battery energy storage system and battery cell factory in Southeast Asia, with new production lines expected to come online in the first half of 2027.
As of May, Canadian Solar’s contracted e-STORAGE backlog totaled $3.5 billion, including 34 gigawatt-hours of operating projects under long-term service agreements.
Parkin said the company continues to pursue both front-of-the-meter and behind-the-meter data center applications. In response to an analyst question, he said Canadian Solar is “very engaged” on data center opportunities, though he said the company could not disclose the parties involved.
Recurrent Energy Posts Loss While Monetizing Assets
Ismael Guerrero, chief executive officer of Recurrent Energy, said the project development subsidiary generated $139 million in first-quarter revenue, improving sequentially because of the sale of the Fort Duncan project. Guerrero called Fort Duncan the first standalone battery energy storage system project in the company’s portfolio financed with non-recourse project finance and without a capacity contract in place.
However, Recurrent Energy posted an operating loss of $60 million. Guerrero said relatively muted project sales and ongoing platform operating costs weighed on results. He added that monetizing operating and under-construction assets may create uneven profit-and-loss impacts in the near term, but said the strategy is necessary to reduce balance sheet leverage and recycle capital.
As of March 31, Recurrent Energy had secured interconnections for 7 gigawatts of solar and 14 gigawatt-hours of storage globally, excluding projects already in operation. Its total pipeline stood at 24 gigawatts of solar and 81 gigawatt-hours of energy storage. The company’s operations and maintenance platform had a contracted portfolio of 15 gigawatts, including 11.2 gigawatts already operational.
Second-Quarter Guidance Calls for Lower Margin
Chief Financial Officer Xinbo Zhu said first-quarter gross margin was boosted by the accrual of tariff refunds, which contributed 860 basis points. He said that even excluding the one-time benefit, gross margin exceeded guidance because of strong storage volumes and a healthy geographic mix of solar module volumes.
Zhu said net cash used in operating activities was $209 million, mainly due to increased inventories tied to the U.S. solar and storage businesses. Canadian solar ended the quarter with $1.9 billion in cash and $6.8 billion in total debt. Capital expenditures were $173 million in the first quarter, primarily for U.S. manufacturing, and the company expects full-year 2026 Capital expenditures of about $1.3 billion.
For the second quarter, Parkin said Canadian Solar expects to recognize revenue on 3.1 gigawatts to 3.3 gigawatts of Solar modules and deliver 2.8 gigawatt-hours to 3.2 gigawatt-hours of energy storage solutions. Total revenue is expected to range from $1.0 billion to $1.2 billion, with gross margin projected between 13% and 15%.
Parkin said the broader solar market remains complex, with price increases not yet fully offsetting upstream cost pressures. In storage, he said the company expects record volumes in the second half, though margins are expected to normalize and remain partly exposed to lithium carbonate price fluctuations.
Canadian Solar reiterated its U.S. full-year 2026 volume guidance of 6.5 gigawatts to 7 gigawatts of module shipments and 4.5 gigawatt-hours to 5.5 gigawatt-hours of energy storage shipments.
About Canadian Solar (NASDAQ:CSIQ)
Canadian Solar Inc (NASDAQ: CSIQ) is a global renewable energy company that specializes in the design, development and manufacturing of Solar photovoltaic (PV) modules and system solutions. Founded in 2001 and headquartered in Guelph, Ontario, the company has grown to become one of the world's largest Solar module suppliers. Canadian Solar offers a comprehensive portfolio of products, including mono- and multi-crystalline Solar cells and modules, as well as advanced energy storage and system integration solutions tailored for residential, commercial and utility-scale applications.
In addition to manufacturing solar components, Canadian solar provides end-to-end services encompassing project development, engineering, procurement and construction (EPC), as well as operations and maintenance.
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