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Earnings call · Jun 2026 (Q2 FY26)

Canadian Solar Q2 FY26 earnings call CSIQ

Aug 27, 2026 Source

Executive summary

Canadian Solar Q2 FY26 — Strong U.S. Manufacturing & Storage Growth Amidst Policy Shifts

Canadian Solar delivered strong Q2 FY26 results driven by robust U.S. manufacturing and energy storage growth, with significant module and storage shipments. The company achieved a major milestone with the opening of its HJT solar cell facility in Jeffersonville, securing substantial domestic backlog. Despite these operational successes, profitability was challenged by elevated freight costs, ramp-up expenses for new facilities, and deferred project sales at Recurrent Energy, leading to a net loss for the quarter. Management remains focused on leveraging U.S. policy shifts and technology roadmaps to drive future growth and margin improvement.

Highlights

5

  • Recognized 3.1 GW of solar modules within guidance and exceeded storage guidance, shipping 3.7 GWh and recognizing revenue on 3.3 GWh.

  • Revenue totaled $1.2 billion, reaching the high end of guidance.

  • Opened state-of-the-art HJT solar cell facility in Jeffersonville, becoming the first commercially operational HJT manufacturer in the U.S., with Phase 1 ramping to 2.1 GW-peak.

  • Secured over 13 GW-peak in contracted backlog for domestically manufactured modules through 2029, valued at north of $4.5 billion.

  • e-STORAGE contracted backlog stood at $3.5 billion, including 34 GWh of contracted projects, and secured a 500 MW, 2.5 GWh DC project with a major U.S. utility for data centers.

Concerns

5

  • Reported a net loss attributable to shareholders of $77 million, or $1.40 per share.

  • Profitability was impacted by elevated freight costs from geopolitical uncertainties and near-term ramp-up costs for the Jeffersonville solar cell facility, leading to a $49 million operating loss in the manufacturing segment.

  • Recurrent Energy's revenue declined sequentially due to deferred project sales, resulting in a $19 million operating loss and a $24 million impairment charge.

  • Net interest expense rose to $43 million from $36 million in Q1, primarily due to lower capitalized interest.

  • Recorded a net foreign exchange loss of $9 million, primarily driven by the appreciation of the Chinese yuan.

Guidance & targets

CategoryTargetConfidence
Solar Module Revenue
3.5 to 3.8 gigawatts
high materiality
High
Energy Storage Deliveries
3.4 and 3.8 gigawatt-hours
medium materiality
High
Total Revenue
$1.3 and $1.5 billion
high materiality
High
Gross Margin
13.5% and 15.5%
high materiality
High
U.S. Module Shipments
6.5 to 7 gigawatts
high materiality
High
Energy Storage Shipments
4.5 to 5.5 gigawatt-hours
high materiality
High
Capital Expenditures
around $1.3 billion
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Manufacturing (CSI Solar)
Operating loss was impacted by higher unit shipping costs and ramp-up expenses for the Jeffersonville solar cell plant. Module margins are expected to improve as Phase 1 ramps and Phase 2 expands.
Solar module volumes shipped: 3.1 GWEnergy storage shipped: 3.7 GWhEnergy storage revenue recognized: 3.3 GWh
———-$49 million operating loss
Recurrent Energy
Revenue declined primarily due to several project sales moving into the second half of the year. Operating expenses rose due to muted project sales and a $24 million impairment charge related to a Latin America project.
426 MW solar asset in Spain into commercial operation150 MW Carwarp project connected in Australia$695 million construction financing equity package for 330 MW Cobalt solar facility in California
$117 million—declined sequentially-$19 million operating loss

Orderbook & backlog

Contracted backlog for domestically manufactured modules over 13 GW-peak Q2 FY26

Deliveries scheduled through 2029; represents north of $4.5 billion in value.

e-STORAGE contracted backlog $3.5 billion Q2 FY26

Includes long-term service agreements covering 34 GWh of contracted projects.

Recurrent Energy secured grid interconnections (solar) approximately 6 gigawatts June 30, 2026

Excludes projects already in operation.

Recurrent Energy secured grid interconnections (energy storage) 13 gigawatt-hours June 30, 2026

Excludes projects already in operation.

Recurrent Energy total development pipeline (solar) nearly 22 gigawatts June 30, 2026
Recurrent Energy total development pipeline (energy storage) 84 gigawatt-hours June 30, 2026

Product announcements

ProductTypeDetails
SolBank 4.0launch
SCET 2.0 (liquid-cooled mid-voltage)update
Solid-state transformersroadmap
Containerized sodium-ion platformroadmap
High-capacity energy storage for AI Data Centersroadmap

Deals & partnerships

Microsoft Long-term power purchase agreement (PPA) for the Carwarp project.

Microsoft is backing the 150-megawatt Carwarp project in Australia, which was recently connected.

MUFG and NORD/LB Provided construction loans for the Cobalt solar facility. $695 million

Closed a $695 million construction financing equity package for the 330-megawatt Cobalt solar facility in California.

Wells Fargo Provided tax equity for the Cobalt solar facility.

Wells Fargo provided the tax equity for the 330-megawatt Cobalt solar facility in California.

Major U.S. utility Contract for a large-scale DC project to support data center grid infrastructure and resiliency.

e-STORAGE secured a contract earlier this year to deliver solutions for energy-intensive data centers.

Space-related partners Collaborating on space PV opportunities using HJT cell technology.

Working with satellite companies on applications for radiation-tolerant and thermal-cycling resilient solar cells.

Capital programs

Jeffersonville HJT solar cell facility Phase 1 ramping up

Benefit:2.1 gigawatt-peak

State-of-the-art HJT solar cell facility, set to enter full-scale production on October 1st.

Jeffersonville HJT solar cell facility Phase 2 equipment installation to begin
Start: before the end of the year

Benefit:6.3 gigawatt-peak total nameplate cell capacity

Will bring total Jeffersonville cell capacity to 6.3 GW-peak by 2027, making it the largest crystalline silicon cell manufacturing plant in North America.

Mesquite module plant expansion scaling up

Benefit:doubled capacity

Part of higher capital outlays anticipated in the second half of 2026.

Shelbyville energy storage facility expansion scaling up

Part of higher capital outlays anticipated in the second half of 2026.

Risks & headwinds

Elevated freight costs Q2 FY26

Impacted profitability, contributed to $49 million operating loss in manufacturing segment

Mitigation:Expects shipping costs to decrease due to increasing onshoring in the U.S., reducing overseas freight.

Near-term ramp-up costs for new manufacturing facilities Q2 FY26

Contributed to $49 million operating loss in manufacturing segment

Mitigation:Costs expected to normalize as Phase 1 of Jeffersonville solar cell facility finishes ramping and Phase 2 expands, leading to improved module margins.

Deferred project sales at Recurrent Energy Q2 FY26

Revenue declined sequentially, led to $19 million operating loss and $24 million impairment charge

Mitigation:Expects to finalize delayed project sales in Q3 FY26, driving a sequentially stronger quarter. Focus on selective monetization of assets to improve financial flexibility and address leverage.

Increased net interest expense Q2 FY26

$43 million in Q2 FY26, up from $36 million in Q1 FY26

Mitigation:Primarily due to lower capitalized interest. Expects to deleverage the project development business as assets are monetized.

Net foreign exchange loss Q2 FY26

$9 million

Mitigation:Primarily driven by strong appreciation in the Chinese yuan. No specific mitigation stated, but likely managed through hedging strategies.

Policy uncertainty from new Section 232 announcement on polysilicon Ongoing, 120-day implementation period

New policy structure with minimum import pricing, tariff provisions, and potential manufacturing offsets

Mitigation:Actively working with customers to navigate uncertainty. Engaged in active, constructive dialogue with the Department of Commerce. Views policy as net positive for Canadian Solar, reinforcing U.S. solar pricing.

What to watch in Q3 FY26

Jeffersonville HJT facility Phase 1 production

October 1st
Current Ramping up
Target Full-scale production

Why it matters

Successful ramp-up and full-scale production of the HJT facility is crucial for improving module margins and leveraging U.S. domestic manufacturing benefits.

Phase 1 is set to enter full-scale production on October 1st.

Q&A highlights

What are the trend lines for R&D spending to bring new technologies to fruition, and where will the IP for these innovations be located, particularly in the U.S.?

R&D spending is typically 1% to 2% of total revenue. The company is developing more manufacturing and process R&D capabilities in the U.S., leading to more IP residing there. Additionally, IP related to power electronics and energy storage systems is increasingly developed in Canada.

“Yes, we develop more and more the manufacturing and also process R&D capabilities in the U.S. We're seeing more and more IP sit with the U.S. Meanwhile, we also developed a lot of good technology in Canada.”

asked by Colin Rusch · answered by Unknown Executive

3 min read 5 chapters

Detailed narrative

U.S. Manufacturing Expansion and Policy Impact

Canadian Solar achieved a significant milestone by officially opening its HJT solar cell facility in Jeffersonville, becoming the first commercially operational HJT manufacturer in the U.S. Phase 1 capacity of 2.1 GW-peak is set for full-scale production by October 1st, with Phase 2 expanding total capacity to 6.3 GW-peak by 2027. This expansion, coupled with the 10 GW-peak module facility in Texas, solidifies CSI Solar's position as a premier integrated PV manufacturer in North America. The company views the new Section 232 announcement on polysilicon as supportive of its domestic manufacturing investments, expecting it to reinforce U.S. solar pricing and drive accelerated deliveries in H2 2026.

e-STORAGE Growth and Data Center Focus

The e-STORAGE segment shipped 3.7 GWh and recognized revenue on 3.3 GWh, outperforming guidance due to accelerated deliveries in North America. The contracted backlog reached $3.5 billion, including 34 GWh of contracted projects. The company is actively engaging with data center hyperscalers and utilities, securing a 500 MW, 2.5 GWh DC project with a major U.S. utility to support data center grid infrastructure and resiliency. Canadian Solar emphasizes its end-to-end full-stack model, covering battery cell production, SolBank platform design, EPC services, and long-term support.

Recurrent Energy Portfolio Management

Recurrent Energy generated $117 million in revenue, experiencing a sequential decline due to deferred project sales and a $24 million impairment charge. Despite financial headwinds, the segment brought a 426 MW solar asset in Spain into commercial operation and connected the 150 MW Carwarp project in Australia. The total development pipeline stands at nearly 22 GW of solar and 84 GWh of energy storage. The strategy focuses on pruning lower-margin assets, such as scaling back the EMEA pipeline, while pursuing high-upside opportunities like Brazil's energy storage auction. Selective monetization of assets is planned for H2 to improve financial flexibility.

Advanced Technology Roadmap

Canadian Solar is executing a multi-generation technology roadmap across solar PV and energy storage. For solar PV, the focus through 2028 is on mass production and optimization of HJT and TOPCon architectures, aiming for 23.2% to 24.4% module efficiency and reduced silver consumption. Beyond 2028, TBC architecture targets 24.8% to 25.2% efficiency for premium residential markets, and tandem cells are targeted for commercial shipments by 2030 to break the 30% module efficiency barrier. In energy storage, SolBank 4.0 will increase energy density by 25% starting in 2027, and the company is exploring solid-state transformers and validating a containerized sodium-ion platform with over 15,000 cycles for long-duration storage.

Sustainability and R&D Investment

The company published its 2025 Corporate Sustainability Report, highlighting its commitment to sustainable practices, including validated net-zero greenhouse gas targets and two zero-carbon factory certifications. Technological innovation is central, with R&D spending typically around 1% to 2% of total revenue. Canadian Solar is developing more manufacturing and process R&D capabilities in the U.S. and Canada, particularly for power electronics and energy storage systems. The choice of HJT technology for U.S. manufacturing is attributed to strong R&D, less operator dependence, and a cleaner IP landscape compared to TOPCon.

AI-generated summary of the company's earnings call. Not investment advice.