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May 11, 2012 at 07:01 AM EDT
ReneSola Ltd. Announces First Quarter 2012 Results
Exceeds guidance with revenues of US$211.5 million

JIASHAN, China, May 11, 2012 /PRNewswire-Asia/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL), a leading global manufacturer of solar products, today announced its unaudited financial results for the first quarter ended March 31, 2012.

First Quarter 2012 Financial and Operating Highlights

  • Total solar wafer and module shipments in Q1 2012 were 466.0 megawatts ("MW"), exceeding Company guidance and representing an increase of 37.1% from 339.9 MW in Q4 2011.
  • Q1 2012 net revenues were US$211.5 million, exceeding Company guidance and representing an increase of 12.7% from US$187.7 million in Q4 2011.
  • Q1 2012 gross loss was US$8.0 million with a gross margin of negative 3.8%, which included a $12.2 million write-down for inventory, compared to a gross loss of US$43.4 million with a gross margin of negative 23.1% in Q4 2011. 
  • Q1 2012 operating loss was US$37.8 million with an operating margin of negative 17.9%, compared to an operating loss of US$52.7 million with an operating margin of negative 28.1% in Q4 2011.
  • Q1 2012 net loss was US$40.2 million, representing basic and diluted loss per share of US$0.23, and basic and diluted loss per American depositary share ("ADS") of US$0.47.
  • Cash and cash equivalents plus restricted cash were $388.3 million as of the end of Q1 2012, compared to US$437.4 million as of the end of Q4 2011.

"We continue to navigate what remains a challenging and substantially oversupplied global solar market by aggressively managing our costs," said Mr. Xianshou Li, ReneSola's chief executive officer. "At the same time, however, we have seen steady improvement in our module sales and have built up a backlog of orders, which we are confident will continue to increase. As such, we are working to leverage our R&D advantages in wafer technology, and specifically our Virtus wafer products, to produce higher-efficiency Virtus modules, which deliver a power output of 245 W to 255 W. Our Virtus modules will use our self-manufactured Virtus wafers, which represent ReneSola's core competitive strengths in wafer R&D and technology. On May 17, we will formally announce and kick-off marketing for our high-efficiency modules and diamond-steel wires at the Shanghai New Exhibition Center (SNEC) PV Power Expo. Additionally, our polysilicon project remains on track, and will give us important flexibility as the market continues to evolve."

First Quarter 2012 Results

Solar Wafer and Module Shipments


1Q12

4Q11

1Q11

Q-o-Q%

Y-o-Y%

Total Solar Wafer and Module Shipments (MW)

466.0

339.9

330.4

37.1%

41.0%

Wafer Shipments (MW)

375.1

245.4

243.5

52.9%

54.0%

Module Shipments (MW)

90.9

94.5

86.9

(3.8%)

4.6%

The sequential increase in solar product shipments was the result of strong demand from European markets, particularly Germany.

Net Revenues


1Q12

4Q11

1Q11

Q-o-Q%

Y-o-Y%

Net Revenues (US$mln)

$211.5

$187.7

$359.2

12.7%

(41.1%)

Revenues in Q1 2012 increased quarter over quarter, with a decrease in the average selling price ("ASP") of solar wafers and modules to US$0.33 per watt ("W") and US$0.84/W, respectively, offset by an increase in solar wafer shipments.

Gross Profit (Loss)


1Q12

4Q11

1Q11

Q-o-Q%

Y-o-Y%

Gross Profit (Loss) (US$mln)

($8.0)

($43.4)

$101.2

-

(107.9%)

Gross Margin

(3.8%)

(23.1%)

28.2%

-

-

The sequential decrease in gross loss was primarily due to lower costs and improved margins on the Company's solar products, offset by an inventory write-down of US$12.2 million, primarily as a result of the decline in the price of polysilicon.

Operating Income (Loss)


1Q12

4Q11

1Q11

Q-o-Q%

Y-o-Y%

Operating Expenses (US$mln)

$29.8

$9.3

$25.6

220.4%

16.4%

Operating Income (Loss) (US$mln)

($37.8)

($52.7)

$75.6

-

(150.0%)

Operating Margin 

(17.9%)

(28.1%)

21.0%

-

-

The sequential increase in operating expenses was primarily due to the one-time gain of US$13.5 million arising from the forfeiture of a prepaid deposit due to the breach of a solar wafer contract by one of the Company's clients in Q4 2011. Operating expenses represented 14.1% of total revenues in Q1 2012, compared to 5.0% in Q4 2011.

Foreign Exchange Gain

The Company had a foreign exchange gain of US$0.8 million in Q1 2012, primarily due to the appreciation of the renminbi ("RMB"). The Company also recognized a US$0.04 million gain on derivatives in Q1 2012, compared to a gain of US$3.6 million in Q4 2011.

Net Income (Loss) Attributable to Holders of Ordinary Shares


1Q12

4Q11

1Q11

Net Income (Loss) (US$mln)

($40.2)

($36.7)

$43.3

Diluted Earnings (Loss) Per Share

($0.23)

($0.21)

$0.24

Diluted Earnings (Loss) Per ADS

($0.47)

($0.43)

$0.49

Business Highlights

Research and Development ("R&D")

In Q1 2012, ReneSola continued to make progress in producing and manufacturing high-efficiency wafers and modules, in particular its Virtus modules. As the Company continues to succeed in improving its Virtus wafer technology, additional benefits will be seen in its high-efficiency Virtus modules, which the Company expects to become increasingly successful in the market. In addition, the Company will start to develop low-oxygen concentration solar wafers, which the Company believes will help improve conversion efficiencies, as well as the attenuation rate of module efficiency. 

The Company recently developed a new technology to recycle products at the polysilicon manufacturing stage, which will help reduce costs. The Company also continues to research the use of carbon composite materials, which the Company believes will help lower costs and expose the Company to new markets.

Module Business

ReneSola delivered 90.9 MW of solar modules in Q1 2012, of which 10 MW were Virtus modules. At present, the Company's module manufacturing has reached its maximum capacity as a result of strong sales generated by its new regional sales teams. The Company expects to ship approximately 150 MW to 170 MW of solar modules in Q2 2012, of which 55 MW are expected to be Virtus modules. For the full year 2012, the Company expects to ship approximately 600 MW of solar modules, of which 200 MW are expected to be Virtus modules. The Company expects to continue to see strong demand for high-efficiency, high-quality products such as the Virtus modules. Accordingly, the Company will increase its module production capacity to 1.2 GW for modules by the end of Q2 2012.

For Q1 2012, the Company's total module manufacturing cost was approximately US$0.74/W. This resulted in a gross margin of approximately 9.0% for the Company's solar module business in Q1 2012. The Company will continue to reduce its module manufacturing costs through a reduction in material costs and improvements in its manufacturing methods, and capitalize on the business's higher margins relative to wafer production. The Company expects total module processing cost to decrease to below US$0.70/W for 2Q 2012.

Wafer Business

ReneSola is now producing high-efficiency Virtus wafers with a conversion efficiency of 18.2%, which is close to monocrystalline wafer conversion efficiency. The Company's blended non-silicon wafer processing cost was US$0.19/W in Q1 2012, a decrease from US$0.20/W in Q4 2012. Since the end of Q1 2012, blended non-silicon wafer processing cost has been reduced to US$0.18 as a result of continued cost-reduction efforts, including the reduced use of electricity and raw materials, as well as lower-priced raw materials. The successful execution of the Company's cost-reduction strategies should allow the Company to reduce its blended non-silicon wafer processing cost to US$0.17/W by the end of 2Q 2012 and to US$0.15/W by the end of 2012.

Polysilicon Update

In Q1 2012, ReneSola produced approximately 900 metric tons ("MT") of polysilicon, which while higher than expected, represented a decrease from approximately 1,089 MT in Q4 2011 as a result of upgrades and maintenance on the state-owned power grid connected to the Company's polysilicon plant. At the end of Q1 2012, the Company had a polysilicon production capacity of 4,000 MT. The Company expects polysilicon production capacity to reach 10,000 MT through Phase II of its polysilicon production plant by the end of 2012.

ReneSola's Sichuan polysilicon plant remains central to the Company's long-term manufacturing and cost-reduction strategy. The Company's internal polysilicon production cost increased to approximately US$33 per kilogram ("kg") for Q1 2012, compared to approximately US$30/kg at the end of Q4 2011, as a result of maintenance and equipment upgrades. Since the end of Q1 2012, polysilicon production cost has returned to approximately US$30/kg and is expected to decrease to approximately $25/kg by the end of Q2 2012. Total internal polysilicon production cost is expected to decrease further to an average of approximately US$22/kg by the end of 2012 once Phase II of the Company's polysilicon production plant is operational. The Company expects Phase II to have stand-alone polysilicon costs of under $20/kg.

Liquidity and Capital Resources

Net cash and cash equivalents plus restricted cash were US$388.3 million at the end of Q1 2012, compared to US$437.4 million at the end of Q4 2011. Total debt was US$800.8 million in Q1 2012, compared to US$715.6 million in Q4 2011, excluding US$111.6 million due in convertible notes.

Capital expenditures were US$45 million for Q1 2012. Short-term borrowings were US$662.6 million in Q1 2012, an increase from US$570.9 million in Q4 2011.

2012 Capacity Expansion Plans and Related CAPEX

The Company expects to spend approximately US$70 million in Q2 2012 to expand its solar module and polysilicon production capacity, as well as improve its manufacturing processes.

Management Changes

Mr. Charles Ding, the Company's former vice president of global sourcing, has left the Company, effective this month.

Outlook

For Q2 2012, the Company expects total solar wafer and module shipments to be in the range of 460 MW to 480 MW, with module shipments of 150 MW to 170 MW, and revenues to be in the range of US$200 million to US$220 million with positive gross margins.

For the full year 2012, the Company's outlook is unchanged, with total solar wafer and module shipments expected to be in the range of 1.8 GW to 2.0 GW.

Conference Call Information

ReneSola's management will host an earnings conference call on Friday, May 11, 2012 at 8 am U.S. Eastern Time (8 pm Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

U.S. / International:

+1-718-354-1231

Hong Kong:

+852-2475-0994

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 May 18, 2012:

International:

+1-718-354-1232

Passcode:

74459356

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, high production quality, 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 processing 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 ADSs are traded on The New York Stock Exchange (NYSE: SOL). For more information about ReneSola, please visit http://www.renesola.com.

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:

Mr. Tony Hung
ReneSola Investor Relations
Tel: +86-573-8473-9011
Email:ir@renesola.com 

Mr. Derek Mitchell
Ogilvy Financial, Beijing
Tel:+86-10-8520-6284
Email:sol@ogilvy.com

In the United States:

Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: sol@ogilvy.com

 

RENESOLA LTD 

Unaudited Consolidated Balance Sheet 

(US dollars in thousands) 








March 31,


 Dec 31, 


 March 31, 


2012


2011


2011

 ASSETS 






 Current assets: 






 Cash and cash equivalents  

338,899


379,039


388,648

 Restricted cash  

49,392


58,335


47,234

 Available-for-sale investment 

-


-


4,754

 Accounts receivable, net of allowances for doubtful accounts 

170,817


129,636


124,659

 Inventories 

176,410


154,182


152,409

 Advances to suppliers-current 

25,449


16,164


31,344

 Amounts due from related parties 

22,807


6,207


376

 Value added tax recoverable 

55,369


41,858


56,279

 Income tax recoverable 

8,308


7,956


2,976

 Prepaid expenses and other current assets  

26,408


18,718


10,142

 Deferred convertible bond issue costs-current 

784


784


909

 Derivative assets 

826


881


3,285

 Assets held-for-sale 

6,449


6,453


-

 Deferred tax assets-current 

15,770


12,709


13,901

 Total current assets  

897,688


832,922


836,916







 Property, plant and equipment, net 

985,977


980,165


842,616

 Prepaid land use right 

49,120


48,564


41,039

 Deferred tax assets-non-current 

28,805


25,157


8,192

 Deferred convertible bond issue costs-non-current 

2,314


2,510


5,417

 Advances to suppliers-non-current 

15,604


17,644


25,249

 Advances for purchases of property, plant and equipment  

51,123


25,867


26,845

 Other long-lived assets 

10,942


10,501


3,274

 Goodwill 

6,095


5,646


5,323

 Total assets  

2,047,668


1,948,976


1,794,871







LIABILITIES AND SHAREHOLDERS' EQUITY 












 Current liabilities: 






 Short-term borrowings  

662,605


570,894


404,002

 Accounts payable  

283,067


235,814


177,706

 Advances from customers-current                                              

55,603


58,238


60,070

 Amounts due to related parties  

26,147


4,913


25

 Other current liabilities  

99,340


114,969


94,342

 Income tax payable 

4,111


4,111


18,754

 Deferred tax liabilities 

536


220


1,908

 Derivative liabilities 

150


218


12,651

 Total current liabilities  

1,131,559


989,377


769,458







 Convertible bond payable-non-current 

111,616


111,616


175,000

 Long-term borrowings  

138,198


144,669


118,809

 Advances from customers-non-current 

49,039


48,051


76,734

 Warranty  

13,816


12,835


9,980

 Deferred gain 

29,527


29,141


25,443

 Other long-term liabilities  

12,339


12,145


1,346

 Total liabilities  

1,486,094


1,347,834


1,176,770







 Shareholders' equity 






   Common shares  

420,370


422,314


422,254

   Additional paid-in capital  

5,106


4,111


2,133

   Treasury stock 

-


(1,944)


-

   Retained earnings 

64,650


104,859


149,052

   Accumulated other comprehensive income  

71,176


71,646


44,662

 Total equity attribute to ReneSola Ltd 

561,302


600,986


618,101

 Noncontrolling interest 

272


156


-

 Total  shareholders' equity 

561,574


601,142


618,101







 Total liabilities and shareholders' equity  

2,047,668


1,948,976


1,794,871

 

RENESOLA LTD

Unaudited Consolidated Statements of  Income Data

(US dollar in thousands, except ADS and share data)








Three Months Ended


March 31, 2012


December 31, 2011


March 31, 2011







Net revenues

211,485


187,691


359,213

Cost of revenues

(219,518)


(231,061)


(258,040)

Gross profit (loss)

(8,033)


(43,370)


101,173

GP%

(3.8%)


(23.1%)


28.2%







Operating (expenses) income:






Sales and marketing

(5,639)


(5,487)


(3,482)

General and administrative

(12,562)


(8,269)


(9,995)

Research and development

(11,713)


(11,546)


(12,168)

Other operating income

143


15,984


25

Total operating expenses

(29,771)


(9,318)


(25,620)







Income (loss) from operations

(37,804)


(52,688)


75,553







Non-operating (expenses) income:






Interest income

2,806


2,187


485

Interest expense

(12,308)


(11,042)


(7,033)

Foreign exchange gains

801


1,816


4,755

Other-than-temporary impairment loss on available-for-sale investment

-


(1,836)


-

Gains (losses) on derivative, net

36


3,603


(19,804)

Gains on repurchase of convertible bonds

-


8,197


-

Total non-operating (expenses) income

(8,665)


2,925


(21,597)

Income (loss) before income tax, noncontrolling interests

(46,469)


(49,763)


53,956







Income tax benefit (expense)

6,249


13,069


(10,620)

Net income (loss)

(40,220)


(36,694)


43,336







Less: Net loss attributed to noncontrolling interests

(11)


(2)


-

Net income (loss) attributed to holders of ordinary shares

(40,209)


(36,692)


43,336













Earnings per share






  Basic

(0.23)


(0.21)


0.25

  Diluted

(0.23)


(0.21)


0.24







Earnings per ADS






  Basic

(0.47)


(0.43)


0.50

  Diluted

(0.47)


(0.43)


0.49







Weighted average number of shares used in computing earnings per share






  Basic

172,613,664


172,613,664


173,856,442

  Diluted

172,613,664


172,613,664


179,895,439

 

RENESOLA LTD

Unaudited Consolidated Statements of Cash Flow

(US dollar in thousands)








Three Months ended



March 31, 2012


March 31, 2011






Operating activity:





Net income (loss)


(40,220)


43,336

Adjustment to reconcile net income to net cash used in operating activities:





  Gain on disposal of land use right


(55)


-

  Inventory write-down


12,201


-

  Depreciation and amortization


22,897


19,633

  Amortization of deferred convertible bond issuances costs and premium


196


34

  Allowance of doubtful receivables and advance to suppliers and prepayment for 
    purchases of property, plant and equipment


90


(595)

  (Gains) losses on derivatives


(36)


19,804

  Share-based compensation


995


1,204

  Loss on disposal of long-lived assets


115


-






Changes in assets and liabilities:





  Accounts receivable


(63,987)


(41,754)

  Inventories


(34,740)


19,447

  Advances to suppliers


(7,255)


(15,899)

  Amounts due from related parties


4,626


16

  Value added tax recoverable


(13,512)


(11,775)

  Prepaid expenses and other current assets


(6,274)


6,904

  Prepaid land use rights


(127)


1,122

  Accounts payable


47,311


(44,542)

  Advances from customers


(1,613)


2,777

  Income tax payables


(356)


3,262

  Other current liabilities


(2,367)


(7,993)

  Other long-term liabilities


(241)


(105)

  Accrued warranty cost


986


1,205

  Deferred tax assets


(6,249)


800

Net cash used in operating activities


(87,617)


(3,119)






Investing activities:





  Purchases of property, plant and equipment


(25,487)


(22,317)

  Advances for purchases of property, plant and equipment


(19,533)


(9,593)

  Proceeds from disposal of property, plant and equipment


22


-

  Cash received from government subsidy


634


-

  Prepayment for investment


(1,911)


-

  Purchases of other long-lived assets


-


(121)

  Changes in restricted cash


8,895


(13,268)

  Net proceeds from settlement of derivatives


115


20

Net  cash used in investing activities


(37,266)


(45,279)






Financing activities:





  Proceeds from bank borrowings


278,764


229,177

  Repayment of bank borrowings


(193,252)


(232,756)

  Proceeds from exercise of stock options


-


120

  Contribution from noncontrolling interests


127


-

  Proceeds from issuance of convertible bonds


-


175,000

  Cash paid for issuance costs


-


(6,360)

  Purchase of capped call transaction


-


(21,505)

Net cash provided by financing activities


85,638


143,676






Effect of exchange rate changes


(895)


2,668






Net increase (decrease) in cash and cash equivalents


(40,140)


97,946

Cash and cash equivalents, beginning of year


379,039


290,702

Cash and cash equivalents, end of year


338,899


388,648








 


RENESOLA LTD

Unaudited Condensed Consolidated Statement of Comprehensive Income 

(US dollar in thousands)










Three Months ended



Mar 31, 2012


Dec 31, 2011


Mar 31, 2011

Net income (loss)


(40,220)


(36,694)


43,336

Other comprehensive income, net of tax







Foreign exchange translation adjustment


(470)


6,374


5,725

Change in fair value of available for sale investment


-


-


1,181

Changes in fair value of cash flow hedges


-


(785)


1,575

Other comprehensive income, net of tax


(470)


5,589


8,481








Comprehensive income (loss)


(40,690)


(31,105)


51,817

Less: comprehensive income (loss) attributable to non-controlling interest


(11)


(2)


-

Comprehensive income (loss) attributable to ReneSola


(40,679)


(31,103)


51,817

 

SOURCE ReneSola Ltd

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