Canadian Solar Inc.’s U.S. Solar Capacity Timelines, 2026 Project Sales Guidance, and FEOC Compliance Claims Clash in 2025 Earnings Calls

Date of Call: Mar 19, 2026

Financials Results

• Revenue: $5.6B for full year 2025, $1.2B in Q4, below guidance
• EPS: $2.5 loss per diluted share for full year 2025, $1.66 loss per diluted share in Q4
• Gross Margin: Full year 2025 gross margin improved by 160 basis points YOY. Q4 gross margin was 10.2%
• Operating Margin: Full year 2025 operating income of $43M. Q4 net loss was $131M

Guidance:

• Q1 2026: Solar module shipments 2.2-2.4 GW, storage 1.7-1.9 GWh, revenue $900M-$1.1B, gross margin 13%-15%.
• Full year 2026: Module shipments 6.5-7 GW and storage shipments 4.5-5.5 GWh to U.S. market. Margins expected to remain soft.

Business Commentary:

Challenging Market Conditions and Strategic Focus:

• Canadian Solar reported total revenue of $5.6 billion for 2025, with a gross margin improvement of 160 basis points year-over-year.
• Despite market headwinds, the company focused on strategic high-value markets and margin protection, prioritizing over shipment volumes.

U.S. Manufacturing Expansion:

• The company ramped up its solar module factory in Mesquite, Texas, to an annual production capacity exceeding 5 gigawatts, with plans to double capacity to 10 gigawatts by end of 2026.
• This expansion is part of a strategic initiative to reshore manufacturing and establish a resilient domestic supply chain in the U.S.

Energy Storage Growth:

• Canadian Solar achieved record energy storage shipments of 7.8 gigawatt hours globally in 2025, representing a 19% year-over-year increase.
• Growth was driven by strong demand, especially in the U.S., due to the rapid build-out of data centers supporting AI growth.

Recurrent Energy Challenges:

• Recurrent Energy experienced an operating loss of $69 million in Q4 due to project sales delays and impairments to project assets.
• The company is rebalancing its business towards monetizing operating and under-construction assets to optimize cash flow.

Financial Outlook and Guidance:

• For Q1 2026, Canadian Solar expects solar module shipments between 2.2 to 2.4 gigawatts and energy storage shipments between 1.7 to 1.9 gigawatt hours.
• The company is navigating cost increases and supply chain challenges, with a focus on controlling operating expenses to support future profitability.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasizes strategic resilience, operational discipline, and progress in U.S. manufacturing, including ramping Texas factory and expanding Indiana cell facility. They cite improving pricing in U.S. solar and storage, and confidence in technology and future profitability.

Q&A:

• Question from Colin Rusch (Oppenheimer & Co. Inc.): What are you seeing in terms of trend lines for U.S. solar pricing and long-term support for pricing that supports aggressive capacity expansion?
  Response: Long-term U.S. solar pricing is stable and per-watt prices have increased due to tight OBBBA-compliant cell supply and higher material costs like silver, supporting margins.

• Question from Philip Shen (ROTH Capital Partners): What drove the project sale delays from Q4 into 2026 and can you share details on the impairments?
  Response: Delays were due to permitting issues; impairments resulted from legislative changes in countries like the U.S., Italy, and France, and unexpected interconnection cost increases rendering projects unviable.

• Question from Philip Shen (ROTH Capital Partners): Can you explain why the 2026 guidance is focused on the U.S. and share the U.S. mix for Q1 and 2026 CapEx?
  Response: The written U.S. guidance was added to the previous global guidance; 2026 CapEx is around $1.2B, primarily in the U.S. for solar cell and storage facilities.

• Question from Maheep Mandloi (Mizuho Securities USA LLC): What are the capital needs for HJT expansion and how do you address FEOC compliance and OBBBA foreign entity concerns?
  Response: Major CapEx for 2026 is in the U.S. for solar cell and storage expansions. Compliance with OBBBA is achieved through restructuring under a new U.S. entity, CS PowerTech, with Canadian Solar as the parent company.

• Question from Maheep Mandloi (Mizuho Securities USA LLC): What gross margins are targeted for U.S. solar and battery manufacturing, and any orders for 2027/2028?
  Response: Historically, U.S. solar manufacturing gross margin exceeds 20%; energy storage targets ~20%+. No specific future orders were discussed, but the company will provide annual global guidance later.

• Question from Alan Lau (Jefferies LLC): How does the major data center energy storage order work and what is the load size?
  Response: It is a 2.5 GWh front-of-the-meter project for a major U.S. utility to support hyperscale data center power demands; the company is also developing holistic total power solutions for behind-the-meter applications.

Contradiction Point 1

U.S. Solar Manufacturing Capacity Timeline

Contradiction on when U.S. solar cell capacity will be largely self-sufficient.

Philip Shen (ROTH Capital Partners, LLC) - Philip Shen (ROTH Capital Partners, LLC)

2025Q4: By late 2026, the U.S. domestic cell capacity will be largely self-sufficient. - Shawn Qu(CEO)

What is the current status and potential impact of the Section 337 investigation and recent USPTO actions regarding the First Solar TOPCon patent lawsuits? - Colin Rusch (Oppenheimer & Co. Inc.)

2025Q3: The Domestic Content Boost (10% ITC boost) will apply once U.S. manufacturing ramps (solar cells by March 2026, battery cells/packs by late 2026/2027). - Shawn Qu(CEO)

Contradiction Point 2

2026 U.S. Project Sale Strategy and Guidance

Contradiction on providing specific guidance for 2026 U.S. project sales volume.

Maheep Mandloi (Mizuho Securities USA LLC) - Maheep Mandloi (Mizuho Securities USA LLC)

2025Q4: The company is not providing annual volume guidance for 2026, focusing instead on profit due to supply chain challenges and geopolitical factors. - Shawn Qu(CEO)

What are the targeted gross margins for U.S. solar module and battery manufacturing, and are there any orders for 2027/2028? - Brian Lee (Goldman Sachs)

2025Q3: Specific volumes (MW/MWh) and deleveraging impact will be detailed in the March 2026 earnings call after Board approval of the AOP. - Shawn Qu(CEO)

Contradiction Point 3

Primary Cause for Project Delays/Pushouts

Contradiction on whether delays are due to FEOC compliance uncertainty or other factors like tariffs.

Philip Shen (ROTH Capital Partners, LLC) - Philip Shen (ROTH Capital Partners, LLC)

2025Q4: The delays were mainly due to permitting issues for a couple of projects... The impairments were driven by: 1) Changes in legislation... 2) Sudden increases in interconnection costs... - Ismael Arias(CEO of Recurrent Energy)

What factors caused the project sale delays from Q4 into 2026, and can you provide additional color on the impairments experienced? - Vikram Bagri (Citigroup Inc.)

2025Q2: Some project delays are attributed to tariff issues, not FEOC. The company's overall pipeline... actually increased. There are major deals at the very last stage of negotiation, indicating continued strong engagement. - Xiaohua Qu(CEO), Yan Zhuang(President of CSI Solar)

Contradiction Point 4

Compliance Status Regarding FEOC Requirements

Contradiction on the current year compliance status for FEOC requirements.

Maheep Mandloi (Mizuho Securities USA LLC) - Maheep Mandloi (Mizuho Securities USA LLC)

2025Q4: The company has completed restructuring to be compliant with the OBBBA by forming a new U.S. entity, CS PowerTech, which is 75.1% owned by Canadian Solar... ensuring major decision-making occurs in Canada. - Shawn Qu(CEO)

What are the capital needs for the HJT expansion, and how are FEOC compliance and the "foreign entity of concern" provisions in OBBBA being addressed? - Unidentified Analyst (on behalf of Philip Shen, ROTH Capital Partners)

2025Q2: The company is currently compliant with FEOC requirements based on the yearly thresholds. - Xiaohua Qu(CEO)

Contradiction Point 5

Clarification and Impact of FEOC Provisions

Contradiction on whether the company is directly impacted by FEOC draft language and the nature of its response.

Maheep Mandloi (Mizuho Securities USA LLC) - Maheep Mandloi (Mizuho Securities USA LLC)

2025Q4: The company has completed restructuring to be compliant with the OBBBA by forming a new U.S. entity, CS PowerTech, which is 75.1% owned by Canadian Solar, ensuring major decision-making occurs in Canada. - Shawn Qu(CEO)

What are the capital needs for the HJT expansion, and how are you addressing FEOC compliance and the "foreign entity of concern" language in the OBBBA? - Alan Lau (Jefferies)

2025Q1: CSI Solar (its Chinese subsidiary) holds a 65% controlling stake in US facilities. If the current FEOC draft language stands, these facilities would be impacted, requiring a change in ownership structure. - Shawn Qu(CEO)