North Coast Solar Stocks

August 12, 2009

ReneSola Ltd Announces Second Quarter 2009 Results

Filed under: SOL — Tags: , , , , , , , — Jason @ 7:41 am

Wednesday August 12, 2009, 7:41 am EDT

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

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 .

    (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
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