TIDMSOLA
ReneSola Ltd Announces Second Quarter 2010 Results
Company achieves record results with revenues of US$253.9 million, quarterly shipments of 258.3 MW and net income of US$36.1 million
JIASHAN, China, Aug. 9 /PRNewswire-Asia-FirstCall/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL) (AIM: SOLA), a leading global manufacturer of solar wafers and provider of solar module original equipment manufacturer ("OEM") services, today announced its unaudited financial results for the second quarter ended June 30, 2010.
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Second Quarter 2010 Financial and Operating Highlights
-- Total solar product shipments in Q2 2010 were a record 258.3 megawatts
("MW"), an increase of 6.6% from 242.4 MW in Q1 2010.
-- Q2 2010 net revenues were a record US$253.9 million, an increase of
22.9% from US$206.6 million in Q1 2010.
-- Q2 2010 gross profit was US$76.6 million with a gross profit margin of
30.2%, compared to gross profit of US$35.3 million with a gross margin
of 17.1% in Q1 2010.
-- Q2 2010 operating income was US$52.5 million with an operating margin
of 20.6%, compared to operating income of US$21.2 million with an
operating margin of 10.3% in Q1 2010.
-- Q2 2010 net income was a record US$36.1 million, representing basic and
diluted earnings per share of US$0.21, and basic and diluted earnings
per American depositary share ("ADS") of US$0.42.
-- The Company generated strong operating cash flow of US$168.4 million in
the first half of 2010, bringing cash and cash equivalents at the end
of Q2 2010 to US$171.2 million, compared with US$106.8 million at the
end of 2009.
"We achieved record results in terms of revenues, net income and shipment volumes in the second quarter of 2010," said Mr. Xianshou Li, ReneSola's chief executive officer. "We delivered a strong gross profit margin of over 30% during the quarter as we continued to lead the industry as a cost-competitive solar manufacturer and executed on our OEM module servicing strategy. Strong market demand coupled with our cost-efficient structure should place ReneSola in a position to increase profitability in the coming quarters."
Results for the Second Quarter 2010
Product Shipments
2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%
Total Solar Product
Shipments (MW) 258.3 242.4 85.9 6.6% 200.7%
Wafer Shipments (MW) 206.7 226.9 83.2 (8.9%) 148.4%
Module Shipments (MW) 50.6 15.4 2.7 228.6% 1,774.1%
Net Revenues
2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%
Net Revenues (US$mln) $253.9 $206.6 $82.6 22.9% 207.4%
Record high revenues in Q2 2010 were driven by higher wafer average selling prices and higher module shipments.
Gross Profit
2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%
Gross Profit (US$mln) $76.6 $35.3 $4.3 117.0% 1,681.4%
Gross Margin 30.2% 17.1% 5.1% -- --
The significant improvement in the Company's gross margin from 17.1% in Q1 2010 to 30.2% in Q2 2010 was driven by overall wafer processing cost reduction and a large decrease in polysilicon costs to market-equivalent prices in Q2 2010.
Operating Income (Loss)
2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%
Operating Expenses (US$mln) $24.2 $14.1 $8.2 68.8% 190.2%
Operating Income (Loss)
(US$mln) $52.5 $21.2 ($4.0) 149.1% --
Operating Margin 20.6% 10.3% (4.8%) -- --
Increases in operating expenses were primarily due to a US$0.8 million bad debt provision against doubtful accounts receivables, a US$1.4 million provision against equipment suppliers' pre-payments and other operating expenses, including US$2.1 million in management bonuses accumulated for 2010.
Net Income (Loss) Attributable to Holders of Ordinary Shares
2Q10 1Q10 2Q09
Net Income (Loss) (US$mln) $36.1 $11.8 ($3.6)
Earnings (Loss) Per Share $0.21 $0.07 ($0.03)
Earnings (Loss) Per ADS $0.42 $0.14 ($0.05)
The Company achieved record net income of US$36.1 million, an increase of over 200% from US$11.8 million in Q1 2010. Basic and diluted earnings per share were US$0.21, and basic and diluted earnings per ADS were US$0.42.
Business Highlights
Wafer Business - Achieving Gross Profit Margin of Over 30%
The Company's wafer business achieved gross profit margin of over 30% fueled by robust market demand for high-quality products and significant cost reductions achieved by the Company. The average polysilicon raw material costs have fallen to market-equivalent prices, while the overall total wafer cost has been reduced to US$0.56/W ("per Watt"). ReneSola is committed to becoming the industry leader as a cost-competitive producer of wafer products, capitalizing on its advanced manufacturing and technologically driven platform to consistently reduce cost. Wafer costs are expected to be driven down further to between US$0.46/W to US$0.48/W by the end of 2011.
Module Business - A Significant Revenue and Profit Contributor
In the downstream module business, ReneSola delivered record module shipments of 50.6 MW with an average selling price of US$1.75/W. These results underscore the tremendous potential in the OEM servicing sector and ReneSola remains confident that the Company's downstream platform will further strengthen its core customer relationships and help enhance ReneSola's leadership position in the global wafer market. The Company expects to ship between 145 MW to 165 MW to new and existing customers in the second half of 2010.
Strong Operating Cash Flows and Cash Position
The Company generated strong operating cash flows of US$168.4 million in the first half of 2010, with a net cash and cash equivalents position of US$171.2 million at the end of Q2 2010 compared to a net cash and cash equivalents position of US$98.0 million at the end of Q1 2010. The Company expects to continue to generate strong operating cash flows during the second half of 2010.
Improving Financial Leverage
At the end of Q2 2010, the Company had interest-bearing debt of US$577.1 million, consisting of US$189.1 million of long-term debt and US$388.0 million of short-term debt. The Company had over US$750 million in credit facilities as of the end of Q2 2010 and is well positioned to reduce financial leverage as the Company continues to generate strong operating cash flows.
2011 Capacity Expansion Plans and Related CAPEX
In 2011, the Company plans to expand wafer production capacity to 1.8 GW from the current 1.2 GW, while expanding module production capacities to 600 MW from the current 375 MW.
The 2010 capital expenditure budget is US$150 million, of which approximately US$100 million covered the already implemented increases in wafer, cell and module capacities to 1.2 GW, 240 MW and 375 MW, respectively, as well as the final amount to be paid for the Sichuan polysilicon facility. The remaining US$50 million from the 2010 budget will be used in building capacity towards the 2011 targets referred to above. A further US$140 million of capital expenditure in 2011 is currently budgeted for achieving those targets.
AIM Cancellation
On July 27, 2010, the Company announced that a resolution would be proposed to cancel its AIM quotation at the upcoming annual general meeting (the "AGM") on August 20, 2010. Cancellation is conditional upon the consent of the Company's shareholders, by a majority of not less than 75% of the votes cast on the resolution to be proposed at the AGM.
ReneSola was admitted to trading on AIM in August 2006 and subsequently obtained a listing of its ADSs on the New York Stock Exchange (the "NYSE") in January 2008. Since its NYSE listing, the Company has seen an increasing number of shareholders migrating their shareholdings in the Company from AIM to the NYSE due to higher levels of liquidity. There are significant costs associated with maintaining the Company's AIM quotation, including the annual fees payable to the London Stock Exchange, nominated adviser and broker fees and other related professional costs. Cancellation will, accordingly, reduce the Company's recurring administrative overheads.
Company Appoints New Vice President of Human Resources
The Company recently appointed Mr. Tim Jia as vice president of human resources. Before joining ReneSola, Mr. Jia served as director of Ingersoll Rand Engineering and Technology Center's human resources and engineering administration department in Shanghai, China from 2003 to 2010. He has approximately 20 years of managerial experience with more than a decade of experience in human resources. Prior to Ingersoll Rand, Mr. Jia worked at Shuangliang Group and Shuangliang Trane Joint Venture for 18 years, where he served in several managerial positions including the director of human resources. Mr. Jia received undergraduate degrees in Machinery Engineering from Wuxi Mechanical Technology College in 1986 and Computer Engineering from Nanjing University in 1991. He also received an MBA from the Open University of Hong Kong in 2000 and is currently a Ph.D. candidate in Law at the China University of Political Science and Law.
Outlook
For the full year 2010, the Company expects revenues to be in the range of US$1.0 billion to US$1.05 billion and gross profit margin to be in the range of 25% to 27%, while maintaining second half gross profit margin in the range of 28% to 30%.
For Q3 2010, the Company expects total solar product shipments to be in the range of 280 MW to 310 MW and revenues to be in the range of US$300 million to US$320 million.
Conference Call Information
ReneSola's management will host an earnings conference call on Monday, August 9, 2010 at 8 am U.S. Eastern Daylight Time / 8 pm Beijing/Hong Kong time / 1 pm British Summer Time.
Dial-in details for the earnings conference call are as follows:
U.S. / International: +1-857-350-1682
United Kingdom: +44-207-365-8426
Hong Kong: +852-3002-1672
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "ReneSola Call."
A replay of the conference call may be accessed by phone at the following number until August 16, 2010:
International: +1-617-801-6888
Passcode: 14646078
Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of ReneSola's website at http://www.renesola.com .
About ReneSola
ReneSola is a leading global manufacturer of solar wafers and producer of solar power products based in China. Capitalizing on proprietary technologies, economies of scale, low-cost production capabilities and technological innovations and know-how, ReneSola leverages its in-house virgin polysilicon and solar cell and module production capabilities to provide its customers with high-quality, cost-competitive solar wafer products and OEM services. The Company possesses a global network of suppliers and customers that includes some of the leading global manufacturers of solar cells and modules. ReneSola's shares are traded on the New York Stock Exchange (NYSE: SOL) and the AIM of the London Stock Exchange (AIM: SOLA).
Safe Harbor Statement
This press release contains statements that constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Whenever you read a statement that is not simply a statement of historical fact (such as when the Company describes what it "believes," "expects" or "anticipates" will occur, what "will" or "could" happen, and other similar statements), you must remember that the Company's expectations may not be correct, even though it believes that they are reasonable. The Company does not guarantee that the forward-looking statements will happen as described or that they will happen at all. Further information regarding risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements is included in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's annual report on Form 20-F. The Company undertakes no obligation, beyond that required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, even though the Company's situation may change in the future.
For investor and media inquiries, please contact:
In China:
Ms. Feng Qi
ReneSola Ltd
Tel: +86-573-8477-3903
Email: feng.qi@renesola.com
Mr. Derek Mitchell
Ogilvy Financial, Beijing
Tel: +86-8520-6284
Email: derek.mitchell@ogilvy.com
In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: jessica.cohen@ogilvypr.com
In the United Kingdom:
Mr. Tim Feather / Mr. Richard Baty
Westhouse Securities Limited, London
Tel: +44-20-7601-6100
Email: tim.feather@westhousesecurities.com
richard.baty@westhousesecurities.com
RENESOLA LTD
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
June 30, March 31, December 31,
2010 2010 2009
ASSETS
Current assets:
Cash and cash equivalents 171,208 98,041 106,808
Restricted cash 75,384 44,195 25,266
Available for sale investment 4,975 6,207 6,207
Trade receivable, net of allowances
for doubtful receivables 102,629 146,386 107,987
Inventories, net of inventory
provisions 164,770 122,335 137,844
Advances to suppliers, current
portion 18,917 12,123 12,092
Amounts due from related parties 412 440 440
Value added tax recoverable 44,341 43,611 51,843
Prepaid expenses and other current
assets 10,783 9,294 7,412
Deferred tax assets, current portion 25,124 25,125 24,325
Total current assets 618,543 507,757 480,224
Property, plant and equipment, net 743,079 721,156 702,816
Prepaid land rent, net 25,351 25,450 23,137
Other Intangible assets 425 562 1,349
Deferred tax assets, non-current
portion 27,723 36,406 40,227
Advances to suppliers, non-current
portion 7,204 7,193 8,072
Advances for purchases of property,
plant and equipment 13,402 21,209 20,840
Other long-term assets 2,669 1,989 2,840
Goodwill 5,323 5,323 5,323
Total assets 1,443,719 1,327,045 1,284,829
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 388,028 406,609 358,634
Accounts payable 190,779 129,159 93,406
Advances from customers, current
portion 51,276 54,029 53,852
Amounts due to related parties 24 40 24
Other current liabilities 73,848 71,413 71,460
Convertible bond payable, current
portion -- -- 32,475
Total current liabilities 703,955 661,250 609,851
Long-term borrowings 189,073 171,409 189,279
Advances from customers, non-current
portion 90,198 73,919 78,578
Other long-term liabilities 12,911 12,008 10,858
Total liabilities 996,137 918,586 888,566
Shareholders' equity
Common shares 414,585 414,068 413,753
Additional paid-in capital 21,896 21,165 21,065
Accumulated deficits (12,772) (48,832) (60,609)
Accumulated other comprehensive
income 23,873 22,058 22,054
Total shareholders' equity 447,582 408,459 396,263
Total liabilities and shareholders'
equity 1,443,719 1,327,045 1,284,829
RENESOLA LTD
Unaudited Consolidated Statements of
Income Data
(US dollars in thousands, except ADS
and share data)
Three Months Ended
June 30, March 31, June 30,
2010 2010 2009
Net revenues 253,879 206,551 82,629
Cost of revenues (177,255) (171,228) (78,378)
Gross profit (loss) 76,624 35,323 4,251
Operating expenses:
Sales and marketing (1,815) (1,426) (1,497)
General and administrative (13,371) (4,727) (4,503)
Research and development (7,459) (6,168) (3,401)
Other general (expense) income (1,529) (1,798) 1,188
Total operating expenses (24,174) (14,119) (8,213)
Income (loss) from operations 52,450 21,204 (3,962)
Non-operating (expenses) income:
Interest income 378 101 176
Interest expenses (5,299) (4,968) (3,972)
Foreign exchange gain (loss) (7) (911) (504)
Gain on early extinguishment of
debt, net of inducement charges -- -- 5,353
Fair value change on derivative
assets (147) -- --
Investment income 293 -- --
Total non-operating (expenses)
income (4,782) (5,778) 1,053
Income (loss) before income tax 47,668 15,426 (2,909)
Income tax benefit (expense) (11,607) (3,649) (680)
Net income (loss) attributed to
holders of ordinary shares 36,061 11,777 (3,589)
Earnings (Loss) per share
Basic 0.21 0.07 (0.03)
Diluted 0.21 0.07 (0.03)
Earnings (Loss) per ADS
Basic 0.42 0.14 (0.05)
Diluted 0.42 0.14 (0.05)
Weighted average number of shares
used in computing earnings per
share
Basic 172,706,512 172,668,245 139,383,154
Diluted 172,706,512 172,668,245 139,383,154
CONSOLIDATED CASH FLOW STATEMENT
Six months ended
June 30, 2010 June 30, 2009
US$000 US$000
Operating activities:
Net income (loss) 47,837 (33,608)
Adjustment to reconcile net income
(loss) to net cash used in
operating activities:
Equity in earnings of investee -- 291
Inventory write-down -- 68,047
Depreciation and amortization 24,346 13,457
Amortization of deferred convertible
bond issue costs and premium 327 1,426
Allowances for doubtful receivables
and advance to suppliers 1,961 631
Prepaid land use right expensed 404 127
Change in fair value of derivatives 147 (1)
Gain on early extinguishment of
debt, net of inducement charges -- (5,353)
Share-based compensation 1,360 1,861
Loss on disposal of long-lived
assets 133 14
Changes in operating assets and
liabilities:
Accounts receivable 5,114 9,951
Inventories (25,861) (14,246)
Advances to suppliers (7,859) 19,379
Amounts due from related parties 31 (11,816)
Value added tax recoverable 7,791 (19,082)
Prepaid expenses and other current
assets (4,463) 7,323
Prepaid land use right -- (110)
Accounts payable 96,277 2,954
Advances from customers 8,496 2,334
Other liabilities (1,098) 2,981
Deferred taxes 12,291 (37,527)
Accrued Warranty 1,141 65
Net cash provided by (used in)
operating activities 168,375 9,098
Investing activities:
Purchases of property, plant and
equipment (53,562) (164,024)
Advances for purchases of property,
plant and equipment 6,083 18,186
Purchase of other long-term assets 67 (447)
Cash received from government
subsidy -- 5,959
Proceeds from disposal of investment -- (635)
Proceeds from disposal of property,
plant and equipment 51 --
Restricted cash (49,631) (51,722)
Cash consideration for acquisition -- (16,831)
Net proceeds from redemption of
financial assets 79 --
Net cash used in investing
activities (96,913) (209,514)
Financing activities:
Proceeds from borrowings 447,676 436,780
Repayment of bank borrowings (422,239) (155,437)
Cash paid for issuance cost (252) --
Proceeds from exercised stock option 304 --
Cash consideration paid to
repurchase convertible bonds (32,715) (19,781)
Net cash provided by financing
activities (7,226) 261,562
Effect of exchange rate changes 164 64
Net increase in cash and cash
equivalents 64,400 61,210
Cash and cash equivalents, beginning
of year 106,808 112,333
Cash and cash equivalents, end of
period 171,208 173,543
SOURCE ReneSola Ltd
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