Fourth Quarter 2013 Financial and Operating Highlights
- Total solar module shipments were 505.3 MW, representing an increase of 9.2% from Q3 2013. Total solar wafer and module shipments in Q4 2013 were 784.1 megawatts (“MW”), representing a decrease of 7.9% from 851.0 MW in Q3 2013.
- Net revenues were US$438.8 million, representing an increase of 4.7% from US$419.3 million in Q3 2013.
- Gross profit was US$47.4 million with a gross margin of 10.8%, compared to gross profit of US$34.1 million with a gross margin of 8.1% in Q3 2013.
- Operating income was US$8.2 million with an operating margin of 1.9%, compared to an operating loss of US$180.3 million with an operating margin of negative 43.0% in Q3 2013.
- Net income attributable to holders of ordinary shares was US$0.8 million, representing basic and diluted earnings per share of US$0.00 and basic and diluted earnings per American depositary share (“ADS”) of US$0.01.
- Cash and cash equivalents plus restricted cash were $348.9 million as of the end of Q4 2013, compared to US$438.5 million as of the end of Q3 2013.
- Net cash outflow from operating activities was US$29.5 million compared to net cash inflow from operating activities of US$79.6 million in Q3 2013.
Full Year 2013 Financial and Operating Highlights
- Total solar module shipments were 1,728.8 MW, representing an increase of 142.5% from 712.8 MW for full year 2012. Total solar wafer and module shipments were 3,146.5 MW, representing an increase of 42.4% from 2,209.0 MW for full year 2012.
- Net revenues were US$1,519.6 million, an increase of 56.8% from US$969.1 million in 2012.
- Gross profit was US$103.3 million with a gross margin of 6.8%, compared to a gross loss of US$35.7 million with a gross margin of negative 3.7% in 2012.
- Operating loss was US$222.1 million with an operating margin of negative 14.6%, mainly due to a non-cash impairment charge of US$202.8 million recorded in Q3 2013 primarily associated with the Company’s Sichuan polysilicon factory, compared to an operating loss of US$179.0 million with an operating margin of negative 18.5% in 2012.
- Net loss attributable to holders of ordinary shares was US$259.5 million, representing basic and diluted loss per share of US$1.42 and basic and diluted loss per ADS of US$2.85.
- Net cash inflow from operating activities was US$120.1 million compared to net cash outflow from operating activities of US$94.7 million in 2012.
“We achieved another quarter of record solar module shipments and record revenue, and recognized net profit for the first time in two years. It was a great achievement of which I’m very happy and proud,” said Mr. Xianshou Li, ReneSola’s chief executive officer. “In a year in which the global solar industry showed real signs of recovery despite persistent challenges, we are happy to have not only endured but to be returning to profitability. In 2013, our module shipments increased dramatically from last year, demonstrating our current position as one of the world’s major module providers, and after only 18 months of scale production. Our business performance and financial results underscore the success of our efforts to grow our brand recognition and market share in international markets. Moreover, we have become one of the top module suppliers in the United States, Europe and Japan.
“We started our global OEM initiative two years ago and in 2013 saw remarkable progress in that strategy. We currently have overseas OEM module capacity of approximately 1GW, with facilities in Poland, South Africa, India, Malaysia, South Korea, Turkey, and most recently Japan, which are responsible for an increasing proportion of our module shipments. Our OEM strategy enables us to grow our business with minimum capital expenditure, and also provides us great flexibility in terms of capacity expansion as dictated by actual market conditions. Furthermore, given the potential of extended and additional anti-dumping and countervailing measures regarding Chinese solar products, our global OEM capability puts us in a very favorable position to manage such regulatory obstacles.
“We saw rapid growth in our international business development last year. We now have 15 overseas sales offices, with our most recent openings in established markets like France, and emerging markets like Panama, Turkey and Thailand. We are also in the process of setting up new sales offices in Southeast Asia, Latin America, the UAE, Africa, Russia, and Canada, and we now have 27 warehouses around the globe. With our local teams and distribution centers serving the majority of overseas markets, we are able to provide tailor-made local support and solutions, as well as instant product delivery. Moreover, we are able to extend the reach of our brand image and enhance our reputation for quality, which is key to our goal of becoming an integrated service and solution provider.”
Full Year 2013 Results
Solar Wafer and Module Shipments
The significant increase in module shipments during 2013 was mainly the result of the Company’s successful efforts to improve its brand recognition and grow its market share globally as a leading module provider and improved market conditions.
Net Revenues and Gross Profit (Loss)
The increase in revenues was the result of an increase in solar module shipments, which offset a decrease in solar module ASPs. The return to gross profit from gross loss was driven by an increase in solar module shipments and a gradual recovery in the global solar market from a situation of significant oversupply.
The increase in operating expenses was primarily due to (1) an impairment charge of US$202.8 million recognized in 2013 primarily related to the Company’s polysilicon facility, and (2) an increase in sales and marketing expenses in conjunction with the Company’s international business development activities. The increase in operating expenses was offset by a gain of US$34.7 million on the forfeiture by a customer of a deposit the Company received in connection with a long-term supply contract. Operating expenses represented 21.4% of total revenues in 2013, compared to 14.8% in 2012. Excluding the non-cash impairment charge and the gain, operating expenses represented 10.3% of total revenues in 2013, compared to 13.1% in 2012 excluding other impairment charges of US$ 16.4 million.
Liquidity and Capital Resources
Net cash inflow from operating activities was US$119.8 million in 2013, compared to net cash outflow of US$94.7 million in 2012.
Net cash and cash equivalents plus restricted cash were US$348.9 million as of the end of 2013, compared to US$268.1 million as of the end of 2012.
As of the end of 2013, total debt was US$742.6 million, compared to US$790.2 million as of the end of 2012, excluding US$111.6 million of convertible notes due March 15, 2018, unless repurchased or converted at an earlier date. As of the end of 2013, short-term borrowings were US$673.1 million, compared to US$733.6 million as of the end of 2012.
The total output of polysilicon for full year 2013 was 2,875 metric tons, with an output of 1,768 metric tons in Q4 2013. The operation of the Company’s Sichuan polysilicon factory was temporarily suspended for equipment maintenance and optimization purposes in Q1 2014. Full operations resumed in March of this year. With polysilicon prices recently going up and remaining stable, the Company expects to benefit from its in-house polysilicon capability going forward.
Research and Development
During Q4, ReneSola continued to invest in the development of new technologies and to increase the efficiency of its current solar products.
Wafers and Modules
During Q4, the Company began trial production of its new A+++ wafer, and expects to begin mass production in Q2 2014. The new A+++ wafer will have an average efficiency increase of 0.25% compared to the A++ wafer.
The Company expects to launch a new Virtus III module using its own A+++ wafer in Q2 2014. The increased efficiency of the new module is expected to result in a slightly lower cost per watt compared to the Virtus II module.
The Company began mass production of its full-black mono-cell module during Q4. This is a high-end, limited supply module designed for residential rooftop use. The full-black module blends seamlessly with the black back panel and provides high efficiency along with a sleek appearance.
The Company’s newly developed glass-glass module, which features exceptional reliability in terms of fireproof performance, as well as great durability under harsh environments such as desert conditions and salt and snow exposure. It is expected to start the certification process and enter trial production soon.
The Company’s micro-inverter now features remote regulation functionality, which enables customers to regulate the voltage and frequency range of the grid to meet field requirements. In Q4, the Company obtained certification for its string inverter across a number of markets, including Germany, South Africa, and the United States.
The Company currently has developed 600 models of LED products, and expects to obtain TUV-CE, UL and CUL, and SAA and CTICK certificates for over 100 of these models during Q2 2014. The Company’s full line of LED products is currently being marketed globally.
Recent Business Developments
- In March, ReneSola announced it will deliver 66 Replus string inverters, 100 Micro Replus micro inverters, and 2,000 ReneSola 240W and 260W Virtus II modules to Enlightened Solar to be installed at residential housing developments in southeastern England.
- In March, ReneSola announced it had delivered approximately 45,900 of its high-efficiency modules to the Photovoltaic Plant of Ferrara Aranova project, a 11.7MW ground-mounted solar project in Italy developed by Tozzi Sud S.p.A., an Italian designer, manufacturer, and installer of power plants.
- In March, ReneSola announced it will begin manufacturing its Virtus II modules in Japan through a joint venture, Vitec Global Solar, in partnership with Vitec Co., Ltd., a Japanese trading company that specializes in the sale of semiconductor and electrical products.
- In February, ReneSola announced it had opened a new office in Lyon, France. The office will provide regional sales and customer support services.
- In February, ReneSola announced it is supplying 13MW of its high-efficiency Virtus and Virtus II polycrystalline solar modules to Low Carbon, a UK-based investor in renewable energy developers and projects. The modules will power a ground-mounted project on 63.5 acres of land in Wiltshire, England.
- In February, ReneSola announced that it had provided 10,000 of its high efficiency solar PV modules to Chevron Energy Solutions, one of the largest installers of solar power in the United States, for a 3.1MW multi-site project in Lemoore, California. The multi-array project will consist of 2.85MW of ReneSola’s 72-cell 300W polycrystalline modules and 260KW of 260W monocrystalline modules.
- In February, ReneSola announced the formal launch of ReneSola Panama Inc., the Company’s first branch office in Latin America. The office will be responsible for sales and marketing efforts across Latin America and the Caribbean region.
- In January, ReneSola announced an agreement to provide Isolux Corsan, a global benchmark in the areas of concessions, energy, construction and industrial services and a leader in engineering, procurement and construction projects for solar PV plants, with 57 megawatts of Virtus PV modules for installation in three commercial PV projects in the United Kingdom.
- In January, ReneSola announced the formal launch of ReneSola South Africa (Pty) Ltd. in Cape Town. The office will be responsible for sales and marketing efforts across Africa and South Africa.
- In January, ReneSola announced it provided Isolux Corsan Servicios, S.A., a global benchmark in the areas of concessions, energy, construction and industrial services and a leader in engineering, procurement and construction projects for solar PV plants, with 31.7 MW of Virtus PV modules for a commercial PV project in the United Kingdom.
- In January, ReneSola marked a year of projects that cumulatively utilize over 50MW of solar power across several sites in North Carolina and that are powered by ReneSola’s high-efficiency 300W 72-cell polycrystalline solar modules.
- In January, ReneSola announced it had been awarded a contract to supply 420MW of solar panels to a leading solar project developer based in Japan. ReneSola’s Virtus II 300W 72-cell high-efficiency polycrystalline PV panels will be installed in over ten ground-mounted power plants in the mountain regions of Japan, and will provide power to the surrounding residential homes.
- In December, ReneSola announced it had signed a Memorandum of Intent to sell three utility-scale projects in Western China, with a total capacity of 60MW, to Jiangsu Akcome Solar Science & Technology Co., Ltd. on December 30, 2013, pursuant to which the share transfer agreement was subsequently entered into on January 3, 2014.
- In December, ReneSola announced its collaboration with Solar Power Systems of Mexico to implement a 192KW project for glass manufacturer Vidrio Formas in Lerma, Edo, Mexico.
- In December, ReneSola announced its ReneSola Jiangsu Product Center Laboratory had received ISO/IEC 17025:2005 certification from the Canadian Standards Association, an international organization that advocates high standards in safety, sustainability, and performance. The Witnessed Manufacturer’s Testing for Certification Program, led by CSA, covered 12 types of tests on ReneSola’s solar panels. Certification under this program means ReneSola PV panel testing and calibration conform to international standards, and positions ReneSola’s Jiangsu laboratory among leaders in the solar industry.
- In December, ReneSola announced collaborative projects with Silicon Valley-based solar integrator Vista Solar.
- In December, ReneSola announced its collaboration with Community Energy, Inc., a Pennsylvania based developer of clean energy projects. ReneSola provided its high-efficiency PV modules to power the 63KW roof-top solar array installed at Temple University in Philadelphia, PA.
- In December, ReneSola announced it will deliver 6.8MW of its high efficiency Virtus II 72-cell 300W polycrystalline photovoltaic modules to one of California’s leading project developers, Pristine Sun.
- In December, ReneSola announced it will partner with LTS Energy to develop a 330 kW solar project for “Ranch 41,” a farm in Fallbrook, California. ReneSola will provide its high-efficiency Virtus II 305W polycrystalline modules for this fixed tilt ground mount PV project.
For Q1 2014, the Company expects total solar module shipments to be in the range of 500MW to 520 MW, and gross margin to be in the range of 9% to 11%.
For full year 2014, the Company expects total solar module shipments to be in the range of 2.3 GW to 2.5 GW.
For year 2014, the Company does not have any plans for internal capacity expansion.