omniture

Trina Solar Announces Second Quarter 2016 Results

2016-08-23 19:00 3358

CHANGZHOU, China, Aug. 23, 2016 /PRNewswire/ -- Trina Solar Limited (NYSE: TSL) ("Trina Solar" or the "Company"), a global leader in photovoltaic ("PV") modules, solutions, and services, today announced its unaudited financial results for the quarter ended June 30, 2016.

Second Quarter 2016 Financial and Operating Highlights

  • Total module shipments were 1,658.3 MW, consisting of 1,619.0 MW of external shipments and 39.3 MW of shipments to the Company's own downstream power projects. This compares with total shipments of 1,423.3 MW in the first quarter of 2016, consisting of 1,370.4 MW of external shipments and 52.9 MW of shipments to the Company's own downstream power projects, and total shipments of 1,231.6 MW in the second quarter of 2015, consisting of 1,000.7 MW of external shipments and 230.9 MW of shipments to the Company's own downstream projects.
  • Net revenues were $961.6 million, compared with $816.9 million in the first quarter of 2016 and $722.9 million in the second quarter of 2015.
  • Gross profit was $176.3 million, compared with $139.7 million in the first quarter of 2016 and $144.9 million in the second quarter of 2015.
  • Gross margin was 18.3%, compared with 17.1% in the first quarter of 2016 and 20.0% in the second quarter of 2015.
  • Operating income was $83.7 million, compared with $44.8 million in the first quarter of 2016 and $60.7 million in the second quarter of 2015.
  • Net income attributable to Trina Solar's ordinary shareholders was $40.3 million, compared with $26.6 million in the first quarter of 2016 and $40.9 million in the second quarter of 2015.
  • Earnings per fully diluted American Depositary Share ("ADS" with each ADS representing 50 of the Company's ordinary shares) were $0.42, compared with $0.29 in the first quarter of 2016 and $0.42 in the second quarter of 2015.

Mr. Jifan Gao, Chairman and CEO of Trina Solar, commented, "We had another solid quarter with major financial and operational metrics improving across the board. Module shipments during the quarter increased on a sequential and year-over-year basis to 1.66 GW. Module shipments were driven mainly by continued demand from China ahead of the expected subsidy policy adjustment. Our new production facility in Thailand is ramping up its capacity on schedule and is helping to strengthen our competitiveness in the U.S.

"Our downstream business performed well in China's rapidly growing market as we connected 292.8 MW of utility projects and 28.0 MW of DG projects during the quarter. We also made progress overseas with the sale of 11.2 MW of projects in the U.K. and Italy during the quarter.

"We are a proven and leading innovator in the global PV industry, having made a series of breakthroughs in transforming lab technology into production practice. Following the achievement of a 21.1% average efficiency for industrially-produced mono-crystalline cells using passivated emitter rear cell (PERC) technology, our R&D team achieved an average efficiency of 20.2% for industrially-produced P-type multi-crystalline silicon cells with PERC technology. We also achieved an average efficiency of 18.7% for our multi-crystalline silicon P-type double print cells that were produced for commercial shipment. We will continue driving the development of our high-efficiency cells in order to offer customers the highest quality products.

"Going forward, we will continue to focus on developing our brand name, products and technology, while identifying opportunities to develop our downstream business. We believe that our strategy gives us a competitive edge in the industry and provides a solid foundation for our sustainable and long term development."

Second Quarter 2016 Results

Net Revenues

Net revenues were $961.6 million, including $60.7 million in revenues from electricity generated by the Company's operational downstream solar power projects, sales of solar power projects that are developed for sale, and EPC services. Total net revenues represent an increase of 17.7% sequentially and an increase of 33.0% year-over-year. Total shipments were 1,658.3 MW, consisting of 1,619.0 MW of external shipments which were recognized in revenue and 39.3 MW of shipments to the Company's downstream power projects. This compares with total shipments of 1,423.3 MW in the first quarter of 2016, consisting of 1,370.4 MW of external shipments and 52.9 MW of shipments to the Company's own downstream power projects, and total shipments of 1,231.6 MW in the second quarter of 2015, consisting of 1,000.7 MW of external shipments and 230.9 MW of shipments to the Company's own downstream projects. The sequential increase in revenues and shipments was primarily driven by growth from China as a result of rush orders before June 30 in anticipation of an expected subsidy policy adjustment, which more than offset the decline of shipments to the U.S., Europe, Japan and the rest of Asia.

Gross Profit and Margin

Gross profit was $176.3 million, compared with $139.7 million in the first quarter of 2016 and $144.9 million in the second quarter of 2015.

Gross margin was 18.3%, compared with 17.1% in the first quarter of 2016 and 20.0% in the second quarter of 2015. The sequential increase in gross margin was mainly due to lower blended costs as a result of a significant decrease in antidumping and countervailing duties in the U.S. as the Company increased the proportion of shipments to the U.S. from its Thailand facilities in the second quarter. The year-­over­-year decrease in gross margin was primarily due to average selling prices declining at a faster rate than the Company's cost reductions.

Operating Expenses, Income and Margin

Operating expenses were $92.6 million, compared with $94.9 million in the first quarter of 2016 and $84.2 million in the second quarter of 2015. Operating expenses included an accounts receivable provision of $2.4 million in the second quarter of 2016, compared with $6.0 million in the first quarter of 2016, and a reversal of accounts receivable provision of $3.1 million in the second quarter of 2015. Operating expenses also included other operating income, which mainly represents income from electricity generated from the Company's downstream solar power projects that are recorded as current assets on the balance sheet prior to the sale of the projects. Other operating income was $7.1 million in the second quarter of 2016, compared with $3.3 million in the first quarter of 2016 and nil in the second quarter of 2015. 

The Company's operating expenses accounted for 9.6% of net revenues during the second quarter of 2016, a decrease from 11.6% in both the first quarter of 2016 and the second quarter of 2015. Excluding the other operating income, the Company's operating expenses accounted for 10.4% of net revenues during the second quarter of 2016, a decrease from 12.0% in the first quarter of 2016 and 11.6% in the second quarter of 2015. The sequential decrease of operating expenses as a percentage of revenue was primarily due to a decrease in accounts receivable provision along with an increase in net revenues. The year-over-year decrease of operating expenses as a percentage of revenue was primarily due to the decrease of shipping expenses resulting from the increasing shipment in China with lower shipping expenses.

As a result, operating income was $83.7 million, compared with $44.8 million in the first quarter of 2016 and $60.7 million in the second quarter of 2015. Operating margin was 8.7%, compared with 5.5% in the first quarter of 2016 and 8.4% in the second quarter of 2015.

Net Interest Expense

Net interest expense was $25.5 million, compared with $15.1 million in the first quarter of 2016 and $12.4 million in the second quarter of 2015. The sequential and year-over-year increases in net interest expenses were mainly due to the increase in both short-term and long-term borrowings, as well as less interest expense being capitalized in the second quarter of 2016.

Foreign Currency Exchange Gain (Loss)

The Company recorded a net foreign currency exchange loss of $2.9 million, which included a gain on the change in fair value of foreign exchange derivative instruments of $4.0 million. This compares with a net gain of $0.8 million in the first quarter of 2016 and a net gain of $5.1 million in the second quarter of 2015. The foreign currency exchange loss in the second quarter of 2016 primarily resulted from the depreciation of the RMB against the USD.

Income Tax Expense

Income tax expense was $16.5 million, compared with income tax expense of $3.7 million in the first quarter of 2016 and $11.8 million in the second quarter of 2015. The sequential and year-over-year increases in income tax expense were mainly due to the increase in taxable profits in the second quarter of 2016 compared with the first quarter of 2016 and the second quarter of 2015.

Net Income and Earnings per ADS

Net income attributable to ordinary shareholders of Trina Solar was $40.3 million, compared with $26.6 million in the first quarter of 2016 and $40.9 million in the second quarter of 2015. Net margin was 4.2%, compared with 3.3% in the first quarter of 2016 and 5.7% in the second quarter of 2015.

Earnings per fully diluted ADS were $0.42, compared with $0.29 in the first quarter of 2016 and $0.42 in the second quarter of 2015.

Financial Condition

As of June 30, 2016, the Company had $831.5 million in cash and cash equivalents, and restricted cash. Total borrowings were $1,792.7 million, of which $1,157.8 million were short-term borrowings.

In the first quarter of 2016, the Company adopted Financial Accounting Standards Board Accounting Standards Update 2015-03, Interest - Imputation of Interest, which requires that debt issuance costs be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability, instead of being reported on the balance sheet as an asset. Accordingly, debt issuance costs with an amortized balance of $10.5 million, which used to be reported as an asset, have been retrospectively reclassified as a direct deduction from the carrying amount of the related debt liability as of June 30, 2015.

Shareholders' equity was $1,113.8 million as of June 30, 2016, an increase from $1,081.9 million as of March 31, 2016 and an increase from $1,031.6 million as of June 30, 2015.

Operations and Business Updates

Manufacturing Capacity

As of June 30, 2016, the Company had the following annualized in-­house manufacturing capacities:

  • Ingot production capacity of approximately 2.3 GW;
  • Wafer capacity of approximately 1.8 GW;
  • PV cell capacity of approximately 5.0 GW; and
  • PV module capacity of approximately 6.0 GW.

Project Development

In the second quarter of 2016, the Company connected a total of 320.8 MW of PV projects to the grid in China, including 28.0 MW DG projects and 292.8 MW utility projects. The Company also sold 11.2 MW projects in the U.K. and Italy.

As of June 30, 2016, the Company had a total of 1,276.8 MW downstream solar projects in grid-connected operation, including 1,241.6 MW in China, 4.2 MW in the U.S., and 31.0 MW in Europe. The 1,241.6 MW projects in China consisted of 1,015.7 MW of utility projects and 225.9 MW of DG projects.

Going Private Transaction

On August 1, 2016, the Company entered into a definitive agreement and plan of merger, pursuant to which the Company will be acquired by an investor consortium in an all-cash transaction implying an equity value of the Company of approximately $1.1 billion. The merger, which is currently expected to close during the first quarter of 2017, is subject to customary closing conditions including the approval of the merger by the Company's shareholders at a meeting of shareholders to be convened.

Third Quarter of 2016 Guidance

The Company expects to ship between 1.55 GW and 1.65 GW of PV modules, of which 30 MW to 50 MW of PV modules will be shipped to the Company's downstream PV projects, from which revenues will not be recognized.

Fiscal Year 2016 Guidance

The Company reiterates its 2016 guidance of 6.30 GW to 6.55 GW, of which 220 MW to 260 MW will be shipped to the Company's downstream projects, from which revenues will not be recognized.

The Company reiterates its 2016 guidance of global solar power project connections at between 400 MW and 500 MW, including 15% to 20% of DG projects in China.

Conference Call

The Company will host a conference call on Tuesday, August 23, 2016 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong, August 23, 2016), to discuss its results for the second quarter of 2016.

Joining Jifan Gao, Chairman and CEO of Trina Solar, on the call will be Merry Xu, Interim CFO, and Yvonne Young, Investor Relations Director. The Company plans to distribute its earnings announcement before the call.

To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:

U.S. Toll Free: 1­855­298­3404
International: +1­631­514­2526
Hong Kong: 800­905­927
Passcode: Trina Solar

If you are unable to participate in the call at this time, a replay will be available from 11:30 a.m. Eastern Time on August 23, 2016 through 11:59 p.m. Eastern Time on August 30, 2016. The dial-in details for the replay are as follows:

U.S. Toll Free: 1-866-846-0868
International: +61-2-9641-7900
Hong Kong: 800-966-697
Replay Passcode: 3680995

This conference call will be broadcast live over the Internet and can be accessed by all interested parties on Trina Solar's website www.trinasolar.com. To listen to the live webcast, please go to Trina Solar's website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Trina Solar's website for 90 days.

About Trina Solar Limited

Trina Solar Limited (NYSE:TSL) is a global leader in PV modules, solutions and services. Founded in 1997 as a PV system integrator, Trina Solar today drives smart energy together with installers, distributors, utilities and developers worldwide. The company's industry-leading position is based on innovation excellence, superior product quality, vertically integrated capabilities and environmental stewardship. For more information, please visit www.trinasolar.com.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words such as "will," "may," "expect," "anticipate," "aim," "intend," "plan," "believe," "estimate," "potential," "continue," and other similar statements. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's ability to raise additional capital to finance its activities; the effectiveness, profitability and marketability of its products; our expectations regarding the expansion of the Company's manufacturing capacities; the Company's future business development; the Company's downstream project development and pipeline; the Company's beliefs regarding its production output and production outlook; the future trading of the securities of the Company; the Company's ability to operate as a public company; the period of time for which the Company's current liquidity will enable the Company to fund its operations; general economic and business conditions; demand in various markets for solar products; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission.

In addition, the commencement of any downstream project is subject to a number of factors, some of which are beyond the Company's control, such as the availability of network transmission and interconnection facilities, as well as obtaining certain government approvals, project rights based on the land location, land use rights as well as the right to construct manufacturing facilities in the relevant locations.

These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results.

For further information, please contact:

   

Trina Solar Limited

Christensen IR

Merry Xu, Interim CFO

Linda Bergkamp

Email: merry.xu@trinasolar.com

Phone: +1 480 614 3014 (US)

 

Email: lbergkamp@ChristensenIR.com   

Yvonne Young

 

Investor Relations Director

 

Email: ir@trinasolar.com

 

 

Trina Solar Limited

Unaudited Condensed Consolidated Statements of Income

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

                   
   

For the Three Months Ended

 

For the Six Months Ended

   

Jun. 30,

 

Mar. 31,

 

Jun. 30,

 

Jun. 30,

Jun. 30,

   

2016

 

2016

 

2015

 

2016

2015

                   

Net revenues

 

$        961,623

 

$        816,901

 

$        722,942

 

1,778,524

$     1,281,031

Cost of revenues

 

785,295

 

677,206

 

578,082

 

1,462,501

1,035,850

Gross profit

 

176,328

 

139,695

 

144,860

 

316,023

245,181

Operating expenses

                 

Selling expenses

 

44,833

 

42,375

 

43,715

 

87,208

79,495

General and administrative expenses

 

43,193

 

46,397

 

32,450

 

89,590

60,158

Research and development expenses

 

11,691

 

9,419

 

8,012

 

21,110

15,691

Other operating income

 

(7,105)

 

(3,304)

 

-

 

(10,409)

-

Total operating expenses

 

92,612

 

94,887

 

84,177

 

187,499

155,344

Operating income 

 

83,716

 

44,808

 

60,683

 

128,524

89,837

Foreign exchange gain (loss)

 

(6,877)

 

9,054

 

6,000

 

2,177

(961)

Interest expenses

 

(25,973)

 

(15,532)

 

(13,036)

 

(41,505)

(24,399)

Interest income 

 

461

 

464

 

668

 

925

1,310

Gain (loss) on change in fair value of derivative

 

4,000

 

(8,210)

 

(925)

 

(4,210)

4,325

Other income, net

 

4,601

 

1,535

 

1,416

 

6,136

3,582

Income before income taxes

 

59,928

 

32,119

 

54,806

 

92,047

73,694

Income tax expense

 

(16,500)

 

(3,674)

 

(11,755)

 

(20,174)

(14,977)

Net income

 

43,428

 

28,445

 

43,051

 

71,873

58,717

Income attributable to the noncontrolling
interests

 

(3,155)

 

(1,827)

 

(2,140)

 

(4,982)

(3,893)

Net income attributable to Trina Solar Limited

 

$          40,273

 

$          26,618

 

$          40,911

 

$          66,891

$          54,824

                   

Earnings per ADS* 

                 

Basic

 

$              0.47

 

$              0.31

 

$              0.48

 

$              0.79

$              0.65

Diluted

 

$              0.42

 

$              0.29

 

$              0.42

 

$              0.71

$              0.59

Weighted average ADS outstanding*

                 

Basic

 

84,932,283

 

84,775,993

 

84,459,232

 

84,854,138

84,378,352

Diluted

 

105,297,396

 

105,329,407

 

105,239,740

 

105,250,749

105,036,322

 

* "ADS" refers to any of our American depository shares, each representing 50 ordinary shares.

 

Trina Solar Limited

Unaudited Condensed Consolidated Statements of Comprehensive Income

(US dollars in thousands)

                   
   

For the Three Months Ended

 

For the Six Months Ended

   

Jun. 30,

 

Mar. 31,

 

Jun. 30,

 

Jun. 30,

Jun. 30,

   

2016

 

2016

2015

 

2016

2015

Net income

 

$          43,428

 

$          28,445

 

$          43,051

 

$          71,873

$          58,717

Other comprehensive income (loss):

                 

Foreign currency translation adjustments

 

(10,873)

 

3,052

 

699

 

(7,821)

549

Comprehensive income

 

32,555

 

31,497

 

43,750

 

64,052

59,266

Comprehensive income attributable to
non-controlling interests

 

(2,284)

 

(2,307)

 

(2,279)

 

(4,591)

(3,794)

Comprehensive income attributable to
Trina Solar Limited

 

$          30,271

 

$          29,190

 

$          41,471

 

$          59,461

$          55,472

 



 

Trina Solar Limited

 

Unaudited Condensed Consolidated Balance Sheets

 

(US dollars in thousands)

             
   

As of Jun. 30,

 

As of Mar. 31,

 

As of Jun. 30,

   

2016

 

2016

 

2015

             

ASSETS

           

Current assets:

           

Cash and cash equivalents

 

$                 648,113

 

$                 452,346

 

$                 456,537

Restricted cash

 

183,428

 

169,043

 

159,714

Inventories                                                              

 

509,496

 

574,215

 

351,784

Downstream solar project assets

 

692,248

 

616,477

 

24,787

Accounts receivable, net

 

655,281

 

572,495

 

633,262

Current portion of advances to suppliers, net

30,434

 

30,522

 

55,064

Prepaid expenses and other current assets, net

280,627

 

273,435

 

155,214

Total current assets

 

2,999,627

 

2,688,533

 

1,836,362

Property, plant and equipment, net
(including downstream solar project assets  
of $798,235, $822,655 and $687,879
as of each period-end, respectively)

 

1,840,968

 

1,882,279

 

1,544,567

Prepaid land use rights, net

 

66,249

 

59,658

 

52,660

Advances to suppliers, net of current portion

19,746

 

12,769

 

14,222

Investment in equity affiliates

 

32,981

 

33,202

 

26,318

Deferred income tax assets, net

 

35,889

 

34,264

 

29,965

Other noncurrent assets

 

97,751

 

105,927

 

77,040

TOTAL ASSETS

 

$              5,093,211

 

$              4,816,632

 

$              3,581,134

             

LIABILITIES AND EQUITY

           

Current liabilities:

           

Short-term borrowings and current portion
of long-term borrowings

 

$              1,157,760

 

$                 933,203

 

$                 922,460

Accounts payable

 

1,227,028

 

1,280,014

 

800,981

Convertible senior notes

 

170,740

 

-

 

-

Accrued expenses and other current liabilities

418,141

 

402,949

 

262,879

Total current liabilities

 

2,973,669

 

2,616,166

 

1,986,320

Long-term borrowings, excluding current portion

634,969

 

583,467

 

94,826

Convertible senior notes

 

111,959

 

281,689

 

278,743

Accrued warranty costs

 

141,692

 

136,090

 

115,195

Other noncurrent liabilities

 

73,508

 

75,150

 

41,620

Total liabilities

 

3,935,797

 

3,692,562

 

2,516,704

             

Ordinary shares

 

43

 

43

 

43

Additional paid-in capital

 

763,090

 

761,504

 

755,668

Retained earnings

 

346,113

 

305,840

 

257,531

Accumulated other comprehensive income

 

4,548

 

14,550

 

18,358

Total Trina Solar Limited shareholders' equity

1,113,794

 

1,081,937

 

1,031,600

Non-controlling interests

 

43,620

 

42,133

 

32,830

Total equity

 

1,157,414

 

1,124,070

 

1,064,430

TOTAL LIABILITIES AND EQUITY

 

$              5,093,211

 

$              4,816,632

 

$              3,581,134

             

Note: In the first quarter of 2016, the Company adopted Financial Accounting Standards Board Accounting Standards Update
2015-03, Interest - Imputation of Interest, and retrospectively reclassified the debt issuance costs to reduce the carrying
amount of short-term borrowings and current portion of long-term borrowings by $1,769 and convertible senior notes by
$8,757 as of June 30, 2015.

Source: Trina Solar Limited
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