omniture

ReneSola Ltd. Announces Fourth Quarter and Full Year 2011 Results

2012-03-16 18:00 1068

JIASHAN, China, March 16, 2012 /PRNewswire-Asia/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL), a leading global manufacturer of solar wafers and provider of solar modules, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2011.

Fourth Quarter 2011 Financial and Operating Highlights

  • Total solar wafer and module shipments in Q4 2011 were 339.9 megawatts ("MW"), exceeding Company guidance and an increase of 3.5% from 328.5 MW in Q3 2011.
  • Q4 2011 net revenues were US$187.7 million, exceeding Company guidance and representing a decrease of 0.7% from US$189.1 million in Q3 2011.
  • Q4 2011 gross loss was US$43.4 million with a gross margin of negative 23.1%, compared to gross loss of US$7.7 million with a gross margin of negative 4.0% in Q3 2011.
  • Q4 2011 operating loss was US$52.7 million with an operating margin of negative 28.1%, compared to an operating loss of US$34.5 million with an operating margin of negative 18.2% in Q3 2011.
  • Q4 2011 net loss was US$36.7 million, representing basic and diluted loss per share of US$0.21, and basic and diluted loss per American depositary share ("ADS") of US$0.43.
  • Cash and cash equivalents plus restricted cash were $437.4 million as of the end of Q4 2011, compared to US$450.3 million as of the end of Q3 2011.

Full Year 2011 Financial and Operating Highlights

  • Total solar wafer and module shipments for the full year 2011 were a record 1,294.8 MW, exceeding Company guidance and an increase of 9.5% from 1,182.8 MW for the full year 2010.
  • Full year 2011 net revenues were US$985.3 million, exceeding Company guidance and representing a decrease of 18.3% from US$1,205.6 million in 2010.
  • Full year 2011 gross profit was US$96.1 million with a gross profit margin of 9.7%, compared to a gross profit of US$348.0 million with a gross margin of 28.9% in 2010.
  • Full year 2011 operating income was US$11.5 million with an operating margin of 1.2%, compared to an operating income of US$245.9 million with an operating margin of 20.4% in 2010.
  • Full year 2011 net income was US$0.3 million, representing basic and diluted earnings per share of US$0.002 and basic and diluted earnings per ADS of US$0.004.

"Challenging market conditions continued to impact our business in the fourth quarter of 2011," said Mr. Xianshou Li, ReneSola's chief executive officer. "The continuing uncertainty surrounding Europe's economy and proposed austerity measures exacerbated the supply-demand situation, negatively impacting our revenues and margins for the quarter, despite near-record shipments including significantly increased module shipments. Although we achieved our year-end cost-reduction targets, which placed our cost structure among the lowest in the industry, it was not enough to offset extremely low solar wafer and module prices. We still believe, however, that our low production costs uniquely position us to weather the current downturn. As a result, we were able to achieve positive net income for the full year of 2011."

Mr. Li continued, "For 2012, we will continue to invest in research and development to further reduce our costs and improve efficiency. While we expect to maintain our leadership position in wafer production, we will increasingly focus on our high-margin module business, capitalizing on our reputation, product quality and new regional teams, to increase sales. We will continue to invest heavily in our in-house polysilicon production, which achieved costs close to the record-low spot prices of December and lower than many of our competitor's long-term polysilicon contracts. As part of our cost-reduction strategy, we will also explore horizontal opportunities like our diamond-steel wire production, which began in the fourth quarter of 2011. We are confident our cost-reduction efforts will help us withstand pricing pressures from an oversupplied market, which we expect to persist into 2013, and capitalize on an industry that overall is still growing at a rapid pace."

Fourth Quarter 2011 Results

Solar Wafer and Module Shipments

4Q11

3Q11

4Q10

Q-o-Q%

Y-o-Y%

Total Solar Wafer and Module Shipments (MW)

339.9

328.5

349.4

3.5%

(2.7%)

Wafer Shipments (MW)

245.4

294.8

222.6

(16.8%)

10.2%

Module Shipments (MW)

94.5

33.7

126.8

180.4%

(25.5%)

The sequential increase in solar product shipments was the result of strong demand for the Company's solar modules from Europe, particularly Germany, due to pent-up demand that arose in Q4 2011.

Net Revenues

4Q11

3Q11

4Q10

Q-o-Q%

Y-o-Y%

Net Revenues (US$mln)

$187.7

$189.1

$386.4

(0.7%)

(51.4%)

Revenues in Q4 2011 were relatively unchanged quarter-over-quarter, with a decrease in the average selling price ("ASP") of solar wafers and modules to US$0.36 per watt ("W") and US$0.97/W, respectively, offset by an increase in solar module shipments.

Gross Profit (Loss)

4Q11

3Q11

4Q10

Q-o-Q%

Y-o-Y%

Gross Profit (Loss) (US$mln)

($43.4)

($7.7)

$119.3

-

(136.4%)

Gross Margin

(23.1%)

(4.0%)

30.9%

-

-

The sequential decrease in gross profit was primarily due to declines in solar wafer and module ASPs, as well as a write-down of approximately US$26.2 million to reflect the significant drop in prices for polysilicon, solar wafers and solar modules in 2011.

Operating Income (Loss)

4Q11

3Q11

4Q10

Q-o-Q%

Y-o-Y%

Operating Expenses (US$mln)

$9.3

$26.8

$33.4

(65.3%)

(72.2%)

Operating Income (Loss) (US$mln)

($52.7)

($34.5)

$85.9

-

(161.4%)

Operating Margin

(28.1%)

(18.2%)

22.2%

-

-

The sequential decrease in operating expenses was primarily due to a one-time gain of $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. Operating expenses represented 5.0% of total revenues in Q4 2011, compared to 14.2% in Q3 2011.

Foreign Exchange Gain

The Company had a foreign exchange gain of US$1.8 million in Q4 2011, primarily due to the appreciation of the renminbi ("RMB"). The Company also recognized a US$3.6 million gain on derivatives, compared to a gain of US$10.1 million in Q3 2011, as the euro depreciated more than the forward rate hedged.

Gain on Repurchase of Convertible Notes

The Company also recognized a gain of US$8.2 million related to the Company's repurchase of a portion of its convertible notes in Q4 2011. As mentioned in previous quarters, the Company may repurchase its convertible notes from time to time.

Net Income (Loss) Attributable to Holders of Ordinary Shares

4Q11

3Q11

4Q10

Net Income (Loss) (US$mln)

($36.7)

($8.2)

$61.0

Diluted Earnings (Loss) Per Share

($0.21)

($0.05)

$0.34

Diluted Earnings (Loss) Per ADS

($0.43)

($0.09)

$0.69

Full Year 2011 Results

Solar Wafer and Module Shipments

FY11

FY10

Y-o-Y%

Total Solar Wafer and Module Shipments (MW)

1,294.8

1,182.8

9.5%

Wafer Shipments (MW)

1,014.1

887.6

14.3%

Module Shipments (MW)

280.7

295.2

(4.9%)


The increase in shipments was the result of an increase in the demand for the Company's solar wafers, especially its Virtus wafer, offset by a slight decrease in solar module shipments as a result of the relatively weak market and Europe's challenging financing environment.

Net Revenues

FY11

FY10

Y-o-Y%

Net Revenues (US$mln)

$985.3

$1,205.6

(18.3%)

The decrease in revenues was driven by a significant decline in the ASPs of solar wafers and modules.

Gross Profit

FY11

FY10

Y-o-Y%

Gross Profit (US$mln)

$96.1

$348.0

(72.4%)

Gross Margin

9.7%

28.9%

-

The decrease in gross profit was primarily due to the declines in solar wafer and module ASPs, as well as inventory write-downs to reflect the significant drop in prices for polysilicon, solar wafers and solar modules.

Operating Income

FY11

FY10

Y-o-Y%

Operating Expenses (US$mln)

$84.5

$102.0

(17.2%)

Operating Income (US$mln)

$11.5

$245.9

(95.3%)

Operating Margin

1.2%

20.4%

-

The decrease in operating expenses was primarily due to a one-time gain of $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. Operating expenses represented 8.6% of total revenues in 2011, compared to 8.5% in 2010.

Net Income Attributable to Holders of Ordinary Shares

FY11

FY10

Net Income (US$mln)

$0.3

$169.0

Diluted Earnings Per Share

$0.002

$0.97

Diluted Earnings Per ADS

$0.004

$1.93

Business Highlights

Research and Development ("R&D")

In Q4 2011, ReneSola began mass production of diamond-steel wires, as previously announced. The Company has already begun to use the wires for its own wafer manufacturing and expects to sell the wires to other companies soon.

At present, the Company's primary R&D investments include improving its Virtus wafer technology and extending its advantages to modules, developing low-oxygen concentration solar wafers and producing carbon composite materials used in solar manufacturing furnaces. In line with its overall cost-reduction strategy, the Company will continue to invest in R&D to further its advancements in technology and manufacturing methods.

Wafer Business

In Q4 2011, the Company completed its multicrystalline wafer production upgrade, bringing the Company's quasi-mono Virtus wafer production capacity, which now represents the Company's entire multicrystalline production capacity, to 1.6 gigawatts ("GW"). At the end of 2011, the Company had a total wafer capacity of 2.0 GW, representing 1.6 GW of Virtus wafers and 400 MW of monocrystalline wafers. The Company expects to maintain this capacity in 2012.

In Q4 2011, the Company's average blended non-silicon wafer processing cost for monocrystalline and Virtus wafers was US$0.20/W, a decrease from US$0.23/W in Q3 2011 as a result of continued cost-reduction efforts, including the use of upgraded furnaces and 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 for monocrystalline and Virtus wafers to US$0.15/W by the end of Q4 2012.

Module Business

At the end of 2011, the Company had a solar module capacity of 500 MW. The Company expects to reach 1.0 GW by the end of 2012 contingent on demand for the Company's solar modules.

At the end of Q4 2011, the Company's module processing cost was approximately US$0.42/W, compared to US$0.44/W at the end of Q3 2011. The Company will continue to reduce its module processing costs through a reduction in material costs and capitalize on the business's higher margins relative to wafer production. At the same time, the Company will increase its sales and marketing efforts through the leadership of its new regional hires in Asia-Pacific, Europe and the Americas. For the full year 2012, the Company expects to ship at least 600 MW of solar modules.

Polysilicon Update

At the end of 2011, the Company had a polysilicon production capacity of 4,000 metric tons ("MT"). By the end of 2012, the Company expects polysilicon production capacity to reach 10,000 MT through Phase II of its polysilicon production plant.

The Company's Sichuan polysilicon plant continued to contribute to the Company's cost-reduction strategy in Q4 2011 and remains central to the Company's long-term manufacturing strategy. In Q4 2011, the Company produced approximately 1,089 MT of polysilicon, an increase from approximately 760 MT in Q3 2011. The Company's internal polysilicon production cost was reduced to approximately US$30/kg by the end of Q4 2011, beating the Company's cost-reduction target and compared to US$35.70/kg at the end of Q3 2011. In Q1 2012, the Company expects polysilicon production to decrease to between 830 MT and 880 MT as a result of upgrades and maintenance on the state-owned power grid connected to the Company's polysilicon plant in February. The Company expects to reduce polysilicon production cost to approximately US$24/kg by the end of 2012 through Phase II of it polysilicon production plant.

Liquidity and Capital Resources

Net cash and cash equivalents plus restricted cash were US$437.4 million at the end of Q4 2011, compared to US$450.3 million at the end of Q3 2011. Total debt was US$715.6 million in Q4 2011, compared to US$691.4 million in Q3 2011, excluding US$111.6 million due in convertible notes.

Capital expenditures were US$34.1 million for Q4 2011 and US$135.3 million for the full year 2011. Short-term borrowings were US$570.9 million in Q4 2011, an increase from US$523.5 million in Q3 2011.

2012 Capacity Expansion Plans and Related CAPEX

The Company expects to spend approximately US$100 million to add 6,000 MT of polysilicon production capacity through Phase II of its polysilicon plant, which will help the Company reduce its overall costs and provide a stable polysilicon supply. While the Company will remain conservative in its 2012 CAPEX, it may expand its solar module capacity in line with demand for the Company's solar modules.

Outlook

For Q1 2012, the Company expects total solar wafer and module shipments to be in the range of 400 MW to 420 MW and revenues to be in the range of US$180 million to US$190 million.

For the full year 2012, the Company expects total solar wafer and module shipments 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, March 16, 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 March 23, 2012:

International: +1-718-354-1232
Passcode: 57628999

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)

Dec 31,

Sep 30,

Dec 31,

2011

2011

2010

ASSETS

Current assets:

Cash and cash equivalents

379,039

406,280

290,702

Restricted cash

58,335

43,999

33,640

Available-for-sale investment

-

1,837

3,332

Accounts receivable, net of allowances for doubtful accounts

129,636

107,856

81,540

Inventories, net of inventory provision

154,182

218,777

170,599

Advances to suppliers-current

16,164

29,674

26,315

Amounts due from related parties

6,207

352

389

Value added tax recoverable

41,858

62,499

44,102

Income tax recoverable

7,956

4,991

4,021

Prepaid expenses and other current assets

18,718

13,330

16,946

Deferred convertible bond issue costs-current

784

923

-

Derivative assets

881

6,676

11,660

Assets held-for-sale

6,453

3,248

-

Deferred tax assets-current

12,709

22,636

14,763

Total current assets

832,922

923,078

698,009

Property, plant and equipment, net

980,165

911,190

801,472

Prepaid land use right

48,564

49,937

37,189

Business license, net

3,726

3,677

-

Deferred tax assets-non-current

25,157

11,256

8,526

Deferred convertible bond issue costs-non-current

2,510

3,189

-

Advances to suppliers-non-current

17,644

22,128

13,743

Advances for purchases of property, plant and equipment

25,867

25,103

26,930

Other long-lived assets

6,775

2,576

2,753

Goodwill

5,646

5,642

5,323

Total assets

1,948,976

1,957,776

1,593,945

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term borrowings

570,894

523,530

400,798

Accounts payable

235,814

209,493

220,798

Advances from customers-current

58,238

59,810

57,396

Amounts due to related parties

4,913

-

25

Other current liabilities

114,969

112,327

79,633

Income tax payable

4,111

3,611

16,438

Deferred tax liabilities

220

3,438

1,778

Derivative liabilities

218

6,657

1,381

Total current liabilities

989,377

918,866

778,247

Convertible bond payable-non-current

111,616

130,800

-

Long-term borrowings

144,669

167,830

121,515

Advances from customers-non-current

48,051

57,389

76,080

Warranty

12,835

12,137

8,701

Other long-term liabilities

41,286

39,624

22,937

Total liabilities

1,347,834

1,326,646

1,007,480

Shareholders' equity

Common shares

422,314

422,314

422,039

Additional paid-in capital

4,111

3,150

19,858

Treasury stock

(1,944)

(1,944)

-

Retained earnings

104,859

141,553

108,387

Accumulated other comprehensive income

71,646

66,057

36,181

ReneSola Ltd. shareholders' equity

600,986

631,130

586,465

Noncontrolling interest

156

-

-

Total shareholders' equity

601,142

631,130

586,465

Total liabilities and shareholders' equity

1,948,976

1,957,776

1,593,945

RENESOLA LTD

Unaudited Consolidated Statements of Income Data

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

Three Months Ended

Twelve Months Ended

Dec 31, 2011

Sep 30, 2011

Dec 31, 2010

Dec 31, 2011

Dec 31, 2010

Net revenues

187,691

189,062

386,445

985,279

1,205,579

Cost of revenues

(231,061)

(196,716)

(267,167)

(889,226)

(857,615)

Gross profit (loss)

(43,370)

(7,654)

119,278

96,053

347,964

GP%

(23.1%)

(4.0%)

30.9%

9.7%

28.9%

Operating expenses:

Sales and marketing

(5,487)

(5,064)

(2,789)

(17,233)

(8,360)

General and administrative

(8,269)

(12,157)

(9,316)

(38,550)

(43,314)

Research and development

(11,546)

(12,152)

(13,336)

(47,055)

(36,263)

Other general (expense) income

15,984

2,525

(7,950)

18,327

(14,083)

Total operating expenses

(9,318)

(26,848)

(33,391)

(84,511)

(102,020)

Income (loss) from operations

(52,688)

(34,502)

85,887

11,542

245,944

Non-operating (expenses) income:

Interest income

2,187

3,587

918

7,862

1,835

Interest expenses

(11,042)

(10,018)

(6,779)

(37,190)

(23,245)

Foreign exchange gain (loss)

1,816

(865)

(1,472)

6,612

(1,814)

Gains (losses) on derivatives, net

3,603

10,055

9,192

(15,297)

6,268

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

(1,836)

(1,705)

-

(6,207)

-

Gains on repurchase of convertible bonds

8,197

20,153

-

28,350

6

Investment loss

-

-

-

(192)

-

Total non-operating (expenses) income

2,925

21,207

1,859

(16,062)

(16,950)

Income (loss) before income tax and
noncontrolling interests

(49,763)

(13,295)

87,746

(4,520)

228,994

Income tax benefit (expense)

13,069

5,145

(26,701)

4,851

(59,998)

Net income (loss)

(36,694)

(8,150)

61,045

331

168,996

Less: Net loss attributed to noncontrolling
interests

(2)

-

-

(2)

-

Net income (loss) attributed to holders of
ordinary shares

(36,692)

(8,150)

61,045

333

168,996

Earnings per share

Basic

(0.21)

(0.05)

0.35

0.00

0.98

Diluted

(0.21)

(0.05)

0.34

0.00

0.97

Earnings per ADS

Basic

(0.43)

(0.09)

0.70

0.00

1.96

Diluted

(0.43)

(0.09)

0.69

0.00

1.93

Weighted average number of shares used in
computing earnings per share

Basic

172,613,664

173,632,298

173,334,992

173,496,901

172,870,921

Diluted

172,613,664

173,632,298

176,978,324

173,496,901

175,111,730

RENESOLA LTD

Unaudited Consolidated Statements of Cash Flow

(US dollar in thousands)

For the year ended December 31

2011

2010

Cash flow from operating activities:

Net income

331

168,996

Adjustment to reconcile net income to net cash (used in) provided by
operating activities:

Investment loss

192

-

Inventory write-down

48,992

1,165

Depreciation and amortization

82,731

56,354

Amortization of deferred convertible bond issuances costs and premium

881

332

Allowance of doubtful receivables and advance to suppliers

2,034

3,919

(Gains) losses on derivatives

15,297

(6,268)

Share-based compensation

4,360

3,935

Loss on disposal of long-lived assets

558

1,253

Gains on repurchase of convertible bonds

(28,350)

(6)

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

6,207

-

Provision for firm purchase commitment

3,940

-

Changes in assets and liabilities:

Accounts receivables

(82,535)

26,886

Inventories

(24,251)

(28,433)

Advances to suppliers

6,898

(32,383)

Amounts due from related parties

(888)

64

Value added tax recoverable

4,274

9,277

Prepaid expenses and other current assets

(954)

(11,130)

Prepaid land use rights

(3,220)

11,172

Accounts payable

4,560

121,463

Advances from customers

(27,025)

(1,362)

Income tax payable

(16,303)

9,555

Other current liabilities

(13,293)

18,934

Other long-term liabilities

4,681

(139)

Accrued warranty cost

3,614

5,261

Deferred taxes

(14,759)

44,325

Net cash (used in) provided by operating activities

(22,028)

403,170

Cash flow from investing activities:

Purchases of property, plant and equipment

(132,827)

(137,715)

Advances for purchases of property, plant and equipment

(19,925)

(6,817)

Purchases of other long-term assets

(239)

1,186

Cash received from government subsidy

5,296

2,408

Proceeds from disposal of property, plant and equipment

155

150

Changes in restricted cash

(22,455)

(7,323)

Cash consideration for acquisition, net of cash received

(1,102)

-

Net cash paid for settlement of derivatives

(6,332)

(3,160)

Net cash used in investing activities

(177,429)

(151,271)

Cash flow from financing activities:

Proceeds from borrowings

898,776

665,007

Repayment of bank borrowings

(735,172)

(708,249)

Cash paid for issuance cost

(7,155)

-

Proceeds from exercise of stock options

149

3,145

Cash paid for ADSs repurchase

(1,944)

-

Proceeds from issuance of convertible bonds

200,000

-

Purchase of conversion spread hedges

(23,841)

-

Contribution from noncontrolling interest of subsidiaries

157

-

Cash paid for repurchase of convertible bonds

(57,055)

(32,715)

Net cash provided by (used in) financing activities

273,915

(72,812)

Effect of exchange rate changes

13,879

4,807

Net increase in cash and cash equivalent

88,337

183,894

Cash and cash equivalent, beginning of year

290,702

106,808

Cash and cash equivalent, end of year

379,039

290,702

Source: ReneSola Ltd.
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