ReneSola Announces Second Quarter 2016 Results

SHANGHAI, August 24, 2016 /PRNewswire/ -- ReneSola Ltd ("ReneSola" or the "Company") (www.renesola.com) (NYSE: SOL), a leading fully-integrated solar project developer and provider of energy efficient technology products, today announced its unaudited financial results for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights

• Revenue was $250.0 million, compared with guidance range of $280-$290 million
• Gross margin was 16.5%, compared with 17.1% in Q1 2016 and 16.5% in Q2 2015
• Net income was $5.5 million, compared with $5.7 million in Q1 2016 and net loss of $2.3 million in Q2 2015
• Total external module shipments were 282.4 MW while module shipments to the Company's downstream projects were approximately 18.9 MW;
• Total external wafer shipments were 423.3 MW compared with 351.0 MW in Q1 2016 which reflects the Company's wafer capacity expansion strategy through technology improvement;
• Successfully sold approximately 20.0 MW of projects in the UK; 21.2 million to be recognized in Q3 2016, additional 1.6 million be recognized within two years
• The Company now has a solar power project pipeline of 938.2 MW, of which 323.8 MW are late stage
• The Company connected six utility-scale projects to UK grid during the quarter with total capacity of approximately 26 MW and expects the projects to be sold in Q3 2016
• LED sales up 26% sequentially with gross margin over 30%

"Our performance was solid this quarter, with significant growth in our downstream project pipeline, execution in project sales and construction, and sequential top-line growth in the LED distribution business. Although total revenue was below guidance due to recognition timing of the four UK projects sold during the quarter, we believe we should benefit from that revenue as well as the potential sale of another six UK projects in the second half of the year. Our strong project monetization outlook and continued growth in the high margin LED initiative give us confidence in our ability to transition from manufacturing business toward project development and distribution business." commented Mr. Xianshou Li, ReneSola's Chief Executive Officer.

Li continued, "For the past year, our strategy has been simple and effective, and we have executed it consistently. We are focused on project development with rapid monetization and expansion through technology improvements, as well as de-emphasis of OEM manufacturing. We have consistently been profitable for the past year, and will continue to improve our capital structure.

Second Quarter 2016 Financial Results

Revenue of $250.0 million was down 4.1% q/q and down 6.8% y/y. Revenue declined due to lower wafer ASP and reduced module shipments to external customers. The Company continues to scale back its OEM business in order to shift toward downstream project development.

Gross profit of $41.2 million was down 7.5% q/q and down 7.3% y/y. Gross margin decreased sequentially to 16.5% from 17.1% in Q1, but was unchanged relative to last year. The sequential margin decline in the quarter was primarily due to changes in product mix, coupled with margin pressure related to wafer sales.

Operating expenses of $34.8 million were 13.9% of revenue, up from 12.4% in Q1 of 2016 and up from 12.6% in Q2 of 2015. The increase in operating expenses in the quarter was largely attributable to higher sales commissions. Sequentially, SG&A expenses increased 7% while R&D expenses decreased 9%.

Operating income was $6.4 million, compared to operating income of $12.2 million in Q1 of 2016 and $10.5 million in Q2 of 2015. Operating margin decreased to 2.5% from 4.7% in Q1 of 2016 and from 3.9% in Q2 of 2015.

Non-operating expenses of $0.4 million include net interest expense of $7.8 million, offset by gains on derivatives of $2.9 million, and foreign exchange gains of $4.3 million.

Net income was $5.5 million, compared to a net income of $5.7 million in Q1 of 2016 and a net loss of $2.3 million in Q2 of 2015. Earnings per ADS were $0.05, compared to $0.06 in Q1 of 2016.

Balance Sheet, Liquidity and Capital Resources

The Company had cash and cash equivalents (including restricted cash) of $163.4 million as of June 30, 2016, compared with $190.0 million at the end of Q1 2016. The decrease of $26.6 million includes a negative foreign currency translation impact of $6.8 million. Total debt was $716.5 million, down from $737.2 million as of March 31, 2016. Total borrowings decreased by $20.7 million in the quarter, similarly benefiting from foreign currency translation.

Second Quarter Operating Highlights

The Company remains focused on developing, operating and selling high-quality solar power projects. Activity is centered on building a pipeline of distributed generation and utility-scale projects in attractive geographies worldwide.

Project Sales

The Company sold four utility-scale projects in the United Kingdom in the second quarter of 2016, representing a total of approximately 20.0 MW of generating capacity. Revenue from the sales of these projects will be recognized in the third quarter of 2016.

Project Pipeline

The Company currently has 938.2 MW of projects in various stages of development. The Company is starting to identify opportunity in the domestic distributed generation market, and now has 35 MW of such projects in its pipeline. The Company continues to focus on developed markets with stable returns and healthy cash flow.

The geographic distribution of project pipeline is outlined in the table below.

Modules and Wafers

The Company continues to provide high quality products at lower cost to select customers. The Company considers its competitive advantages to be improving conversion efficiency and supply chain management.

During the second quarter, total external module shipments were 282.4 MW, down 19.5% from the first quarter of 2016 and down 12.3% from the second quarter of 2015. Total wafer shipments were 423.3 MW, up 20.6% q/q and up 50.3% y/y which reflects the Company's wafer capacity expansion strategy through technology improvement.

LED

During the second quarter, ReneSola's LED business reached revenue of $7.8 million, up approximately 26% from $6.2 million in Q1 2016, and achieved a gross margin of over 30%.

The market for energy efficient products is large and growing rapidly. LED lighting is one of the most effective products for reducing energy consumption with high product quality. We are leveraging our brand name and global distribution footprint to build an attractive, high margin business that we think will grow into a meaningful contributor to our results in the years ahead.

Outlook

For Q3 2016, the Company expects revenue to be approximately $200 million and gross margin to be around 10%. This outlook reflects the impact from high polysilicon prices combined with declining wafer prices.

For full year 2016, the Company now expects revenue in the range of $900 million to $1.1 billion, compared with previous guidance of $1.0 billion to $1.2 billion. The lower revenue outlook reflects a slowdown in shipments and lower ASP.

Conference Call Information

ReneSola's management will host an earnings conference call on August 24, 2016 at 8:30 a.m. U.S. Eastern Time (8:30 p.m. China Time).

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

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is 61587431.

A replay of the conference call may be accessed by phone at the following numbers until September 1, 2016. To access the replay, please again reference the conference passcode 61587431.

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

Founded in 2005, and listed on the New York Stock Exchange in 2008, ReneSola (NYSE: SOL) is an international leading brand and technology provider of energy efficient products. Leveraging its global presence and expansive distribution and sales network, ReneSola is well positioned to provide its highest quality green energy products and on-time services for EPC, installers, and green energy projects around the world. For more information, please visit 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:

ReneSola Ltd
Ms. Rebecca Shen
+86 (21) 6280-9180 x106
ir@renesola.com

The Blueshirt Group Asia
Mr. Gary Dvorchak, CFA
+86 (138) 1079-1480
gary@blueshirtgroup.com

In the United States:

The Blueshirt Group
Mr. Ralph Fong
+1 (415) 489-2195
ralph@blueshirtgroup.com

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