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ReneSola (SOL) Incurs Narrower-Than-Expected Loss in Q4

Zacks Equity Research

ReneSola Ltd. SOL incurred a loss of a penny per American Depositary Share (ADS) from continuing operations in fourth-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 5 cents. The reported figure reflects substantial deterioration when compared to earnings of 4 cents registered in the year-ago quarter.

For 2018, the company reported earnings of a penny per ADS.

Revenues

ReneSola’s fourth-quarter net revenues of $5.6 million missed the Zacks Consensus Estimate of $24 million by 77%. The top line also declined 91.4% year over year and 70.3% sequentially.

Quarterly revenues also missed the company’s projected range of $20-$30 million. The downside was on account of a delay in the sale of ReneSola’s two assets in Hungary and Poland during the quarter under review.

For 2018, the company reported net revenues of $96.9 million compared with $103 million in 2017.

Renesola Ltd. Price, Consensus and EPS Surprise

Renesola Ltd. Price, Consensus and EPS Surprise | Renesola Ltd. Quote

Project Details

As of Dec 31, 2018, ReneSola had over 231.7 megawatts (MW) of rooftop projects in operation and more than 11.6 MW of rooftop projects under construction in China.

As of Dec 31, 2018, the company had a pipeline of almost 1.7 gigawatts of projects in various stages, of which, 773 MW are late-stage projects. Of these late-stage projects, 54.3 MW are under construction.

Operational Highlights

Gross margin of 51.4% in the fourth quarter expanded a whopping 4090 basis points (bps) year over year and 550 bps sequentially. This uptick can be attributed to improved margin from project sales.

Operating expenses totaled $4.8 million, up 152.6% from the prior-year quarter and 65.5% from the previous quarter.

Operating loss in the quarter came in at $1.9 million compared to the year-ago quarter’s operating income of $4.9 million. The company had reported an operating income of $5.7 million in the third quarter of 2018.

Financial Condition

As of Dec 31, 2018, ReneSola had cash and cash equivalents of $6.8 million compared with $13.4 million as of Dec 31, 2017.

Long-term borrowings were $41.4 million as of Dec 31, 2018, compared with $32.5 million at the end of December 2017.  

Net cash used in operating activities at the end of 2018 totaled $51.1 million compared with $18.4 million cash provided by operating activities at 2017 end.

Guidance

ReneSola projects first-quarter 2019 revenues in the band of $8-$10 million, with overall gross margin in the 0-15% range.

For 2019, the company expects to generate revenues in the $150-$170 million range, with overall gross margin of 20-25%.

Business Update

In France, ReneSola has formed a strategic partnership with Green City Energy to jointly develop four solar parks, with a total installed capacity of 69.0 MW in 2018. With a total installed capacity of 69 MW, the four parks will generate approximately 105 million kW hours of electricity per year.

Zacks Rank

ReneSola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Solar Releases

SunPower Corp. SPWR incurred adjusted loss of 21 cents per share in fourth-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 38 cents.

SolarEdge Technologies SEDG reported fourth-quarter 2018 adjusted earnings of 63 cents per share, which missed the Zacks Consensus Estimate of 70 cents by 10%.

First Solar Inc. FSLR reported fourth-quarter 2018 earnings of 49 cents per share, which missed the Zacks Consensus Estimate of 64 cents by 23.1%.

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