ReneSola Ltd. Announces First Quarter 2012 Results

JIASHAN, China, May 11, 2012 /PRNewswire-Asia/ -- ReneSola Ltd ("ReneSola" or the "Company") (NYSE: SOL), a leading global manufacturer of solar products, today announced its unaudited financial results for the first quarter ended March 31, 2012.

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First Quarter 2012 Financial and Operating Highlights

• Total solar wafer and module shipments in Q1 2012 were 466.0 megawatts ("MW"), exceeding Company guidance and representing an increase of 37.1% from 339.9 MW in Q4 2011.
• Q1 2012 net revenues were US$211.5 million, exceeding Company guidance and representing an increase of 12.7% from US$187.7 million in Q4 2011.
• Q1 2012 gross loss was US$8.0 million with a gross margin of negative 3.8%, which included a $12.2 million write-down for inventory, compared to a gross loss of US$43.4 million with a gross margin of negative 23.1% in Q4 2011. 
• Q1 2012 operating loss was US$37.8 million with an operating margin of negative 17.9%, compared to an operating loss of US$52.7 million with an operating margin of negative 28.1% in Q4 2011.
• Q1 2012 net loss was US$40.2 million, representing basic and diluted loss per share of US$0.23, and basic and diluted loss per American depositary share ("ADS") of US$0.47.
• Cash and cash equivalents plus restricted cash were $388.3 million as of the end of Q1 2012, compared to US$437.4 million as of the end of Q4 2011.

"We continue to navigate what remains a challenging and substantially oversupplied global solar market by aggressively managing our costs," said Mr. Xianshou Li, ReneSola's chief executive officer. "At the same time, however, we have seen steady improvement in our module sales and have built up a backlog of orders, which we are confident will continue to increase. As such, we are working to leverage our R&D advantages in wafer technology, and specifically our Virtus wafer products, to produce higher-efficiency Virtus modules, which deliver a power output of 245 W to 255 W. Our Virtus modules will use our self-manufactured Virtus wafers, which represent ReneSola's core competitive strengths in wafer R&D and technology. On May 17, we will formally announce and kick-off marketing for our high-efficiency modules and diamond-steel wires at the Shanghai New Exhibition Center (SNEC) PV Power Expo. Additionally, our polysilicon project remains on track, and will give us important flexibility as the market continues to evolve."

First Quarter 2012 Results

Solar Wafer and Module Shipments

The sequential increase in solar product shipments was the result of strong demand from European markets, particularly Germany.

Net Revenues

Revenues in Q1 2012 increased quarter over quarter, with a decrease in the average selling price ("ASP") of solar wafers and modules to US$0.33 per watt ("W") and US$0.84/W, respectively, offset by an increase in solar wafer shipments.

Gross Profit (Loss)

The sequential decrease in gross loss was primarily due to lower costs and improved margins on the Company's solar products, offset by an inventory write-down of US$12.2 million, primarily as a result of the decline in the price of polysilicon.

Operating Income (Loss)

The sequential increase in operating expenses was primarily due to the one-time gain of US$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 in Q4 2011. Operating expenses represented 14.1% of total revenues in Q1 2012, compared to 5.0% in Q4 2011.

Foreign Exchange Gain

The Company had a foreign exchange gain of US$0.8 million in Q1 2012, primarily due to the appreciation of the renminbi ("RMB"). The Company also recognized a US$0.04 million gain on derivatives in Q1 2012, compared to a gain of US$3.6 million in Q4 2011.

Net Income (Loss) Attributable to Holders of Ordinary Shares

Business Highlights

Research and Development ("R&D")

In Q1 2012, ReneSola continued to make progress in producing and manufacturing high-efficiency wafers and modules, in particular its Virtus modules. As the Company continues to succeed in improving its Virtus wafer technology, additional benefits will be seen in its high-efficiency Virtus modules, which the Company expects to become increasingly successful in the market. In addition, the Company will start to develop low-oxygen concentration solar wafers, which the Company believes will help improve conversion efficiencies, as well as the attenuation rate of module efficiency. 

The Company recently developed a new technology to recycle products at the polysilicon manufacturing stage, which will help reduce costs. The Company also continues to research the use of carbon composite materials, which the Company believes will help lower costs and expose the Company to new markets.

Module Business

ReneSola delivered 90.9 MW of solar modules in Q1 2012, of which 10 MW were Virtus modules. At present, the Company's module manufacturing has reached its maximum capacity as a result of strong sales generated by its new regional sales teams. The Company expects to ship approximately 150 MW to 170 MW of solar modules in Q2 2012, of which 55 MW are expected to be Virtus modules. For the full year 2012, the Company expects to ship approximately 600 MW of solar modules, of which 200 MW are expected to be Virtus modules. The Company expects to continue to see strong demand for high-efficiency, high-quality products such as the Virtus modules. Accordingly, the Company will increase its module production capacity to 1.2 GW for modules by the end of Q2 2012.

For Q1 2012, the Company's total module manufacturing cost was approximately US$0.74/W. This resulted in a gross margin of approximately 9.0% for the Company's solar module business in Q1 2012. The Company will continue to reduce its module manufacturing costs through a reduction in material costs and improvements in its manufacturing methods, and capitalize on the business's higher margins relative to wafer production. The Company expects total module processing cost to decrease to below US$0.70/W for 2Q 2012.

Wafer Business

ReneSola is now producing high-efficiency Virtus wafers with a conversion efficiency of 18.2%, which is close to monocrystalline wafer conversion efficiency. The Company's blended non-silicon wafer processing cost was US$0.19/W in Q1 2012, a decrease from US$0.20/W in Q4 2012. Since the end of Q1 2012, blended non-silicon wafer processing cost has been reduced to US$0.18 as a result of continued cost-reduction efforts, including the reduced use of electricity and raw materials, as well as 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 to US$0.17/W by the end of 2Q 2012 and to US$0.15/W by the end of 2012.

Polysilicon Update

In Q1 2012, ReneSola produced approximately 900 metric tons ("MT") of polysilicon, which while higher than expected, represented a decrease from approximately 1,089 MT in Q4 2011 as a result of upgrades and maintenance on the state-owned power grid connected to the Company's polysilicon plant. At the end of Q1 2012, the Company had a polysilicon production capacity of 4,000 MT. The Company expects polysilicon production capacity to reach 10,000 MT through Phase II of its polysilicon production plant by the end of 2012.

ReneSola's Sichuan polysilicon plant remains central to the Company's long-term manufacturing and cost-reduction strategy. The Company's internal polysilicon production cost increased to approximately US$33 per kilogram ("kg") for Q1 2012, compared to approximately US$30/kg at the end of Q4 2011, as a result of maintenance and equipment upgrades. Since the end of Q1 2012, polysilicon production cost has returned to approximately US$30/kg and is expected to decrease to approximately $25/kg by the end of Q2 2012. Total internal polysilicon production cost is expected to decrease further to an average of approximately US$22/kg by the end of 2012 once Phase II of the Company's polysilicon production plant is operational. The Company expects Phase II to have stand-alone polysilicon costs of under $20/kg.

Liquidity and Capital Resources

Net cash and cash equivalents plus restricted cash were US$388.3 million at the end of Q1 2012, compared to US$437.4 million at the end of Q4 2011. Total debt was US$800.8 million in Q1 2012, compared to US$715.6 million in Q4 2011, excluding US$111.6 million due in convertible notes.

Capital expenditures were US$45 million for Q1 2012. Short-term borrowings were US$662.6 million in Q1 2012, an increase from US$570.9 million in Q4 2011.

2012 Capacity Expansion Plans and Related CAPEX

The Company expects to spend approximately US$70 million in Q2 2012 to expand its solar module and polysilicon production capacity, as well as improve its manufacturing processes.

Management Changes

Mr. Charles Ding, the Company's former vice president of global sourcing, has left the Company, effective this month.

Outlook

For Q2 2012, the Company expects total solar wafer and module shipments to be in the range of 460 MW to 480 MW, with module shipments of 150 MW to 170 MW, and revenues to be in the range of US$200 million to US$220 million with positive gross margins.

For the full year 2012, the Company's outlook is unchanged, with total solar wafer and module shipments expected 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, May 11, 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:

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 May 18, 2012:

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