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ReneSola Ltd Announces Second Quarter 2009 Results

2009-08-12 19:44 790


JIASHAN, China, Aug. 12 /PRNewswire-Asia-FirstCall/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL) (AIM: SOLA), a leading vertically integrated Chinese manufacturer of solar products, today announced its unaudited financial results for the second quarter ended June 30, 2009.

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

Recent Operating Highlights

-- According to schedule, ReneSola commenced production of the first

batch of polysilicon from Phase 1 of its two-phase, 3,000 metric

tonne ("MT") annualized capacity polysilicon manufacturing facility

in China's Sichuan province in July 2009. Production in 2009 is

expected to be in the range of 400 MT to 500 MT, while production for

2010 is expected to be in the range of 2,800 MT to 2,900 MT.

-- ReneSola successfully completed the acquisition of Wuxi Jiacheng

Solar Energy Technology Co. ("JC Solar"), on May 31, 2009. In June

2009, JC Solar shipped 2.7 megawatts ("MW") of modules and recorded

gross margin of over 30%.

-- Recently, ReneSola further enhanced its liquidity by increasing its

total onshore bank credit lines to US$634 million, with an additional

US$133 million in credit lines expected from Bank of China.

Results for the Second Quarter of 2009

Product Shipment

Total solar product shipment in Q2 2009 was 85.9 MW, consisting of 83.2 MW from wafer shipments and 2.7 MW from module shipments.

Net Revenues

Net revenues for Q2 2009 were US$82.6 million, a decrease of 22.7% sequentially and 52.2% year-over-year.

Gross Profit (Loss)

Gross profit for Q2 2009 was US$4.3 million, compared to gross loss of US$51.1 million in Q1 2009(1) and gross profit of US$42.8 million in Q2 2008. Gross margin for Q2 2009 was 5.1%, compared to negative 47.8% for Q1 2009 and positive 24.7% for Q2 2008.

Operating Profit (Loss)

Operating loss for Q2 2009 was US$4.0 million, compared to an operating loss of US$58.3 million for Q1 2009(1). Operating margin for Q2 2009 was negative 4.8%, compared to negative 54.6% for Q1 2009(1). Total operating expenses for Q2 2009 were US$8.2 million, an increase from US$7.3 million for Q1 2009, mainly due to the US$0.78 million amortization of intangible assets consisting of customer relations and order backlog from the JC Solar acquisition.

Earnings (Loss) Before Income Tax

Loss before income tax for Q2 2009 was US$2.9 million, compared to a loss of US$62.8 million for Q1 2009(1). The Company recognized a net gain of US$5.4 million as a result of its US$40.1 million convertible bond repurchase using cash and issuance of 4,000,000 ordinary shares during the quarter.

Taxation

A tax expense of US$0.7 million was recognized for Q2 2009, compared with a tax benefit of US$32.8 million for Q1 2009, as a result of the inventory write-down in Q1 2009(1).

Net Income (Loss) Attributable To Holders of Ordinary Shares

Net loss attributable to holders of ordinary shares for Q2 2009 was US$3.6 million, compared to net loss attributable to holders of ordinary shares of US$30.0 million for Q1 2009(1).

Q2 2009 basic and diluted loss per share was US$0.03, and basic and diluted loss per ADS was US$0.05.

Three months Three months Three months

ended ended ended

June 30, 2008 March 31, 2009 June 30, 2009

(Unaudited) (Unaudited) (Unaudited)

Net revenue (US$000) 173,007 106,946 82,629

Gross profit (loss) (US$000) 42,786 (51,087) 4,251

Gross margin (%) 24.7 (47.8) 5.1

Operating profit (loss)

(US$000) 34,535 (58,346) (3,962)

Foreign exchange loss

(US$000) (797) (550) (504)

Profit (loss) for the

period (US$000) 23,309 (30,019) (3,589)

"The second quarter of 2009 marked an historic quarter in ReneSola's evolution as a solar company," commented Mr. Xianshou Li, ReneSola's chief executive officer. "During the quarter, we completed our transformation from one of the world's largest manufacturers of solar wafers into a low-cost, fully integrated producer of solar products following the commencement of production at our 3,000 MT Sichuan polysilicon manufacturing facility and the successful acquisition of JC Solar. We have demonstrated our resilience and ability to achieve strategic and operational milestones despite the continuing difficult operating environment. We expect that as industry fundamentals continue to improve, the benefits brought forward by our fully integrated operations will further enhance our competitive position in the global solar industry."

Mr. Charles Bai, ReneSola's chief financial officer, added, "Our results for the second quarter of 2009 marked a significant step toward a return to profitability for ReneSola. In the face of a challenging overall environment, we increased our gross profit margin to 5.1% as a result of prudent inventory and purchasing management and improved manufacturing efficiency. We are hopeful that during the remainder of the year, we will continue to see margin improvement as a result of stable wafer pricing and our inventory carrying value more closely resembling spot polysilicon market prices."

Recent Business Developments

Financing Update

ReneSola's wholly-owned subsidiary, Zhejiang Yuhui Solar Energy Source Co., Ltd ("Zhejiang Yuhui"), recently signed a strategic cooperation agreement (the "agreement") with Bank of China, Jiaxing Branch (the "Bank"). Under terms of the agreement, the Bank will grant total credit facilities of US$249 million to Zhejiang Yuhui. The new credit facilities include existing credit facilities of US$116 million that the Bank has already granted to Zhejiang Yuhui. The credit facilities include short-term credit lines for working capital, mid- to long-term project loans, loans to fund acquisitions, and domestic and international trade finance. The grant of facilities is subject to approval by the provincial branch of Bank of China.

In addition to the credit facilities, the Bank also intends to provide mid- to long-term financing to solar projects that the Company has been developing, subject to the bank's internal risk assessment and approval procedures.

Sichuan Polysilicon Facility Launches Production

As announced in mid-July of 2009, the Company successfully commenced production of the first batch of polysilicon from Phase 1 of its two-phase, 3,000 MT annualized capacity polysilicon manufacturing plant. Phase 2 is expected to reach mechanical completion in September of 2009.

Output from the polysilicon facility is expected to be in the range of 400 MT to 500 MT in 2009 and is now expected to increase to between 2,800 MT and 2,900 MT in 2010. The facility utilizes a close-loop Advanced Siemens process for polysilicon production. Polysilicon production cost is expected to decline to between approximately US$40 per kilogram to US$45 per kilogram by the first half of 2010.

Successful Acquisition and Integration of JC Solar

As previously announced, Zhejiang Yuhui entered into an agreement on May 20, 2009 to acquire the entire issued share capital of the solar cell and module manufacturer JC Solar. The acquisition closed on May 31, 2009.

As of June 30, 2009, JC Solar had annual solar cell and module manufacturing capacities of 25 MW and 50 MW, respectively. By the end of 2009, ReneSola is expected to have annual solar cell manufacturing capacity of 100 MW and solar module manufacturing capacity of 250 MW.

Letters of Intent Signed for Domestic Projects

As previously announced, the Company entered into a letter of intent with the Yancheng city government in Jiangsu province to develop a 500 MW on-grid solar power generation project. In addition, the Company has been granted the exclusive right in a letter of intent with the Panzhihua east district government in Sichuan province to develop a 5 MW rooftop project. Both projects are subject to feasibility studies and approvals by various government authorities.

2009 Outlook

The Company expects revenues to increase by 60% to 70% sequentially in Q3.

The Company maintains its full year product shipment outlook of 450 MW to 500 MW and its full year revenue outlook of US$500 million to US$550 million.

Conference Call Information

ReneSola's management will host an earnings conference call on Wednesday, August 12, 2009 at 8:30 a.m. U.S. Eastern Time / 8:30 p.m. Beijing/Hong Kong time / 1:30 p.m. 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 August 19, 2009:

International: +1-617-801-6888

Passcode: 36277347

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 Chinese manufacturer of solar products 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.

(1) 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.

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:

Ms. Jessica Barist Cohen

Ogilvy Financial, New York

Tel: +1-646-460-9989

Email: jessica.cohen@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

December 31, March 31, June 30,

2008 2009 2009

US$000 US$000 US$000

ASSETS

Current assets:

Cash and cash equivalents 112,333 172,614 173,543

Restricted cash 5,958 67,394 58,068

Accounts receivable, net of

allowances for doubtful receivables 43,160 34,965 35,319

Inventories 193,036 148,856 142,703

Advances to suppliers 36,991 18,930 20,174

Amounts due from related parties 457 441 457

Value added tax recoverable 15,498 22,829 35,374

Prepaid expenses and other current

assets 13,722 10,107 5,772

Deferred tax assets 18,979 38,748 12,877

Total current assets 440,134 514,884 484,287

Property, plant and equipment, net 341,427 415,561 510,085

Prepaid land rent, net 13,472 13,372 19,505

Other Intangible assets -- -- 3,934

Deferred tax assets 2,340 15,049 45,568

Deferred convertible bond issue costs 1,970 1,573 834

Advances to suppliers over one year 45,729 48,635 40,958

Advances for purchases of property,

plant and equipment 161,705 164,959 139,359

Equity investment -- -- --

Other long-term assets 1,011 1,064 1,397

Goodwill -- -- 5,323

Total assets 1,007,788 1,175,097 1,251,250

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings 191,987 277,006 347,939

Accounts payable 37,942 37,181 42,055

Advances from customers 49,284 58,584 43,872

Amount due to related party 11,863 24 24

Other current liabilities 42,060 47,156 59,321

Total current liabilities 333,136 419,951 493,211

Convertible bond payable 138,904 139,080 98,992

Long-term borrowings 32,833 135,667 159,586

Advances from customers over one year 105,203 113,181 114,074

Other long-term liabilities 15,624 15,197 20,621

Total liabilities 625,700 823,076 886,484

ReneSola Ltd. Shareholders' equity

Common shares 330,666 330,666 345,645

Additional paid-in capital 17,769 18,457 19,630

Retained earnings (deficit) 11,294 (18,725) (22,313)

Accumulated other comprehensive

income 22,080 21,623 21,804

Total ReneSola Ltd. Shareholders'

equity 381,809 352,021 364,766

Noncontrolling interests 279 -- --

Total equity 382,088 352,021 364,766

Total liabilities and equity 1,007,788 1,175,097 1,251,250

CONSOLIDATED INCOME STATEMENT

Three months Three months Three months

ended ended ended

June 30, March 31, June 30,

2008 2009 2009

US$000 US$000 US$000

Net revenues 173,007 106,946 82,629

Cost of revenues (130,221) (158,033) (78,378)

Gross profit (loss) 42,786 (51,087) 4,251

Operating expenses:

Sales and marketing (231) (116) (1,497)

General and administrative (4,869) (3,956) (4,503)

Research and development (3,504) (3,446) (3,401)

Other general income (expenses) 353 259 1,188

Total operating expenses (8,251) (7,259) (8,213)

Income (loss) from operations 34,535 (58,346) (3,962)

Interest income 234 456 176

Interest expenses (2,755) (4,048) (3,972)

Foreign exchange (loss) gain (797) (550) (504)

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

Gain on early extinguishment of

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

Income (loss) before income tax 31,217 (62,779) (2,909)

Income tax benefit (expenses) (6,844) 32,760 (680)

Net income (loss) 24,373 (30,019) (3,589)

Less: net (income) loss attributable

to noncontrolling interests (1,064) -- --

Net income (loss) attributable to

holders of ordinary shares 23,309 (30,019) (3,589)

Earnings (Loss) per share

Basic 0.20 (0.22) (0.03)

Diluted 0.19 (0.22) (0.03)

Weighted average number of shares

used in computing earnings per

share:

Basic shares 120,159,747 137,624,912 139,383,154

Diluted shares 130,898,990 137,624,912 139,383,154

CONSOLIDATED CASH FLOW STATEMENT

Six months Six months

ended ended

June 30, June 30,

2008 2009

US$000 US$000

Operating activities:

Net income (loss) 40,984 (33,608)

Adjustment to reconcile net income

(loss) to net cash used in

operating activities:

Noncontrolling interests 1,122 --

Equity in earnings of investee -- 291

Inventory write-down -- 68,047

Provision for purchase commitment -- --

Depreciation and amortization 6,112 13,457

Amortization of deferred convertible

bond issue costs and premium 1,528 1,426

Allowances for doubtful receivables 253 631

Prepaid land use right expensed 117 127

Change in fair value of derivatives (573) (1)

Gain on early extinguishment of

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

Share-based compensation 1,845 1,861

Impairment in investment -- --

Loss on disposal of long-lived assets -- 14

Changes in operating assets and

liabilities:

Accounts receivable 5,526 9,951

Inventories (84,370) (14,246)

Advances to suppliers (43,641) 19,379

Amounts due from related parties 903 (11,816)

Value added tax recoverable 5 (19,082)

Prepaid expenses and other current

assets (3,716) 7,323

Prepaid land use right (1,579) (110)

Accounts payable 7,476 2,954

Advances from customers 30,794 2,334

Other liabilities 3,999 2,981

Deferred taxes 5,380 (37,527)

Accrued Warranty -- 65

Net cash provided by (used in)

operating activities (27,835) 9,098

Investing activities:

Purchases of property, plant and

equipment (72,998) (164,024)

Advances for purchases of property,

plant and equipment (57,254) 18,186

Purchase of other long-term assets -- (447)

Cash received from government

subsidy -- 5,959

Proceeds from disposal of investment -- (635)

Proceeds from disposal of property,

plant and equipment -- --

Restricted cash -- (51,722)

Cash consideration for acquisition -- (16,831)

Cash associated with deconsolidated

subsidiary (4,416) --

Net cash used in investing

activities (134,668) (209,514)

Financing activities:

Proceeds from borrowings 120,938 436,780

Repayment of bank borrowings (40,348) (155,437)

Net proceeds from issuance of common

shares 294,012 --

Proceeds from exercised stock option 243 --

Dividend paid -- --

Cash received from related parties 15 --

Cash paid to related parties -- --

Cash consideration paid to

repurchase convertible bonds -- (19,781)

Net cash provided by financing

activities 374,860 261,562

Effect of exchange rate changes 8,659 64

Net increase in cash and cash

equivalents 221,016 61,210

Cash and cash equivalents, beginning

of year 53,137 112,333

Cash and cash equivalents, end of

year 274,153 173,543

Source:
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