ReneSola Ltd. Announces Fourth Quarter and Full Year 2011 Results

JIASHAN, China, March 16, 2012 /PRNewswire-Asia/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL), a leading global manufacturer of solar wafers and provider of solar modules, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2011.

(Logo: http://photos.prnewswire.com/prnh/20080506/CNTU030 )

Fourth Quarter 2011 Financial and Operating Highlights

• Total solar wafer and module shipments in Q4 2011 were 339.9 megawatts ("MW"), exceeding Company guidance and an increase of 3.5% from 328.5 MW in Q3 2011.
• Q4 2011 net revenues were US$187.7 million, exceeding Company guidance and representing a decrease of 0.7% from US$189.1 million in Q3 2011.
• Q4 2011 gross loss was US$43.4 million with a gross margin of negative 23.1%, compared to gross loss of US$7.7 million with a gross margin of negative 4.0% in Q3 2011.
• Q4 2011 operating loss was US$52.7 million with an operating margin of negative 28.1%, compared to an operating loss of US$34.5 million with an operating margin of negative 18.2% in Q3 2011.
• Q4 2011 net loss was US$36.7 million, representing basic and diluted loss per share of US$0.21, and basic and diluted loss per American depositary share ("ADS") of US$0.43.
• Cash and cash equivalents plus restricted cash were $437.4 million as of the end of Q4 2011, compared to US$450.3 million as of the end of Q3 2011.

Full Year 2011 Financial and Operating Highlights

• Total solar wafer and module shipments for the full year 2011 were a record 1,294.8 MW, exceeding Company guidance and an increase of 9.5% from 1,182.8 MW for the full year 2010.
• Full year 2011 net revenues were US$985.3 million, exceeding Company guidance and representing a decrease of 18.3% from US$1,205.6 million in 2010.
• Full year 2011 gross profit was US$96.1 million with a gross profit margin of 9.7%, compared to a gross profit of US$348.0 million with a gross margin of 28.9% in 2010.
• Full year 2011 operating income was US$11.5 million with an operating margin of 1.2%, compared to an operating income of US$245.9 million with an operating margin of 20.4% in 2010.
• Full year 2011 net income was US$0.3 million, representing basic and diluted earnings per share of US$0.002 and basic and diluted earnings per ADS of US$0.004.

"Challenging market conditions continued to impact our business in the fourth quarter of 2011," said Mr. Xianshou Li, ReneSola's chief executive officer. "The continuing uncertainty surrounding Europe's economy and proposed austerity measures exacerbated the supply-demand situation, negatively impacting our revenues and margins for the quarter, despite near-record shipments including significantly increased module shipments. Although we achieved our year-end cost-reduction targets, which placed our cost structure among the lowest in the industry, it was not enough to offset extremely low solar wafer and module prices. We still believe, however, that our low production costs uniquely position us to weather the current downturn. As a result, we were able to achieve positive net income for the full year of 2011."

Mr. Li continued, "For 2012, we will continue to invest in research and development to further reduce our costs and improve efficiency. While we expect to maintain our leadership position in wafer production, we will increasingly focus on our high-margin module business, capitalizing on our reputation, product quality and new regional teams, to increase sales. We will continue to invest heavily in our in-house polysilicon production, which achieved costs close to the record-low spot prices of December and lower than many of our competitor's long-term polysilicon contracts. As part of our cost-reduction strategy, we will also explore horizontal opportunities like our diamond-steel wire production, which began in the fourth quarter of 2011. We are confident our cost-reduction efforts will help us withstand pricing pressures from an oversupplied market, which we expect to persist into 2013, and capitalize on an industry that overall is still growing at a rapid pace."

Fourth Quarter 2011 Results

Solar Wafer and Module Shipments

The sequential increase in solar product shipments was the result of strong demand for the Company's solar modules from Europe, particularly Germany, due to pent-up demand that arose in Q4 2011.

Net Revenues

Revenues in Q4 2011 were relatively unchanged quarter-over-quarter, with a decrease in the average selling price ("ASP") of solar wafers and modules to US$0.36 per watt ("W") and US$0.97/W, respectively, offset by an increase in solar module shipments.

Gross Profit (Loss)

The sequential decrease in gross profit was primarily due to declines in solar wafer and module ASPs, as well as a write-down of approximately US$26.2 million to reflect the significant drop in prices for polysilicon, solar wafers and solar modules in 2011.

Operating Income (Loss)

The sequential decrease in operating expenses was primarily due to a one-time gain of $13.5 million arising from the forfeiture of a prepaid deposit due to the breach of a solar wafer contract by one of the Company's clients. Operating expenses represented 5.0% of total revenues in Q4 2011, compared to 14.2% in Q3 2011.

Foreign Exchange Gain

The Company had a foreign exchange gain of US$1.8 million in Q4 2011, primarily due to the appreciation of the renminbi ("RMB"). The Company also recognized a US$3.6 million gain on derivatives, compared to a gain of US$10.1 million in Q3 2011, as the euro depreciated more than the forward rate hedged.

Gain on Repurchase of Convertible Notes

The Company also recognized a gain of US$8.2 million related to the Company's repurchase of a portion of its convertible notes in Q4 2011. As mentioned in previous quarters, the Company may repurchase its convertible notes from time to time.

Net Income (Loss) Attributable to Holders of Ordinary Shares

Full Year 2011 Results

Solar Wafer and Module Shipments

The increase in shipments was the result of an increase in the demand for the Company's solar wafers, especially its Virtus wafer, offset by a slight decrease in solar module shipments as a result of the relatively weak market and Europe's challenging financing environment.

Net Revenues

The decrease in revenues was driven by a significant decline in the ASPs of solar wafers and modules.

Gross Profit

The decrease in gross profit was primarily due to the declines in solar wafer and module ASPs, as well as inventory write-downs to reflect the significant drop in prices for polysilicon, solar wafers and solar modules.

Operating Income

The decrease in operating expenses was primarily due to a one-time gain of $13.5 million arising from the forfeiture of a prepaid deposit due to the breach of a solar wafer contract by one of the Company's clients. Operating expenses represented 8.6% of total revenues in 2011, compared to 8.5% in 2010.

Net Income Attributable to Holders of Ordinary Shares

Business Highlights

Research and Development ("R&D")

In Q4 2011, ReneSola began mass production of diamond-steel wires, as previously announced. The Company has already begun to use the wires for its own wafer manufacturing and expects to sell the wires to other companies soon.

At present, the Company's primary R&D investments include improving its Virtus wafer technology and extending its advantages to modules, developing low-oxygen concentration solar wafers and producing carbon composite materials used in solar manufacturing furnaces. In line with its overall cost-reduction strategy, the Company will continue to invest in R&D to further its advancements in technology and manufacturing methods. 

Wafer Business

In Q4 2011, the Company completed its multicrystalline wafer production upgrade, bringing the Company's quasi-mono Virtus wafer production capacity, which now represents the Company's entire multicrystalline production capacity, to 1.6 gigawatts ("GW"). At the end of 2011, the Company had a total wafer capacity of 2.0 GW, representing 1.6 GW of Virtus wafers and 400 MW of monocrystalline wafers. The Company expects to maintain this capacity in 2012.

In Q4 2011, the Company's average blended non-silicon wafer processing cost for monocrystalline and Virtus wafers was US$0.20/W, a decrease from US$0.23/W in Q3 2011 as a result of continued cost-reduction efforts, including the use of upgraded furnaces and lower-priced raw materials. The successful execution of the Company's cost reduction strategies should allow the Company to reduce its blended non-silicon wafer processing cost for monocrystalline and Virtus wafers to US$0.15/W by the end of Q4 2012.

Module Business

At the end of 2011, the Company had a solar module capacity of 500 MW. The Company expects to reach 1.0 GW by the end of 2012 contingent on demand for the Company's solar modules.

At the end of Q4 2011, the Company's module processing cost was approximately US$0.42/W, compared to US$0.44/W at the end of Q3 2011. The Company will continue to reduce its module processing costs through a reduction in material costs and capitalize on the business's higher margins relative to wafer production. At the same time, the Company will increase its sales and marketing efforts through the leadership of its new regional hires in Asia-Pacific, Europe and the Americas. For the full year 2012, the Company expects to ship at least 600 MW of solar modules.

Polysilicon Update

At the end of 2011, the Company had a polysilicon production capacity of 4,000 metric tons ("MT"). By the end of 2012, the Company expects polysilicon production capacity to reach 10,000 MT through Phase II of its polysilicon production plant.

The Company's Sichuan polysilicon plant continued to contribute to the Company's cost-reduction strategy in Q4 2011 and remains central to the Company's long-term manufacturing strategy. In Q4 2011, the Company produced approximately 1,089 MT of polysilicon, an increase from approximately 760 MT in Q3 2011. The Company's internal polysilicon production cost was reduced to approximately US$30/kg by the end of Q4 2011, beating the Company's cost-reduction target and compared to US$35.70/kg at the end of Q3 2011. In Q1 2012, the Company expects polysilicon production to decrease to between 830 MT and 880 MT as a result of upgrades and maintenance on the state-owned power grid connected to the Company's polysilicon plant in February. The Company expects to reduce polysilicon production cost to approximately US$24/kg by the end of 2012 through Phase II of it polysilicon production plant.

Liquidity and Capital Resources

Net cash and cash equivalents plus restricted cash were US$437.4 million at the end of Q4 2011, compared to US$450.3 million at the end of Q3 2011. Total debt was US$715.6 million in Q4 2011, compared to US$691.4 million in Q3 2011, excluding US$111.6 million due in convertible notes.

Capital expenditures were US$34.1 million for Q4 2011 and US$135.3 million for the full year 2011. Short-term borrowings were US$570.9 million in Q4 2011, an increase from US$523.5 million in Q3 2011.

2012 Capacity Expansion Plans and Related CAPEX

The Company expects to spend approximately US$100 million to add 6,000 MT of polysilicon production capacity through Phase II of its polysilicon plant, which will help the Company reduce its overall costs and provide a stable polysilicon supply. While the Company will remain conservative in its 2012 CAPEX, it may expand its solar module capacity in line with demand for the Company's solar modules.

Outlook

For Q1 2012, the Company expects total solar wafer and module shipments to be in the range of 400 MW to 420 MW and revenues to be in the range of US$180 million to US$190 million.

For the full year 2012, the Company expects total solar wafer and module shipments to be in the range of 1.8 GW to 2.0 GW.

Conference Call Information

ReneSola's management will host an earnings conference call on Friday, March 16, 2012 at 8 am U.S. Eastern Time (8 pm Beijing/Hong Kong time).

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

U.S. / International:       +1-718-354-1231
Hong Kong:                  +852-2475-0994

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 March 23, 2012:

International:                 +1-718-354-1232
Passcode:                     57628999

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, high production quality, 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 processing 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 ADSs are traded on The New York Stock Exchange (NYSE: SOL). For more information about ReneSola, please visit http://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:

Mr. Tony Hung
ReneSola Investor Relations
Tel: +86-573-8473-9011
Email:[email protected]

Mr. Derek Mitchell
Ogilvy Financial, Beijing
Tel:+86-10-8520-6284
Email:[email protected]

In the United States:

Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: [email protected]

SOURCE ReneSola Ltd.

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