ReneSola Ltd Announces Second Quarter 2010 Results


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Aug 09, 2010
ReneSola Ltd Announces Second Quarter 2010 Results
Company achieves record results with revenues of US$253.9 million, quarterly shipments of 258.3 MW and net income of US$36.1 million

JIASHAN, China, Aug 09, 2010 /PRNewswire via COMTEX/ --

ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL) (AIM: SOLA), a leading global manufacturer of solar wafers and provider of solar module original equipment manufacturer ("OEM") services, today announced its unaudited financial results for the second quarter ended June 30, 2010.

    (Logo: http://photos.prnewswire.com/prnh/20080506/CNTU030 )
    (Logo: http://www.newscom.com/cgi-bin/prnh/20080506/CNTU030 )


    Second Quarter 2010 Financial and Operating Highlights
    -- Total solar product shipments in Q2 2010 were a record 258.3 megawatts
       ("MW"), an increase of 6.6% from 242.4 MW in Q1 2010.
    -- Q2 2010 net revenues were a record US$253.9 million, an increase of
       22.9% from US$206.6 million in Q1 2010.
    -- Q2 2010 gross profit was US$76.6 million with a gross profit margin of
       30.2%, compared to gross profit of US$35.3 million with a gross margin
       of 17.1% in Q1 2010.
    -- Q2 2010 operating income was US$52.5 million with an operating margin
       of 20.6%, compared to operating income of US$21.2 million with an
       operating margin of 10.3% in Q1 2010.
    -- Q2 2010 net income was a record US$36.1 million, representing basic and
       diluted earnings per share of US$0.21, and basic and diluted earnings
       per American depositary share ("ADS") of US$0.42.
    -- The Company generated strong operating cash flow of US$168.4 million in
       the first half of 2010, bringing cash and cash equivalents at the end
       of Q2 2010 to US$171.2 million, compared with US$106.8 million at the
       end of 2009.


"We achieved record results in terms of revenues, net income and shipment volumes in the second quarter of 2010," said Mr. Xianshou Li, ReneSola's chief executive officer. "We delivered a strong gross profit margin of over 30% during the quarter as we continued to lead the industry as a cost-competitive solar manufacturer and executed on our OEM module servicing strategy. Strong market demand coupled with our cost-efficient structure should place ReneSola in a position to increase profitability in the coming quarters."

    Results for the Second Quarter 2010



    Product Shipments
                                   2Q10    1Q10     2Q09    Q-o-Q%    Y-o-Y%
    Total Solar Product
     Shipments (MW)                258.3   242.4    85.9     6.6%     200.7%
    Wafer Shipments (MW)           206.7   226.9    83.2    (8.9%)    148.4%
    Module Shipments (MW)           50.6    15.4     2.7   228.6%   1,774.1%



    Net Revenues

                                  2Q10     1Q10     2Q09    Q-o-Q%    Y-o-Y%
    Net Revenues (US$mln)        $253.9   $206.6   $82.6     22.9%    207.4%


Record high revenues in Q2 2010 were driven by higher wafer average selling prices and higher module shipments.



    Gross Profit

                                  2Q10     1Q10     2Q09    Q-o-Q%    Y-o-Y%
    Gross Profit (US$mln)        $76.6    $35.3     $4.3    117.0%  1,681.4%
    Gross Margin                  30.2%    17.1%     5.1%      --        --


The significant improvement in the Company's gross margin from 17.1% in Q1 2010 to 30.2% in Q2 2010 was driven by overall wafer processing cost reduction and a large decrease in polysilicon costs to market-equivalent prices in Q2 2010.

    Operating Income (Loss)

                                   2Q10     1Q10      2Q09   Q-o-Q%  Y-o-Y%
    Operating Expenses (US$mln)   $24.2    $14.1      $8.2    68.8%  190.2%
    Operating Income (Loss)
     (US$mln)                     $52.5    $21.2     ($4.0)  149.1%     --
    Operating Margin               20.6%    10.3%     (4.8%)    --      --


Increases in operating expenses were primarily due to a US$0.8 million bad debt provision against doubtful accounts receivables, a US$1.4 million provision against equipment suppliers' pre-payments and other operating expenses, including US$2.1 million in management bonuses accumulated for 2010.


    Net Income (Loss) Attributable to Holders of Ordinary Shares

                                           2Q10           1Q10          2Q09
    Net Income (Loss) (US$mln)            $36.1          $11.8         ($3.6)
    Earnings (Loss) Per Share             $0.21          $0.07        ($0.03)
    Earnings (Loss) Per ADS               $0.42          $0.14        ($0.05)


The Company achieved record net income of US$36.1 million, an increase of over 200% from US$11.8 million in Q1 2010. Basic and diluted earnings per share were US$0.21, and basic and diluted earnings per ADS were US$0.42.

Business Highlights

Wafer Business - Achieving Gross Profit Margin of Over 30%

The Company's wafer business achieved gross profit margin of over 30% fueled by robust market demand for high-quality products and significant cost reductions achieved by the Company. The average polysilicon raw material costs have fallen to market-equivalent prices, while the overall total wafer cost has been reduced to US$0.56/W ("per Watt"). ReneSola is committed to becoming the industry leader as a cost-competitive producer of wafer products, capitalizing on its advanced manufacturing and technologically driven platform to consistently reduce cost. Wafer costs are expected to be driven down further to between US$0.46/W to US$0.48/W by the end of 2011.

Module Business - A Significant Revenue and Profit Contributor

In the downstream module business, ReneSola delivered record module shipments of 50.6 MW with an average selling price of US$1.75/W. These results underscore the tremendous potential in the OEM servicing sector and ReneSola remains confident that the Company's downstream platform will further strengthen its core customer relationships and help enhance ReneSola's leadership position in the global wafer market. The Company expects to ship between 145 MW to 165 MW to new and existing customers in the second half of 2010.

Strong Operating Cash Flows and Cash Position

The Company generated strong operating cash flows of US$168.4 million in the first half of 2010, with a net cash and cash equivalents position of US$171.2 million at the end of Q2 2010 compared to a net cash and cash equivalents position of US$98.0 million at the end of Q1 2010. The Company expects to continue to generate strong operating cash flows during the second half of 2010.

Improving Financial Leverage

At the end of Q2 2010, the Company had interest-bearing debt of US$577.1 million, consisting of US$189.1 million of long-term debt and US$388.0 million of short-term debt. The Company had over US$750 million in credit facilities as of the end of Q2 2010 and is well positioned to reduce financial leverage as the Company continues to generate strong operating cash flows.

2011 Capacity Expansion Plans and Related CAPEX

In 2011, the Company plans to expand wafer production capacity to 1.8 GW from the current 1.2 GW, while expanding module production capacities to 600 MW from the current 375 MW.

The 2010 capital expenditure budget is US$150 million, of which approximately US$100 million covered the already implemented increases in wafer, cell and module capacities to 1.2 GW, 240 MW and 375 MW, respectively, as well as the final amount to be paid for the Sichuan polysilicon facility. The remaining US$50 million from the 2010 budget will be used in building capacity towards the 2011 targets referred to above. A further US$140 million of capital expenditure in 2011 is currently budgeted for achieving those targets.

AIM Cancellation

On July 27, 2010, the Company announced that a resolution would be proposed to cancel its AIM quotation at the upcoming annual general meeting (the "AGM") on August 20, 2010. Cancellation is conditional upon the consent of the Company's shareholders, by a majority of not less than 75% of the votes cast on the resolution to be proposed at the AGM.

ReneSola was admitted to trading on AIM in August 2006 and subsequently obtained a listing of its ADSs on the New York Stock Exchange (the "NYSE") in January 2008. Since its NYSE listing, the Company has seen an increasing number of shareholders migrating their shareholdings in the Company from AIM to the NYSE due to higher levels of liquidity. There are significant costs associated with maintaining the Company's AIM quotation, including the annual fees payable to the London Stock Exchange, nominated adviser and broker fees and other related professional costs. Cancellation will, accordingly, reduce the Company's recurring administrative overheads.

Company Appoints New Vice President of Human Resources

The Company recently appointed Mr. Tim Jia as vice president of human resources. Before joining ReneSola, Mr. Jia served as director of Ingersoll Rand Engineering and Technology Center's human resources and engineering administration department in Shanghai, China from 2003 to 2010. He has approximately 20 years of managerial experience with more than a decade of experience in human resources. Prior to Ingersoll Rand, Mr. Jia worked at Shuangliang Group and Shuangliang Trane Joint Venture for 18 years, where he served in several managerial positions including the director of human resources. Mr. Jia received undergraduate degrees in Machinery Engineering from Wuxi Mechanical Technology College in 1986 and Computer Engineering from Nanjing University in 1991. He also received an MBA from the Open University of Hong Kong in 2000 and is currently a Ph.D. candidate in Law at the China University of Political Science and Law.

Outlook

For the full year 2010, the Company expects revenues to be in the range of US$1.0 billion to US$1.05 billion and gross profit margin to be in the range of 25% to 27%, while maintaining second half gross profit margin in the range of 28% to 30%.

For Q3 2010, the Company expects total solar product shipments to be in the range of 280 MW to 310 MW and revenues to be in the range of US$300 million to US$320 million.

Conference Call Information

ReneSola's management will host an earnings conference call on Monday, August 9, 2010 at 8 am U.S. Eastern Daylight Time / 8 pmBeijing/Hong Kong time / 1 pm British Summer Time.

    Dial-in details for the earnings conference call are as follows:

    U.S. / International: +1-857-350-1682
    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 16, 2010:

    International:        +1-617-801-6888
    Passcode:             14646078


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

ReneSola is a leading global manufacturer of solar wafers and producer of solar power products based in China. Capitalizing on proprietary technologies, economies of scale, low-cost production capabilities and technological innovations and know-how, ReneSola leverages its in-house virgin polysilicon and solar cell and module production capabilities to provide its customers with high-quality, cost-competitive solar wafer products and OEM services. The Company possesses a global network of suppliers and customers that includes some of the leading global manufacturers of solar cells and modules. ReneSola's shares are traded on the New York Stock Exchange (NYSE: SOL) and the AIM of the London Stock Exchange (AIM: SOLA).

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. Feng Qi
     ReneSola Ltd
     Tel:   +86-573-8477-3903
     Email: feng.qi@renesola.com

     Mr. Derek Mitchell
     Ogilvy Financial, Beijing
     Tel:   +86-8520-6284
     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 United Kingdom:

     Mr. Tim Feather / Mr. Richard Baty
     Westhouse Securities Limited, London
     Tel:   +44-20-7601-6100
     Email: tim.feather@westhousesecurities.com
            richard.baty@westhousesecurities.com



                                                     RENESOLA LTD
                                         Unaudited Consolidated Balance Sheet
                                              (US dollars in thousands)
                                             June 30,   March 31, December 31,
                                               2010       2010        2009
    ASSETS
    Current assets:
    Cash and cash equivalents                171,208      98,041     106,808
    Restricted cash                           75,384      44,195      25,266
    Available for sale investment              4,975       6,207       6,207
    Trade receivable, net of allowances
     for doubtful receivables                102,629     146,386     107,987
    Inventories, net of inventory
     provisions                              164,770     122,335     137,844
    Advances to suppliers, current
     portion                                  18,917      12,123      12,092
    Amounts due from related parties             412         440         440
    Value added tax recoverable               44,341      43,611      51,843
    Prepaid expenses and other current
     assets                                   10,783       9,294       7,412
    Deferred tax assets, current portion      25,124      25,125      24,325
    Total current assets                     618,543     507,757     480,224

    Property, plant and equipment, net       743,079     721,156     702,816
    Prepaid land rent, net                    25,351      25,450      23,137
    Other Intangible assets                      425         562       1,349
    Deferred tax assets, non-current
     portion                                  27,723      36,406      40,227
    Advances to suppliers, non-current
     portion                                   7,204       7,193       8,072
    Advances for purchases of property,
     plant and equipment                      13,402      21,209      20,840
    Other long-term assets                     2,669       1,989       2,840
    Goodwill                                   5,323       5,323       5,323
    Total assets                           1,443,719   1,327,045   1,284,829

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
    Short-term borrowings                    388,028     406,609     358,634
    Accounts payable                         190,779     129,159      93,406
    Advances from customers, current
     portion                                  51,276      54,029      53,852
    Amounts due to related parties                24          40          24
    Other current liabilities                 73,848      71,413      71,460
    Convertible bond payable, current
     portion                                      --          --      32,475
    Total current liabilities                703,955     661,250     609,851

    Long-term borrowings                     189,073     171,409     189,279
    Advances from customers, non-current
     portion                                  90,198      73,919      78,578
    Other long-term liabilities               12,911      12,008      10,858
    Total liabilities                        996,137     918,586     888,566

    Shareholders' equity
      Common shares                          414,585     414,068     413,753
      Additional paid-in capital              21,896      21,165      21,065
      Accumulated deficits                   (12,772)    (48,832)    (60,609)
      Accumulated other comprehensive
       income                                 23,873      22,058      22,054
    Total shareholders' equity               447,582     408,459     396,263

    Total liabilities and shareholders'
     equity                                1,443,719   1,327,045   1,284,829



                                                    RENESOLA LTD
                                        Unaudited Consolidated Statements of
                                                     Income Data
                                        (US dollars in thousands, except ADS
                                                   and share data)

                                                 Three Months Ended
                                            June 30,     March 31,    June 30,
                                              2010         2010         2009

    Net revenues                            253,879      206,551       82,629
    Cost of revenues                       (177,255)    (171,228)     (78,378)
    Gross profit (loss)                      76,624       35,323        4,251

    Operating expenses:
    Sales and marketing                      (1,815)      (1,426)      (1,497)
    General and administrative              (13,371)      (4,727)      (4,503)
    Research and development                 (7,459)      (6,168)      (3,401)
    Other general (expense) income           (1,529)      (1,798)       1,188
    Total operating expenses                (24,174)     (14,119)      (8,213)

    Income (loss) from operations            52,450       21,204       (3,962)

    Non-operating (expenses) income:
    Interest income                             378          101          176
    Interest expenses                        (5,299)      (4,968)      (3,972)
    Foreign exchange gain (loss)                 (7)        (911)        (504)
    Gain on early extinguishment of
     debt, net of inducement charges             --           --        5,353
    Fair value change on derivative
     assets                                    (147)          --           --
    Investment income                           293           --           --
    Total non-operating (expenses)
     income                                  (4,782)      (5,778)       1,053
    Income (loss) before income tax          47,668       15,426       (2,909)

    Income tax benefit (expense)            (11,607)      (3,649)        (680)
    Net income  (loss) attributed to
     holders of ordinary shares              36,061       11,777       (3,589)

    Earnings (Loss) per share
      Basic                                    0.21         0.07        (0.03)
      Diluted                                  0.21         0.07        (0.03)

    Earnings (Loss) per ADS
      Basic                                    0.42         0.14        (0.05)
      Diluted                                  0.42         0.14        (0.05)

    Weighted average number of shares
     used in computing earnings per
     share
      Basic                             172,706,512  172,668,245  139,383,154
      Diluted                           172,706,512  172,668,245  139,383,154




                                              CONSOLIDATED CASH FLOW STATEMENT
                                                       Six months ended
                                              June 30, 2010     June 30, 2009
                                                    US$000           US$000
     Operating activities:
     Net income (loss)                              47,837           (33,608)
     Adjustment to reconcile net income
      (loss) to net cash used in
      operating activities:
     Equity in earnings of investee                     --               291
     Inventory write-down                               --            68,047
     Depreciation and amortization                  24,346            13,457
     Amortization of deferred convertible
      bond issue costs and premium                     327             1,426
     Allowances for doubtful receivables
      and advance to suppliers                       1,961               631
     Prepaid land use right expensed                   404               127
     Change in fair value of derivatives               147                (1)
     Gain on early extinguishment of
      debt, net of inducement charges                   --            (5,353)
     Share-based compensation                        1,360             1,861
     Loss on disposal of long-lived
      assets                                           133                14
     Changes in operating assets and
      liabilities:
     Accounts receivable                             5,114             9,951
     Inventories                                   (25,861)          (14,246)
     Advances to suppliers                          (7,859)           19,379
     Amounts due from related parties                   31           (11,816)
     Value added tax recoverable                     7,791           (19,082)
     Prepaid expenses and other current
      assets                                        (4,463)            7,323
     Prepaid land use right                             --              (110)
     Accounts payable                               96,277             2,954
     Advances from customers                         8,496             2,334
     Other liabilities                              (1,098)            2,981
     Deferred taxes                                 12,291           (37,527)
     Accrued Warranty                                1,141                65
     Net cash provided by (used in)
      operating activities                         168,375             9,098

     Investing activities:
     Purchases of property, plant and
      equipment                                    (53,562)         (164,024)
     Advances for purchases of property,
      plant and equipment                            6,083            18,186
     Purchase of other long-term assets                 67              (447)
     Cash received from government
      subsidy                                           --             5,959
     Proceeds from disposal of investment               --              (635)
     Proceeds from disposal of property,
      plant and equipment                               51                --
     Restricted cash                               (49,631)          (51,722)
     Cash consideration for acquisition                 --           (16,831)
     Net proceeds from redemption of
      financial assets                                 79                 --
     Net cash used in investing
      activities                                   (96,913)         (209,514)

     Financing activities:
     Proceeds from borrowings                      447,676           436,780
     Repayment of bank borrowings                 (422,239)         (155,437)
    Cash paid for issuance cost                      (252)               --
     Proceeds from exercised stock option              304                --
     Cash consideration paid to
      repurchase convertible bonds                 (32,715)          (19,781)
     Net cash provided by financing
      activities                                    (7,226)          261,562

     Effect of exchange rate changes                   164                64

     Net increase in cash and cash
      equivalents                                   64,400            61,210
     Cash and cash equivalents, beginning
      of year                                      106,808           112,333
     Cash and cash equivalents, end of
      period                                       171,208           173,543


SOURCE ReneSola Ltd

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