Trina Solar Announces First Quarter 2010 Results
Gross Margin, Record Shipment Volume Exceed Company Guidance
CHANGZHOU, China, May 25 /PRNewswire-Asia-FirstCall/ -- Trina Solar Limited (NYSE: TSL) ("Trina Solar" or the "Company"), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, announced today its financial results for the first quarter ended March 31, 2010.
First Quarter 2010 Financial and Operating Highlights
-- Solar module shipments were approximately 193 MW, compared to the
Company's previous guidance of 180 MW to 190 MW, representing an
increase of 17.9% sequentially and 295.5% year-over-year
-- Net revenues were $336.8 million, an increase of 7.5% sequentially and
155.0% year-over-year
-- Gross margin was 30.9%, above the Company's guidance of 26% to 28%,
compared to 32.6% in the fourth quarter of 2009 and 17.2% in the first
quarter of 2009
-- Operating income and operating margin were $76.0 million and 22.6%,
respectively, compared to $64.4 million and 20.6%, respectively, in the
fourth quarter of 2009
-- Net income was $44.5 million, which includes a net foreign currency
exchange loss of $14.5 million, compared to $48.8 million in the fourth
quarter of 2009
-- Earnings per fully diluted ADS were $0.66, which includes impact of a
net foreign currency exchange loss of $0.21 per fully diluted ADS,
compared to $0.74 in the fourth quarter of 2009
"We are very pleased to deliver another quarter of record shipments and strong operating margins for the first three months of 2010, thanks to effective management and relentless execution," said Mr. Jifan Gao, Chairman and CEO of Trina Solar. "In line with our clear strategic objectives, we continued to increase shipments and strategic customer contracts to a growing portfolio of diversified PV end-markets, including the United States and Australia, while further consolidating our position in Europe with the inauguration of our European headquarters in Zurich."
"We have also maintained our strong focus on innovative technology development, and are excited to announce a range of new high quality products this quarter. These included three new product lines featuring our high efficiency square mono cell technology (Quad Max cell technology), an aesthetically appealing black module design series to target the growing residential and small business market, and a large, high-wattage module line suitable for commercial and industrial installations and utility-scale solar projects."
"We continue to enhance Trina Solar's global brand visibility with our recently announced sponsorship of world-class Formula One team, Renault, highlighting the increasing use of solar technology applications within this high profile sport. We believe this partnership may further inspire the development and widespread adoption of renewable energy technologies and solutions for the commercial automotive industry, and demonstrates our commitment to helping create a greener environment."
"Finally, with regard to current macroeconomic concerns involving the European markets and the Euro, we are still seeing strong demand for our products, and that our shipment flow to customers has not been negatively affected by credit availability or other related factors. We continue to expand and refine our internally-managed currency hedging program, which has been in place since the fourth quarter of 2008."
Recent Business Highlights
During the first quarter of 2010, the Company
-- Announced its selection by China's Ministry of Science and Technology
to establish a research and development centre for PV technology
-- Announced the establishment of its EU regional headquarters in Zurich,
Switzerland
-- Raised approximately $184 million through the successful follow-on
public offering in March 2010 of 9,085,000 ADSs, each representing 50
ordinary shares of the Company. The Company is using the net proceeds
to expand manufacturing facilities for the production of PV cells and
modules, for research and development purposes, including the expansion
of its research and development center, and for downstream projects and
general corporate purposes
-- Announced a sales agreement to supply U.S. wholesale distributor Essco
with approximately 25 MW of PV modules and an additional 4 MW at the
option of Essco, to be delivered during 2010
-- Announced initial shipments made to RF Industries Pty Ltd, Australia's
leading renewable energy distributor
-- Changed the ratio of its ordinary shares to ADSs from one hundred (100)
ordinary shares to one ADS to fifty (50) ordinary shares to one ADS,
which resulted in the same effect as a two-for-one ADS split. As a
result, the EPS figures for all prior periods have been adjusted to
reflect this ADS ratio change
Subsequent Events
Subsequent to the first quarter of 2010, the Company
-- Partnered with one of the largest and most experienced global renewable
energy developers, Enfinity NV ("Enfinity"), to cover the roofs of the
Belgian-European Pavilion and the Theme Pavilion at the 2010 Shanghai
World Expo with the Company's modules
-- Introduced new product lines, including a 'Design Series' black solar
module and a Utility Scale Solar module, unveiled at Solarexpo 2010 in
Verona, Italy, and a premium branded square mono cell module (Quad MAX
technology) to be showcased at InterSolar 2010 in Munich, Germany
First Quarter 2010 Results
Net Revenues
Trina Solar's net revenues in the first quarter of 2010 were $336.8 million, an increase of 7.5% sequentially and an increase of 155.0% year-over-year. Total shipments were 192.6 MW, compared to the Company's previous guidance of 180 MW to 190 MW, versus 163.7 MW in the fourth quarter of 2009 and 48.8 MW in the first quarter of 2009. The sequential increase in total shipments was primarily due to increased demand in European markets, due, in part to increased brand recognition for our products in new and established PV markets, combined with increased demand to install new PV systems ahead of mid-year feed-in tariff adjustments in Germany.
Gross Profit and Margin
Gross profit in the first quarter of 2010 was $104.2 million, compared to $102.2 million in the fourth quarter of 2009 and $22.7 million in the first quarter of 2009. Gross margin was 30.9% in the first quarter of 2010, compared to the Company's previous guidance of 26% to 28%, which was primarily due to lower average silicon purchase prices. The gross margin was 32.6% in the fourth quarter of 2009 and 17.2% in the first quarter of 2009. The year-over-year increase in gross margin was primarily due to the Company's favorable reduction of its silicon purchase price and non-silicon manufacturing costs relative to module ASP decline. The Company continued its focus efforts to reduce its manufacturing cost per watt through ongoing efficiency gains linked to its lean manufacturing initiatives and improved supply chain management.
Operating Expense, Income and Margin
Operating expenses in the first quarter of 2010 were $28.2 million, a decrease of 25.2% sequentially and an increase of 77.9% year-over-year. The sequential decrease was primarily due to a $6.0 million doubtful receivables write-off in the fourth quarter of 2009, while the yearly increase was primarily due to the growth in shipments and expansion in the Company's global sales and marketing efforts. The Company's operating expenses represented 8.4% of its first quarter net revenues, a decrease from 12.1% in the fourth quarter of 2009 and 12.0% in the first quarter of 2009. Operating expenses in the first quarter of 2010 also include $1.0 million in share-based compensation expenses, compared to $1.2 million in the fourth quarter of 2009 and $1.0 million in the first quarter of 2009.
As a result of the foregoing, operating income in the first quarter of 2010 was $76.0 million, compared to $64.4 million in the fourth quarter of 2009 and $6.8 million in the first quarter of 2009. Operating margin was 22.6% in the first quarter of 2010 compared to 20.6% in the fourth quarter of 2009 and 5.2% in the first quarter of 2009.
Net Interest Expense
Net interest expense in the first quarter of 2010 was $9.0 million, compared to $7.3 million in the fourth quarter of 2009 and $5.7 million in the first quarter of 2009. The sequential and year-over-year increases were due to additional bank borrowings to support the Company's announced capacity expansion.
Foreign Currency Exchange
The Company had a loss in foreign currency exchange of $14.5 million in the first quarter of 2010, which was net of a gain in fair value of derivative instruments of approximately $13.0 million. This compares to a net loss of $2.6 million in the fourth quarter of 2009 and a net loss of $7.5 million in the first quarter of 2009. This net loss was primarily due to the depreciation of the Euro against the U.S. dollar in the first quarter which was partially offset by the gain from foreign currency forward contracts used by the Company to hedge its foreign currency risk exposure.
The Company continued foreign currency hedging during the first quarter of 2010 using foreign currency forward contracts between the Euro and the U.S. dollar, with the goal of mitigating, to some extent, the effects of exchange rate volatility.
Net Income and EPS
Net income was $44.5 million in the first quarter of 2010, compared to a net income of $48.8 million in the fourth quarter of 2009 and a $11.0 million loss in the first quarter of 2009. The net foreign currency exchange loss included in net income was $14.5 million, compared to a net foreign currency exchange loss of $2.6 million and a net foreign currency exchange loss of $7.5 million in the fourth quarter and first quarter of 2009, respectively.
Net margin was 13.2% in the first quarter of 2010, compared to 15.6% in the fourth quarter of 2009 and negative 8.0% in the first quarter of 2009.
Earnings per fully diluted ADS were $0.66. The negative impact of first quarter net foreign currency exchange loss was approximately $0.21 per fully diluted ADS.
Financial Condition
As of March 31, 2010, the Company had $690.5 million in cash and cash equivalents and restricted cash, which includes the net proceeds of its recent follow-on offering. The Company's working capital balance was $728.9 million. Total bank borrowings stood at $518.0 million, of which $296.1 million were long-term borrowings. The Company reduced its short-term borrowings by $45.5 million to approximately $221.9 million in the first quarter.
Shareholders' equity was $898.8 million, an increase from $679.3 million at the end of the fourth quarter of 2009.
Second Quarter and Full Year 2010 Guidance
For the second quarter of 2010, the Company expects to ship between 200 MW to 205 MW of PV modules. The Company currently believes its gross margin for the second quarter will be in the high 20s in percentage terms. Such guidance is based on the current exchange rate between the Euro and U.S. dollar.
For the full year of 2010, the Company reiterates its guidance for total PV module shipments between 750 MW to 800 MW, representing an increase of 88% to 100% from 2009.
Operations and Business Outlook
Non-Silicon Cost Reduction
In the first quarter of 2010, the Company's non-silicon manufacturing cost for its in-house core raw materials to module production was approximately $0.76 per watt, a sequential reduction of $0.02. By the year end of 2010, the Company expects further reduction to reach approximately $0.70 through the continuation of technology and manufacturing process improvements, including supply chain and logistics management initiatives currently under testing or development.
Silicon Procurement
Through the Company's diversified range of short, medium, and long-term supply contracts, which include agreements entered into in the first quarter of 2007, the Company will continue to maintain competitive silicon costs relative to the current market price.
Sales Outlook
As a result of increasing demand visibility for its module products in both its European and non-European markets, the Company expects to increase its shipment volumes on a quarter to quarter basis through the end of 2010. Additionally, the Company expects to increase its percentage of global shipments to the United States in the second half of 2010.
Capacity Expansion
Through yield increases achieved from improved cell conversion efficiency rates, improved production efficiencies and manufacturing line enhancements, the Company has increased its annualized in-house production capacities of ingot and wafer as well as PV cells and modules to approximately 600 MW and 750 MW respectively as of March 2010. The Company expects to expand its annualized cell and module production capacity to reach up to 950 MW by the third quarter of 2010.
Conference Call
The Company will host a conference call at 8:00 a.m. ET on May 25, 2010, to discuss the results for the quarter ended March 31, 2010. Joining Jifan Gao, Chairman and CEO of Trina Solar, will be Terry Wang, Chief Financial Officer, Sean Tzou, Chief Operating Officer, and Thomas Young, Senior Director of Investor Relations. Supplemental information will be made available on the Investors Section of Trina Solar's website at http://www.trinasolar.com . To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1 (800) 884-2382. International callers should dial +1 (660) 422-4933. The conference ID for the call is 7260-0212.
If you are unable to participate in the call at this time, a replay will be available on May 25 at 10:00 a.m. ET, through June 8, at 11:59 p.m. ET. To access the replay, dial 1 (800) 642-1687, international callers should dial +1 (706) 645-9291, and enter the conference 7260-0212.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties on Trina Solar's website at http://www.trinasolar.com . To listen to the live webcast, please go to Trina Solar's website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Trina Solar's website for 90 days.
About Trina Solar Limited
Trina Solar Limited (NYSE: TSL) is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. Trina Solar's products provide reliable and environmentally-friendly electric power for a growing variety of end-user applications worldwide. For further information, please visit Trina Solar's website at http://www.trinasolar.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's ability to raise additional capital to finance the Company's activities; the effectiveness, profitability, and marketability of its products; the future trading of the securities of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
Trina Solar Limited
Unaudited Consolidated Statement of Operations
(US dollars in thousands, except ADS and share data)
For the Three Months Ended
March 31, December 31, March 31,
2010 2009* 2009*
Net revenues $336,841 $313,271 $132,108
Cost of revenues 232,606 211,073 109,401
Gross profit 104,235 102,198 22,707
Operating expenses
Selling expenses 14,993 12,722 4,309
General and administrative expenses 11,161 23,061 10,660
Research and development expenses 2,087 1,986 909
Total operating expenses 28,241 37,769 15,878
Operating income 75,994 64,429 6,829
Foreign exchange loss (27,514) (8,284) (7,647)
Interest expenses (9,430) (7,543) (6,605)
Interest income 386 253 859
Gain on change in fair value
of derivative 13,023 5,719 170
Other expenses (income), net (166) 1,883 (104)
Income (loss) before income taxes 52,293 56,457 (6,498)
Income tax expenses (7,752) (7,637) (4,459)
Net income (loss) $44,541 $48,820 $(10,957)
Earnings per ADS
Basic 0.72 0.80 (0.22)
Diluted 0.66 0.74 (0.22)
Weighted average ADS outstanding
Basic 62,050,482 60,728,876 50,182,671
Diluted 70,758,862 69,346,186 50,182,671
Trina Solar Limited
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
March 31, December 31, March 31,
2010 2009* 2009*
ASSETS
Current assets:
Cash and cash equivalents $636,080 $406,058 $153,325
Restricted cash 54,393 72,006 40,788
Marketable Securities 723 4,034 --
Inventories 80,685 81,154 79,109
Project assets 7,196 1,938 --
Accounts receivable, net 305,496 287,950 169,583
Current portion of advances
to suppliers 44,393 41,303 36,631
Prepaid expenses and
other current assets, net 48,812 33,074 10,395
Total current assets 1,177,778 927,517 489,831
Property, plant and equipment 504,365 476,858 363,816
Prepaid land use right 27,281 27,423 26,779
Advances to suppliers - long-term 96,317 105,188 118,325
Deferred tax assets 10,430 9,926 5,064
Other noncurrent assets 1,568 1,786 2,368
TOTAL ASSETS $1,817,739 $1,548,698 $1,006,183
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings, including
current portion of long-term debt $221,907 $267,428 $305,524
Accounts payable 162,588 186,535 70,339
Income tax payable 12,115 12,874 8,444
Accrued expenses and other current
liabilities 52,227 48,564 23,762
Total current liabilities 448,837 515,401 408,069
Long-term bank borrowings 296,102 182,516 14,629
Convertible note payable 133,838 133,036 130,611
Accrued warranty costs 24,057 21,023 13,789
Other noncurrent liabilities 16,074 17,410 12,546
Total liabilities 918,908 869,386 579,644
Ordinary shares 39 34 30
Additional paid-in capital 636,747 459,520 313,960
Retained earnings 252,859 208,318 101,134
Other comprehensive income 9,186 11,440 11,415
Total shareholders' equity 898,831 679,312 426,539
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,817,739 $1,548,698 $1,006,183
* Note to unaudited consolidated financial statements:
On January 1, 2010, the Company adopted ASC 470-20 (former EITF 09-1, "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible debt Issuance or Other Financing"). Accordingly, the share lending arrangement has been measured at fair value and recognized as an issuance cost associated with the convertible debt offering. As a result, additional debt issuance costs of $4.1 million were retrospectively recorded on the issuance date with a corresponding increase to additional paid-in capital. The debt issuance costs have also been retrospectively amortized over the life of the convertible notes. The cumulative effect of the adoption resulted in a decrease of $621,246 and $1,979,059 in the beginning balance of retained earnings on January 1, 2009 and 2010 respectively, and the adoption of ASC 470-20 resulted in additional interest expenses in the first and fourth quarter of 2009 of $334,803 and $342,243, respectively. The total interest expense recognized from amortization of convertible debt issuance costs, including the effect of adoption of ASC 470-20, was $2,350,293 for Q1 2010.
For further information, please contact:
Trina Solar Limited
Terry Wang, CFO
Phone: +86-519-8548-2009 (Changzhou)
Thomas Young, Senior Director of Investor Relations
Phone: +86-519-8548-2009 (Changzhou)
Email: [email protected]
Brunswick Group
Caroline Jinqing Cai
Phone: +86-10-6566-2256
Michael Fuchs
Phone: +86-10-6566-2256
Email: [email protected]
SOURCE Trina Solar Limited
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