omniture

ReneSola Ltd Announces First Quarter 2009 Results and Acquisition of Cell and Module Manufacturer

2009-05-21 21:11 807

- First quarter 2009 average processing cost decreased to $0.36 per watt

- First quarter 2009 silicon consumption rate decreased to 6.0 grams per watt

- Company evolving into fully integrated solar manufacturer through acquisition of JC Solar

JIASHAN, China, May 21 /PRNewswire-Asia/ -- ReneSola Ltd (“ReneSola” or the “Company”) (NYSE: SOL) (AIM: SOLA), a leading global manufacturer of solar wafers, today announced its unaudited financial results for the quarter ended March 31, 2009.

(Logo: http://www.prnasia.com/sa/200806261902.jpg )

Recent Operating Highlights

-- Q1 2009 wafer and other solar product shipment was 90.5 megawatts

(“MW”), of which 70.7 MW was from wafer sales and 19.8 MW was from

tolling services.

-- Q1 2009 export sales reached 60%, demonstrating further diversification

of ReneSola’s customer base.

-- Silicon consumption rate decreased to 6.0 grams per watt in Q1 2009

from 6.05 grams per watt in Q4 2008.

-- Average processing cost decreased to US$0.36 per watt in Q1 2009

compared to US$0.39 per watt in Q4 2008.

-- ReneSola strengthened its balance sheet by retiring approximately RMB

270 million of its convertible bond due March 2012 while increasing its

total onshore bank credit lines to US$577 million.

-- Wafer manufacturing capacity expansion is on track and is expected to

increase to 825 MW by July 2009.

-- Phase 1 of Sichuan polysilicon plant remains on schedule to reach

mechanical completion by end of June 2009.

-- ReneSola intends to embark on a two-pronged downstream expansion

strategy that (1) will make it one of the world’s most cost competitive

fully integrated solar companies with manufacturing capabilities

spanning from polysilicon to module production, and (2) will seek to

gain a strong foot hold in China’s solar project space.

First Quarter 2009 Financial Highlights

-- Q1 2009 net revenues were US$106.9 million, a decrease of 13.0% from

US$123.0 million in Q1 2008 and a decrease of 32.6% from US$158.6

million in Q4 2008.

-- Q1 2009 gross loss and gross margin were US$51.1 million and negative

47.8%, respectively, compared to gross loss and gross margin of

US$130.1 million and negative 82.0%, respectively, in Q4 2008(1). In

the fourth quarter of 2008, the Company recorded a US$137.1 million

inventory write-down against the net realizable value of inventories as

a result of the rapid decrease in the market price and value of

feedstock such as polysilicon and scrap silicon materials, work in

progress materials and finished solar wafers. Excluding the US$68.0

million inventory write-down in Q1 2009(2) In the first quarter of 2009,

the Company recorded a US$68.0 million inventory write-down against the

net realizable value of inventories as a result of the rapid decrease

in the market price and value of feedstock such as polysilicon and

scrap silicon materials, work in progress materials and finished solar

wafers., adjusted gross profit and gross margin were US$17.0 million

and positive 15.9%, respectively.

-- Q1 2009 net loss attributable to holders of ordinary shares was US$30.0

million compared to Q4 2008 net loss attributable to holders of

ordinary shares of US$128.3 million. Q1 2009 adjusted net income

attributable to holders of ordinary shares was US$2.1 million excluding

the inventory write-down(2).

-- Q1 2009 basic and diluted loss per share was US$0.22, and basic and

diluted loss per American Depositary Share (“ADS”) was US$0.44.

Three Three Three Three Three

months months months months months

ended ended ended ended ended

3/31/08 12/31/08 12/31/08* 3/31/09 3/31/09*

Unaudited Unaudited Unaudited Unaudited Unaudited

(Adjusted) (Adjusted)

Net revenue (US$000) 122,982 158,623 158,623 106,946 106,946

Gross profit

(loss) (US$000)

27,234 (130,139) 6,916 (51,087) 16,960

Gross margin (%) 22.1% (82.0%) 4.4% (47.8%) 15.9%

Operating profit

(loss) (US$000) 23,187 (143,126) (6,071) (58,346) 9,701

Foreign exchange

loss (US$000) (56) (1,052) (1,052) (550) (550)

Profit (loss) for the

period (US$000) 17,675 (128,275) (8,494) (30,019) 2,083

* Figures noted exclude the US$137.1 million fourth quarter 2008 inventory

write-down and the US$68.0 million first quarter 2009 inventory write-

down.

(1) In the fourth quarter of 2008, the Company recorded a US$137.1 million

inventory write-down against the net realizable value of inventories

as a result of the rapid decrease in the market price and value of

feedstock such as polysilicon and scrap silicon materials, work in

progress materials and finished solar wafers.

(2) In the first quarter of 2009, the Company recorded a US$68.0 million

inventory write-down against the net realizable value of inventories

as a result of the rapid decrease in the market price and value of

feedstock such as polysilicon and scrap silicon materials, work in

progress materials and finished solar wafers.

“Against the backdrop of extremely challenging market conditions, I am pleased to report that ReneSola produced a resilient first quarter performance underpinned by relatively strong wafer shipments and further reductions in production costs,” commented Mr. Xianshou Li, ReneSola’s chief executive officer. “We are benefiting from our continued focus on execution and cost reduction. Our commitment to continual technological and operational improvements also helps maintain our competitive advantage. As a result, our production costs were reduced to US$0.36 per watt and our silicon consumption rate fell to an average of 6.0 grams per watt during the first quarter of 2009.

“I am also very pleased to announce that we recently took the initial steps towards downstream integration in the PV market through the acquisition of JC Solar, a China-based cell and module manufacturer with respective annualized manufacturing capacities of 25 MW and 50 MW. Our plan is to maintain annual cell manufacturing capacity at 25 MW and to increase annual module manufacturing capacity to 100 MW during 2009. With our expected commencement of in-house polysilicon production in July, ReneSola will become an early mover as a fully integrated solar company. Building a diversified global customer base remains one of our key strategies and JC Solar possesses the essential technological certificates necessary for module sales in Europe and the United States. We expect to quickly gain market share across these markets by capitalizing on ReneSola’s cost competitiveness and JC Solar’s cell and module manufacturing and distribution capabilities.

“As production costs continue to decline, the PV industry is becoming increasingly competitive. As such, full vertical integration from polysilicon to module manufacturing becomes key in maintaining cost competitiveness and gaining market share. We continue to believe there will be a recovery in global demand as the year progresses and we remain confident in the long term prospects of the solar industry.”

Mr. Charles Bai, ReneSola’s chief financial officer, added, “We made steady progress in liquidity management with another quarter of generating positive operating cash flows. Our credit facility lines from domestic banks increased to $577 million during the quarter from $463 million at the end of fourth quarter of 2008. Cash from operating activities and additional credit lines enabled us to repurchase approximately RMB 270.0 million of convertible bonds during the second quarter of 2009 at a significant discount to face value. We also restructured the repayment profile of our credit facility lines, increasing the ratio of mid- to long-term loans in our loan portfolio. The convertible bond repurchases and debt composition restructuring have contributed additional strength to our balance sheet and will provide added support for our growth plans.”

Financial Results for the First Quarter 2009

Net Revenues

Net revenues for Q1 2009 were US$106.9 million, a decrease of 13.0%

year-over-year and 32.6% sequentially. The decrease in revenues was primarily attributable to falling wafer ASPs and a reduction in wafer shipments during the quarter. The average selling price (“ASP”) of wafers in Q1 2009 decreased to US$1.27 per watt from US$2.16 in Q4 2008.

Gross Profit (Loss)

Gross loss for Q1 2009 was US$51.1 million, compared to gross loss of US$130.1 million in Q4 2008 and gross profit of US$27.2 million in Q1 2008. Excluding the inventory write-down, adjusted gross profit for Q1 2009 was US$17.0 million. Gross margin for Q1 2009 was negative 47.8%, compared to negative 82.0% for Q4 2008 and positive 22.1% for Q1 2008. Excluding the inventory write-down, adjusted gross margin for Q1 2009 was positive 15.9%.

Operating Profit (Loss)

Operating loss for Q1 2009 was US$58.3 million, compared to operating loss of US$143.1 million for Q4 2008 and operating profit of US$23.2 million for Q1 2008. Excluding the inventory write-down, adjusted operating profit for Q1 2009 was US$9.7 million.

Operating margin for Q1 2009 was negative 54.6%, compared to negative 90.2% for Q4 2008 and positive 18.9% for Q1 2008. Excluding the inventory write-down, adjusted operating margin for Q1 2009 was 9.1%. Total operating expenses for Q1 2009 were US$7.3 million, down from US$13.0 million for Q4 2008. Of the total operating expenses for Q1 2009, US$4.0 million was attributable to general and administrative expenses, down from US$9.2 million for Q4 2008.

Earnings (Loss) Before Income Tax

Loss before income tax for Q1 2009 was US$62.8 million, compared to a loss of US$146.9 million for Q4 2008 and earnings of US$21.3 million for Q1 2008. Excluding the inventory write-down, adjusted income before income tax for Q1 2009 was US$5.3 million. Finance costs increased by 9.6% sequentially, reflecting the rise in bank borrowings to US$412.7 million, which includes long-term borrowings of US$135.7 million as of March 31, 2009. Q1 2009 foreign exchange loss was approximately US$0.6 million compared to a foreign exchange loss of US$1.1 million for Q4 2008.

Taxation

A tax benefit of US$32.8 million was recognized for Q1 2009, with US$37.1 million of the total tax benefit arising from the estimated loss, compared with a tax benefit of US$18.3 million for Q4 2008, of which US$17.3 million of the total tax benefit was attributable to the Q4 2008 inventory write-down.

Net Income (Loss) Attributable To Holders of Ordinary Shares

Net loss attributable to holders of ordinary shares for Q1 2009 was US$30.0 million, compared to net loss attributable to holders of ordinary shares of US$128.3 million for Q4 2008 and net income attributable to holders of ordinary shares of US$17.7 million for Q1 2008. Excluding the inventory write-down, adjusted net income attributable to holders of ordinary shares for Q1 2009 was US$2.1 million.

Q1 2009 basic and diluted loss per share was US$0.22, and basic and diluted loss per ADS was US$0.44. Excluding the inventory write-down, Q1 2009 adjusted basic and diluted earnings per share was US$0.02, while adjusted basic and diluted earnings per ADS was US$0.04.

Recent Business Developments

Acquisition of JC Solar

ReneSola’s wholly owned subsidiary Zhejiang Yuhui Solar Energy Source Co., Ltd entered into an agreement on May 20, 2009 to acquire the entire issued share capital of solar cell and module manufacturer, Wuxi Jiacheng Solar Energy Technology Co. ("JC Solar") (the “Acquisition”). The total consideration for the Acquisition was RMB 118 million, paid in cash.

JC Solar is located in the Yixing Economic Development Zone of Wuxi City, Jiangsu province, and is an established cell and module manufacturer. JC Solar has approximately 300 employees with current annual cell production capacity of 25 MW and annual module production capacity of 50 MW. In the year ended December 31, 2008, JC Solar recorded an unaudited net profit of RMB 69 million and had a net asset value of RMB 98 million at that date. The Acquisition provides ReneSola with a means of downstream integration.

Convertible Bond Repurchases

On May 19, 2009, ReneSola announced that during the second quarter of 2009, the Company repurchased approximately RMB 270 million aggregate principal amount of its RMB 928,700,000 U.S. Dollar Settled 1.0% Convertible Bonds due March 26, 2012 (the "Bonds"), for a total consideration of approximately RMB 186 million. The total consideration was paid approximately 76% by cash and 24% by shares.

ReneSola may from time to time seek to make additional repurchases of its Bonds. Such repurchases, if any, will depend on prevailing market conditions, the Company’s liquidity requirements and other factors.

Zhejiang Province’s First BIPV Project

On May 13, 2009, ReneSola announced that it obtained approval from Zhejiang’s provincial government to pioneer a 5 MW building integrated photovoltaic (“BIPV”) rooftop project in China’s Zhejiang province. The BIPV rooftop project has a total planned area of 80,400 square meters on several government buildings in Jiashan County, Zhejiang province and is subject to final approval by the Ministries of Finance and Housing and Urban-Rural Development.

The BIPV rooftop project has a budgeted total investment of RMB 160 million and will be partially funded through the RMB 15 per watt subsidy announced by China’s Ministry of Finance in March 2009. The local government may provide additional subsidies and ReneSola has reached a tentative partnership agreement with a local bank to provide additional funding.

Divestment of ReneSola Malaysia

In July 2007, the Company invested approximately Ringgt Malaysia 1.3 million for 51% equity interest in ReneSola (Malaysia) SDN. BHD (“ReneSola Malaysia”), which was incorporated in Malaysia in February 2007 to process certain types of reclaimable silicon raw materials sourced overseas that did not meet the import requirements of the Chinese government. The processed reclaimable silicon was then shipped to Zhejiang Yuhui for further processing as feedstock for the Company’s wafer manufacturing. The Company sold its 51% equity interest to the Malaysian joint venture partner for a consideration of Ringgt Malaysia 1 as part of the Company’s strategy to use polysilicon, instead of reclaimable silicon materials, as the Company’s primary feedstock for wafer manufacturing. The divestment was recently completed in April 2009.

2009 Outlook

The Company’s wafer shipment for the second quarter of 2009 is expected to be in the range of 85 MW to 95 MW, with full year product shipment expected to be between 450 MW to 500 MW. Full year revenue is expected to be between US$500 million to US$550 million.

Conference Call Information

ReneSola’s management will host an earnings conference call on Thursday, May 21, 2009 at 9 am U.S. Eastern Time / 9 pm Beijing/Hong Kong time / 2 pm British Summer Time.

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

U.S. / International: +1-617-614-6205

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 28, 2009:

International: +1-617-801-6888

Passcode: 16044506

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 Ltd (“ReneSola”) is a leading global manufacturer of solar wafers 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). 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 annual report on Form 20-F. 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.

For investor and media inquiries, please contact:

In China:

Ms. Julia Xu

ReneSola Ltd

Tel: +86-573-8477-3372

Email: julia.xu@renesola.com

Mr. Derek Mitchell

Ogilvy Financial, Beijing

Tel: +86-10-8520-6284

Email: derek.mitchell@ogilvy.com

In the United States:

Mr. Thomas Smith

Ogilvy Financial, New York

Tel: +1-212-880-5269

Email: thomas.smith@ogilvypr.com

In the UK:

Mr. Tim Feather / Mr. Richard Baty

Hanson Westhouse Limited

Tel: +44-20-7601-6100

Email: tim.feather@hansonwesthouse.com /

richard.baty@hansonwesthouse.com

CONSOLIDATED BALANCE SHEET

As at As at As at

March 31, December 31, March 31,

2008 2008 2009

US$000 US$000 US$000

ASSETS

Current assets:

Cash and cash equivalents 67,441 112,333 172,614

Restricted cash -- 5,958 67,394

Accounts receivable, net of

allowances for doubtful receivables 16,234 43,160 34,965

Inventories 156,277 193,036 148,856

Advances to suppliers 88,843 36,991 18,930

Amounts due from related parties 36,046 457 441

Value added tax recoverable 3,808 15,498 22,829

Prepaid expenses and other current

assets 4,972 13,722 10,107

Deferred tax assets 8,861 18,979 38,748

Total current assets 382,482 440,134 514,884

Property, plant and equipment, net 172,330 341,427 415,561

Prepaid land rent, net 9,391 13,472 13,372

Deferred tax assets 629 2,340 15,049

Deferred convertible bond issue costs 3,087 1,970 1,573

Advances to suppliers over one year 45,729 48,635

Advances for purchases of property,

plant and equipment 77,169 161,705 164,959

Other long-term assets 1,011 1,064

Total assets 645,088 1,007,788 1,175,097

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings 88,968 191,987 277,006

Accounts payable 22,373 37,942 37,181

Advances from customers 72,188 49,284 58,584

Amount due to related party 15 11,863 24

Other current liabilities 12,328 42,060 47,156

Total current liabilities 195,872 333,136 419,951

Convertible bond payable 133,999 138,904 139,080

Long-term borrowings 34,085 32,833 135,667

Advances from customers over one year 105,203 113,181

Other long-term liabilities 1,114 15,624 15,197

Total liabilities 365,070 625,700 823,076

ReneSola Ltd. Shareholders’ equity

Common shares 145,291 330,666 330,666

Additional paid-in capital 15,579 17,769 18,457

Retained earnings (Deficit) 83,875 11,294 (18,725)

Accumulated other comprehensive

income 17,638 22,080 21,623

Total ReneSola Ltd. Shareholders’

equity 262,383 381,809 352,021

Noncontrolling interests 17,635 279 --

Total equity 280,018 382,088 352,642

Total liabilities and equity 645,088 1,007,788 1,175,097

CONSOLIDATED INCOME STATEMENT

Three months Three months Three months

ended ended ended

March 31, December 31 March 31,

2008 2008 2009

US$000 US$000 US$000

Net revenues 122,982 158,623 106,946

Cost of revenues (95,748) (288,762) (158,033)

Gross profit (loss) 27,234 (130,139) (51,087)

Operating expenses:

Sales and marketing (267) (43) (116)

General and administrative (3,389) (9,160) (3,956)

Research and development (442) (2,771) (3,446)

Impairment loss on property, plant

and equipment -- (763) --

Other general income (expenses) 51 (250) 259

Total operating expenses (4,047) (12,987) (7,259)

Income (loss) from operations 23,187 (143,126) (58,346)

Interest income 306 929 456

Interest expenses (2,144) (3,692) (4,048)

Foreign exchange (loss) gain (56) (1,052) (550)

Equity in losses of investee -- -- (291)

Income (loss) before income tax 21,293 (146,941) (62,779)

Income tax benefit(expenses) (3,560) 18,278 32,760

Net income (loss) 17,733 (128,663) (30,019)

Less: net (income) loss

attributable to noncontrolling

interests (58) 388 --

Net income (loss) attributable to

holders of ordinary shares 17,675 (128,275) (30,019)

Earnings (Loss) per share

Basic 0.15 (0.93) (0.22)

Diluted 0.14 (0.93) (0.22)

Weighted average number of shares

used in computing earnings per

share:

Basic shares 113,906,186 137,624,912 137,624,912

Diluted shares 124,460,612 137,624,912 137,624,912

ADJUSTED CONSOLIDATED INCOME STATEMENT

Three months Adjustment Three months

ended for inventory ended

March 31, write-down March 31,

2009 2009

US$000 US$000 US$000

(Adjusted

Non-GAAP)

Net revenues 106,946 106,946

Cost of revenues (158,033) 68,047 (89,986)

Gross profit (loss) (51,087) 68,047 16,960

Operating expenses:

Sales and marketing (116) (116)

General and administrative (3,956) (3,956)

Research and development (3,446) (3,446)

Impairment loss on property,

plant and equipment -- --

Other general income

(expenses) 259 259

Total operating expenses (7,259) (7,259)

Income (loss) from operations (58,346) 68,047 9,701

Interest income 456 456

Interest expenses (4,048) (4,048)

Foreign exchange (loss) gain (550) (550)

Equity in earnings of investee 330 (291)

Income (loss) before income tax (62,779) 68,047 5,268

Income tax benefit (expenses) 32,760 (35,945) (3,185)

Net income (loss) (30,019) 32,102 2,083

Less: net (income) loss

attributable to

noncontrolling interests -- --

Net income (loss)

attributable to holders of

ordinary shares (30,019) 32,102 2,083

Earnings (Loss) per share

Basic (0.22) 0.02

Diluted (0.22) 0.02

Weighted average number of

shares used in computing

earnings per share:

Basic shares 137,624,912 137,624,912

Diluted shares 137,624,912 137,624,912

(Cont.)

Three months Adjustment Three months

ended for inventory ended

December 31, write-down December 31,

2008 2008

US$000 US$000 US$000

(Adjusted

Non-GAAP)

Net revenues 158,623 158,623

Cost of revenues (288,762) 137,055 (151,707)

Gross profit (loss) (130,139) 137,055 6,916

Operating expenses:

Sales and marketing (43) (43)

General and administrative (9,160) (9,160)

Research and development (2,771) (2,771)

Impairment loss on property,

plant and equipment (763) (763)

Other general income

(expenses) (250) (250)

Total operating expenses (12,987) (12,987)

Income (loss) from

operations (143,126) 137,055 (6,071)

Interest income 929 929

Interest expenses (3,692) (3,692)

Foreign exchange (loss) gain (1,052) (1,052)

Equity in earnings of

investee -- --

Income (loss) before income

tax (146,941) 137,055 (9,886)

Income tax benefit

(expenses) 18,278 (17,274) 1,004

Net income (loss) (128,663) 119,781 (8,882)

Less: net (income) loss

attributable to

noncontrolling interests 388 388

Net income (loss)

attributable to holders of

ordinary shares (128,275) 119,781 (8,494)

Earnings (Loss) per share

Basic (0.93) (0.06)

Diluted (0.93) (0.06)

Weighted average number of

shares used in computing

earnings per share:

Basic shares 137,624,912 137,624,912

Diluted shares 137,624,912 137,624,912

Source: ReneSola Ltd
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