Company Raises Full Year 2008 Production Output and Revenue Guidance
JIASHAN, China, May 14 /Xinhua-PRNewswire/ -- ReneSola Ltd ("ReneSola" or the "Company"), a leading Chinese manufacturer of solar wafers, today announced its unaudited financial results for the first quarter ended March 31, 2008.
Financial and Business Highlights
-- First quarter 2008 net revenues were US$123.0 million, an increase of
242.4% from US$35.9 million in the first quarter of 2007, and an
increase of 28.0% from US$96.0 million in the fourth quarter of 2007.
-- First quarter 2008 gross margin was 22.1% compared to 20.4% in the
fourth quarter of 2007.
-- First quarter 2008 net income was US$17.7 million, an increase of
160.6% from US$6.8million in the first quarter of 2007, and an increase
of 1.2% from US$17.5 million in the fourth quarter of 2007.
-- First quarter 2008 basic and diluted earnings per share were US$0.15
and US$0.14, respectively, and basic and diluted earnings per ADS were
US$0.30 and US$0.28, respectively. Each ADS represents two shares.
-- First quarter production output was 66.5 MW, an increase of 29.6% from
51.3 MW in the fourth quarter of 2007, exceeding previously issued
guidance of 62 MW.
-- Silicon consumption rate decreased to 6.3 grams per watt in the first
quarter of 2008 from 6.5 grams per watt in the fourth quarter of 2007.
-- Wafer production capacity is planned to increase to 1,000 MW by the end
of 2009.
Three months ended,
March 31, December 31, March 31,
2007 2007 2008
Net revenue (US$000) 35,916 96,046 122,982
Gross profit (US$000) 8,152 19,619 27,234
Gross margin (%) 22.7% 20.4% 22.1%
Operating profit (US$000) 6,939 15,000 23,187
Foreign exchange gain (loss) (US$000) (63) (1,174) (56)
Income tax benefit (expense) (US$000) 23 5,171 (3,560)
Net income for the period (US$000) 6,783 17,471 17,675
Production output (MW) 15.3 51.3 66.5
"We exceeded our targeted output and once again achieved record revenues for the quarter," said Mr. Xianshou Li, ReneSola’s chief executive officer. "During the first quarter, we increased production output to 66.5 MW through the successful ramp-up of production capacity that was installed in the fourth quarter of 2007. This resulted in substantial growth in revenue and operating profits. Our dedication to efficient production processes and innovation continued to yield impressive performance."
“In January 2008, we completed our initial public offering on the New York Stock Exchange, generating net proceeds of approximately US$109.0 million,” continued Mr. Li. “The listing strengthened our balance sheet and increased our brand recognition. We remain optimistic about the remainder of 2008, and are committed to growing in order to meet increasing demand for our high quality wafer products.”
Financial Results for the First Quarter
Net revenues
Net revenues for the first quarter of 2008 were US$123.0 million, an increase of 28.0% sequentially and 242.4% year-over-year. The increase in first quarter revenues was primarily attributable to an increase in output from the expanded production capacity and increasing wafer ASPs.
Gross profit
First quarter 2008 gross profit was US$27.2 million, a 38.8% increase sequentially and 234.1% year-over-year. The gross margin for the first quarter 2008 was 22.1% compared to 20.4% in the fourth quarter of 2007. The increase in gross margin was achieved despite an increase in average feedstock costs of 21.0% sequentially and was primarily attributable to a further reduction in silicon consumption rate to 6.3 grams per watt from 6.5 grams per watt in fourth quarter of 2007, a continuing reduction in non-raw material related production costs and an increase in wafer ASPs due to the high demand for our wafer products.
Operating profit
Operating profit in the first quarter of 2008 was US$23.2 million, an increase of 54.6% sequentially and 234.2% year-over-year. Operating margin was 18.9% in the first quarter compared to 15.6% in the fourth quarter of 2007. Total operating expenses in the first quarter of 2008 were US$4.0 million, down from US$4.6 million in the fourth quarter of 2007.
Profit before tax
Profit before tax in the first quarter was US$21.3 million, a 72.2% increase sequentially and 215.0% increase year-over-year. Finance costs increased by 26.9% sequentially, reflecting increased bank borrowings and interest rates. Finance costs as a percentage of net revenue decreased from 1.8% in the fourth quarter of 2007 to 1.7% in the first quarter of 2008. The first quarter foreign exchange loss was US$0.06 million compared to foreign exchange loss of US$1.2 million in the fourth quarter of 2007.
Taxation
We recognized a tax charge of US$3.6 million in the first quarter of 2008, compared to a tax credit of US$5.2 million in the fourth quarter of 2007. ReneSola’s subsidiary, Zhejiang Yuhui Solar Energy Source Co. Ltd, ("Zhejiang Yuhui"), after the first two years of exemptions, is now subject to a tax rate of 12.5% under the new PRC Enterprise Income Tax Law, or the EIT Law. The current applicable tax rate is half the statutory rate of 25%, which is expected to apply to Zhejiang Yuhui, effective from the beginning of 2010. Furthermore, in 2007 Zhejiang Yuhui received an income tax credit equivalent to 40% of the cost of capital equipment manufactured in the PRC. This tax policy has now been withdrawn from 2008 with the enactment of the New Enterprise Income Tax Law.
Net profit
First quarter 2008 net profit increased 1.2% sequentially and 160.6% year-over-year to US$17.7 million.
Other Recent Business Developments
ReneSola announced on November 19, 2007 that it planned to develop a polysilicon manufacturing facility with an annualized capacity of 1,500 tons in Meishan, Sichuan province, China. With a substantial pipeline of wafer sales secured under various long term contracts and strong customer interest in signing further long-term contracts, ReneSola has decided to increase the previously announced 1,500 tons of annual polysilicon manufacturing to 3,000 tons on the same site in Meishan to secure more in-house polysilicon supplies. Land leveling has been completed and construction has commenced with completion expected in early 2009. The facility is expected to be operational in the first half of 2009. As part of the project, ReneSola has signed purchasing contracts and made down-payments for major capital equipment from world-class international equipment suppliers.
On May 12, 2008 an earthquake with a magnitude of 7.8 struck China’s Sichuan province. There was no damage to ReneSola’s facilities and construction remains on schedule. ReneSola does not expect the earthquake to have a material effect on its operations in Sichuan province.
Production Capacity
With our current facilities reaching full capacity and strong customer demand for additional wafer sales contracts, ReneSola is pleased to announce a further expansion in its wafer manufacturing capacity to 1,000 MW by the end of 2009. The Company believes the new wafer manufacturing capacity will provide important ramp-up capabilities to meet increasing market demand. Negotiations on equipment purchases are currently under way and are expected to be completed within the next couple of months.
Second Quarter Outlook
We anticipate production output to be in the range of 75 MW to 80 MW in the second quarter of 2008 compared to 66.5 MW in the first quarter of 2008 and 23 MW in the second quarter of 2007. Gross margin for the second quarter of 2008 is expected to remain stable. On April 17, 2008, we increased previously issued full year 2008 production output to 310 MW to 320 MW and revenue guidance to US$530 million to US$550 million for 2008. We are once again increasing our outlook for full year 2008 and expect production output to be in the range of 330 MW to 340 MW with annual net revenues of approximately US$570 million to US$590 million.
Conference Call Information
ReneSola’s management will host an earnings conference call on May 14, 2008 at 8 AM U.S. EDT / 8 PM Beijing/Hong Kong time / 1 PM BST.
Dial-in details for the earnings conference call are as follows:
U.S. & International: +1-617-597-5313
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 May 21, 2008:
International: +1-617-801-6888
Passcode: 28483587
About ReneSola
ReneSola Ltd ("ReneSola") is a leading solar wafer manufacturer based in China. Capitalizing on proprietary technologies and technical know-how, ReneSola manufactures monocrystalline and multicrystalline solar wafers. In addition, ReneSola strives to enhance its competitiveness through upstream integration into virgin polysilicon manufacturing. ReneSola possesses a global network of suppliers and customers that include some of the leading global manufacturers of solar cells and modules. ReneSola’s shares are currently traded on the New York Stock Exchange (NYSE: SOL) and the AIM of the London Stock Exchange (AIM: SOLA.L). 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 we describe what we "believe," "expect" or "anticipate" will occur, what "will" or "could" happen, and other similar statements), you must remember that our expectations may not be correct, even though we believe that they are reasonable. We do 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 our filings with the U.S. Securities and Exchange Commission, including our registration statement on Form F-1. We undertake 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 our situation may change in the future.
CONSOLIDATED INCOME STATEMENT
Three months Three months Three months
ended ended ended
March 31, December 31, March 31,
2007 2007 2008
US$000 US$000 US$000
Net revenue 35,916 96,046 122,982
Cost of sales (27,764) (76,427) (95,748)
Gross profit 8,152 19,619 27,234
Operating expenses:
Sales and marketing (149) (169) (267)
General and administrative (1,058) (3,635) (3,389)
R&D Expense (63) (898) (442)
Other expenses, net 57 83 51
Total operating expenses (1,213) (4,619) (4,047)
Income from operations 6,939 15,000 23,187
Interest income 60 229 306
Interest expenses (176) (1,690) (2,144)
Foreign exchange (loss) gain (63) (1,174) (56)
Total non-operating (expenses)
income (179) (2,635) (1,894)
Income before income tax expenses 6,760 12,365 21,293
Income tax benefit(expenses) 23 5,171 (3,560)
Minority interest -- 65 58
Net income 6,783 17,471 17,675
Net income per share:
- Basic 0.07 0.17 0.15
- Diluted 0.07 0.17 0.14
Net income per ADS:
- Basic 0.14 0.34 0.30
- Diluted 0.14 0.34 0.28
Shares used in computation:
- Basic 100,000,032 100,000,032 113,906,186
- Diluted 100,841,684 110,645,584 124,460,612
CONSOLIDATED BALANCE SHEET
As at As at As at
March 31, December March 31,
2007 31, 2007 2008
US$000 US$000 US$000
ASSETS
Current assets:
Cash and cash equivalents 131,031 53,137 67,441
Accounts receivable, net of
allowances for doubtful
receivables 854 8,755 16,234
Inventories 59,597 110,630 156,277
Advances to suppliers 10,415 53,727 88,843
Amounts due from related parties 7,152 13,382 36,046
Value added tax recoverable 6,775 117 3,808
Prepaid expenses and other
current assets 4,104 13,006 4,972
Deferred tax assets 3,576 10,487 8,861
Total current assets 223,504 263,241 382,482
Property, plant and equipment,
net 26,651 136,598 172,330
Prepaid land rent, net 4,268 7,502 9,391
Deferred tax assets 68 284 629
Deferred convertible bond issue
costs 4,212 3,336 3,087
Advances for purchases of
property, plant and equipment 26,290 29,648 77,169
Total assets 284,993 440,609 645,088
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities
Current liabilities:
Short-term borrowings (45,983) (71,691) (88,968)
Accounts payable (4,869) (13,147) (22,373)
Advances from customers (31,893) (59,626) (72,188)
Amounts due to related parties (224) -- (15)
Other current liabilities (1,824) (13,912) (12,328)
Total current liabilities (84,793) (158,376) (195,872)
Convertible bond payable (120,096) (128,265) (133,999)
Long-term borrowings -- (17,797) (34,085)
Other long-term liabilities (63) (1,246) (1,114)
Total liabilities (204,952) (305,684) (365,070)
Minority interest: -- (9,217) (17,635)
Shareholders’ equity
Common shares (36,266) (36,266) (145,291)
Additional paid-in capital (11,808) (14,827) (15,579)
Retained earnings (30,047) (66,200) (83,875)
Accumulated other comprehensive
income (1,920) (8,415) (17,638)
Total shareholders’ equity (80,041) (125,708) (262,383)
Total liabilities and
shareholders’ equity (284,993) (440,609) (645,088)
CONSOLIDATED CASH FLOW STATEMENT
Three Three Three
months months months
ended ended ended
March 31, December 31, March 31,
2007 2007 2008
US$000 US$000 US$000
Cash flows from operating
activities:
Net income 6,783 17,471 17,675
Adjustments for:
Minority interest -- 65 58
Depreciation 518 1,733 2,459
Amortization of deferred convertible
bond issue costs and premium 38 728 753
Allowances for doubtful receivables 56 378 4
Prepaid land rent expensed 27 46 35
Share-based compensation 69 670 670
Changes in operating assets and
liabilities:
Accounts receivable (210) (3,040) (7,914)
Inventories (14,419) (13,621) (40,353)
Advances to suppliers 6,696 (17,818) (32,194)
Amounts due from related parties (1,334) 991 (17,746)
Value added tax recoverable (1,713) 3,899 (2,667)
Prepaid expenses and other current
assets (1,116) 5,211 2,151
Prepaid land rent -- (25) (1,579)
Accounts payable (80) 2,960 8,505
Advances from customers (2,897) 22,259 9,869
Deferred taxes (188) (5,029) 1,730
Other liabilities 123 4,156 (3,728)
Net cash provided by (used in)
operating activities (7,647) 21,034 (62,272)
Cash flows from investing
activities:
Purchases of property, plant and
equipment (6,723) (35,341) (22,330)
Advances for purchases of property,
plant and equipment (11,211) (5,947) (45,339)
Cash provided to related parties -- (3,680) --
Net cash used in investing
activities (17,934) (44,968) (67,669)
Cash flows from financing
activities:
Net proceeds from short-term
borrowings 31,228 6,292 29,221
Proceeds from issuance of common
shares -- -- 119,762
Share issuance costs -- -- (10,737)
Net proceeds from issuance of
convertible bonds 115,771 --
Contribution from minority
shareholders of subsidiaries -- -- --
Proceeds from capital contribution -- -- --
Distribution in respect of
reorganization -- -- --
Other distribution to shareholders -- -- --
Cash received from related parties -- 111 15
Cash paid to related parties (389) (120) --
Net cash provided by financing
activities 146,610 6,283 138,261
Effect of exchange rate changes 140 1,853 5,984
Net increase in cash and cash
equivalents 121,169 (15,798) 14,304
Cash and cash equivalents, beginning
of year 9,862 68,935 53,137
Cash and cash equivalents, end of
year 131,031 53,137 67,441
For investor and media inquiries, please contact:
In China:
Mr. Charles Bai
ReneSola Ltd
Tel: +86-573-8477-3061
Email: charles.bai@renesola.com
Mr. Derek Mitchell
Ogilvy Public Relations Worldwide (Beijing)
Tel: +86-10-8520-6284
Email: derek.mitchell@ogilvy.com
In the United States:
Mr. Jeremy Bridgman
Ogilvy Public Relations Worldwide (New York)
Tel: +1-212-880-5363
Email: jeremy.bridgman@ogilvypr.com
In the UK:
Mr. Tim Feather/Mr. Richard Baty
Hanson Westhouse Limited
Tel: +44-207-601-6100
Email: tim.feather@hansonwesthouse.com
richard.baty@hansonwesthouse.com
