August 12, 2014 - ReneSola Ltd today announced its unaudited financial results for the second quarter ended June 30, 2014.
Financial and Operational Highlights for Q2 2014
- Total solar module shipments were 498.7MW, compared to 434.1MW in Q2 2013 and 521.1MW in Q1 2014. Total solar wafer and module shipments were 698.3MW, compared to 849.3MW in Q2 2013 and 710.1MW in Q1 2014.
- Net revenues were US$387.1 million, compared to US$377.4 million in Q2 2013 and US$415.0 million in Q1 2014.
- Gross profit was US$56.9 million with a gross margin of 14.7%, compared to gross profit of $30.4 million with a gross margin of 8.0% in Q2 2013 and a gross profit of US$44.0 million with a gross margin of 10.6% in Q1 2014.
- Operating income was US$10.6 million with an operating margin of 2.7%, compared to an operating loss of US$16.6 million with an operating margin of negative 4.4% in Q2 2013 and an operating loss of US$8.7 million with an operating margin of negative 2.1% in Q1 2014.
- Net income attributable to holders of ordinary shares was US$0.8 million, representing basic and diluted income per share of US$0.00 and basic and diluted income per American depositary share ("ADS") of US$0.01.
- Cash and cash equivalents plus restricted cash totaled $218.8 million as of the end of Q2 2014, compared to US$405.8 million as of the end of Q2 2013 and US$214.9 million as of the end of Q1 2014.
- Net cash outflow from operating activities was US$40.6 million, compared to net cash inflow from operating activities of US$65.5 million in Q2 2013 and net cash outflow from operating activities of US$112.3 million in Q1 2014.
"We are proud to report that ReneSola recorded a profitable second quarter with a gross margin of 14.7%, beating consensus and our guidance," said Mr. Xianshou Li, ReneSola's chief executive officer. "Our quarterly results stemmed from fundamental improvements to our business operations as well as a differentiated and competitive global-centric business model, which we expect will lead to stronger results for the rest of this year."
"The current international business environment for Chinese solar manufacturers is becoming more challenging, with an increasing number of trade cases in different regions around the world. However, having positioned ourselves as a global player, we are able to leverage our differentiated business model, which comprises robust and localized international operations and an extensive international manufacturing network through our OEM partnerships across the globe and generates 1.1 GW of module capacity from 11 factories in 7 countries. Our globalized structure enables us to adapt to demand changes quickly, be they the result of market forces or changes in trade policies. Continued investment in our global network has yielded new client wins and industry recognition for our wide range of solar products."
"Our cost-reduction efforts have been successful in both our internal domestic and international OEM operations, helping us to achieve industry-competitive gross margins during the quarter. This was aided by our fully-operational, in-house polysilicon production capabilities and a more efficient process control. Going forward, we will make efforts to further reduce our production cost and to improve our profitability."
"We continue to see high growth potential in the commercial and retail markets across our international target markets. With our extensive and expanding global network, we expect increasing opportunities among commercial and retail markets with comparatively higher ASPs and better payment terms. With already more than 1,800 clients across 77 countries worldwide, we will continue to aggressively grow this large client base in the second half of this year and to provide a full suite of ReneSola-branded solar and renewable energy products to our rapidly growing and more retail-focused client base."
Mr. Daniel K. Lee, ReneSola's chief financial officer, commented, "The second quarter results demonstrate the effectiveness of our global business infrastructure to deal with the solar industry's increasingly complex trade dynamics and to position ourselves favorably for a sustainable, balanced and diversified revenue mix. Our international strategy is in line with our prudent financial approach and asset-light operating strategy. We expect to continue to expand our international platform and improve our financial metrics in the second half of the year."
Second Quarter 2014 Results
Solar Wafer and Module Shipments
The module shipments of 499MW were within the Company's guidance of 480MW to 500MW. The sequential decrease in solar module shipments was mainly the result of decreased shipments to the United States and Europe. The sharp decrease in wafer shipments year over year was the result of a strategic business decision to use the majority of the Company's wafer for internal module production.
Net Revenues and Gross Profit
Net revenues decreased quarter over quarter as a result of a decrease in module shipments. The sequential increase in the Company's gross margin was a result of full-capacity in-house polysilicon production, more efficient operational process control, and a price drop for Taiwan-produced cells.
Operating Income (Loss)
The sequential decrease in operating expenses was primarily due to a reversal of allowances for doubtful accounts provided in Q1 which was subsequently collected in Q2, as well as the impact of our cost control efforts over other general and administrative expenses.
Foreign Exchange Gain
In Q2 2014, the Company had a foreign exchange loss of US$1.3 million and recognized a US$0.9 million gain on derivatives.
Change in Fair Value of Warrant Derivative Liabilities
The Company recognized a gain from a change in fair value of warrant derivative liabilities of US$1.0 million in Q2 2014, primarily due to the decrease in the Company's stock price.
Net Income (Loss) Attributable to Holders of Ordinary Shares
Liquidity and Capital Resources
Net cash outflow from operating activities was US$40.6 million in Q2 2014, compared to net cash outflow of US$112.3 million in Q1 2014.
Net cash and cash equivalents plus restricted cash were US$218.8 million as of June 30, 2014, compared to US$214.9 million as of March 31, 2014.
Total debt was US$760.3 million as of June 30, 2014, compared to US$723.9 million as of March 31, 2014, excluding US$111.6 million of convertible notes due March 15, 2018, unless repurchased or converted at an earlier date. Short-term borrowings were US$696.2 million as of June 30, 2014, compared to US$653.3 million as of March 31, 2014.
The Company's total output of polysilicon in Q2 was 1815.6 metric tons, compared to an output of 175 metric tons in Q1 2014. Operations of the Company's Sichuan polysilicon plant remained at 100% capacity after a temporary shutdown in Q1 for maintenance and technical improvements. With the overall stability in polysilicon prices, and production cost reductions resulting from seasonally lower electricity prices, the Company expects to continue to benefit from its in-house polysilicon production capabilities in Q3 2014.
Geographic Breakdown of Module Shipments
Research and Development
During Q2, ReneSola continued to invest in research and development regarding the Company's new and existing green energy products.
Mass production was achieved for the Company's A+++ wafer, which has an average efficiency rate 0.15% higher than the A++ wafer.
The Company continues to obtain applicable certification for its inverters across several international markets, including the United States, Italy, the United Kingdom, and Australia.
The Company has completed research and development for three more energy storage system product lines and currently features five categories and 11 series of 146 energy storage system products which are all available for purchase.
Additional certification across different continents has been completed for three categories of the Company's LED products, including bulbs, indoor lighting and outdoor lighting.
Recent Business Developments
- In August, the Company announced that ReneSola UK will supply 22MW of its high-efficiency polycrystalline Virtus I and Virtus II solar modules for use in two ground-mounted, utility-scale projects in the United Kingdom.
- In July, the Company announced its industry-leading results in a series of reliability tests conducted by PV Evolution Labs (PVEL). The Company's modules achieved top performance rankings on PVEL's "PV Module Reliability Scorecard" for 2014 in four testing categories: Dynamic Mechanical Load, Damp Heat, Potential Induced Degradation, and Humidity-Freeze.
- In July, ReneSola announced the delivery of 30 ReneSola Novaplus 2KW energy storage systems to a national distributor in Chelmsford, England for onward sale to Essex installation company Think Green Energy. An additional 10 units were on order for use by Think Green Energy customers in the southeast of England.
- In July, the Company announced it had entered a framework agreement with China Seven Star Holdings Limited regarding a partnership in potential sales to China Seven Star of no less than 200MW of existing and new PV projects within 18 months. The parties subsequently signed a Memorandum of Understanding that stipulates ReneSola will sell to China Seven Star two utility-scale projects, both of which are completed and connected to the grid, with a total capacity of 9.7MW in Bulgaria.
- In June, ReneSola announced that Solar Insurance & Finance (Solarif), an international and independent insurance broker specializing in insurance for PV installations, had certified ReneSola modules based on a positive audit of the Company involving relevant technical, financial, environmental, and labor considerations.
- In June, the Company announced it had forged a partnership with SolarMax, a Swiss based global pure-play photovoltaic (PV) inverter company with its U.S. headquarters in Atlanta, GA and more than 20 years of PV inverter experience, and had finalized its first order of SolarMax inverters for Black Rock Solar.
- In June, ReneSola announced that ReneSola Germany, in cooperation with energy supplier EnBW Energie Baden-Wurttemberg AG, had built the largest solar park in Baden-Wurttemberg, Germany with approximately 40,000 polycrystalline photovoltaic ReneSola modules and a total capacity of 10MW.
- In May, the Company announced it had finalized an order to deliver nearly 20,000 of its high efficiency Virtus II PV modules to GeoPeak Energy, a leading solar developer and EPC. The order will be the first of its kind for ReneSola America, as the non-Chinese modules are being manufactured by the Company's OEM factory using non-Taiwanese cells.
- In May, ReneSola appointed Jason Wu as the Company's vice president of marketing to oversee the Company's global marketing, new product management, and brand enhancement.
- In May, the Company announced a deal to provide 1.6MW in solar modules and 1MW in mounting systems to Consolidated Energy & Economic Engineering Co. to power a series of residential and commercial rooftop projects in the country of Jordan.
- In April, ReneSola announced the appointment of Mr. Daniel Lee as the Company's new chief financial officer.
- In April, the Company announced it had completed the sale of three utility-scale projects in Western China, with a total capacity of 60MW, to Jiangsu Akcome Solar Science & Technology Co., Ltd.
- In April, the Company announced it had been awarded a "TOP BRAND PV" seal in the union of states of Belgium, the Netherlands, and Luxembourg ("Benelux") by EuPD Research, the leading market intelligence company in the sustainable business sector and an independent brand management appraiser of module manufacturers in Germany, Italy, the United Kingdom, Benelux, and France.
For Q3 2014, the Company expects its total solar module shipments to be in the range of 530MW to 550MW, and its gross margin to be in the range of 15% to 17%.