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|ReneSola Ltd. Announces Fourth Quarter and Full Year 2010 Results|
JIASHAN, China, March 1, 2011 /PRNewswire via COMTEX/ --
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, 2010.
Fourth Quarter 2010 Financial and Operating Highlights
Full Year 2010 Financial and Operating Highlights
"We delivered excellent value to our shareholders for the full year 2010, achieving a record return on equity of 34.4%," said Mr. Xianshou Li, ReneSola's chief executive officer, "Capitalizing on robust market demand, we expanded our capacities and increased our shipments throughout the year to reach record revenues of over US$1.2 billion. We continued to execute on our cost-reduction strategy in the fourth quarter, lowering our non-silicon wafer processing cost to US$0.24/W. Our polysilicon plant also began to contribute to profitability as we continued to ramp up polysilicon production and reduce production cost to US$45/kg in February against a macro environment of rising polysilicon spot prices."
Mr. Li continued, "We intend to further reduce our wafer processing cost in 2011 and increase the current polysilicon production to 3,500 MT through de-bottlenecking while reducing cost to US$35/kg by the end of 2011. In the beginning of 2011, as part of our technology initiatives, we have unveiled a new multicrystalline wafer, the Virtus wafer, which achieves a higher cell conversion efficiency rate than the industry standard. As we continue to focus on cost reductions, expand our capacities and seek technological improvements, we expect to maintain our position as a leading cost-competitive solar manufacturer."
Julia Xu, ReneSola's chief financial officer, commented, "Our strategic execution in 2010 generated strong operating cash flows and prudent capital expenditures that have significantly improved our balance sheet. Our net debt-to-equity ratio has been reduced to 33.8% in 2010 from 104.9% in 2009, positioning us well as we look to capture market share through capacity expansions. In addition to record revenues of US$1.2 billion and record shipments of 1.2 GW, we achieved impressive gross and operating margins of 28.9% and 20.4%, respectively, for the full year 2010. As a single segment player with a focus on wafer production, we capitalized on strong market demand and reduced in-house manufacturing cost to deliver a strong performance in 2010."
Ms. Xu continued, "In 2011, we expect to face increased market competition due to additional solar capacities that had been added. Accordingly, we have secured over 20 long-term contracts in 2010, representing 1.3 GW of expected wafer sales in 2011, while our in-house polysilicon production will satisfy approximately 30% of our internal polysilicon demand with a full-year average cost per kilogram between US$40 and US$45."
Fourth Quarter 2010 Results
Record revenues in Q4 2010 were driven by higher wafer average selling price ("ASP"), excluding processing services, of US$0.88 per watt ("W") and the continued growth of the Company's module business.
The sequential decrease in gross margin was primarily due to increased module sales among the Company's total revenue mix.
Sequential increases in operating expenses were primarily due to a US$5.1 million increase in other expenses as a result a one-off sale of recyclable polysilicon accumulated during the Company's early years of operation when it was producing wafers using reclaimed polysilicon. Operating expenses represented 8.6% of total revenues in Q4 2010, in line with 8.5% in Q3 2010.
In Q4 2010, the Company also recognized a US$10.1 million gain in the fair value of foreign exchange forward contracts entered into to hedge foreign currency risks. The Company also recognized a write-back of deferred tax assets of US$5.5 million in Q4 2010 to adjust deferred tax credit accumulated in 2009, resulting in an inflated effective tax rate of 30.4% for Q4 2010.
Full Year 2010 Results
Record revenues for the full year 2010 were driven by higher wafer ASPs than anticipated and strong growth in the Company's module business.
The significant improvement in the Company's gross margin from negative 8.5% for the full year 2009 to positive 28.9% for the full year 2010 was driven by an overall wafer processing cost reduction to US$0.24/W and a large decrease in polysilicon cost to between US$55 per kilogram ("kg") and US$60/kg.
Increases in operating expenses were primarily due to increases in R&D and SG&A expenses in accordance with sales.
ReneSola's wafer business achieved over 30% gross profit margin for a third consecutive quarter in Q4 2010, supported by growing demand for the Company's wafers and substantial cost reductions by the Company. In Q4 2010, ReneSola reduced its non-silicon wafer processing cost to US$0.24/W and managed its polysilicon raw material cost to US$55/kg to US$60/kg, well below the average polysilicon spot price for the quarter. The Company's prudent control over raw material procurement coupled with in-house polysilicon production capabilities have led to steady polysilicon input prices that have provided protection against rising polysilicon spot prices. The Company will continue its cost reduction efforts through advancements in technology and manufacturing.
As announced earlier this year, the Company has developed a new multicrystalline wafer, the Virtus Wafer. The Virtus Wafer, which achieves an average cell conversion efficiency rate of 17.5%, more than 1% higher than the industry standard. The Company expects to commence pilot production of the wafer this year.
The Company has over 20 long-term wafer contracts lasting for periods of one to five years and totaling 1.3 GW for 2011, which represents all of the Company's expected wafer shipments for 2011.
The Company continues to expand its downstream module business. In Q4 2010, the Company delivered record module shipments of 126.8 MW with an ASP excluding processing services of US$1.85/W, driven primarily by strong market demand. The Company remains confident in the potential of its downstream business, seeking both branded and non-branded opportunities.
The Company's Sichuan polysilicon plant began to contribute to profitability in the fourth quarter, supporting wafer demand through increased production and improving margins through reduced production cost. In Q4 2010, the Company produced approximately 610 metric tons ("MT") of polysilicon, an increase of 126.8% from approximately 269 MT in Q3 2010. The Company's polysilicon production cost was between approximately US$55/kg to US$60/kg during Q4 2010. Production cost has been further reduced to US$52/kg with 201 MT of production in January 2011 and US$45/kg with 246 MT of production in February 2011.
The Company is on target to produce 700 MT to 800 MT with an average production cost of approximately US$45/kg in Q1 2011. As the Company moves towards its goal to produce 3,500 MT and reduce production cost to US$35/kg by the end of 2011, it believes it will be significantly shielded from polysilicon procurement risk The Company plans to build an additional 5,000 MT of polysilicon production capacity, bringing total capacity to 8,500 MW, in order to meet the growing demand of polysilicon requirement as the Company expands its wafer capacities to 1.9 GW in 2011.
Strong Operating Cash Flows and Cash Position
The Company generated strong operating cash inflow of US$116.1 million in Q4 2010, bringing total operating cash inflow to US$403.2 million for the full year 2010. Net cash and cash equivalents plus restricted cash was US$324.3 million at the end of Q4 2010, compared to US$286.6 million in Q3 2010, while total debt was reduced from US$542.2 million in Q3 2010 to US$522.3 million in Q4 2010.
Capital expenditure spending was US$56.3 million for Q4 2010 and US$140.9 million for the full year 2010, resulting in free cash flow of US$262.3 million for the full year 2010. Short-term borrowings increased from US$353.6 million in Q3 2010 to US$400.8 million in Q4 2010 primarily due to US$93.8 million of long-term borrowings maturing at the end of 2011. Short-term borrowings consist of US$117.9 million in trade finance, US$189.1 million in short term revolving short-term facilities and US$93.8 million as the short-term portion of the long-term debt
2011 Capacity Expansion Plans and Related CAPEX
The Company expects to spend US$350 million in 2011 to expand wafer production capacity from the current 1.3 GW to 1.9 GW while increasing module production capacity from the current 400 MW to 600 MW and expanding polysilicon production from the current 3,000 MT to 8,500 MT, approximately 500 MT of which the Company does not expect to incur additional capital expenditure, as it will be achieved through de-bottlenecking of existing facilities.
The Company cancelled its admission to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange on November 30, 2010.
Company Appoints New President of JC Solar and New VP of Internal Control and Audit
The Company recently appointed Dr. Panjian (Paul) Li as senior vice president of ReneSola and president of Wuxi Jiacheng Solar Energy Technology Co., Ltd. ("JC Solar"), the Company's wholly-owned subsidiary which produces solar cells and modules. As president of JC Solar, Dr. Li, formally ReneSola's chief operating officer, will help lead the Company as it expands its downstream capabilities. Dr. Li will continue to contribute to the Company's overall strategy and business development through his role as senior vice president.
The Company recently appointed John Ding as vice president of internal control and audit. Mr. Ding previously served as director of internal control and audit for ReneSola since 2009. With nearly twenty years of work experience in finance, including more than ten years of management experience and over five years of internal control and audit experience at US-listed companies, Mr. Ding has comprehensive knowledge in accounting, tax policies, credit control and physical asset management. Before joining ReneSola, Mr. Ding served as director of internal audit and SOX compliance at The9 Limited from 2008 to 2009 and held positions in credit, tax and internal control departments at Dell (China) Co., Ltd. from 2003 to 2008. Mr. Ding received a bachelor's degree in international economics and trade from Fudan University as well as a master's degree in professional accounting from Xiamen University. He holds CIA and CCSA certificates.
For Q1 2011, the Company expects total solar wafer and module shipments to be in the range of 320 MW to 330 MW, revenues to be in the range of US$310 million to US$330 million and gross profit margin to be in the range of 30% to 32%.
For the full year 2011, the Company expects total solar wafer and module shipments to be in the range of 1.6 GW to 1.7 GW, representing an increase of 35% to 44% year-over-year.
Conference Call Information
ReneSola's management will host an earnings conference call on Tuesday, March 1, 2011 at 8 am U.S. Eastern Daylight Time / 9 pmBeijing/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 March 8, 2011:
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.
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 American depositary shares are traded on the New York Stock Exchange (NYSE: SOL).
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.
SOURCE ReneSola Ltd