ReneSola Ltd Announces Second Quarter 2015 Results

Aug 25, 2015, 06:34 ET from ReneSola Ltd.

SHANGHAI, Aug. 25, 2015 /PRNewswire/ -- ReneSola Ltd ("ReneSola" or the "Company") (www.renesola.com) (NYSE: SOL), a leading brand and technology provider of energy-efficient products, today announced its unaudited financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Financial and Operating Highlights

  • Total solar module shipments were 322.0 megawatts ("MW"), representing a decrease of 35.1% from Q1 2015. Total solar wafer and module shipments in Q2 2015 were 603.7MW, compared to 691.5MW in Q1 2015, and 698.3MW in Q2 2014.
  • Net revenues were US$268.4 million, representing a decrease of 23.1% from US$349.0 million in Q1 2015, and a decrease of 30.7% from US$387.1 million in Q2 2014.
  • Gross profit was US$44.4 million with a gross margin of 16.5%, compared to gross profit of US$36.7 million with a gross margin of 10.5% in Q1 2015, and gross profit of US$56.9 million with a gross margin of 14.7% in Q2 2014.
  • Operating income was US$10.5 million with an operating margin of 3.9%, compared to an operating loss of US$9.5 million with an operating margin of negative 2.7% in Q1 2015, and operating income of US$10.6 million with an operating margin of 2.7% in Q2 2014.
  • Net loss attributable to holders of ordinary shares was US$2.3 million, representing basic and diluted loss per share of US$0.01 and basic and diluted loss per American depositary share ("ADS") of US$0.02, compared to basic and diluted loss per share of US$0.09 and basic and diluted loss per ADS of US$0.18 in Q1 2015.
  • Cash and cash equivalents plus restricted cash totaled $185.1 million as of the end of Q2 2015, compared to US$228.1 million as of the end of Q1 2015, and US$218.8 million as of the end of Q2 2014.
  • Net cash outflow from operating activities was US$11.6 million compared to net cash outflow from operating activities of US$9.0 million in Q1 2015, and net cash outflow from operating activities of US$40.6 million in Q2 2014.

"We are proud of the continuous success that we have been demonstrating in executing our solar downstream strategies," said Mr. Xianshou Li, ReneSola's chief executive officer. "The second quarter of 2015 represented an important turning point for ReneSola as we began to reap the benefits of our downstream efforts by beginning to sell solar projects from the 70MW portfolio that we developed and constructed in the UK. While we are scaling back our module business, we have been rapidly building our new solar portfolio comprised of selective high-quality projects mainly from attractive markets including the U.S., the UK, and Japan. This includes our recently announced a U.S. joint venture that will initially complete approximately 150MW based on a high-quality portfolio of projects in the U.S."

"In the second half of 2015, we will leverage our track record and well-known and growing brand name to deepen our penetration into global solar project markets and to expand our project portfolio in key markets. Through these efforts we aim to develop and build over 300 MW of solar projects that will be operational by 2016. We believe our global business platform, established customer relationships, strategic partnerships and experienced international team position us well for success in the marketplace," added Mr. Li.

"As the Company is successfully transitioning into the downstream, ReneSola's profitability and balance sheet outlook are also improving," commented Mr. Daniel K. Lee, ReneSola's chief financial officer. "We have significantly improved our gross margins quarter over quarter as a result of both internal cost control and favorable contributions from our downstream project business. Operating under our global risk management framework, we continued to tightly monitor our client credit evaluation process on the module business side and maintained discipline targeting only robust solar project markets without government subsidy payment issues. As we plan to complete the monetization of our remaining 51MW of UK projects in the second half of this year, we will build a larger portfolio of high-quality projects, changing the core dynamics of the company and taking us on a path we believe will enhance shareholder value over the long-term."

Second Quarter 2015 Results

Solar Wafer and Module Shipments

2Q15

1Q15

2Q14

Q-o-Q%

Y-o-Y%

Module Shipments (MW)

322.0

496.4

498.7

-35.1%

-35.4%

Wafer Shipments (MW)

281.7

195.1

199.6

44.4%

41.1%

Total Solar Wafer and Module

Shipments (MW)

603.7

691.5

698.3

-12.7%

-13.5%

The quarter-over-quarter decrease in module shipments was mainly due to a strategic shift toward downstream project business. The quarter-over-quarter increase in wafer shipments is due to temporary business opportunities.

Net Revenues and Gross Profit

2Q15

1Q15

2Q14

Q-o-Q%

Y-o-Y%

Net Revenues (US$mln)

$268.4

$349.0

$387.1

-23.1%

-30.7%

Gross Profit (US$mln)

$44.4

$36.7

$56.9

21.0%

-22.0%

Gross Margin

16.5%

10.5%

14.7%

-

-

Net revenues decreased quarter over quarter due to lower module shipments, which is consistent with the Company's downstream expansion strategy and efforts to scale back its module business. The quarter-over-quarter increase in the Company's gross margin was a result of material and processing cost reductions and positive contribution from the revenue recognition from the sale of a solar project.

Operating Income (Loss)

2Q15

1Q15

2Q14

Q-o-Q%

Y-o-Y%

Operating Expenses (US$mln)

$33.9

$46.2

$46.3

-26.6%

-26.8%

Operating Income (Loss) (US$mln)

$10.5

($9.5)

$10.6

-

-

Operating Margin

3.9%

-2.7%

2.7%

-

-

The quarter-over-quarter decrease in operating expenses was primarily due to lower sales and marketing expenses associated with lower module shipments as well as gains mainly related to discounts obtained in connection with the settlement of certain payables.

Foreign Exchange Gain (Loss)

In Q2 2015, the Company had a net foreign exchange loss of $2.6 million, which includes a loss of $8.8 million from foreign exchange forward contracts.

Net Income (Loss) Attributable to Holders of Ordinary Shares

2Q15

1Q15

2Q14

Net Income (Loss) (US$mln)

($2.3)

($18.0)

$0.8

Diluted Earnings (Loss) per Share

($0.01)

($0.09)

$0.00

Diluted Earnings (Loss) per ADS

($0.02)

($0.18)

$0.01

Liquidity and Capital Resources

Net cash outflow from operating activities was US$11.6 million in Q2 2015, compared to net cash outflow of US$9.0 million in Q1 2015.

Net cash and cash equivalents plus restricted cash totaled US$185.1 million as of June 30, 2015, compared to US$228.1 million as of March 31, 2015.

Total bank borrowing was US$694.7 million as of June 30, 2015, compared to US$723.0 million as of March 31, 2015. Short-term borrowings were US$653.6 million at June 30, 2015, compared to US$681.7 million at March 31, 2015.

The Company has US$62.2 million of convertible notes due on March 15, 2018 with a put option on March 15, 2016. In Q2 2015, the Company repurchased $0.7 million notional amount of its convertible notes. The Company might continue to repurchase its convertible bonds from time to time, subject to market conditions and other strategic considerations.

Project Business Update

ReneSola currently has a total of approximately 77.4MW in existing projects, including 51.1MW in the United Kingdom, 1.2MW in Japan, 9.7MW in Bulgaria and 15.4MW in Romania. The Company also has a late stage project pipeline with over 200MW in development across the UK, U.S. and Japan. Please note that while the Company expects its projects under development to secure the necessary permits and approvals and to achieve certain benchmarks according to the timelines provided, certain projects may be delayed or may not reach completion due to various circumstances.

United Kingdom

In the UK, in the second quarter the Company closed the sale of the Field House solar power plant totaling 6.4MW. The Company also sold the 13.5MW Wedgehill utility scale solar project with majority of cash received. Due to certain contractual provisions in the sales agreement, the revenue associated with the sale of Wedgehill was deferred in this quarter.

ReneSola added 28MW of late-stage projects to its pipeline in the second quarter, all of which are expected to be connected to the grid before March 2016.

Project Name

MW

Status

COD/Expected COD

Wedgehill

13.5

Sold*

Dec 14

Field House

6.4

Sold

Mar 15

Membury

16.5

Sale in progress

Mar 15

Port Farm

34.6

Sale in Progress

Mar 15

Total Existing

51.1

Project CH

10

Project Acquired

Mar 16

Project RF

8

SPA Signed

Mar 16

Project Ain

5

In Due Diligence

Feb 16

Project F2

5

In Due Diligence

Feb 16

Total Pipeline

28

*ASC360-20 - Property, Plant, and Equipment - Real Estate Sales guidance for revenue recognition. Due to a negotiated buyer's acceptance provision which could result in rejection of the power plant, although the probability of such contingency occurring after statistical analysis was considered extremely remote, under the US GAAP ASC360-20 the revenue associated with the sale of the project was deferred.

United States

In the United States, the Company has entered into a definitive agreement with Pristine Sun, LLC to form a joint venture, Baynergy, LLC, for which ReneSola is the majority interest holder, to develop, build and operate over 300MW of solar projects across the country, including a first phase of 82 projects totaling 151.8MW, most of which are distributed generation projects. Currently Baynergy has 88MW accepted in California, Minnesota and North Carolina, with expected completion by the end of 2016.

Japan

ReneSola currently has a total project pipeline of 32.4MW in Japan, including 1.2MW of completed projects.

Project Name

MW

Status

COD/Expected COD

Kyoto Project 1

0.3

Construction Completed

Sep 15

Tochigi Project 2

0.9

Construction Completed

Feb 15

Chiba Project 3

0.3

Developing

Oct 16

Tochigi Project 4

0.6

Developing

Feb 16

Aichi Project 5

0.9

Developing

Jun 16

Aichi Project 6

1

Developing

Jun 16

Gifu Project 7

1

Developing

Mar 16

Kyoto Project 8

9.9

Developing

Jul 17

Miyazaki Project 9

17.5

Developing

Oct 17

Total

32.4

The Company is actively exploring project opportunities in several developed markets and will update its project pipeline accordingly.

Business Highlights

Geographic Breakdown of Module Shipments

2015 Q2

2015 Q1

2014 Q2

U.S.

5.8%

3.3%

11.2%

Europe

13.7%

44.4%

31.4%

Japan

36.4%

30.4%

23.3%

China

25.3%

4.8%

15.3%

Other

18.8%

17.1%

18.8%

Recent Business Developments

  • In August 2015, ReneSola announced that it will partner with Pristine Sun, LLC, a leading San Francisco-based solar project developer, to form a joint venture, Baynergy, LLC, to accelerate U.S. project development. The JV will develop, build and operate over 300MW of solar projects in the United States, including many distributed generation projects. Baynergy initially will own solar projects in various development stages and will continue to develop, build and operate a total solar project pipeline of 300MW. The joint venture has an initial target of 150MW of solar projects to be in operation by the end of 2016.
  • In July 2015, the Company announced it will provide Cofely Solar Technics, a major player in energy efficiency, with 30MW of solar modules which will be used in a ground-mounted, utility-scale project in Nottinghamshire in the UK. Under the terms of the agreement, ReneSola's contracted OEMs will deliver 30MW of the Company's high-efficiency 260w Virtus II solar modules produced in Poland for the project between July and September of this year.
  • In July 2015, ReneSola announced that it will provide 20MW of solar modules to an international leading EPC company in Europe for several utility-scale projects in Germany. Under the terms of the agreement, ReneSola's contracted OEMs will deliver 20MW of the Company's high-efficiency Virtus II solar modules in Q3 of this year.
  • In July 2015, the Company announced that it acquired the total project development rights for 22.5MW of ground-mounted, utility-scale solar projects in Japan. The projects, most of which are expected to commence production and connect to the grid beginning in late 2015 and early 2016, will primarily utilize ReneSola's PV modules, specifically the company's top-rated Virtus II module.
  • In July 2015, ReneSola announced that it sold its 13.5MW Wedgehill utility scale solar project in the United Kingdom, which utilized ReneSola's Virtus II modules, to a renowned solar energy generator in the UK. The project was connected to the grid in December 2014 and is qualified for the UK's 1.4 R.O.C scheme.

Outlook

For Q3 2015, the Company expects its net revenues to be in the range of US$330 million to US$340 million, and gross margin to be in the range of 15% to 16%.

Conference Call Information

ReneSola's management will host an earnings conference call on August 25, 2015 at 8 am U.S. Eastern Time (8 pm Beijing/Hong Kong time).

U.S. / International:       +1-866-519-4004 Hong Kong:                   +852-3018-6771

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 September 2, 2015:

International:                 +1-646-254-3697 Passcode:                    15932344

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

Founded in 2005, and listed on the New York Stock Exchange in 2008, ReneSola (NYSE: SOL) is an international leading brand and technology provider of energy efficient products. Leveraging its global presence and expansive distribution and sales network, ReneSola is well positioned to provide its highest quality green energy products and on-time services for EPC, installers, and green energy projects around the world. For more information, please visit 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 the Company describes what it "believes," "expects" or "anticipates" will occur, what "will" or "could" happen, and other similar statements), you must remember that the Company's expectations may not be correct, even though it believes that they are reasonable. The Company does 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 the Company's filings with the U.S. Securities and Exchange Commission, including the Company's annual report on Form 20-F. The Company undertakes 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 the Company's situation may change in the future.

For investor and media inquiries, please contact:

In China:

Ms. Juliet Yang ReneSola Ltd Tel: +86 (21) 6280-9180 ext. 105 Email: ir@renesola.com

Mr. Derek Mitchell Ogilvy Financial, Beijing Tel: +86 (10) 8520-6139 Email: sol@ogilvy.com

In the United States:

Ogilvy Financial Tel: +1 (646) 867-1888 Email: sol@ogilvy.com

 RENESOLA LTD 

 Unaudited Consolidated Balance Sheets 

 (US dollars in thousands) 

Jun 30,

Mar 31,

June 30,

2015

2015

2014

 ASSETS 

 Current assets: 

 Cash and cash equivalents  

43,153

47,857

58,127

 Restricted cash  

141,942

180,291

160,708

 Accounts receivable, net of allowances for doubtful accounts 

89,826

133,462

212,533

 Inventories 

277,658

268,546

390,010

 Advances to suppliers-current 

44,566

50,629

9,819

 Amounts due from related parties 

101

12

1,116

 Value added tax recoverable 

24,355

29,261

21,505

 Prepaid income tax 

1,705

1,108

3,454

 Prepaid expenses and other current assets  

53,351

48,457

56,066

 Project assets 

53,651

65,791

32,998

 Deferred convertible notes issue costs-current  

302

414

784

 Derivative assets 

1,577

1,839

576

 Deferred tax assets-current, net 

4,496

3,568

1,786

 Total current assets  

736,683

831,235

949,482

 Property, plant and equipment, net 

705,256

728,670

803,721

 Prepaid land use right, net 

40,151

40,381

40,209

 Deferred tax assets-non-current, net 

15,886

17,428

17,990

 Deferred convertible notes issue costs-non-current 

-

-

549

 Advances for purchases of property, plant and equipment  

169

954

2,419

 Advances to suppliers-non-current 

-

-

5,627

 Deferred project costs 

20,874

-

-

 Other long-lived assets 

6,248

8,360

4,155

 Total assets  

1,525,267

1,627,028

1,824,152

 LIABILITIES AND SHAREHOLDERS' EQUITY 

 Current liabilities: 

 Convertible bond payable-current 

62,190

62,850

-

 Short-term borrowings  

653,627

681,707

696,229

 Accounts payable  

405,881

478,559

509,200

 Advances from customers-current 

32,656

53,109

44,105

 Amounts due to related parties  

6,392

2,889

4,055

 Other current liabilities  

113,187

118,794

145,277

 Income tax payable 

125

124

1,475

 Derivative liabilities 

4,747

22

166

 Warrant liability 

1,050

1,733

7,298

 Total current liabilities  

1,279,855

1,399,787

1,407,805

 Convertible notes payable-non-current  

-

-

111,616

 Long-term borrowings  

41,117

41,342

64,030

 Advances from customers-non-current 

1,191

1,191

3,192

 Deferred revenue 

26,054

-

-

 Warranty  

36,185

34,298

25,688

 Deferred subsidies and other 

24,744

24,988

53,756

 Other long-term liabilities  

972

1,128

775

 Total liabilities  

1,410,118

1,502,734

1,666,862

 Shareholders' equity 

   Common shares  

478,391

478,391

476,441

   Additional paid-in capital  

7,248

6,882

6,991

   Accumulated loss 

(450,530)

(448,230)

(410,402)

   Accumulated other comprehensive income  

80,040

87,251

84,260

 Total equity attribute to ReneSola Ltd 

115,149

124,294

157,290

 Total  shareholders' equity 

115,149

124,294

157,290

 Total liabilities and shareholders' equity  

1,525,267

1,627,028

1,824,152

 

RENESOLA LTD

Unaudited Consolidated Statements of Income

(US dollar in thousands, except ADS and share data)

Three Months Ended 

Jun 30, 2015

Mar 31, 2015

June 30, 2014

Net revenues

268,401

349,003

387,106

Cost of revenues 

(224,001)

(312,338)

(330,232)

Gross profit

44,400

36,665

56,874

GP%

16.5%

10.5%

14.7%

Operating (expenses) income:

Sales and marketing 

(18,126)

(21,843)

(21,864)

General and administrative 

(15,518)

(13,736)

(13,529)

Research and development 

(11,166)

(13,418)

(13,941)

Other operating income

10,893

2,812

3,026

Total operating expenses 

(33,917)

(46,185)

(46,308)

Income (loss) from operations 

10,483

(9,520)

10,566

Non-operating (expenses) income:

Interest income 

743

932

1,230

Interest expense

(11,177)

(10,842)

(11,179)

Foreign exchange gains (losses)

6,181

(16,070)

(1,294)

Gains (losses) on foreign exchange derivatives, net

(8,753)

4,501

858

Gains on repurchase of convertible bonds

155

11,648

Fair value change of warrant liability

683

158

998

Income (loss) before income tax, noncontrolling interests

(1,685)

(19,193)

1,179

Income tax (expense) benefit

(615)

1,165

(422)

Net income (loss)

(2,300)

(18,028)

757

Net income (loss) attributed to holders of ordinary shares

(2,300)

(18,028)

757

Earnings per share

  Basic

(0.01)

(0.09)

0.00

  Diluted

(0.01)

(0.09)

0.00

Earnings per ADS

  Basic

(0.02)

(0.18)

0.01

  Diluted

(0.02)

(0.18)

0.01

Weighted average number of shares used in

computing loss per share

  Basic

204,627,464

203,918,702

203,373,943

  Diluted

204,627,464

203,918,702

204,555,179

RENESOLA LTD

Unaudited Condensed Consolidated Statements of Comprehensive Income

(US dollar in thousands, except ADS and share data)

Three Months Ended

Jun 30, 2015

Mar 31, 2015

June 30, 2014

Net income (loss)

(2,300)

(18,028)

757

Other comprehensive income (loss)

Foreign exchange translation adjustment

(7,211)

6,171

2,710

Other comprehensive income (loss)

(7,211)

6,171

2,710

Comprehensive income (loss)

(9,511)

(11,857)

3,467

Less:comprehensive loss attributable to

non-controlling interest

-

-

-

Comprehensive income (loss)

attributable to Renesola

(9,511)

(11,857)

3,467

 

RENESOLA LTD

Unaudited Consolidated Statements of Cash Flow

(US dollar in thousands)

 Six Months Ended 

Jun 30, 2015

Jun 30, 2014

Operating activities:

Net loss

(20,328)

(13,834)

Adjustment to reconcile net loss to net cash provided by (used in)

operating activity:

  Inventory write-down

640

799

  Depreciation and amortization

46,601

45,370

  Amortization of deferred convertible bond issuances costs and premium

254

392

  Allowance of doubtful receivables, advance to suppliers and prepayment for 

  purchases of property, plant and equipment

(1,277)

5,197

  Loss on derivatives

4,252

518

  Fair value change of warrant liability

(840)

(2,048)

  Gain from settlement of certain payables

(6,258)

-

  Share-based compensation

(264)

1,041

  Loss on disposal of long-lived assets

(4)

1,255

  Gain on disposal of land use right

-

(573)

  Gain on disposal of  subsidiaries

-

(2,615)

 Gain on CB repurchase 

(11,803)

-

Changes in assets and liabilities:

  Accounts receivable

32,105

18,642

  Inventories

45,767

(34,540)

  Project assets and deferred project cost

(12,782)

1,369

  Advances to suppliers

(16,375)

4,141

  Amounts due from related parties

(3,828)

(5,683)

  Value added tax recoverable

5,406

8,018

  Prepaid expenses and other current assets

(8,745)

3,727

  Prepaid land use rights, net

(535)

-

  Accounts payable

(49,389)

(133,608)

  Advances from customers

(47,927)

(58,659)

  Income tax payable

(475)

(4,670)

  Other  current liabilities

1,178

10,922

  Deferred revenue

22,110

-

  Other long-term liabilities

(620)

(3,626)

  Other long-term assets

(755)

-

  Accrued warranty cost

4,406

5,076

  Deferred taxes assets

(1,145)

(1,217)

Net cash provided by (used in) operating activities

(20,631)

(152,865)

Investing activities:

  Purchases of property, plant and equipment

(1,661)

(39,330)

  Advances for purchases of property, plant and equipment

(103)

(2,446)

  Cash received from government subsidy

-

11,762

  Proceeds from disposal of property, plant and equipment

25

41

  Changes in restricted cash 

(20,095)

95,669

  Net cash received (paid) on settlement of  derivatives

606

(901)

  Proceeds from disposal of subsidiaries

-

18,473

Net  cash provided by (used in) investing activities

(21,228)

83,268

Financing activities:

  Proceeds from bank borrowings

474,208

543,197

  Proceeds from related parties

3,000

  Repayment of bank borrowings

(473,566)

(508,886)

  Proceeds from exercise of stock options

1,625

624

  Repurchase of convertible notes

(20,364)

-

Net cash provided  by (used in) financing activities

(15,097)

34,935

Effect of exchange rate changes

261

6,016

Net increase (decrease) in cash and cash equivalents

(56,695)

(28,646)

Cash and cash equivalents, beginning of year

99,848

86,773

Cash and cash equivalents, end of year

43,153

58,127

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SOURCE ReneSola Ltd.



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