Canadian Solar Inc. (NASDAQ:CSIQ) shares are trading lower after the company reported third-quarter 2024 results below street expectations.

The company reported an 18% year-over-year revenue decline to $1.51 billion, missing the consensus estimate of $1.71 billion. The decline reflects lower module ASPs and reduced project sales, partially offset by increased sales of battery energy storage solutions and higher solar module shipment volumes.

The gross margin declined 20% YoY to $247.44 million and 30 bps to 16.4%. Lower module ASPs, partially offset by reduced manufacturing costs and stronger margins from battery storage sales, drove the decline.

Total module shipments recognized as revenue in Q3 reached 8.4 GW, increasing 2% sequentially and 1% YoY. This total includes 31 MW delivered to the company's utility-scale solar projects.

EPS for the quarter was a 31 cents loss, down from an income of 33 cents a year ago, missing the analyst consensus of 12 cents loss.

Operating cash outflow for the quarter was $230.97 million, compared to $429.34 million in the second quarter and down from $157.89 million inflow in the third quarter of 2023.

As of November 30, CSIQ had a $3.2 billion e-STORAGE contracted backlog. As of September 30, 2024, Recurrent Energy's total solar project development pipeline was 26.4 GWp, including 1.7 GWp under construction, 4.8 GWp of backlog, and 19.9 GWp of projects in advanced and early-stage pipelines.

"The solar industry faces significant external and internal challenges. While we have achieved relatively strong results, the outlook remains complex. We are currently operating at an optimal scale with industry-leading technologies, and we remain committed to investing in R&D to ensure that we remain at the forefront of innovation across our portfolio of products and solutions," commented Dr. Shawn Qu, Chairman and CEO.

Yan Zhuang, President of Canadian Solar's subsidiary CSI Solar, commented, "In energy storage, e-STORAGE recorded robust growth, reaching a record 4.4 GWh in shipments over the first three quarters of the year. At the same time, we are solidifying our market presence in established regions such as the U.S., Canada, and the UK, while expanding into emerging markets, exemplified by our inaugural project contract in Chile."

"We ended the quarter with a strong cash position of $2.8 billion, which we will strategically deploy to support our long-term growth plans and strengthen our financial position, as we continue to navigate industry challenges," commented Xinbo Zhu, Senior VP and CFO.

Q4 Outlook: Canadian Solar expects total revenue of $1.5 billion—$1.7 billion, versus a consensus estimate of $2.17 billion, and anticipates a gross margin of 16 – 18%.

The company expects total module shipments recognized as revenues by CSI Solar to be 8.0 GW to 8.5 GW. CSI Solar expects battery storage shipments of 2.0 GWh to 2.4 GWh, including 1.2 GWh for its projects.

2025 Outlook: CSIQ expects total module shipments to be 30 GW to 35 GW and CSI Solar's total battery energy storage shipments in the range of 11 GWh to 13 GWh, including approximately 1 GW and 1 GWh, respectively, to the company's projects.

Price Action: CSIQ shares traded lower by 5.47% at $11.41 at the last check on Thursday.

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