ReneSola Narrows Loss, Beats Revs
ReneSola Ltd. (SOL) reported loss per American Depositary Share (ADS) of 24 cents per share for the second quarter of 2013, narrower than the Zacks Consensus Estimate of a loss of 26 cents per ADS. The second-quarter loss also narrowed from the year-ago quarterly loss of 40 cents per ADS and the prior quarter loss of 45 cents per ADS. The results reflect the company’s focus on improving selling prices.
Operational Results
Net revenues for the quarter rose to $377.4 million from $233.0 million in the prior-year quarter, supported by higher selling prices and increased shipments. Reported quarterly revenues also beat the Zacks Consensus Estimate of $367.0 million. Also, the figure was above the prior quarter revenues of $284.2 million.
During the quarter, total solar wafer and module shipments were 849.3 megawatt (“MW”), up 70.8% year over year and 28.3% sequentially.
Panel prices for solar wafers increased by 1 cent to 23 cents per watt and prices for modules increased 2 cents to 63 cents per share per watt, sequentially.
Operating expenses were up 22.6% year over year due to a significant increase in research and development ("R&D") expenses. Operating loss during the quarter was $16.6 million as compared to operating losses of $34.6 million in second quarter of 2012 and $33.4 million in first quarter of 2013.
Financial Condition
As of Jun 30, 2013, ReneSola had cash and cash equivalents plus restricted cash of $405.8 million, compared with $442.7 million as of Mar 31, 2013. Net cash inflow from operating activities was $65.5 million compared with net cash inflow from operating activities of $4.2 million in first quarter of 2013. Total debt was $909.9 million compared with $958.6 million as of Mar 31, 2013.
Guidance
ReneSola expects its third-quarter revenue to be in the range of $360 million to $380 million. It also foresees gross margins to turn positive in the third quarter, between 7% and 9%.
The company expects third quarter 2013 solar wafer and module shipments between 730 MW and 750 MW, with solar module shipments in a range of 430 MW to 450 MW.
Full-year 2013 solar wafer and module shipments are forecast to be between 2.8 gigawatts (:GW) and 3.0 GW, with solar module shipments of 1.6 GW to 1.8 GW.
At the Peers
Recently, JA Solar Holdings Co. Ltd. (JASO) announced a loss of 58 cents per ADS in the second quarter of 2013, narrower than the Zacks Consensus Estimate of a loss of 62 cents.
LDK Solar Co. Ltd. (LDK) reported second quarter of fiscal 2013 loss per ADS of 97 cents, wider than the Zacks Consensus Estimate of a loss of 92 cents per ADS. However, quarterly loss narrowed from the year-ago loss of $2.00 per ADS.
A few days back, JinkoSolar Holding Co. Ltd. (JKS) reported adjusted earnings per ADS of 56 cents, well above the Zacks Consensus Estimate of a loss per ADS of 7 cents, a diluted loss per ADS of 56 cents in the first quarter of 2013 as well as a diluted loss per ADS of $2.11 in the second quarter of 2012.
Our Take
In spite of ReneSola reporting in the red this quarter, the narrower-than-expected loss is encouraging. Also, the top line succeeded in beating the Zacks Consensus Estimate.
Despite a challenging macro environment and a competitive solar industry, the company continued to make substantial progress and exceeded its shipment volume guidance. In order to build its brand image, the company also introduced its proprietary technology to customers across multiple international markets.
With the company’s focus on improving operating efficiencies, multiple contracts and agreements, generation of material cost savings and introduction of innovative products like the power conserving microinverter Replus, we believe that the company is well positioned. The company presently retains a short-term Zacks Rank #2 (Buy).
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