May 29, 2014
ReneSola Ltd. ("ReneSola" or the "Company") (www.renesola.com) (NYSE: SOL), a leading brand and technology provider of solar photovoltaic ("PV") products, announced its unaudited financial results for the first quarter ended March 31, 2014.
Financial and Operational Highlights
- In Q1, total solar module shipments were 521.1 megawatts ("MW"), compared to 505.3 MW in Q4 of 2013. Total solar wafer and module shipments in Q1 were 710.1 MW, compared to 784.1 MW in Q4.
- Net revenues were US$415.0 million, compared to US$438.8 million in Q4 2013.
- Gross profit was US$44.0 million with a gross margin of 10.6%, compared to gross profit of US$49.7 million with a gross margin of 11.3% in Q4 2013.*
- Operating loss was US$8.7 million with an operating margin of negative 2.1%, compared to operating income of US$8.8 million with an operating margin of 2.0% in Q4 2013.
- Net loss attributable to holders of ordinary shares was US$14.6 million, representing basic and diluted loss per share of US$0.07 and basic and diluted loss per American depositary share ("ADS") of US$0.14.
- Cash and cash equivalents plus restricted cash totaled $214.9 million as of the end of Q1 2014, compared to US$348.9 million as of the end of Q4 2013.
- Net cash outflow from operating activities was US$112.3 million compared to net cash outflow from operating activities of US$30.8 million in Q4 2013.
* Starting from Q1 2014, the Company has changed its accounting classification of warranty expense, which was previously classified as cost of goods sold, to better reflect its global OEM business operations and align its accounting policy to industry peers. Accordingly, beginning with this quarter, warranty expense has been recognized in the selling expense. The change in classification has been retroactively applied for all periods presented. The impact of change in classification on the consolidated financial statements are: gross profit increased by US$2.55 million, US$2.33 million and US$1.96 million; sales and marketing expense increased by US$2.55 million, US$2.33 million and US$1.96 million for Q1 2014,Q4 2013 and Q1 2013, respectively.
"Our OEM strategy continues to be the backbone of our worldwide sales and distribution efforts," said Mr. Xianshou Li, ReneSola's chief executive officer. "ReneSola's overseas OEM module capacity now exceeds 1.1GW, with a total of 11 facilities in Europe, Africa, South Asia, and the Asia-Pacific region, and allows us to grow our business with minimal capital expenditure requirements. While we recognize the regulatory uncertainty regarding trade frictions across a number of major solar markets, including the United States and possibly India and Australia, we continue to be well positioned compared to our peers with our OEM facilities around the world, and will look for opportunities to gain market share from resulting market changes. Potential higher ASPs in those markets served by our OEM capacity will also help our profitability. Our OEM manufacturing network continues to play a key role in our business model in becoming a global brand and technology provider with sales channels spread across multiple continents. Additionally, we continue to grow our sales and distribution network worldwide with 22 offices and 37 warehouses. Furthermore, our ever-growing local sales teams provide us with greater adaptability in dealing with changing market conditions and meeting client needs as they emerge.
"We are gradually switching our focus from big-scale utility projects to small-scale projects, specifically commercial and residential rooftop projects. We are seeing stronger and more sustainable growth in these retail markets across different continents and are able to sell at a higher price to such smaller projects. With our brand recognition, local warehouses and on-site technical support, we are providing retail customers with integrated solar services and solutions, which not only allows us to charge a premium but also puts us on the path to becoming a stronger brand and higher-profile technology provider in the industry. We expect that by the end of this year, retail market sales will account for nearly half of our module shipments.
One of our key Q1 highlights was a tremendous sales pick-up in Japan. We expect sales volume to continue through the rest of this year, providing another example of our strong sales and marketing capabilities across international markets. Also, our polysilicon factory, after a brief period of maintenance, has been back to full production since the end of March, and we expect it will contribute positively to our overall profitability from Q2 onward.
"We have made module production cost reduction one of our priorities for 2014, and we have a detailed plan in place that we will implement gradually throughout the year. We expect the cost reduction to come primarily from our in-house polysilicon supply, increased production efficiency, and more efficient sourcing of other materials. We are aiming to be a cost-leading module supplier in the industry, while maintaining the same high level of product quality that the market has come to expect from ReneSola."
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