CHANGZHOU, China, March 3 /PRNewswire-Asia/ -- Trina Solar Limited (NYSE: TSL) ("Trina Solar" or the "Company"), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, today announced its financial results for the fourth quarter and fiscal year 2008.
Fourth Quarter 2008 Financial and Operating Highlights
-- Solar module shipments were 57.59 MW, a decrease of 13.2% sequentially
and an increase of 140.9 % year-over-year
-- Total net revenues were $216.3 million, a decrease of 25.6%
sequentially and an increase of 113.4% year-over-year
-- Gross profit was $20.8 million, which gave effect to a non-cash
inventory provision of $17.0 million. Gross margin was 9.6%, compared
to 22.4% in the third quarter of 2008. The negative impact of the
inventory provision to fourth quarter gross margin was 7.9%.
-- Net loss was $0.7 million
-- Earnings per fully diluted ADS were negative $0.03. The negative impact
of the fourth quarter inventory was approximately $0.68 per fully
diluted ADS
-- Net positive operating cash flow of approximately $57.2 million
-- Short-term debt balances reduced by approximately $40.8 million to
$248.6 million as of December 31, 2008. Total available credit line
increased to over $200 million from approximately $150 million during
the fourth quarter
-- Reduced the Company’s non-silicon manufacturing cost for its
multicrystalline module products to $0.82 cents per watt
Full Year 2008 Results Financial and Operating Highlights
-- Solar module shipments were 201.01 MW, compared to the Company’s
previous guidance of 200 MW to 206 MW, an increase of 164.8% from 2007
-- Total net revenues were $831.9 million, an increase of 175.6% from 2007
-- Gross profit was $164.4 million, an increase of 143.2% from 2007
-- Gross margin was 19.8%, compared to 22.4% in 2007
-- Net income for the full year was $61.4 million, an increase of 71.7%
from 2007
-- Earnings per fully diluted ADS for 2008 were $2.37, compared to $1.51
in 2007
-- Secured module contracts which are expected to generate approximately
300 MW in 2009 module shipments
-- Ranked in the top two of 14 international solar module manufacturers in
TUV Reinland’s Energy Yield 2008 for the testing period from September
1 to 30, 2008, as reported in January of 2009
“Despite the challenging global economic and financial climate, we are pleased with our strong performance in the fourth quarter,” said Mr. Jifan Gao, Chairman and CEO of Trina Solar. “The value of and loyalty towards our brand helped us to exceed our quarterly revenue guidance, despite sector-wide declines in the average sales price of modules. The launch of our European warehouse operations added to our fourth quarter sales by improving our delivery response time and services to customers.
By accelerating our non-silicon manufacturing cost reduction, we produced positive operating cash flows which preserved our cash balances as we reduced our short-term debt balances. We will continue to focus on generating positive operating cash flows to support our 2009 growth plan and strategic initiatives, which will focus on enhancements to our technology, cost reduction and brand recognition.
Addressing cost reduction, we achieved significant progress in our multicrystalline production, which we ramped up steeply in 2008. Based on our fourth quarter cost of approximately $0.82 per watt and targeted further reduction of 5% for the first quarter of 2009, we believe we will become one of the industry’s cost leaders with recognized high quality. Our supply chain enhancements include increased adoption of higher efficiency materials, in addition to innovative manufacturing processes currently in advanced testing stage to increase our yields and efficiencies to further reduce unit costs.
We are also pleased to share that in January of this year Trina Solar learned it had been ranked by TUV Reinland in the top two out of 14 participating international module manufacturers for specific energy yield, during TUV Reinland’s Energy Yield 2008 testing period from September 1 to 30, 2008. This underscores our committed emphasis to continually improve the quality of our material and production qualities, in addition to our customer’s pre and post sales service experience.
Although economic concerns continue to affect negatively the overall PV market, we have benefited from our strong sales capabilities and brand recognition in part due to our abilities to expand our wholesale and project related distribution channels in an increasing number of markets.”
Recent Business Highlights
During the fourth quarter of 2008, the Company benefited from:
-- Strong customer loyalty from significant, earlier established PV
partners throughout Europe and worldwide, who are less impacted by the
reduced availability of commercial credit
-- Increasing sales diversification to a total of 18 established and
emerging PV markets, including Greece, the Czech Republic, Australia,
and the United States
-- Increased sales to project system integrators, which currently
represent more than half of our total shipments
-- Strong support from Spanish partners who are increasingly active doing
projects outside of Spain
-- Capacity expansion to 350MW for each of ingot, wafer, cell and module
productions as of December 31, 2008
-- New cell production Lines 13 and 14 being placed into commercial
operation
-- Launch of European warehouse operations in Rotterdam, Netherlands
The Company also announced the planned establishment of the Company’s North American operations base in San Francisco in 2009.
Fourth Quarter 2008 Results
Net Revenues
Trina Solar’s net revenues in the fourth quarter of 2008 were $216.3 million, which exceeded the Company’s previous guidance of $190 million to $210 million, a decrease of 25.6% sequentially and an increase of 113.4%
year-over-year. Total shipments were 57.59 MW, within the Company’s previous guidance of 55 MW to 60 MW, compared to 66.36 MW in the third quarter of 2008 and 23.91 MW in the fourth quarter of 2007. The sequential decline in ASP and total shipments was primarily due to weakened economic conditions, decreased availability of project financing in European markets, and reduced Spanish market demand resulting from amendments in government incentive legislation.
Gross Profit and Margin
Gross profit in the fourth quarter of 2008 was $20.8 million, compared to $65.2 million in the third quarter of 2008 and $27.6 million in the fourth quarter of 2007. Gross profit includes a non-cash inventory provision of $17.0 million. Gross margin was 9.6% in the fourth quarter of 2008, compared to the Company’s previous guidance of 13% and 15%. The fourth quarter gross margin decreased from 22.4% in the third quarter of 2008 and 27.2% in the fourth quarter of 2007. Other than the non-cash inventory provision, the sequential and year-over-year decreases in gross margin were also due to lower module ASP resulting from weakened demand caused by global economic and financial climate. The decline was partially offset by significant reductions in blended polysilicon costs due to improved market supply conditions and the increased contribution by the Company’s portfolio of polysilicon feedstock contracts. The Company also accelerated reduction of its manufacturing cost per watt due to increased production yield efficiencies resulting from improving both its technology transfer and supply chain management efforts.
Inventory Provision
The Company made a non-cash inventory provision in the fourth quarter of $17.0 million based on a revaluation of its silicon inventory as a result of notable market price declines in the quarter. The non-cash inventory provision also had a corresponding effect on the Company’s operating and net margins.
Operating Expense, Income and Margin
Operating expenses in the fourth quarter of 2008 were $16.9 million, a decrease of 8.0% sequentially and an increase of 49.0% year-over-year. The Company’s operating expenses accounted for 7.8% of its fourth quarter net revenues, an increase from 6.3% in the third quarter of 2008 and a decrease from 11.2% in the fourth quarter of 2007. The sequential percentage increase was primarily due to the sequential decline in total net revenues. The
year-over-year decrease was achieved due to expense-control measures taken by the Company during 2008 combined with the continued growth of the Company’s business over the course of the year. Operating expenses in the fourth quarter of 2008 included approximately $1.0 million in share-based compensation expenses, compared to approximately $0.7 million in the fourth quarter of 2007.
As a result of foregoing, operating income in the fourth quarter of 2008 was $3.9 million, compared to $46.8 million in the third quarter of 2008 and $16.2 million in the fourth quarter of 2007. Operating margin was 1.8% in the fourth quarter of 2008, compared to 16.1% in the third quarter of 2008 and 16.0% in the fourth quarter of 2007.
Net Interest Expense
Net interest expense in the fourth quarter of 2008 was $6.5 million, compared to $7.2 million in the third quarter of 2008 and $0.3 million in the fourth quarter of 2007. The sequential decline was due to a reduction in short term loan balances while the year-over-year increase was due to additional bank borrowings to support the Company’s 2008 capacity expansion.
Foreign Currency Exchange Gain
Foreign currency exchange gain was $3.2 million in the fourth quarter of 2008, compared to a $4.9 million loss in the third quarter of 2008 and a $1.4 million loss in the fourth quarter of 2007. This increase was due to the appreciation of the Euro against the US dollar and the Company’s increased hedging capacity involving the utilization of foreign currency forward contracts.
Net Income and EPS
Net loss was $0.7 million in the fourth quarter of 2008, a decrease from $32.1 million in the third quarter of 2008 and $17.5 million in the fourth quarter of 2007. Net loss includes a foreign currency exchange gain of $3.2 million.
Net margin was negative 0.3% in the fourth quarter of 2008, compared to 11.0% in the third quarter of 2008 and 17.3% in the fourth quarter of 2007.
Earnings per fully diluted ADS were negative $0.03. The effect of the fourth quarter inventory provision, net of tax effect, was approximately $0.68 per fully diluted ADS while the effect of the fourth quarter foreign currency exchange gain, net of tax effect, was approximately $0.13 per fully diluted ADS.
Full Year 2008 Results
For 2008, net revenues were $831.9 million, compared to the Company’s previous guidance of $800 million to $850 million. Total net revenue rose 175.6% from $301.8 million in 2007, primarily due to the increased shipments and offset in part by the decreased ASP. Total shipments were 201.01 MW, an increase of 164.8% from 75.91 MW in 2007. Gross profit for 2008 was $164.4 million, an increase of 143.2% from $67.6 million in 2007. Gross margin was 19.8% in 2008, compared to 22.4% in 2007. The Company’s previous 2008 guidance was from 20% to 22%.
Operating income for 2008 was $100.0 million, up 177.8% from $36.0 million in 2007. Operating margin was 12.0% in 2008, compared to 11.9% in 2007.
Net income from continuing operations for 2008 was $61.4 million, an increase of 73.5% from 2007. Net income was $61.4 million, an increase of 71.7% from 2007. Net margin was 7.4% in 2008, compared to 11.8% in 2007.
Earnings per fully-diluted ADS for 2008 were $2.37, an increase of 57% compared to $1.51 per fully diluted ADS for the full year 2007.
Financial Condition
As of December 31, 2008, the Company had $177.2 million in cash and cash equivalents, and restricted cash. The Company’s working capital balance was $84.2 million. Total bank borrowings stood at $263.2 million, of which $14.6 million were long-term borrowings. Shareholders’ equity was $433.1 million, up slightly from $432.7 million at the end of the third quarter of 2008.
The Company increased the effective capacity of its foreign currency hedging program during the fourth quarter of 2008 involving forward currency contracts between the Euro and US dollar currencies, with goal to mitigate possible negative effects of exchange rate volatility.
First Quarter and Fiscal Year 2009 Guidance
While the Company typically provides a range of guidance for future performance, the current global economic and financial climate makes such predictions difficult.
For the first quarter of 2009, the Company expects to ship between 50 MW to 55 MW of PV modules. The Company believes gross margin for the first quarter will likely be between 15% and 17%.
For the full year of 2009 the Company expects total PV module shipments between 350 MW to 400 MW, representing an increase of 74% to 99% from 2008.
Operations and Business Outlook for 2009
Module Cost Reduction
As of February, 2009, the Company’s non-silicon manufacturing cost for its multicrystalline modules, which are expected to represent approximately 70% of its 2009 production, was approximately $0.82 per watt. By year end 2009 the Company expects further reduction of 15% to 20% through a combination of technology and manufacturing process improvements, including supply chain and logistics management initiatives currently under testing or development.
Order Backlog
The Company is currently targeting module production of between 350 MW to 400 MW for 2009. The Company has entered into contracts expected to generate approximately 300 MW in 2009 shipments.
Silicon Procurement
Through the Company’s diversified range of short, medium, and long-term supply contracts, which include agreements entered into in the first quarter of 2007, the Company will continue to maintain competitive silicon costs relative to the current market price.
Capacity Expansion
Given recent changes in the global economic and financial climate, the Company is analyzing several 2009 capacity growth scenarios for anticipated announcement in the second quarter of 2009.
Cell Technology and Product Development Update
The Company is currently improving its cell manufacturing processes, including passivation and metallization techniques involved in the photovoltaic manufacturing process, with target year end cell efficiency goals of up to 18.5% and 17.5%, respectively, for its monocrystalline and multicrystalline product lines, compared to 17.5% and 16.3% achieved in December 2008. The Company also plans to further enhance its BIPV module product.
Conference Call
The Company will host a conference call at 8:00 a.m. ET on March 3, 2009, to discuss the results for the quarter ended December 31, 2008. Joining Jifan Gao, Chairman and CEO of Trina Solar, will be Terry Wang, Chief Financial Officer, Sean Tzou, Chief Operating Officer, Steven Zhu, Vice President, International Procurement and Business Development, Arturo Herrero, Vice President, Sales and Marketing, and Thomas Young, Director of Investor Relations. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1 (800) 884-2382. International callers should dial +1 (660) 422-4933. The conference ID for the call is 8623-0496.
If you are unable to participate in the call at this time, a replay will be available on March 3 at 11:00 a.m. ET, through March 10, at 11:59 p.m. ET. To access the replay, dial 1 (800) 642-1687, international callers should dial +1 (706) 645-9291, and enter the conference ID 8623-0496.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties on Trina Solar’s website at http://www.trinasolar.com . To listen to the live webcast, please go to Trina Solar’s website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Trina Solar’s website for 90 days.
About Trina Solar Limited
Trina Solar Limited (NYSE: TSL) is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. Trina Solar’s products provide reliable and environmentally-friendly electric power for a growing variety of end-user applications worldwide. For further information, please visit Trina Solar’s website at http://www.trinasolar.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company’s ability to raise additional capital to finance the Company’s activities; the effectiveness, profitability, and marketability of its products; the future trading of the securities of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company’s ability to protect its proprietary information; general economic and business conditions; the volatility of the Company’s operating results and financial condition; the Company’s ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
Trina Solar Limited
Unaudited Consolidated Statement of Operations
(US dollars in thousands, except ADS and share data)
For the Three
Months Ended For the Three Months Ended
September 30, December 31,
2008 2008 2007
Net revenues $290,723 $216,338 $101,394
Cost of revenues 225,533 195,535 73,796
Gross profit 65,190 20,803 27,598
Operating expenses
Selling expenses 6,780 5,348 3,860
General and administrative
expenses 11,018 11,313 6,533
Research and development
expenses 502 278 978
Polysilicon project
discontinuance 102 -- --
Total operating expenses 18,402 16,939 11,371
Operating income 46,788 3,864 16,227
Exchange gain or (loss) (4,882) 3,209 (1,440)
Interest expenses (7,764) (7,011) (2,636)
Interest income 608 544 2,362
Gain (loss) on change in
fair value of derivative -- (1,067) 1,842
Other income 1 1 502
Income (loss) before
income taxes 34,751 (460) 16,857
Income tax (expenses)
benefit (2,698) (213) 509
Net income (loss) from
continuing operations 32,053 (673) 17,366
Net income (loss) from
discontinued operations -- -- 162
Net income (loss) $32,053 $(673) $17,528
Earnings (loss) per ADS from
continuing operations
Basic 1.280 (0.027) 0.696
Diluted 1.169 (0.027) 0.685
Earnings (loss) per ADS
Basic 1.280 (0.027) 0.702
Diluted 1.169 (0.027) 0.691
Weighted average ADS
outstanding
Basic 25,037,307 25,072,076 24,959,857
Diluted 28,394,335 25,072,076 25,351,666
For the Year Ended December 31,
2008 2007
Net revenues $831,901 $301,819
Cost of revenues 667,459 234,191
Gross profit 164,442 67,628
Operating expenses
Selling expenses 20,302 11,019
General and administrative expenses 39,019 17,817
Research and development expenses 3,039 2,805
Polysilicon project discontinuance 2,100 --
Total operating expenses 64,460 31,641
Operating income 99,982 35,987
Exchange gain or (loss) (11,802) (1,999)
Interest expenses (23,937) (7,551)
Interest income 2,944 4,810
Gain (loss) on change in fair value
of derivative (1,067) 854
Other income (156) 1,554
Income (loss) before income taxes 65,964 33,655
Income tax (expenses) benefit (4,609) 1,707
Net income (loss) from continuing
operations 61,355 35,362
Net income (loss) from discontinued
operations -- 368
Net income (loss) $61,355 $35,730
Earnings (loss) per ADS from
continuing operations
Basic 2.453 1.511
Diluted 2.374 1.492
Earnings (loss) per ADS
Basic 2.453 1.527
Diluted 2.374 1.507
Weighted average ADS outstanding
Basic 25,012,027 23,397,997
Diluted 26,907,234 23,706,852
Trina Solar Limited
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
September 30, December 31, December 31,
2008 2008 2007
ASSETS
Current assets:
Cash and cash equivalents $136,297 $132,224 $59,696
Restricted cash 48,526 44,991 103,375
Inventories 102,110 85,687 58,548
Accounts receivable, net 110,598 105,193 72,323
Other receivables 4,161 4,380 3,063
Advances to suppliers 69,121 42,247 42,953
Amount due from related parties 5,272 -- 614
Value-added tax recoverable 7,639 3,052 1,417
Deferred tax assets 964 2,109 380
Current assets of discontinued
operations -- -- 33
Total current assets 484,688 419,883 342,402
Property, plant and equipment 355,378 357,594 197,124
Intangible assets, net 7,013 26,915 5,462
Advances to suppliers - long-term 113,286 130,352 53,737
Foreign currency embedded derivative 854 854 854
Deferred tax assets 2,609 2,808 1,095
Deferred convertible bond issue cost 1,861 1,710 --
TOTAL ASSETS $965,689 $940,116 $600,674
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings, including
current portion of long-term debt $289,406 $248,558 $163,563
Accounts payable 48,721 62,504 42,691
Accrued expenses 17,578 17,567 10,255
Advances from customers 8,795 2,369 2,371
Income tax payable 7,314 3,649 1,406
Foreign currency derivatives -- 1,067 --
Current liabilities to be disposed -- -- 199
Total current liabilities 371,814 335,714 220,485
Long-term bank borrowings 14,666 14,631 8,214
Long-term advances from customers 1,170
Convertible bond payable 132,786 133,248 --
Accrued warranty costs 10,739 12,473 4,486
Long-term payables 1,771 10,993 --
Total liabilities 532,946 507,059 233,185
Ordinary shares 26 30 26
Additional paid-in capital 307,879 308,904 304,878
Retained earnings 113,380 112,707 51,352
Other comprehensive income 11,458 11,416 11,233
Total shareholders' equity 432,743 433,057 367,489
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $965,689 $940,116 $600,674
For further information, please contact:
Trina Solar Limited
Terry Wang, CFO
Tel: +86-519-8548-2009 (Changzhou)
Thomas Young, Director of Investor Relations
Tel: +86-519-8548-2009 (Changzhou)
Email: ir@trinasolar.com
CCG Investor Relations
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Richard Micchelli, Financial Writer
Tel: +1-646-454-4516
Email: richard.micchelli@ccgir.com
