Global solar module supplier and project developer Canadian Solar has reported a strong performance in its financial results for the quarter ended September 30, 2020.

The module manufacturer said it earned a gross profit of $178 million in the third quarter (Q3) of 2020. Gross profit was up 21% quarter over quarter (QoQ) while the gross margin in Q3 stood at 19.5%. The gross margin declined due to previously anticipated module average selling price (ASP) pressure and increased manufacturing input costs; however, the magnitude of the fluctuations was smaller than expected.

Canadian Solar has so far brought over 5.6 GW of solar power projects across six continents into commercial operation. As of September 30, 2020, the company’s total project pipeline was 16.3 GW, including 1.3 GW under construction, 3.8 GW of backlog, and 11.2 GW of an earlier-stage pipeline. Its pipeline includes early- to mid-stage project opportunities currently under development but are yet to be de-risked.

The company’s net revenue Q3 grew by 20% year-over-year (YoY) and 31% QoQ to $914 million, driven by higher module shipments and project sales, partly offset by a lower module ASP.

Meanwhile, its income from operations in Q3 was $59 million, up 30% QoQ.

The company also recorded a net foreign exchange loss of $13 million in Q3, compared to a net loss of $4.5 million in Q2 and a net gain of $0.6 million YoY. The higher foreign exchange loss was mainly due to the depreciation of the U.S. Dollar relative to the Chinese Renminbi.

Net income attributable to Canadian Solar in Q3 was $8.8 million ($0.15 per diluted share), compared to net income of $20.6 million ($0.34 per diluted share) in Q2 of 2020.

Net cash provided by operating activities Q3 was a positive $47 million, compared to $114 million used in Q2 of 2020.

Total module shipments in Q3 grew by 33% YoY and 9% QoQ to 3,169 MW, thanks to strong global demand growth. Of the 3.1 GW shipments, 278 MW was shipped to the company’s own utility-scale solar power projects.

Meanwhile, total operating expenses in Q3 stood at $119 million, up from $102 million in Q2, driven by higher research and development spending along with increased shipping and handling expenses.

Non-cash depreciation and amortization charges in Q3 was $56 million, compared to $48 million in Q2 and $37 million in Q3 2019.

Canadian Solar recently announced that it would list its Module and System Solutions (MSS) business either on the Shanghai Stock Exchange’s Science and Technology Innovation Board (STAR market) or the Shenzhen Stock Exchange’s ChiNext market.

For the fourth quarter of 2020, Canadian Solar expects total module shipments to be in the range of 2.9 GW to 3 GW, including approximately 350 MW of module shipments to its own projects. Total revenues are expected to be in the range of $980 million to $1,015 million.

The company expects the gross margin to be between 8% and 10%, below its normal gross margins, reflecting the negative near-term impact of raw materials shortages, which have pushed certain costs up by approximately 50% to 100%, including polysilicon, solar glass, and EVA, combined with higher shipping costs and unfavorable currency movements.

The full 2020 module shipment guidance is expected to be between 11.2 GW and 11.3 GW, while the 2021 shipment guidance would be 18 GW to 20 GW, the statement added.

Dr. Shawn Qu, chairman and the chief executive officer of Canadian Solar, said, “Our updated module shipment guidance reflects the impact of the shortage of certain raw material supply and subsequent price increase, which is affecting our immediate term production plans and resulting in higher costs. That said, we have plans to mitigate the profit margin pressure. We expect large capacity additions for solar glass over the next few months, and therefore a lessening margin impact over the coming quarters. Likewise, some of the higher cost burdens will be shared with our customers.

In a recent interview with Mercom, JA Solar’s Steven Chen also echoed similar sentiments on the ongoing shortage of solar components. Read the full interview here.