PR Newswire | Aug 12, 2021 06:03AM EDT

08/12 05:02 CDT

Canadian Solar Reports Second Quarter 2021 Results GUELPH, ON, Aug. 12, 2021

GUELPH, ON, Aug. 12, 2021 /PRNewswire/ -- Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ: CSIQ) today announced financial results for the quarter ended June 30, 2021.

Highlights

* Solar module shipments of 3.7 GW in the second quarter of 2021, top end of 3.5 GW to 3.7 GW guidance. * Revenue increased 105% year-over-year ("yoy") to a record $1.43 billion, in line with guidance of $1.4 billion to $1.5 billion. * Gross margin of 12.9%, ahead of guidance range of 9.5% to 10.5%. * Net income attributable to Canadian Solar of $11 million, or $0.18 per diluted share. * 1.5 GWh of battery storage projects under construction and 19 GWh of total storage development pipeline. * Published the ESG Sustainability Report with updated disclosures aligned with global standards on July 29, 2021. * Carve-out IPO of CSI Solar subsidiary remains on track.

Dr. Shawn Qu, Chairman and CEO, commented, "I am pleased that we have turned the corner in the second quarter, delivering strong revenue growth and better-than-expected profitability. While market conditions remain challenging, we continue to focus on initiatives to strengthen our long-term positioning such as growing our pipeline of valuable solar and battery storage projects, and differentiating our technology and product offering through value-add system solutions. Notably, we have made significant progress in growing, executing and monetizing our battery storage projects and will update the market in due course.

"At the same time, we are also fully incorporating environmental, social and governance factors in all our major business decisions, and recently published our latest ESG Sustainability Report. As an example, we are establishing our first manufacturing facility of 10 GW ingot capacity in Qinghai Province, which will help us meaningfully reduce the carbon footprint of our products as nearly 90% of Qinghai's installed power capacity is clean energy.

"Separately, the carve-out IPO of CSI Solar remains on track, with the listing application materials having been submitted. We are now addressing comments from the Shanghai Stock Exchange in accordance with usual review procedures."

Yan Zhuang, President of Canadian Solar's CSI Solar subsidiary, said, "Although polysilicon and transportation costs remained elevated, we continue to raise module pricing, prioritize margins while maximizing capacity utilization, and continue to improve on our product and manufacturing efficiency as we take further cost control measures. During the second quarter, we also delivered our first batch of large-scale battery storage shipments. While we anticipate and respond to short-term market fluctuations, our long-term growth strategy remains unchanged. That is, to grow market share through capacity expansion, improve pricing power through technology differentiation and optimized channel structure, and gain more control over our supply chain through upstream positioning."

Ismael Guerrero, Corporate VP and President of Canadian Solar's Global Energy subsidiary, said, "We have seen a meaningful increase in demand for our solar and battery storage projects driven by both existing and new low cost of capital market players. This demonstrates that the capital pool for clean energy infrastructure assets is both broadening and deepening, yet the supply of these assets remains scarce. We are positioned to benefit from these trends with a global solar project pipeline of 22 GW of which nearly 6 GW is contracted and/or under construction. We also have a global battery storage project pipeline of 19 GWh of which 2.3 GWh is contracted and/or under construction. Recently, we started signing higher priced PPAs (power purchase agreements), which are helping to offset the impact of higher equipment costs. Meanwhile, we continue to execute on our strategy to grow our base of recurring income through expanding our market share in services such as operations and maintenance and long-term ownership of project investment vehicles."

Dr. Huifeng Chang, Senior VP and CFO, added, "We posted our highest quarterly revenue of $1.43 billion in the second quarter and made significant progress to capitalize on growth in the battery storage market. We ended the second quarter with $1.3 billion in cash, and have raised approximately $110 million to date from our at-the-market equity offering program, which is well on track. We also took the opportunity to lengthen the overall maturity profile of our debt during the quarter to further improve our financial position."

Second Quarter 2021 Results

Total module shipments in the second quarter of 2021 were 3.66 GW, a 26% yoy increase and 17% quarter-over-quarter ("qoq") increase. Of the total, 167 MW was shipped to the Company's own utility-scale solar power projects.

Net revenue in the second quarter of 2021 grew by 105% yoy and 31% qoq to $1,430 million. The sequential improvement was driven by an increase in module shipments and average selling price ("ASP"), growth in beyond-module sales and a higher revenue contribution from battery storage shipments, partially offset by lower project sales.

Gross profit in the second quarter of 2021 was $185 million, down 5% qoq but up 26% yoy. Gross margin in the second quarter of 2021 was 12.9%, above guidance of 9.5% to 10.5% driven by higher module ASP, manufacturing efficiency improvements and a greater contribution from battery storage shipments and beyond-module sales. Sequentially, the second quarter gross margin was below first quarter 2021 gross margin of 17.9% mainly driven by lower project sales margin due to a geographic mix shift.

Total operating expenses in the second quarter of 2021 were $158 million compared to $151 million in the first quarter of 2021. The sequential increase was mainly driven by higher shipping and handling expenses and a decrease in other operating income, partially offset by a customer claim reversal.

Non-cash depreciation and amortization charges in the second quarter of 2021 were $66 million, compared to $62 million in the first quarter of 2021, and $48 million in the second quarter of 2020. The sequential increase was driven by CSI Solar's capacity expansion as reflected in higher property, plant and equipment.

Net foreign exchange loss in the second quarter of 2021 was $3 million, compared to a net loss of $7 million in the first quarter of 2021 and a net loss of $5 million in the second quarter of 2020.

Income tax benefit in the second quarter of 2021 was $2 million, compared to $14 million of income tax expense in the first quarter of 2021 and $9 million of income tax expense in the second quarter of 2020. The benefit reflected lower effective tax rate and lower impact from high tax jurisdictions.

Net income attributable to Canadian Solar in the second quarter of 2021 was $11 million, or $0.18 per diluted share, compared to net income of $23 million, or $0.36 per diluted share in the first quarter of 2021. The decline in net income was driven by lower gross profit and higher operating expenses, partially offset by the income tax benefit.

Net cash used by operating activities in the second quarter of 2021 was $61 million, compared to $83 million in the first quarter of 2021. The operating cash outflow was mainly driven by an increase in accounts receivable and a continued increase in inventory, as a result of capacity expansion as well as a tactical hedge against input cost and ASP inflation. This was partially offset by higher accounts and notes payables.

Total debt in the second quarter of 2021 was $2.23 billion, compared to $2.28 billion in the first quarter of 2021. The decrease in total debt was mainly driven by a reduction of project financing upon project sales, partially offset by new borrowing and existing facility drawdowns. Non-recourse debt used to finance solar power projects decreased to $454 million in the second quarter of 2021 from $522 million in the first quarter of 2021 as a result of project sales.

Battery Storage Opportunities

Canadian Solar is strategically positioned in the battery storage market, both in solar plus battery storage, as well as in stand-alone storage opportunities. The rapid growth of the energy storage market is driven by technology improvements, declining battery storage costs, rising penetration of renewable energy and accelerating retirements of fossil fuel capacity.

Canadian Solar has a strong brand recognition and global network given its leadership in both module manufacturing and solar project development. Both CSI Solar and Global Energy have focused strategically on their respective energy storage businesses:

* Under Global Energy, energy storage project development is now fully integrated within the main solar development teams. Given the segment's large and growing pipeline, it is positioned to capture utility-scale energy storage projects. * Under CSI Solar, the battery storage solutions team focuses on delivering bankable, end-to-end, integrated battery storage solutions for utility scale, commercial and industrial, as well as residential applications. These systems solutions will be complemented with long term service agreements, including future battery capacity augmentation services.

While there are synergies between the Global Energy and CSI Solar teams, both operate independently and on different sections of the battery storage value chain. The project pipeline for each team should be assessed independently. Please refer to the Global Energy and CSI Solar sections of this document for specific pipeline figures.

Global Energy Segment

Canadian Solar has one of the world's largest and most geographically diversified utility-scale solar and energy storage project development platforms, with a strong track record of originating, developing, financing and building over 6.1 GWp of solar power plants across six continents. The Company has built a leadership position in solar project development with over 22 GWp total pipeline, as well as in energy storage project development with over 19 GWh of aggregate pipeline.

The continued pipeline expansion and strong project development track record will support Global Energy's growth in three key areas:

* Project sales: The Company plans to grow its volume of project sales by a compound annual growth rate of 25% over the next five years, well ahead of global market growth rate of approximately 20% according to many research reports. * Investment vehicles: The Company is optimizing its project monetization strategy by establishing local investment vehicles that will help maximize the value of its project assets. The Company also intends to retain minority ownership in these vehicles. By 2025, the Company plans to reach at least 1 GW of combined net ownership in solar power projects through these vehicles. This approach will help the Company build and grow a stable base of long-term cash flows from contracted electricity. The Company will be able to recycle a large portion of the capital into developing new solar projects for growth. Meanwhile, Canadian Solar expects to capture additional operational value throughout the partial ownership period, including long-term cash flows from power sales, operations and maintenance (O&M), asset management and other services (see point 3). The Company currently owns a 15% stake in the Canadian Solar Infrastructure Fund ("CSIF", TSE: 9284), the largest listed Japanese infrastructure fund on the Tokyo Stock Exchange. The Company also established the Brazilian Participation Fund for Infrastructure projects (FIP-IE). Similar project investment vehicles in certain European countries are also currently underway. Through launching these localized vehicles, Canadian Solar is building up its expertise in designing investment vehicles in local markets that will help maximize the value of its project assets. * Services: Canadian Solar currently manages over 2 GW of operational projects under long-term O&M agreements, and an additional 2 GW of contracted projects that will be operated and maintained by the Company once they are placed in operation. The Company's target is to reach 11 GW of projects under O&M agreements by 2025. Management targets to achieve the following over the next 5 years:

Global Energy Targets 2021 2022 2023 2024 2025

Annual Project Sales, GWp 1.8-2.3 2.4-2.9 3.2-3.7 3.6-4.1 4.0-4.5

Operational O&M Projects, GWp 2.6 4.0 6.5 9.2 11.0

Net Cumulative Projects Retained, MWp 200 400 760 960 1,000

Gross Cumulative Projects Retained, MWp 650 1,300 2,650 3,150 3,400

Solar Project Pipeline

As of June 30, 2021, the Company's total project pipeline was 22.2 GWp, including 1.7 GWp under construction, 4.1 GWp of backlog, and 16.4 GWp of earlier stage pipeline. The backlog includes projects that have passed their Risk Cliff Date and are expected to be built in the next one to four years. A project's Risk Cliff Date depends on the country where the project is located and is defined as the date on which the project passes the last high-risk development stage. This is usually after the projects have received all the required environmental and regulatory approvals, interconnection agreements, feed-in tariff ("FIT") arrangements and power purchase agreements ("PPAs"). Over 90% of projects in backlog are contracted (i.e., have secured a PPA or FIT), and the remaining are reasonably assured of securing PPAs.

The Company's pipeline includes early- to mid-stage project opportunities currently under development but that are yet to be de-risked.

The following table presents the Company's total project pipeline.

Total Project Pipeline (as of June 30, 2021) - MWp

Region In Construction Backlog Pipeline Total

North America 115 744 4,900 5,759

Latin America 981* 2,100 4,310 7,391

Europe, the Middle East and Africa ("EMEA") - 455* 3,632 4,087

Japan 145 236 72 453

Asia Pacific excluding Japan and China 347 191 1,547 2,085

China (part of CSI Solar) 80 403 1,920 2,403

Total 1,668 4,129 16,381 22,178

*Note: Gross MWp size of projects includes 573 MWp in construction in LatinAmerica,

and 110 MWp in backlog in EMEA, that are not owned by Canadian Solar or havebeen sold to third parties.

The Company has 381 MWp of premium, high FIT projects in Japan. The table below sets forth the expected COD schedule of the Company's project backlog in development and construction in Japan, as of June 30, 2021:

Expected COD Schedule-MWp

2021 2022 2023 and Total thereafter

31 190 160 381

Battery Storage Project Pipeline

The Global Energy segment has been actively developing utility-scale solar plus energy storage projects, as well as stand-alone battery storage projects. The Company found that virtually all its solar power projects under development can co-host energy storage facilities and has done so since the first quarter of 2021. By co-hosting energy storage facilities with solar power plants on the same piece of land and using the same interconnection point, the Company expects to significantly enhance the value of its assets under development.

Canadian Solar has already signed several storage tolling agreements with a variety of power purchasers, including community choice aggregators, investor-owned utilities, universities, and public utility districts. The Company has also signed development services agreements to retrofit operational solar projects with battery storage, many of which were previously developed by the Company.

The table below sets forth Global Energy's storage project development backlog and pipeline.

Storage Project Development Backlog and Pipeline (as of June 30, 2021) - MWh

Region In Construction Backlog Pipeline Total

North America 1,501 800 9,285 11,586

Latin America - - 4,505 4,505

Europe, the Middle East and Africa ("EMEA") - - 1,242 1,242

Japan - - 19 19

Asia Pacific excluding Japan - - 1,910 1,910

Total 1,501 800 16,961 19,262

Solar Power Plants and Battery Storage Projects in Operation

As of June 30, 2021, the Company's solar power plants in operation totaled 391 MWp, with a combined estimated net resale value of approximately $390 million to Canadian Solar. The estimated resale value is based on selling prices that Canadian Solar is currently negotiating or transaction prices of similar assets in the relevant markets.

Solar Power Plants in Operation - MWp

Asia PacificLatin America Japan China Total ex. Japan and China

100 28 61 202 391

Note: Gross MWp size of projects, includes 26 MWp in Asia Pacific ex. Japan andChina already sold tothird parties. China portfolio is part of CSI Solar.

Operating Results

The following table presents unaudited select results of operations data of the Company's Global Energy segment.

Global Energy Segment Financial Results

(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30, 2020* 2021 2021 2021 2020*

Net revenues 280,614 471,062 32,433 751,676 274,983

Cost of revenues 268,855 358,037 29,080 626,892 183,014

Gross profit 11,759 113,025 3,353 124,784 91,969

Operating expenses 15,632 27,944 17,991 43,576 45,777

Income (loss) from operations (3,873) 85,081 (14,638) 81,208 46,192

Gross margin 4.2% 24.0% 10.3% 16.6% 33.4%

Operating margin -1.4% 18.1% -45.1% 10.8% 16.8%

*Historical amounts for the three months and six months ended June 30, 2020have been revised to conform to current period presentation

CSI Solar Segment

CSI Solar's 2021 and 2022 capacity expansion targets are detailed below.

Manufacturing Capacity, GW (as of period end)

FY20 Actual 1H21 Actual FY21 Plan

Ingot 2.1 5.1 5.1

Wafer 6.3 8.7 11.5

Cell 9.6 13.3 13.9

Module 16.1 19.7 22.7

Note: CSI Solar's capacity expansion plans are subject to change without notice based on market conditions and capital allocation plans.

Operating Results

The following table presents unaudited select results of operations data of the CSI Solar segment for the periods indicated.

CSI Solar Segment Financial Results*

(In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30, 2021 2021 2020** 2021 2020**

Net revenues 1,183,958 695,152 709,180 1,879,110 1,398,927

Cost of revenues 1,028,470 627,694 551,812 1,656,164 1,079,390

Gross profit 155,488 67,458 157,368 222,946 319,537

Operating expenses 140,516 120,126 79,484 260,642 157,472

Income (loss) from operations 14,972 (52,668) 77,884 (37,696) 162,065

Gross margin 13.1% 9.7% 22.2% 11.9% 22.8%

Operating margin 1.3% -7.6% 11.0% -2.0% 11.6%

* Includes effects of both sales to third party customers and to the Company'sGlobal Energy Segment. Please refer to theattached financial tables for intercompany transaction elimination information.Income from operations reflectsmanagement's allocation and estimate as some services are shared by theCompany's two business segments

** Historical amounts for the three months and six months ended June 30, 2020have been revised to conform to currentperiod presentation

The table below provides the geographic distribution of the net revenue of CSI Solar:

CSI Solar Net Revenues Geographic Distribution* (In Millions of U.S. Dollars,Except Percentages)

Q2 2021 % of Net Q1 2021 % of Net Q2 2020 % of Net Revenues Revenues Revenues

Asia 527 46 240 39 265 40

Americas 421 37 261 42 211 32

Europe and others 201 17 117 19 187 28

Total 1,149 100 618 100 663 100

*Excludes sales from CSI Solar to Global Energy.

CSI Solar shipped 3.7 GW of modules to nearly 80 countries in the second quarter of 2021. The top five markets ranked by shipments were China, the U.S., Brazil, Germany and Japan.

Battery Storage Solutions

Within CSI Solar, the battery storage solutions team delivers competitive turnkey, integrated battery storage solutions, including bankable and fully wrapped capacity and performance guarantees. These guarantees are complemented with long term operations and maintenance agreements, which include future battery capacity augmentation services and bring in longer term, stable income.

The table below sets forth CSI Solar's battery storage system integration's contracted projects and/or under construction, those in high probability forecast, and pipeline, as of June 30, 2021.

Contracted/ Forecast Pipeline Total In Construction

Storage (MWh) 861 1,400 4,351 6,612

Contracted/in construction projects are expected to be delivered within the next 12 to 18 months. Forecast projects include those that have more than 75% probability of being contracted within the next 12 months, and the remaining pipeline includes projects that have been identified but have a below 75% probability of being contracted.

Business Outlook

The Company's business outlook is based on management's current views and estimates given factors such as existing market conditions, order book, production capacity, input material prices, foreign exchange fluctuations, anticipated timing of project sales, and the global economic environment. This outlook is subject to uncertainty with respect to, among other things, customer demand, project construction and sale schedules, product sales prices and costs, and the global impact of the ongoing COVID-19 pandemic. Management's views and estimates are subject to change without notice.

For the third quarter of 2021, the Company expects total module shipments to be in the range of 3.8 GW to 4.0 GW, including approximately 275 MW of module shipments to the Company's own projects. Total revenues are expected to be in the range of $1.2 billion to $1.4 billion. Gross margin is expected to be between 14% and 16%.

The Company reiterates its expectation that full year 2021 revenue will be in the range of $5.6 billion to $6.0 billion, while slightly reducing its full year 2021 total module shipment guidance to 16 GW to 17 GW from 18 GW to 20 GW previously. The Company reiterates its project sales guidance of 1.8 GW to 2.3 GW and total battery storage shipment guidance of 810 MWh to 860 MWh for the full year 2021.

Dr. Shawn Qu, Chairman and CEO, commented, "While we continue to navigate volatile market conditions, we expect Canadian Solar's performance to improve through the remainder of 2021 both in shipment volume, profitability and project sale execution. The wider-than-usual revenue and profitability range for the third quarter reflects the timing of certain project sales which may be recognized towards the end of the quarter or early in the following one. Additionally, we expect higher module ASPs to offset the lowered full year module shipments and therefore full year revenue guidance is unchanged. Canadian Solar continues to expect market share gains in 2021 as the trimmed shipment guidance is reflective of marginally softer global demand expectations as a response to higher equipment costs.

"Structurally, demand for solar energy and battery storage continues to grow strongly. Canadian Solar is well positioned to capture long-term growth through continued investments in high quality capacity, project pipeline and technology R&D, and continues to focus on delivering long-term sustainable returns for shareholders."

Recent Developments

On August 10, 2021, Canadian Solar announced its wholly owned subsidiary Recurrent Energy signed a 15-year Resource Adequacy agreement with Pacific Gas & Electric to provide 150 MW / 600 MWh of energy storage in phase 2 of the Crimson project. The full Crimson project of 350 MW / 1,400 MWh will be one of the largest battery energy storage projects in the world when it comes online beginning in summer 2022.

On July 29, 2021, Canadian Solar published its 2020 Sustainability Report, which provides an extensive analysis of the Company's environmental, social and governance performance, and establishment of organizational structures and target metrics to incorporate ESG into every major business decision.

On July 27, 2021, Canadian Solar announced it closed a BRL500 million (approximately US$100 million) financing facility with Brazilian banks BTG Pactual and Ita BBA to support the development and construction of its solar projects in Brazil. The facility will fund up to 70% of Canadian Solar's equity contribution in a subset of its Brazilian project portfolio, a unique structure in the local market.

On July 21, 2021, Canadian Solar announced its wholly owned subsidiary Recurrent Energy completed the sale of the Maplewood 1 and Maplewood 2 solar projects in Texas to a leading U.S. annuity and life insurance company. The two projects, with a combined capacity of 328 MWp, are currently under construction and are expected to reach commercial operation before the end of Q3 2021.

On July 14, 2021, Canadian Solar announced it signed a 10-year power purchase agreement with Centrica Energy Trading A/S for two solar power projects totaling 12 MWp in Italy.

On July 12, 2021, Canadian Solar announced it was awarded the first utility-scale battery storage project in Colombia of 45 MW / 45 MWh. The project will consist of a 45 MWh lithium-ion battery energy storage system and is expected to reach commercial operation by June 2023. The project is granted with a 15-year revenue structure with the Colombian government and is indexed to the country's inflation or producer price index.

On June 29, 2021, Canadian Solar announced it was awarded 86 MWp in Japan's 8th solar energy auction, accounting for the largest share of the total capacity auctioned. The projects are expected to reach commercial operation between the years of 2024 and 2026. Once constructed, these projects will enter into a 20-year power purchase agreement with Tohoku Power Electric Company at a weighted average rate of 10.77 ($0.098) per kWh.

On June 28, 2021, Canadian Solar announced its majority-owned subsidiary CSI Solar Co., Ltd. ("CSI Solar") submitted the application documents for its potential initial public offering ("IPO") and listing on the Science and Technology Innovation Board (the "STAR" Market) of the Shanghai Stock Exchange. The documents have been received by the Shanghai Stock Exchange.

On June 24, 2021, Canadian Solar announced it secured EUR50 million bilateral corporate facility with Banco Santander, S.A. ("Santander") to support growth of its project development pipeline in the EMEA region, further diversifying the Company's sources of financing.

On June 22, 2021, Canadian Solar announced its wholly owned subsidiary Recurrent Energy expanded its energy storage footprint in the U.S., with several leading Battery Energy Storage Systems ("BESS") contracted totaling 2.3 GWh to be built in 2021 and 2022. These projects span retrofits as-a-service, solar plus storage PPAs, and stand-alone storage tolling agreements.

On May 24, 2021, Canadian Solar announced it signed a 10-year power purchase agreement with Axpo Italia for the purchase of energy produced by two solar power plants totaling 12 MWp under development by Canadian Solar in Italy.

Conference Call Information

The Company will hold a conference call at 8:00 a.m. U.S. Eastern Daylight Time on Thursday, August 12, 2021 (8:00 p.m., Thursday, August 12, 2021 in Hong Kong) to discuss its second quarter 2021 results and business outlook. The dial-in phone number for the live audio call is +1-866-519-4004 (toll-free from the U.S.), +852-3018-6771 (local dial-in from Hong Kong), 400-6208-038 (local dial-in from Mainland China) or +1 845-675-0437 from international locations. The passcode for the call is 9437597. A live webcast of the conference call will also be available on the investor relations section of Canadian Solar's website at www.canadiansolar.com.

A replay of the call will be available 2 hours after the conclusion of the call until 9:00 a.m. U.S. Eastern Daylight Time on Friday, August 20, 2021 (9:00 p.m., August 20, 2021 in Hong Kong) and can be accessed by dialing +1-855-452-5696 (toll-free from the U.S.), +852-3051-2780 (local dial-in from Hong Kong), 400-6322-162 (toll-free from Mainland China) or +1-646-254-3697 from international locations. The passcode for the replay is 9437597. A webcast replay will also be available on the investor relations section of Canadian Solar's at www.canadiansolar.com.

About Canadian Solar Inc.

Canadian Solar was founded in 2001 in Canada and is one of the world's largest solar technology and renewable energy companies. It is a leading manufacturer of solar photovoltaic modules, provider of solar energy and battery storage solutions, and developer of utility-scale solar power and battery storage projects with a geographically diversified pipeline in various stages of development. Over the past 20 years, Canadian Solar has successfully delivered over 59 GW of premium-quality, solar photovoltaic modules to customers across the world. Likewise, since entering the project development business in 2010, Canadian Solar has developed, built and connected over 6.1 GWp in over 20 countries across the world. Currently, the Company has around 400 MWp of projects in operation, nearly 6 GWp of projects under construction or in backlog (late-stage), and an additional 16 GWp of projects in pipeline (mid- to early- stage). Canadian Solar is one of the most bankable companies in the solar and renewable energy industry, having been publicly listed on the NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn or visit www.canadiansolar.com.

Safe Harbor/Forward-Looking Statements

Certain statements in this press release regarding the Company's expected future shipment volumes, gross margins are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business and economic conditions and the state of the solar industry; volatility, uncertainty, delays and disruptions related to the COVID-19 pandemic; governmental support for the deployment of solar power; future available supplies of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand from major markets such as Japan, the U.S., China and Brazil; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling prices; delays in new product introduction; delays in utility-scale project approval process; delays in utility-scale project construction; delays in the completion of project sales; continued success in technological innovations and delivery of products with the features that customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company's SEC filings, including its annual report on Form 20-F filed on April 19, 2021. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. Investors should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.

FINANCIAL TABLES FOLLOW

The following tables provide unaudited select financial data for the Company's CSI Solar and Global Energy businesses. Historical amounts for the three months and six months ended June 30, 2020 have been revised to conform to current period presentation:

Select Financial Data - CSI Solar and Global Energy

Three Months Ended June 30, 2021 (In Thousands of U.S. Dollars, Except Percentages)

Elimination CSI Solar Global and Total Energy unallocated items^ (1)

Net revenues 1,183,958 280,614 (34,911) 1,429,661

Cost of revenues 1,028,470 268,855 (52,451) 1,244,874

Gross profit 155,488 11,759 17,540 184,787

Gross margin 13.1% 4.2% - 12.9%

Income (loss) from 14,972 (3,873) 15,281 26,380 operations

Select Financial Data - CSI Solar and Global Energy

Six Months Ended June 30, 2021 (In Thousands of U.S. Dollars, Except Percentages)

Elimination CSI Solar Global and Total Energy unallocated items^ (1)

Net revenues 1,879,110 751,676 (111,786) 2,519,000

Cost of revenues 1,656,164 626,892 (143,445) 2,139,611

Gross profit 222,946 124,784 31,659 379,389

Gross margin 11.9% 16.6% - 15.1%

Income (loss) from (37,696) 81,208 26,351 69,863 operations

Select Financial Data - CSI Solar and Global Energy

Three Months Ended June 30, 2020 (In Thousands of U.S. Dollars, Except Percentages)

Elimination CSI Solar Global and Total Energy unallocated items^(1)

Net revenues 709,180 32,433 (45,767) 695,846

Cost of revenues 551,812 29,080 (32,258) 548,634

Gross profit 157,368 3,353 (13,509) 147,212

Gross margin 22.2% 10.3% - 21.2%

Income (loss) from 77,884 (14,638) (17,778) 45,468 operations

Select Financial Data - CSI Solar and Global Energy

Six Months Ended June 30, 2020 (In Thousands of U.S. Dollars, Except Percentages)

Elimination CSI Solar Global and Total Energy unallocated items^(1)

Net revenues 1,398,927 274,983 (152,429) 1,521,481

Cost of revenues 1,079,390 183,014 (111,332) 1,151,072

Gross profit 319,537 91,969 (41,097) 370,409

Gross margin 22.8% 33.4% - 24.3%

Income from 162,065 46,192 (49,353) 158,904 operations

^(1) Includes inter-segment elimination, and unallocated corporate costs notconsidered part ofmanagement's evaluation of reportable segment operating performance.

Select Financial Data - CSI Solar and Global Energy

Three Months Three Months Three Months Three Months Ended Ended Ended Ended June 30, 2021March 31, 2021December 31, 2020June 30, 2020

(In Thousands of U.S. Dollars)

CSI Solar Revenues:

Solar modules 843,463 552,247 586,820 597,461

Solar system kits 88,057 36,071 39,071 42,901

Battery storage solutions 68,890 2,358 4,953 -

China energy (incl. electricity sales)94,347 7,095 15,194 16,141

Others 54,290 20,506 21,999 6,910

Subtotal 1,149,047 618,277 668,037 663,413

Global Energy Revenues:

Solar power projects 266,598 452,847 354,671 2,685

O&M and asset management services 8,607 9,966 8,365 6,321

Others 5,409 8,249 9,581 23,427

Subtotal 280,614 471,062 372,617 32,433

Total net revenues 1,429,661 1,089,339 1,040,654 695,846

Select Financial Data - CSI Solar and Global Energy

Six Months Ended Six Months Ended June 30, 2021 June 30, 2020

(In Thousands of U.S. Dollars)

CSI Solar Revenues:

Solar modules 1,395,710 1,133,790

Solar system kits 124,128 72,098

Battery storage solutions 71,248 -

China energy (incl. electricity sales)101,442 19,944

Others 74,796 20,666

Subtotal 1,767,324 1,246,498

Global Energy Revenues:

Solar power projects 719,445 230,438

O&M and asset management services 18,573 11,485

Others 13,658 33,060

Subtotal 751,676 274,983

Total net revenues 2,519,000 1,521,481

Canadian Solar Inc.

Unaudited Condensed Consolidated Statements of Operations

(In Thousands of U.S. Dollars, Except Share and Per Share Data and UnlessOtherwise Stated)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

Net revenues $1,429,661 $1,089,339 $695,846 $2,519,000 $1,521,481

Cost of revenues 1,244,874 894,737 548,634 2,139,611 1,151,072

Gross profit 184,787 194,602 147,212 379,389 370,409

Operating expenses:

Selling and distribution 83,581 84,080 53,463 167,661 106,122 expenses

General and 68,578 67,457 46,354 136,035 99,315 administrative expenses

Research and 13,158 12,450 10,924 25,608 20,980 development expenses

Other operating income (6,910) (12,868) (8,997) (19,778) (14,912)

Total operating expenses 158,407 151,119 101,744 309,526 211,505

Income from operations 26,380 43,483 45,468 69,863 158,904

Other income (expenses):

Interest expense (14,795) (14,673) (16,960) (29,468) (35,973)

Interest income 2,837 3,248 2,081 6,085 4,859

Gain (loss) on change in fair value of derivatives, (12,150) 12,572 (2,349) 422 30,759 net

Foreign exchange gain 8,884 (19,648) (2,192) (10,764) (36,311) (loss), net

Investment income (loss) 5,154 1,263 1,525 6,417 (12,487)

Other expenses, net (10,070) (17,238) (17,895) (27,308) (49,153)

Income before income taxesand equity in earnings of 16,310 26,245 27,573 42,555 109,751unconsolidated investees

Income tax benefit (expense) 1,645 (13,852) (8,899) (12,207) 20,154

Equity in earnings of 585 1,203 1,739 1,788 1,755unconsolidated investees

Net income 18,540 13,596 20,413 32,136 131,660

Less: Net income (loss)attributable to non- 7,279 (9,183) (191) (1,904) 425controlling interests

Net income attributable to $11,261 $22,779 $20,604 $34,040 $131,235Canadian Solar Inc.

Earnings per share - basic $0.19 $0.38 $0.35 $0.57 $2.20

Shares used in computation - 60,288,824 59,862,901 59,371,856 60,077,039 59,539,092basic

Earnings per share - diluted $0.18 $0.36 $0.34 $0.54 $2.18

Shares used in computation - 61,339,043 67,531,709 59,793,196 67,580,787 60,127,369diluted

Canadian Solar Inc.

Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss)

(In Thousands of U.S. Dollars)

Three Months Ended Six Months Ended

June March 31 June June 30, June 30, 30, , 30,

2021 2021 2020 2021 2020

Net Income 18,540 13,596 20,413 32,136 131,660

Other comprehensive income(net of tax of nil):

Foreign currency translation 9,629 (31,702) 30,997 (22,073) (14,974)adjustment

De-recognition of commodity - - 4,439 - 4,439hedge and interest rate swap

Loss on changes in fair value of - - (104) - (4,115)derivatives

Comprehensive income (loss) 28,169 (18,106) 55,745 10,063 117,010

Less: comprehensiveincome (loss) attributable to non- 8,760 (15,692) 3,802 (6,932) 2,361controlling interests

Comprehensive income (loss)attributable to Canadian Solar 19,409 (2,414) 51,943 16,995 114,649Inc.

Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets

(In Thousands of U.S. Dollars)

June 30, December 31,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 814,193 $ 1,178,752

Restricted cash 493,776 458,334

Accounts receivable trade, net 624,754 408,958

Accounts receivable, unbilled 39,478 28,461

Amounts due from related parties 35,721 5,834

Inventories 1,129,964 695,981

Value added tax recoverable 121,956 102,460

Advances to suppliers 178,155 182,146

Derivative assets 3,372 23,351

Project assets 563,245 747,764

Prepaid expenses and other current assets 357,153 353,781

Total current assets 4,361,767 4,185,822

Restricted cash 3,364 2,629

Property, plant and equipment, net 1,397,768 1,157,731

Solar power systems, net 160,263 158,262

Deferred tax assets, net 195,657 170,656

Advances to suppliers 100,042 97,173

Prepaid land use right 71,011 62,414

Investments in affiliates 62,519 78,291

Intangible assets, net 20,444 22,429

Project assets 389,967 389,702

Right-of-use assets 30,555 26,793

Other non-current assets 231,250 184,952

TOTAL ASSETS $ 7,024,607 $ 6,536,854

Canadian Solar Inc.

Unaudited Condensed Consolidated Balance Sheets (Continued)

(In Thousands of U.S. Dollars)

June 30, December 31,

2021 2020

Current liabilities:

Short-term borrowings $ 867,450 $ 1,202,285

Long-term borrowings on project assets - 490,956 198,794 current

Accounts payable 762,272 514,742

Notes payable 817,037 710,636

Amounts due to related parties 282 314

Other payables 658,279 508,839

Advance from customers 132,619 189,470

Derivative liabilities 6,062 10,755

Operating lease liabilities 11,992 15,204

Other current liabilities 122,027 237,316

Total current liabilities 3,868,976 3,588,355

Accrued warranty costs 49,264 37,732

Long-term borrowings 530,760 446,090

Convertible notes 223,895 223,214

Liability for uncertain tax positions 15,764 14,729

Deferred tax liabilities 49,741 49,080

Loss contingency accruals 29,249 26,458

Operating lease liabilities 18,950 13,232

Financing liabilities 82,692 81,871

Other non-current liabilities 191,057 163,308

TOTAL LIABILITIES 5,060,348 4,644,069

Equity:

Common shares 744,886 687,033

Additional paid-in capital (22,476) (28,236)

Retained earnings 974,344 940,304

Accumulated other comprehensive loss (45,724) (28,679)

Total Canadian Solar Inc. shareholders' 1,651,030 1,570,422equity

Non-controlling interests in subsidiaries 313,229 322,363

TOTAL EQUITY 1,964,259 1,892,785

TOTAL LIABILITIES AND EQUITY $ 7,024,607 $ 6,536,854

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SOURCE Canadian Solar Inc.