ReneSola Ltd. (ADR) (NYSE:SOL), a leading brand and technology provider of energy-efficient products, today announced its unaudited financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Financial and Operating Highlights

  • Total solar module shipments were 322.0 megawatts (“MW”), representing a decrease of 35.1% from Q1 2015. Total solar wafer and module shipments in Q2 2015 were 603.7MW, compared to 691.5MW in Q1 2015, and 698.3MW in Q2 2014.
  • Net revenues were US$268.4 million, representing a decrease of 23.1% from US$349.0 million in Q1 2015, and a decrease of 30.7% from US$387.1 million in Q2 2014.
  • Gross profit was US$44.4 million with a gross margin of 16.5%, compared to gross profit of US$36.7 million with a gross margin of 10.5% in Q1 2015, and gross profit of US$56.9 million with a gross margin of 14.7% in Q2 2014.
  • Operating income was US$10.5 million with an operating margin of 3.9%, compared to an operating loss of US$9.5 million with an operating margin of negative 2.7% in Q1 2015, and operating income of US$10.6 million with an operating margin of 2.7% in Q2 2014.
  • Net loss attributable to holders of ordinary shares was US$2.3 million, representing basic and diluted loss per share of US$0.01 and basic and diluted loss per American depositary share (“ADS”) of US$0.02, compared to basic and diluted loss per share of US$0.09 and basic and diluted loss per ADS ofUS$0.18 in Q1 2015.
  • Cash and cash equivalents plus restricted cash totaled $185.1 million as of the end of Q2 2015, compared to US$228.1 million as of the end of Q1 2015, and US$218.8 million as of the end of Q2 2014.
  • Net cash outflow from operating activities was US$11.6 million compared to net cash outflow from operating activities of US$9.0 million in Q1 2015, and net cash outflow from operating activities of US$40.6 million in Q2 2014.

“We are proud of the continuous success that we have been demonstrating in executing our solar downstream strategies,” said Mr. Xianshou Li, ReneSola’schief executive officer. “The second quarter of 2015 represented an important turning point for ReneSola as we began to reap the benefits of our downstream efforts by beginning to sell solar projects from the 70MW portfolio that we developed and constructed in the UK. While we are scaling back our module business, we have been rapidly building our new solar portfolio comprised of selective high-quality projects mainly from attractive markets including the U.S., the UK, and Japan. This includes our recently announced a U.S. joint venture that will initially complete approximately 150MW based on a high-quality portfolio of projects in the U.S.”

“In the second half of 2015, we will leverage our track record and well-known and growing brand name to deepen our penetration into global solar project markets and to expand our project portfolio in key markets. Through these efforts we aim to develop and build over 300 MW of solar projects that will be operational by 2016. We believe our global business platform, established customer relationships, strategic partnerships and experienced international team position us well for success in the marketplace,” added Mr. Li.

As the Company is successfully transitioning into the downstream, ReneSola’s profitability and balance sheet outlook are also improving,” commented Mr.Daniel K. Lee, ReneSola’s chief financial officer. “We have significantly improved our gross margins quarter over quarter as a result of both internal cost control and favorable contributions from our downstream project business. Operating under our global risk management framework, we continued to tightly monitor our client credit evaluation process on the module business side and maintained discipline targeting only robust solar project markets without government subsidy payment issues. As we plan to complete the monetization of our remaining 51MW of UK projects in the second half of this year, we will build a larger portfolio of high-quality projects, changing the core dynamics of the company and taking us on a path we believe will enhance shareholder value over the long-term.”

Second Quarter 2015 Results

Solar Wafer and Module Shipments

2Q15 1Q15 2Q14 Q-o-Q% Y-o-Y%
Module Shipments (MW) 322.0 496.4 498.7 -35.1% -35.4%
Wafer Shipments (MW) 281.7 195.1 199.6 44.4% 41.1%
Total Solar Wafer and ModuleShipments (MW) 603.7 691.5 698.3 -12.7% -13.5%

The quarter-over-quarter decrease in module shipments was mainly due to a strategic shift toward downstream project business. The quarter-over-quarter increase in wafer shipments is due to temporary business opportunities.

Net Revenues and Gross Profit

2Q15 1Q15 2Q14 Q-o-Q% Y-o-Y%
Net Revenues (US$mln) $268.4 $349.0 $387.1 -23.1% -30.7%
Gross Profit (US$mln) $44.4 $36.7 $56.9 21.0% -22.0%
Gross Margin 16.5% 10.5% 14.7%

Net revenues decreased quarter over quarter due to lower module shipments, which is consistent with the Company’s downstream expansion strategy and efforts to scale back its module business. The quarter-over-quarter increase in the Company’s gross margin was a result of material and processing cost reductions and positive contribution from the revenue recognition from the sale of a solar project.

Operating Income (Loss)

2Q15 1Q15 2Q14 Q-o-Q% Y-o-Y%
Operating Expenses (US$mln) $33.9 $46.2 $46.3 -26.6% -26.8%
Operating Income (Loss) (US$mln) $10.5 ($9.5) $10.6
Operating Margin 3.9% -2.7% 2.7%

The quarter-over-quarter decrease in operating expenses was primarily due to lower sales and marketing expenses associated with lower module shipments as well as gains mainly related to discounts obtained in connection with the settlement of certain payables.

Foreign Exchange Gain (Loss)

In Q2 2015, the Company had a net foreign exchange loss of $2.6 million, which includes a loss of $8.8 million from foreign exchange forward contracts.

Net Income (Loss) Attributable to Holders of Ordinary Shares

2Q15 1Q15 2Q14
Net Income (Loss) (US$mln) ($2.3) ($18.0) $0.8
Diluted Earnings (Loss) per Share ($0.01) ($0.09) $0.00
Diluted Earnings (Loss) per ADS ($0.02) ($0.18) $0.01

Liquidity and Capital Resources

Net cash outflow from operating activities was US$11.6 million in Q2 2015, compared to net cash outflow of US$9.0 million in Q1 2015.

Net cash and cash equivalents plus restricted cash totaled US$185.1 million as of June 30, 2015, compared to US$228.1 million as of March 31, 2015.

Total bank borrowing was US$694.7 million as of June 30, 2015, compared to US$723.0 million as of March 31, 2015. Short-term borrowings were US$653.6 million at June 30, 2015, compared to US$681.7 million at March 31, 2015.

The Company has US$62.2 million of convertible notes due on March 15, 2018 with a put option on March 15, 2016. In Q2 2015, the Company repurchased$0.7 million notional amount of its convertible notes. The Company might continue to repurchase its convertible bonds from time to time, subject to market conditions and other strategic considerations.

Project Business Update

ReneSola currently has a total of approximately 77.4MW in existing projects, including 51.1MW in the United Kingdom, 1.2MW in Japan, 9.7MW in Bulgariaand 15.4MW in Romania. The Company also has a late stage project pipeline with over 200MW in development across the UK, U.S. and Japan. Please note that while the Company expects its projects under development to secure the necessary permits and approvals and to achieve certain benchmarks according to the timelines provided, certain projects may be delayed or may not reach completion due to various circumstances.

United Kingdom

In the UK, in the second quarter the Company closed the sale of the Field House solar power plant totaling 6.4MW. The Company also sold the 13.5MW Wedgehill utility scale solar project with majority of cash received. Due to certain contractual provisions in the sales agreement, the revenue associated with the sale of Wedgehill was deferred in this quarter.

ReneSola added 28MW of late-stage projects to its pipeline in the second quarter, all of which are expected to be connected to the grid before March 2016.

Project Name MW Status COD/Expected COD
Wedgehill 13.5 Sold* Dec 14
Field House 6.4 Sold Mar 15
Membury 16.5 Sale in progress Mar 15
Port Farm 34.6 Sale in Progress Mar 15
Total Existing 51.1
Project CH 10 Project Acquired Mar 16
Project RF 8 SPA Signed Mar 16
Project Ain 5 In Due Diligence Feb 16
Project F2 5 In Due Diligence Feb 16
Total Pipeline 28

*ASC360-20 – Property, Plant, and Equipment – Real Estate Sales guidance for revenue recognition. Due to a negotiated buyer’s acceptance provision which could result in rejection of the power plant, although the probability of such contingency occurring after statistical analysis was considered extremely remote, under the US GAAP ASC360-20 the revenue associated with the sale of the project was deferred.

United States

In the United States, the Company has entered into a definitive agreement with Pristine Sun, LLC to form a joint venture, Baynergy, LLC, for which ReneSola is the majority interest holder, to develop, build and operate over 300MW of solar projects across the country, including a first phase of 82 projects totaling 151.8MW, most of which are distributed generation projects. Currently Baynergy has 88MW accepted in California, Minnesota and North Carolina, with expected completion by the end of 2016.

Japan

ReneSola currently has a total project pipeline of 32.4MW in Japan, including 1.2MW of completed projects.

Project Name MW Status COD/Expected COD
Kyoto Project 1 0.3 Construction Completed Sep 15
Tochigi Project 2 0.9 Construction Completed Feb 15
Chiba Project 3 0.3 Developing Oct 16
Tochigi Project 4 0.6 Developing Feb 16
Aichi Project 5 0.9 Developing Jun 16
Aichi Project 6 1 Developing Jun 16
Gifu Project 7 1 Developing Mar 16
Kyoto Project 8 9.9 Developing Jul 17
Miyazaki Project 9 17.5 Developing Oct 17
Total 32.4

The Company is actively exploring project opportunities in several developed markets and will update its project pipeline accordingly.

Business Highlights

Geographic Breakdown of Module Shipments

2015 Q2 2015 Q1 2014 Q2
U.S. 5.8% 3.3% 11.2%
Europe 13.7% 44.4% 31.4%
Japan 36.4% 30.4% 23.3%
China 25.3% 4.8% 15.3%
Other 18.8% 17.1% 18.8%

Recent Business Developments

  • In August 2015, ReneSola announced that it will partner with Pristine Sun, LLC, a leading San Francisco-based solar project developer, to form a joint venture, Baynergy, LLC, to accelerate U.S. project development. The JV will develop, build and operate over 300MW of solar projects in the United States, including many distributed generation projects. Baynergy initially will own solar projects in various development stages and will continue to develop, build and operate a total solar project pipeline of 300MW. The joint venture has an initial target of 150MW of solar projects to be in operation by the end of 2016.
  • In July 2015, the Company announced it will provide Cofely Solar Technics, a major player in energy efficiency, with 30MW of solar modules which will be used in a ground-mounted, utility-scale project in Nottinghamshire in the UK. Under the terms of the agreement, ReneSola’s contracted OEMs will deliver 30MW of the Company’s high-efficiency 260w Virtus II solar modules produced in Poland for the project between July and September of this year.
  • In July 2015, ReneSola announced that it will provide 20MW of solar modules to an international leading EPC company in Europe for several utility-scale projects in Germany. Under the terms of the agreement, ReneSola’s contracted OEMs will deliver 20MW of the Company’s high-efficiency Virtus II solar modules in Q3 of this year.
  • In July 2015, the Company announced that it acquired the total project development rights for 22.5MW of ground-mounted, utility-scale solar projects inJapan. The projects, most of which are expected to commence production and connect to the grid beginning in late 2015 and early 2016, will primarily utilize ReneSola’s PV modules, specifically the company’s top-rated Virtus II module.
  • In July 2015, ReneSola announced that it sold its 13.5MW Wedgehill utility scale solar project in the United Kingdom, which utilized ReneSola’s Virtus II modules, to a renowned solar energy generator in the UK. The project was connected to the grid in December 2014 and is qualified for the UK’s 1.4 R.O.C scheme.

Outlook

For Q3 2015, the Company expects its net revenues to be in the range of US$330 million to US$340 million, and gross margin to be in the range of 15% to 16%. (Original Source)

Shares of Renesola LTD closed yesterday at $1.17. SOL has a 1-year high of $3.62 and a 1-year low of $0.94. The stock’s 50-day moving average is $1.32 and its 200-day moving average is $1.46.

On the ratings front, Renesola has been the subject of a number of recent research reports. In a report issued on August 5, Cowen analyst Jeff Osborne upgraded SOL to Buy. Separately, on June 3, Roth Capital’s Philip Shen reiterated a Hold rating on the stock and has a price target of $1.30.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Osborne and Philip Shen have a total average return of -13.0% and -20.8% respectively. Osborne has a success rate of 39.2% and is ranked #3607 out of 3730 analysts, while Shen has a success rate of 17.8% and is ranked #3718.

ReneSola Ltd is a manufacturer of solar wafers and producer of solar power products based in China, which are thin sheets of crystalline silicon material made by slicing monocrystalline or multicrystalline ingots.