omniture

ReneSola Ltd Announces Second Quarter 2010 Results

2010-08-09 19:46 1302

Company achieves record results with revenues of US$253.9 million, quarterly shipments of 258.3 MW and net income of US$36.1 million

JIASHAN, China, Aug. 9 /PRNewswire-Asia-FirstCall/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL) (AIM: SOLA), a leading global manufacturer of solar wafers and provider of solar module original equipment manufacturer ("OEM") services, today announced its unaudited financial results for the second quarter ended June 30, 2010.

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Second Quarter 2010 Financial and Operating Highlights

-- Total solar product shipments in Q2 2010 were a record 258.3 megawatts

("MW"), an increase of 6.6% from 242.4 MW in Q1 2010.

-- Q2 2010 net revenues were a record US$253.9 million, an increase of

22.9% from US$206.6 million in Q1 2010.

-- Q2 2010 gross profit was US$76.6 million with a gross profit margin of

30.2%, compared to gross profit of US$35.3 million with a gross margin

of 17.1% in Q1 2010.

-- Q2 2010 operating income was US$52.5 million with an operating margin

of 20.6%, compared to operating income of US$21.2 million with an

operating margin of 10.3% in Q1 2010.

-- Q2 2010 net income was a record US$36.1 million, representing basic and

diluted earnings per share of US$0.21, and basic and diluted earnings

per American depositary share ("ADS") of US$0.42.

-- The Company generated strong operating cash flow of US$168.4 million in

the first half of 2010, bringing cash and cash equivalents at the end

of Q2 2010 to US$171.2 million, compared with US$106.8 million at the

end of 2009.

"We achieved record results in terms of revenues, net income and shipment volumes in the second quarter of 2010," said Mr. Xianshou Li, ReneSola's chief executive officer. "We delivered a strong gross profit margin of over 30% during the quarter as we continued to lead the industry as a cost-competitive solar manufacturer and executed on our OEM module servicing strategy. Strong market demand coupled with our cost-efficient structure should place ReneSola in a position to increase profitability in the coming quarters."

Results for the Second Quarter 2010

Product Shipments

2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%

Total Solar Product

Shipments (MW) 258.3 242.4 85.9 6.6% 200.7%

Wafer Shipments (MW) 206.7 226.9 83.2 (8.9%) 148.4%

Module Shipments (MW) 50.6 15.4 2.7 228.6% 1,774.1%

Net Revenues

2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%

Net Revenues (US$mln) $253.9 $206.6 $82.6 22.9% 207.4%

Record high revenues in Q2 2010 were driven by higher wafer average selling prices and higher module shipments.

Gross Profit

2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%

Gross Profit (US$mln) $76.6 $35.3 $4.3 117.0% 1,681.4%

Gross Margin 30.2% 17.1% 5.1% -- --

The significant improvement in the Company's gross margin from 17.1% in Q1 2010 to 30.2% in Q2 2010 was driven by overall wafer processing cost reduction and a large decrease in polysilicon costs to market-equivalent prices in Q2 2010.

Operating Income (Loss)

2Q10 1Q10 2Q09 Q-o-Q% Y-o-Y%

Operating Expenses (US$mln) $24.2 $14.1 $8.2 68.8% 190.2%

Operating Income (Loss)

(US$mln) $52.5 $21.2 ($4.0) 149.1% --

Operating Margin 20.6% 10.3% (4.8%) -- --

Increases in operating expenses were primarily due to a US$0.8 million bad debt provision against doubtful accounts receivables, a US$1.4 million provision against equipment suppliers' pre-payments and other operating expenses, including US$2.1 million in management bonuses accumulated for 2010.

Net Income (Loss) Attributable to Holders of Ordinary Shares

2Q10 1Q10 2Q09

Net Income (Loss) (US$mln) $36.1 $11.8 ($3.6)

Earnings (Loss) Per Share $0.21 $0.07 ($0.03)

Earnings (Loss) Per ADS $0.42 $0.14 ($0.05)

The Company achieved record net income of US$36.1 million, an increase of over 200% from US$11.8 million in Q1 2010. Basic and diluted earnings per share were US$0.21, and basic and diluted earnings per ADS were US$0.42.

Business Highlights

Wafer Business - Achieving Gross Profit Margin of Over 30%

The Company's wafer business achieved gross profit margin of over 30% fueled by robust market demand for high-quality products and significant cost reductions achieved by the Company. The average polysilicon raw material costs have fallen to market-equivalent prices, while the overall total wafer cost has been reduced to US$0.56/W ("per Watt"). ReneSola is committed to becoming the industry leader as a cost-competitive producer of wafer products, capitalizing on its advanced manufacturing and technologically driven platform to consistently reduce cost. Wafer costs are expected to be driven down further to between US$0.46/W to US$0.48/W by the end of 2011.

Module Business - A Significant Revenue and Profit Contributor

In the downstream module business, ReneSola delivered record module shipments of 50.6 MW with an average selling price of US$1.75/W. These results underscore the tremendous potential in the OEM servicing sector and ReneSola remains confident that the Company's downstream platform will further strengthen its core customer relationships and help enhance ReneSola's leadership position in the global wafer market. The Company expects to ship between 145 MW to 165 MW to new and existing customers in the second half of 2010.

Strong Operating Cash Flows and Cash Position

The Company generated strong operating cash flows of US$168.4 million in the first half of 2010, with a net cash and cash equivalents position of US$171.2 million at the end of Q2 2010 compared to a net cash and cash equivalents position of US$98.0 million at the end of Q1 2010. The Company expects to continue to generate strong operating cash flows during the second half of 2010.

Improving Financial Leverage

At the end of Q2 2010, the Company had interest-bearing debt of US$577.1 million, consisting of US$189.1 million of long-term debt and US$388.0 million of short-term debt. The Company had over US$750 million in credit facilities as of the end of Q2 2010 and is well positioned to reduce financial leverage as the Company continues to generate strong operating cash flows.

2011 Capacity Expansion Plans and Related CAPEX

In 2011, the Company plans to expand wafer production capacity to 1.8 GW from the current 1.2 GW, while expanding module production capacities to 600 MW from the current 375 MW.

The 2010 capital expenditure budget is US$150 million, of which approximately US$100 million covered the already implemented increases in wafer, cell and module capacities to 1.2 GW, 240 MW and 375 MW, respectively, as well as the final amount to be paid for the Sichuan polysilicon facility. The remaining US$50 million from the 2010 budget will be used in building capacity towards the 2011 targets referred to above. A further US$140 million of capital expenditure in 2011 is currently budgeted for achieving those targets.

AIM Cancellation

On July 27, 2010, the Company announced that a resolution would be proposed to cancel its AIM quotation at the upcoming annual general meeting (the "AGM") on August 20, 2010. Cancellation is conditional upon the consent of the Company's shareholders, by a majority of not less than 75% of the votes cast on the resolution to be proposed at the AGM.

ReneSola was admitted to trading on AIM in August 2006 and subsequently obtained a listing of its ADSs on the New York Stock Exchange (the "NYSE") in January 2008. Since its NYSE listing, the Company has seen an increasing number of shareholders migrating their shareholdings in the Company from AIM to the NYSE due to higher levels of liquidity. There are significant costs associated with maintaining the Company's AIM quotation, including the annual fees payable to the London Stock Exchange, nominated adviser and broker fees and other related professional costs. Cancellation will, accordingly, reduce the Company's recurring administrative overheads.

Company Appoints New Vice President of Human Resources

The Company recently appointed Mr. Tim Jia as vice president of human resources. Before joining ReneSola, Mr. Jia served as director of Ingersoll Rand Engineering and Technology Center's human resources and engineering administration department in Shanghai, China from 2003 to 2010. He has approximately 20 years of managerial experience with more than a decade of experience in human resources. Prior to Ingersoll Rand, Mr. Jia worked at Shuangliang Group and Shuangliang Trane Joint Venture for 18 years, where he served in several managerial positions including the director of human resources. Mr. Jia received undergraduate degrees in Machinery Engineering from Wuxi Mechanical Technology College in 1986 and Computer Engineering from Nanjing University in 1991. He also received an MBA from the Open University of Hong Kong in 2000 and is currently a Ph.D. candidate in Law at the China University of Political Science and Law.

Outlook

For the full year 2010, the Company expects revenues to be in the range of US$1.0 billion to US$1.05 billion and gross profit margin to be in the range of 25% to 27%, while maintaining second half gross profit margin in the range of 28% to 30%.

For Q3 2010, the Company expects total solar product shipments to be in the range of 280 MW to 310 MW and revenues to be in the range of US$300 million to US$320 million.

Conference Call Information

ReneSola's management will host an earnings conference call on Monday, August 9, 2010 at 8 am U.S. Eastern Daylight Time / 8 pm Beijing/Hong Kong time / 1 pm British Summer Time.

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

U.S. / International: +1-857-350-1682

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 August 16, 2010:

International: +1-617-801-6888

Passcode: 14646078

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, low-cost production capabilities 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 OEM 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 shares are traded on the New York Stock Exchange (NYSE: SOL) and the AIM of the London Stock Exchange (AIM: SOLA).

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:

Ms. Feng Qi

ReneSola Ltd

Tel: +86-573-8477-3903

Email: feng.qi@renesola.com

Mr. Derek Mitchell

Ogilvy Financial, Beijing

Tel: +86-8520-6284

Email: derek.mitchell@ogilvy.com

In the United States:

Ms. Jessica Barist Cohen

Ogilvy Financial, New York

Tel: +1-646-460-9989

Email: jessica.cohen@ogilvypr.com

In the United Kingdom:

Mr. Tim Feather / Mr. Richard Baty

Westhouse Securities Limited, London

Tel: +44-20-7601-6100

Email: tim.feather@westhousesecurities.com

richard.baty@westhousesecurities.com

RENESOLA LTD

Unaudited Consolidated Balance Sheet

(US dollars in thousands)

June 30, March 31, December 31,

2010 2010 2009

ASSETS

Current assets:

Cash and cash equivalents 171,208 98,041 106,808

Restricted cash 75,384 44,195 25,266

Available for sale investment 4,975 6,207 6,207

Trade receivable, net of allowances

for doubtful receivables 102,629 146,386 107,987

Inventories, net of inventory

provisions 164,770 122,335 137,844

Advances to suppliers, current

portion 18,917 12,123 12,092

Amounts due from related parties 412 440 440

Value added tax recoverable 44,341 43,611 51,843

Prepaid expenses and other current

assets 10,783 9,294 7,412

Deferred tax assets, current portion 25,124 25,125 24,325

Total current assets 618,543 507,757 480,224

Property, plant and equipment, net 743,079 721,156 702,816

Prepaid land rent, net 25,351 25,450 23,137

Other Intangible assets 425 562 1,349

Deferred tax assets, non-current

portion 27,723 36,406 40,227

Advances to suppliers, non-current

portion 7,204 7,193 8,072

Advances for purchases of property,

plant and equipment 13,402 21,209 20,840

Other long-term assets 2,669 1,989 2,840

Goodwill 5,323 5,323 5,323

Total assets 1,443,719 1,327,045 1,284,829

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term borrowings 388,028 406,609 358,634

Accounts payable 190,779 129,159 93,406

Advances from customers, current

portion 51,276 54,029 53,852

Amounts due to related parties 24 40 24

Other current liabilities 73,848 71,413 71,460

Convertible bond payable, current

portion -- -- 32,475

Total current liabilities 703,955 661,250 609,851

Long-term borrowings 189,073 171,409 189,279

Advances from customers, non-current

portion 90,198 73,919 78,578

Other long-term liabilities 12,911 12,008 10,858

Total liabilities 996,137 918,586 888,566

Shareholders' equity

Common shares 414,585 414,068 413,753

Additional paid-in capital 21,896 21,165 21,065

Accumulated deficits (12,772) (48,832) (60,609)

Accumulated other comprehensive

income 23,873 22,058 22,054

Total shareholders' equity 447,582 408,459 396,263

Total liabilities and shareholders'

equity 1,443,719 1,327,045 1,284,829

RENESOLA LTD

Unaudited Consolidated Statements of

Income Data

(US dollars in thousands, except ADS

and share data)

Three Months Ended

June 30, March 31, June 30,

2010 2010 2009

Net revenues 253,879 206,551 82,629

Cost of revenues (177,255) (171,228) (78,378)

Gross profit (loss) 76,624 35,323 4,251

Operating expenses:

Sales and marketing (1,815) (1,426) (1,497)

General and administrative (13,371) (4,727) (4,503)

Research and development (7,459) (6,168) (3,401)

Other general (expense) income (1,529) (1,798) 1,188

Total operating expenses (24,174) (14,119) (8,213)

Income (loss) from operations 52,450 21,204 (3,962)

Non-operating (expenses) income:

Interest income 378 101 176

Interest expenses (5,299) (4,968) (3,972)

Foreign exchange gain (loss) (7) (911) (504)

Gain on early extinguishment of

debt, net of inducement charges -- -- 5,353

Fair value change on derivative

assets (147) -- --

Investment income 293 -- --

Total non-operating (expenses)

income (4,782) (5,778) 1,053

Income (loss) before income tax 47,668 15,426 (2,909)

Income tax benefit (expense) (11,607) (3,649) (680)

Net income (loss) attributed to

holders of ordinary shares 36,061 11,777 (3,589)

Earnings (Loss) per share

Basic 0.21 0.07 (0.03)

Diluted 0.21 0.07 (0.03)

Earnings (Loss) per ADS

Basic 0.42 0.14 (0.05)

Diluted 0.42 0.14 (0.05)

Weighted average number of shares

used in computing earnings per

share

Basic 172,706,512 172,668,245 139,383,154

Diluted 172,706,512 172,668,245 139,383,154

CONSOLIDATED CASH FLOW STATEMENT

Six months ended

June 30, 2010 June 30, 2009

US$000 US$000

Operating activities:

Net income (loss) 47,837 (33,608)

Adjustment to reconcile net income

(loss) to net cash used in

operating activities:

Equity in earnings of investee -- 291

Inventory write-down -- 68,047

Depreciation and amortization 24,346 13,457

Amortization of deferred convertible

bond issue costs and premium 327 1,426

Allowances for doubtful receivables

and advance to suppliers 1,961 631

Prepaid land use right expensed 404 127

Change in fair value of derivatives 147 (1)

Gain on early extinguishment of

debt, net of inducement charges -- (5,353)

Share-based compensation 1,360 1,861

Loss on disposal of long-lived

assets 133 14

Changes in operating assets and

liabilities:

Accounts receivable 5,114 9,951

Inventories (25,861) (14,246)

Advances to suppliers (7,859) 19,379

Amounts due from related parties 31 (11,816)

Value added tax recoverable 7,791 (19,082)

Prepaid expenses and other current

assets (4,463) 7,323

Prepaid land use right -- (110)

Accounts payable 96,277 2,954

Advances from customers 8,496 2,334

Other liabilities (1,098) 2,981

Deferred taxes 12,291 (37,527)

Accrued Warranty 1,141 65

Net cash provided by (used in)

operating activities 168,375 9,098

Investing activities:

Purchases of property, plant and

equipment (53,562) (164,024)

Advances for purchases of property,

plant and equipment 6,083 18,186

Purchase of other long-term assets 67 (447)

Cash received from government

subsidy -- 5,959

Proceeds from disposal of investment -- (635)

Proceeds from disposal of property,

plant and equipment 51 --

Restricted cash (49,631) (51,722)

Cash consideration for acquisition -- (16,831)

Net proceeds from redemption of

financial assets 79 --

Net cash used in investing

activities (96,913) (209,514)

Financing activities:

Proceeds from borrowings 447,676 436,780

Repayment of bank borrowings (422,239) (155,437)

Cash paid for issuance cost (252) --

Proceeds from exercised stock option 304 --

Cash consideration paid to

repurchase convertible bonds (32,715) (19,781)

Net cash provided by financing

activities (7,226) 261,562

Effect of exchange rate changes 164 64

Net increase in cash and cash

equivalents 64,400 61,210

Cash and cash equivalents, beginning

of year 106,808 112,333

Cash and cash equivalents, end of

period 171,208 173,543

Source: ReneSola Ltd
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