North Coast Solar Stocks

November 13, 2009

Yingli Green Energy Reports Third Quarter 2009 Results

Filed under: YGE — Tags: , , , , , , — Jason @ 4:07 am

Shipment Volume Reached Record High and Increased More Than 80% Quarter over Quarter
Income from Operations Increased 127% Quarter over Quarter
Non-GAAP EPS Increased to RMB 1.20 from RMB 0.91 Quarter over Quarter

4:07 am EST, Friday November 13, 2009

BAODING, China, Nov. 13 /PRNewswire-Asia-FirstCall/ — Yingli Green Energy Holding Company Limited (YGE; “Yingli Green Energy” or the “Company”), one of the world’s leading vertically integrated photovoltaic (“PV”) product manufacturers, today announced its unaudited consolidated financial results for the quarter ended September 30, 2009.

Third Quarter 2009 Consolidated Financial and Operating Highlights
— Total net revenues were RMB 2,225.2 million (US$326.0 million) and PV module shipment volume increased more than 80% quarter over quarter.
— Gross profit was RMB 447.6 million (US$65.6 million), with a gross margin of 20.1%.
— Operating income was RMB 242.8 million (US$35.6 million), with an operating margin of 10.9 %.
— Net income(1) was RMB 120.8 million (US$17.7 million) and diluted earnings per ordinary share and per American depositary share (“ADS”) was RMB 0.79 (US$0.12).
— On an adjusted Non-GAAP(2) basis, net income was RMB 184.2 million (US$27.0 million) and diluted earnings per ordinary share and per ADS was RMB 1.20 (US$0.18).

“I am pleased to announce strong results for the third quarter, with record highs in shipment volume and net revenues and healthy growth in net income,” said Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. “The main driving force for these results was increased market demand for our ‘Yingli Solar’ brand products as the solar project financing environment continued to improve and as we began to see the benefits of our recently implemented competitive pricing strategy, which leverages our favorable cost structure. Additionally, our continuous focus on high quality products and customer service enabled us to continue to expand our market share and raise recognition of our products in both established and emerging solar markets during the quarter, which we expect will help drive growth in the quarters to come.”

“I am also very pleased to report that our gross margin continued to increase, reaching 20.1% in the third quarter from 18.3% in the second quarter of 2009 and 15.3% in the first quarter of 2009, underlining our ability to improve profitability by reducing both polysilicon and processing costs while achieving significant shipment volume growth,” Mr. Miao continued.

Mr. Miao concluded, “To maintain our leading position, we will continue to focus on research and development and integrating our value chain. I am pleased to report that Project PANDA has achieved its first phase target ahead of schedule, producing next-generation cells with an average conversion efficiency rate of 18% or higher on our pilot production line. Also of note, our in-house polysilicon manufacturing plant, Fine Silicon, is set to begin trial production in December 2009. With Fine Silicon on-line, we will become one of a limited number of PV manufacturers in the world with a fully vertically integrated business model, covering the manufacturing process from polysilicon to PV modules. In addition, we will be the first vertically integrated PV product manufacturer in the world to have all of our production facilities located on one site. We believe this will enable us to further optimize our cost structure and capture profit at nearly every stage of the PV industry value chain, thus driving profitability and allowing us to better serve our global customer base.”

Third Quarter 2009 Financial Results

Total Net Revenues

Total net revenues were RMB 2,225.2 million (US$326.0 million) in the third quarter of 2009, an increase of 48.5% from RMB 1,498.9 million in the second quarter of 2009 and a slight increase from RMB 2,209.8 million in the third quarter of 2008. The increase from the second quarter of 2009 was primarily due to the more than 80% increase in PV module shipment volume resulting from the improved credit environment in major PV markets, increased brand awareness, continued promotional efforts and improved product bankability, and was partially offset by a lower average selling price.

Gross Profit and Gross Margin

Gross profit in the third quarter of 2009 was RMB 447.6 million (US$65.6 million), an increase of 63.5% from RMB 273.8 million in the second quarter of 2009 and a decrease of 9.1% from RMB 492.6 million in the third quarter of 2008. Gross margin was 20.1% in the third quarter of 2009, up from 18.3% in the second quarter of 2009 and down from 22.3% in the third quarter of 2008. The increase in gross margin from the second quarter of 2009 was primarily due to the decrease in the blended cost of polysilicon as a result of lower polysilicon purchase prices and consumption of comparatively higher priced polysilicon inventory as well as decreasing polysilicon usage per watt and lower non-polysilicon cost in the third quarter of 2009.

Operating Expenses

Operating expenses in the third quarter of 2009 were RMB 204.8 million (US$30.0 million), compared to RMB 167.0 million in the second quarter of 2009 and RMB 115.5 million in the third quarter of 2008. The increase in operating expenses from the second quarter of 2009 was primarily attributable to the increase in selling expenses and general and administrative expenses consistent with the large increase in PV module shipment volume, as well as higher research and development expenses in connection with the progress of a series of research and development initiatives, including Project PANDA. Operating expenses as a percentage of total net revenues were 9.2% in the third quarter of 2009, compared to 11.1% in the second quarter of 2009 and 5.2% in the third quarter of 2008. The decrease in operating expenses as a percentage of total net revenues from the second quarter of 2009 was mainly due to the increase in total net revenues.

Operating Income and Margin

Operating income in the third quarter of 2009 was RMB 242.8 million (US$35.6 million), an increase of 127.4% from RMB 106.8 million in the second quarter of 2009 and a decrease of 35.6% from RMB 377.1 million in the third quarter of 2008. Operating margin was 10.9% in the third quarter of 2009, compared to 7.1% in the second quarter of 2009 and 17.1% in the third quarter of 2008. The increase in operating margin from the second quarter of 2009 was mainly due to increased gross margin and decreased operating expenses as a percentage of net revenues.

Interest Expense

Interest expense was RMB 100.6 million (US$14.7 million) in the third quarter of 2009, compared to RMB 115.9 million in the second quarter of 2009 and RMB 34.8 million(3) in the third quarter of 2008.

After excluding non-cash interest expenses, interest expense was RMB 68.2 million (US$10.0 million) in the third quarter of 2009, compared to RMB 79.1 million in the second quarter of 2009 and RMB 31.6 million in the third quarter of 2008. The weighted average interest rate for the borrowings in the third quarter of 2009 was 6.66%, a decrease from 6.88% in the second quarter of 2009, both measured on a basis excluding non-cash interest expenses. The decrease in weighted average interest rate was a result of the Company’s efforts to reduce funding costs.

Foreign Currency Exchange Gain

Foreign currency exchange gain was RMB 71.8 million (US$10.5 million) in the third quarter of 2009, compared to a foreign currency exchange gain of RMB 108.7 million in the second quarter of 2009 and a foreign currency exchange loss of RMB 133.1 million in the third quarter of 2008. The foreign currency exchange gain in the third quarter of 2009 was primarily due to the appreciation of the Euro against the Renminbi.

Income Tax Expense

Income tax expense was RMB 31.0 million (US$4.5 million) in the third quarter of 2009, compared to an income tax expense of RMB 16.0 million in the second quarter of 2009 and an income tax benefit of RMB 0.2 million in the third quarter of 2008. The increase in income tax expense from the second quarter of 2009 was primarily attributable to the increased net operating income generated by Tianwei Yingli. Under the PRC Enterprise Income Tax Law and the various implementation rules, Tianwei Yingli was subject to an enterprise income tax rate of 0% in 2008 and 12.5% in 2009, and Yingli Energy (China) Company Limited (“Yingli China”), a wholly-owned subsidiary of the Company, was subject to an enterprise income tax rate of 15% in both 2008 and 2009.

Net Income

As a result of the factors discussed above, net income was RMB 120.8 million (US$17.7 million) in the third quarter of 2009, compared to a net loss of RMB 393.7 million in the second quarter of 2009 and net income of RMB 147.6 million in the third quarter of 2008. Diluted earnings per ordinary share and per ADS was RMB 0.79 (US$0.12) in the third quarter of 2009, compared to diluted loss per ordinary share and per ADS of RMB 3.03 in the second quarter of 2009.

On an adjusted non-GAAP basis, net income was RMB 184.2 million (US$27.0 million) in the third quarter of 2009, compared to adjusted non-GAAP net income of RMB 119.8 million in the second quarter of 2009. Adjusted non-GAAP diluted earnings per ordinary share and per ADS was RMB 1.20 (US$0.18) in the third quarter of 2009, compared to adjusted non-GAAP diluted earnings per ordinary share and per ADS of RMB 0.91 in the second quarter of 2009.

Balance Sheet Analysis

As of September 30, 2009, Yingli Green Energy had RMB 2,657.6 million (US$389.3 million) in cash and restricted cash, and RMB 3,045.3 million (US$446.1 million) in working capital, compared to RMB 2,620.6 million in cash and restricted cash, and RMB 4,356.4 million in working capital, as of June 30, 2009.

Long-term bank borrowings decreased to RMB 1,107.5 million (US$162.2 million) as of September 30, 2009 from RMB 1,971.9 million as of June 30, 2009 and short-term borrowings increased to RMB 3,142.8 million (US$460.4 million) as of September 30, 2009 from RMB 1,817.5 million as of June 30, 2009. The change in the balances of long-term bank borrowings and short-term borrowings in the third quarter was primarily due to the reclassification of long-term bank borrowings and short-term borrowings.

As of the date of this press release, the Company had approximately RMB 7,623 million in authorized lines of credit, of which RMB 4,897 million had been utilized.

Business Outlook for Full Year 2009

Given the strong third quarter results and greater visibility into market demand for the fourth quarter, the Company is updating its annual PV module shipment target to be in the estimated range of 490 MW to 500 MW from the previous expected range of 450 MW to 500 MW for fiscal year 2009, which represents an increase of 74.0% to 77.6% compared to fiscal year 2008.

In addition, the Company is updating its gross margin target for fiscal year 2009 to be in the estimated range of 19% to 20% from the previous expected range of 18% to 20%.

Non-GAAP Financial Measures

To supplement the financial measures calculated in accordance with GAAP, this press release includes certain non-GAAP financial measures of adjusted net income (loss) and adjusted diluted earnings (loss) per ordinary share and per ADS, each of which is adjusted to exclude items related to share-based compensation, accretion of the non-cash interest expense resulting from the derivative liabilities bifurcated from the Company’s convertible notes issued in January 2009, from the beneficial conversion feature from the convertible notes issued in July 2009, from the freestanding warrants issued in connection with a loan facility provided by ADM Capital in April 2009, and from the equity component bifurcated from the Company’s convertible notes issued in December 2007 upon the adoption and retroactive application of FSP APB14-1, the non-cash interest expense in connection with the conversion of the Company’s convertible notes issued in January 2009, the non-cash interest expense in connection with the change in the fair value of interest rate swap entered into in June 2009, the non-cash loss on debt extinguishment resulting from the early full repayment of ADM Capital loan, the subsequent non-cash changes in the fair value of the derivative liabilities and amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli. The Company believes excluding these items from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company’s core operating results as such items are not directly attributable to the underlying performance of the Company’s business operations and do not impact its cash earnings. The Company also believes these non-GAAP financial measures are important to help investors understand the Company’s current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial information included elsewhere in this press release.

Currency Conversion

Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB 6.8262 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of September 30, 2009. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollar amounts at such rate, or at any other rate. The percentages stated in this press release are calculated based on Renminbi.

Conference Call

Yingli Green Energy will host a conference call and live webcast to discuss the results at 8:00 AM Eastern Standard Time (EST) on Friday, November 13, 2009, which corresponds to 9:00 PM Beijing/Hong Kong time the same day.

The dial-in details for the live conference call are as follows:

— U.S. Toll Free Number: +1-800-291-9234
— International dial-in number: +1-617-614-3923
— Passcode: 82289455

A live and archived webcast of the conference call will be available on the Investors section of Yingli Green Energy’s website at http://www.yinglisolar.com . A replay will be available shortly after the call on Yingli Green Energy’s website for 90 days.

A replay of the conference call will be available until November 27, 2009 by dialing:

— U.S. Toll Free Number: +1-888-286-8010
— International dial-in number: +1-617-801-6888
— Passcode: 45378350

    For further information, please contact:

    In China:
     Qing Miao
     Director, Investor Relations
     Yingli Green Energy Holding Company Limited
     Tel:   +86-312-3100-502
     Email: ir@yinglisolar.com

     Courtney Shike
     Brunswick Group LLC
     Tel:   +86-10-6566-2256
     Email: cshike@brunswickgroup.com

    In the United States:
     Katie Cralle
     Brunswick Group LLC
     Tel:   +1-212-333-3810
     Email: kcralle@brunswickgroup.com



         YINGLI GREEN ENERGY HOLDING COMPANY LIMITED AND SUBSIDIARIES

               Unaudited Condensed Consolidated Balance Sheets

                                (In thousands)

                                      December 31,
                                          2008
                                     (As adjusted)(1)  September 30, 2009
                                           RMB          RMB          US$
    ASSETS
    Current assets:
    Cash and restricted cash             1,218,148   2,657,583       389,321
    Accounts receivable, net             1,464,973   2,692,593       394,450
    Inventories                          2,040,731   1,749,987       256,363
    Prepayments to suppliers               774,014     419,716        61,486
    Prepaid expenses and other
     current assets                        563,267     608,499        89,142
    Total current assets                 6,061,133   8,128,378     1,190,762

    Prepayments to suppliers               674,164     672,994        98,590
    Property, plant and equipment,
     net                                 3,385,682   6,273,888       919,089
    Land use rights                         63,022     267,519        39,190
    Goodwill and intangible assets,
     net                                   666,429     625,583        91,645
    Investments in and advances to
     affiliates, including an
     acquisition deposit                   192,537      21,372         3,131
    Other assets                            24,829      19,124         2,801
    Total assets                        11,067,796  16,008,858     2,345,208

    LIABILITIES AND SHAREHOLDERS'
     EQUITY
    Current liabilities:
    Short-term bank borrowings,
     including current portion
     of long-term bank borrowings        2,044,200   3,142,810       460,404
    Accounts payable                       628,903   1,355,637       198,593
    Other current liabilities and
     accrued expenses                       84,563     255,432        37,419
    Advances from customers                 51,933      41,398         6,065
    Dividend payable                        10,956      10,956         1,605
    Other amounts due to related
     parties, including an
     entrusted loan                          8,864     276,818        40,552
    Total current liabilities            2,829,419   5,083,051       744,638

    Convertible senior notes             1,214,814   1,272,451       186,407
    Senior secured convertible notes            --      71,611        10,491
    Long-term bank borrowings,
     excluding current portion             662,956   1,107,506       162,243
    Accrued warranty cost, excluding
     current portion                       114,691     156,201        22,883
    Other liabilities                       73,646      72,986        10,692
    Total liabilities                    4,895,526   7,763,806     1,137,354

    Shareholders' equity:
    Ordinary shares                          9,922      11,353         1,663
    Additional paid-in capital           3,724,358   6,146,494       900,427
    Accumulated other comprehensive
     income                                 31,206      18,442         2,702
    Retained earnings                    1,011,633     597,233        87,491
    Total Yingli Green Energy
     shareholders' equity                4,777,119   6,773,522       992,283
    Noncontrolling interests             1,395,151   1,471,530       215,571
    Total shareholders' equity           6,172,270   8,245,052     1,207,854
    Total liabilities and
     shareholders' equity               11,067,796  16,008,858     2,345,208

     (1) Reflects retrospective application of SFAS 160, "Noncontrolling
         Interests in Consolidated Financial Statements-an amendment of ARB
         No.51." and retrospective application of FSP APB 14-1, "Accounting
         for Convertible Debt Instruments that May be Settled in Cash upon
         Conversion (Including Partial Cash Settlement)."



         YINGLI GREEN ENERGY HOLDING COMPANY LIMITED AND SUBSIDIARIES

          Unaudited Condensed Consolidated Statements of Operations

      (In thousands, except for share, ADS, per share and per ADS data)

                                            Three months ended
                           September 30,    June 30,         September 30,
                               2008          2009                2009
                          (As adjusted)(1)
                                RMB           RMB           RMB          US$
    Net revenues:
    Sales of PV modules      2,193,203     1,460,715     2,210,404     323,812
    Sales of PV systems          2,809        32,813         1,303         191
    Other revenues              13,765         5,374        13,499       1,978
    Total net revenues       2,209,777     1,498,902     2,225,206     325,981
    Cost of revenues:
    Cost of PV modules
     sales                  (1,710,361)   (1,193,400)   (1,765,289)   (258,605)
    Cost of PV systems
     sales                      (2,047)      (26,626)         (946)       (139)
    Cost of other
     revenues                   (4,731)       (5,089)      (11,390)     (1,669)
    Total cost of
     revenues               (1,717,139)   (1,225,115)   (1,777,625)   (260,413)
    Gross profit               492,638       273,787       447,581      65,568
    Selling expenses           (35,347)      (39,626)      (47,992)     (7,031)
    General and
     administrative
     expenses                  (60,458)      (81,233)     (101,903)    (14,928)
    Research and
     development
     expenses                  (19,702)      (46,130)      (54,880)     (8,039)
    Total operating
     expenses                 (115,507)     (166,989)     (204,775)    (29,998)
    Income from
     operations                377,131       106,798       242,806      35,570
    Other income
     (expense):
    Interest expense           (34,782)     (115,923)     (100,565)    (14,732)
    Interest income              2,067           830         1,303         191
    Foreign currency
     exchange gain
     (loss)                   (133,056)      108,710        71,788      10,517
    Loss on debt
     extinguishment                 --      (244,745)           --          --
    Loss on derivative
     liabilities                    --      (204,246)           --          --
    Other income                   581           836         3,113         455
    Earnings (loss)
     before income
     taxes                     211,941      (347,740)      218,445      32,001
    Income tax benefit
     (expense)                     234       (15,998)      (31,031)     (4,546)
    Net income (loss)          212,175      (363,738)      187,414      27,455
    Less: Earnings
     attributable to
     the noncontrolling
     interests                 (64,545)      (29,943)      (66,568)     (9,752)
    Net income (loss)
     attributable to
    Yingli Green Energy        147,630      (393,681)      120,846      17,703

    Weighted average
     shares and ADSs
     outstanding
    Basic                  127,447,821   130,044,300   148,379,700 148,379,700
    Diluted                129,410,578   130,044,300   153,660,518 153,660,518

    Earnings (loss) per
     share and per ADS
    Basic                         1.16         (3.03)         0.81        0.12
    Diluted                       1.14         (3.03)         0.79        0.12


    Reconciliation of Non-GAAP measures to GAAP measures

                                              Three months ended
                                  September 30,  June 30,     September 30,
                                      2008         2009            2009
                                       RMB          RMB        RMB       US$
    Non-GAAP income attributable
     to Yingli Green Energy          175,307     119,794    184,241   26,990
    Share-based compensation
     attributable to Yingli
     Green Energy                    (10,854)    (14,721)   (15,990)  (2,342)
    Amortization of intangible
     assets attributable to
     Yingli Green Energy             (13,639)    (12,971)   (15,058)  (2,206)
    Loss on derivative
     liabilities attributable
     to Yingli Green Energy               --    (204,246)        --       --
    Loss on debt extinguishment
     attributable to Yingli
     Green Energy                         --    (244,745)        --       --
    Non-cash interest expenses
     attributable to Yingli
     Green Energy                     (3,184)    (36,792)   (32,347)  (4,739)
    Net income (loss)
     attributable to Yingli
     Green Energy                    147,630    (393,681)   120,846   17,703
    Non-GAAP diluted earnings per
     share and per ADS                  1.34        0.91       1.20     0.18
    Share-based compensation per
     share and per ADS                 (0.08)      (0.11)     (0.10)   (0.01)
    Amortization of intangible
     assets per share and per ADS      (0.10)      (0.10)     (0.10)   (0.01)
    Loss on derivative
    liabilities per share and
     per ADS                              --       (1.57)        --       --
    Loss on debt extinguishment
     per share and per ADS                --       (1.88)        --       --
    Non-cash interest expenses
     per share and per ADS             (0.02)      (0.28)     (0.21)   (0.04)
    Diluted earnings (loss) per
     share and per ADS                  1.14       (3.03)      0.79     0.12
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