Canadian Solar Reports Second Quarter 2009 Results

ONTARIO, Canada -

Q209 Highlights

– Net revenues of US$114.2 million, a 131% increase from Q109 net revenues of US$49.5 million. — Shipments of 48.2 MW, a 168% increase from Q109 shipments of 18 MW. — Gross margin of 20.2% and net margin of 15.5%, compared to Q109 negative gross margin of 7.9% and Q109 negative net margin of 9.7%. — Earnings per diluted share of US$0.49, compared to Q109 net loss per diluted share of US$0.13.

Canadian Solar Inc. (”the Company”, “Canadian Solar” or “we”) (Nasdaq: CSIQ) today announced its unaudited financial results for the second quarter of 2009 ended June 30, 2009 and its outlook for third quarter 2009 shipments.

Net revenues for the quarter were US$114.2 million, compared to net revenues of US$212.6 million for the second quarter of 2008 and US$49.5 million for the first quarter of 2009.

Net income for the quarter was US$17.7 million, or US$0.49 per diluted share, compared to US$12.1 million, or US$0.41 per diluted share, for the second quarter of 2008 and a net loss of US$4.8 million, or US$0.13 per diluted share, for the first quarter of 2009.

Our Q209 shipments were 48.2 MW, including 39.5 MW of conventional high efficiency polysilicon modules, 7.0 MW of our proprietary e-Modules, and 1.7 MW of cells and solar application products.

The increase in Q209 sales came from all geographic markets important to the solar industry. Europe continues to be our largest contributing geographic market. Our sales in this region increased 86% to US$66.9 million in Q209 from US$36.0 million in Q109. The Company also experienced strong sales growth in Asia and America, with sequential gains of 188% and 500%, respectively, over Q109, resulting in a diversified and balanced global market distribution.

The company has been making continuous improvements on solar cell conversion efficiency and production cost. For our new, higher efficiency monocrystalline cells, we reached over 18.5% cell efficiency in pilot production, while the average efficiency of the current monocrystalline cell in mass production was 17.2% during Q2. For multicrystalline cells, our average efficiency was about 16.1% during the quarter. For our proprietary low-cost e-Modules, the average cell efficiency was about 15% during the quarter. On the cost side, we have successfully reduced our wafer to module processing cost for polysilicon solar modules to US$0.60 per watt in Q209 from US$0.71 per watt in Q109.

Dr. Shawn Qu, Chairman and CEO of Canadian Solar, commented: “Our second quarter revenue came in well ahead of expectations as we benefitted from robust customer orders around the world. We are glad that we took a conservative financial management strategy in Q4 of 2008 and Q1 this year, including prudent inventory measures and cash management, which allowed us to compete in Q2 with low materials and financing costs. These advantages, combined with our competitive processing costs and lean operating structure, resulted in a significant improvement in our gross margin and net margin, and position us for success in future quarters. We have noticed that many customers and their financing banks choose Canadian Solar products due to our competitive prices, product quality and strength of our balance sheet. Our flexible vertical integration business model, reputation for high-quality and our solid customer relationships allow us not only to compete, but also to gain market share in a tough economic environment.”

Arthur Chien, CFO of Canadian Solar, noted: “We significantly reduced our higher priced inventory in Q2, and are now very well positioned to benefit from further declines in raw materials costs as we work to increase our market share. Our current inventory primarily consists of feedstock, wafer and cells we will use for Q3 shipments.”

Revenue by Geographical Location (US $ millions) Region 2009 Q2 2009 Q1 2008 Q2 Revenue % Revenue % Revenue % Asia 31.1 27.2 % 10.8 21.8 % 13.1 6.2 % Europe 66.9 58.6 % 36.0 72.7 % 188.3 88.6 % America 16.2 14.2 % 2.7 5.5 % 11.2 5.2 % Total 114.2 100 % 49.5 100 % 212.6 100 % Region 2009 H1 2008 H1 Revenue % Revenue % Asia 41.9 25.6 % 15.5 4.0 % Europe 102.9 62.9 % 355.9 92.7 % America 18.9 11.5 % 12.4 3.3 % Total 163.7 100 % 383.8 100 % Recent Developments — On track to expand module capacity to 820 MW, cell plant capacity to 420 MW by the end of Q3 and to expand the ingot and wafer plant to 200 MW by year end. — As part of its growth plan Canadian Solar has recently arranged for approximately US$300 million in additional bank lines that can be drawn down at any time. This gives the Company a total of US$524 million in available bank lines. — Established and staffed Canadian Solar Japan, Inc., a wholly owned subsidiary, to address the growing market in Japan and expect to start sales in Q4 of 2009. — Incorporated and staffed Canadian Solar Solutions, Inc., a wholly owned subsidiary in Ontario, Canada to address the significant market opportunities in Canada.

Outlook

Based on the market situation, forecast and our current order book, we expect to have shipments of approximately 90 MW to 100 MW in Q309. We now expect shipments of approximately 260-270 MW for the full year 2009, up from prior guidance of 200 MW to 220 MW. The above outlook is based on the Company’s current views with respect to operating and market conditions, which are subject to change. The risks to our guidance also include change of product pricing and project financing environment.

Dr. Shawn Qu, Chairman and CEO, remarked: “We believe that the very large growth in customer orders in Q309 over Q209 demonstrates our ability to gain market share. These share gains are the result of our competitive pricing, high product quality and the bankability of our products. Although the market remains uncertain and the solar project financing remains challenging, we think that we will carry this momentum forward into Q4 as we continue to expand our business in diversified geographies, including Germany, Italy, the Czech Republic, Spain, Korea and US. We also expect to see sales contributions from Japan, China and Canada in the near future.”

Investor Conference Call / Webcast Details

The dial-in number for the live audio call, which will begin today, Thursday, August 6, 2009 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. August 6, 2009 in Hong Kong), is +1-617-847-8712. The conference call passcode is 63818298. A live webcast of the conference call will also be available on Canadian Solar’s website at www.canadian-solar.com .

A replay of the call will be available approximately one hour after the conclusion of the live call through 12:00 p.m. on August 13, 2009, U.S. Eastern Time (12:00 a.m., August 14, 2009 in Hong Kong) by telephone at +1-617-801-6888. To access the replay, use passcode 52551852. A webcast replay will also be available at www.canadian-solar.com .

About Canadian Solar Inc. (NASDAQ: CSIQ)

Canadian Solar Inc. is a leading vertically integrated provider of ingot, wafer, solar cell, solar module and other solar applications. Canadian Solar designs, manufactures and delivers solar products and solar systems for on-grid and off-grid use to customers worldwide. Canadian Solar is one of the world’s largest solar module producers by manufacturing capacity. With operations in North America, Europe and Asia, Canadian Solar provides premium quality, cost-effective and environmentally-friendly solar solutions to support global sustainable development. For more information, visit www.canadian-solar.com .

Safe Harbor/Forward-Looking Statements:

Certain statements in this press release including statements regarding expected future financial and industry growth 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; governmental support for the deployment of solar power; future shortage or availability of the supply 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, including customers of our silicon materials sales; changes in demand from major markets such as Germany; 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; continued success in technological innovations and delivery of products with the features 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 originally filed on June 8, 2009. 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. You 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.

Canadian Solar Inc. Unaudited Condensed Consolidated Statements of Operations (In Thousands of U.S. Dollars, Except Share And Per Share Data And Unless Otherwise Stated) Item 2009 Q2 2009 Q1 2008 Q2 2009 H1 2008 H1 Net revenues $114,176 $49,465 $212,585 $163,641 $383,820 Cost of revenues 91,096 53,360 179,509 144,456 322,509 Gross profit (loss) 23,080 (3,895) 33,076 19,185 61,311 Selling expenses 3,229 1,881 2,852 5,110 5,357 General and administrative expenses 6,410 4,518 6,485 10,928 11,911 Research and development expenses 530 470 447 1,000 749 Total operating expenses 10,169 6,869 9,784 17,038 18,017 Income (loss) from operations 12,911 (10,764) 23,292 2,147 43,294 Interest expenses (1,913) (2,254) (3,509) (4,167) (6,332) Interest income 2,849 563 59 3,412 161 Gain on debt extinguishment — – 2,430 — 2,430 Debt conversion expenses — – (10,170) — (10,170) Gain (Loss) on foreign currency derivatives (1,050) 11,366 — 10,316 — Exchange gain (loss) 6,038 (2,876) (619) 3,162 7,693 Income (loss) before taxes 18,835 (3,965) 11,483 14,870 37,076 Income tax (1,163) (820) 580 (1,983) (6,428) Net income (loss) $17,672 $(4,785) $12,063 $12,887 $30,648 Basic earnings (loss) per share $0.50 $(0.13) $0.43 $0.36 $1.10 Basic weighted average out- standing shares 35,699,453 35,686,313 28,085,875 35,692,919 27,738,862 Diluted earnings (loss) per share $0.49 $(0.13) $0.41 $0.36 $1.05 Diluted weighted average outstanding shares 36,141,329 35,686,313 29,384,701 35,802,842 29,210,678 Note: The Q2 08 and H1 08 net profit were increased by $1.5 million and $1.1 million respectively as compared to the Q2 08 and H1 08 net profit as per press release announcements after the retrospective application of FASB Staff Position - APB 14-1 on January 1, 2009. Canadian Solar Inc. Unaudited Condensed Consolidated Balance Sheets (In Thousands of U.S. Dollars) Item 2009.6.30 2008.12.31 Assets Current assets Cash and cash equivalents $86,832 $115,661 Restricted cash 158,558 20,622 Accounts receivable, net of allowance for doubtful accounts 115,679 51,611 Inventories 107,635 92,683 Value added tax recoverable 18,728 15,900 Advances to suppliers 19,572 24,654 Foreign currency derivative assets — 6,974 Prepaid and other current assets 15,809 10,910 Current assets - subtotal 522,813 339,015 Property, plant and equipment, net 172,348 165,542 Intangible assets 219 263 Advances to suppliers 43,582 43,087 Prepaid land use right 12,658 12,782 Investment 3,000 3,000 Deferred tax assets - non current 6,537 6,966 Total assets 761,157 570,655 Liabilities and stockholders’ equity Current liabilities Short term borrowings 266,744 110,665 Accounts payable 59,536 29,957 Other payables 21,810 24,043 Advances from customers 4,107 3,571 Amounts due to related parties 41 94 Foreign currency derivative liabilities 169 — Other current liabilities 6,608 4,333 Current liabilities - subtotal 359,015 172,663 Accrued warranty costs 12,190 10,847 Liability for uncertain tax positions 9,882 8,704 Convertible notes 848 830 Long term borrowings 30,738 45,357 Total liabilities 412,673 238,401 Common shares 395,252 395,154 Additional paid in capitals (63,548) (66,705) Retained earnings (Accumulated deficit) 1,783 (11,104) Accumulated other comprehensive income 14,997 14,909 Total stockholders’ equity 348,484 332,254 Total liabilities and stockholders’ equity $761,157 $570,655

Source: Canadian Solar Inc.

In Canada, Alex Taylor, IR Director of Canadian Solar Inc., +1-519-954-2057, Fax +1-519-954-2597, ir at csisolar.com; or In the U.S., David Pasquale of Global IR Partners, +1-914-337-8801, csiq at globalirpartners.com, for Canadian Solar Inc.